Posts Tagged ‘for sale’

Central San Diego Housing Market Update-August 2013

As the month of August drew to a close, It is still a strong sellers market, while buyers (including cash investors) continued bidding wars on listed properties. However, the skyrocketing home prices may be peaking, with the average sale price finally slipping over the previous month. Our 20% year-over-year price increase has been slipping closer to a 17% increase.

There are a number of factors at work right now slowing the housing market down a bit. These include rising interest rates (from 3.5% earlier this year to a current rate of 4.7%), housing inventory levels catching up with demand, and prices simply peaking (they can only go so far before many potential buyers get priced out of the market).

To get the latest figures, I ran an analysis of home figures from the MLS for the central San Diego region. This includes communities such as Mission Valley, Serra Mesa, University Heights, Normal Heights, Hillcrest, Mission Hills,  Bay Park, and Clairemont. The numbers include both condo/townhomes as well as single-family homes.


Housing Figures-Central San Diego

Date Number of Sales Ave Sale Price Ave Price/Square Ft. Ave Days on Market
August 2013 224 $436K $360 27
July 2013 239 $447K $353 29
August 2012 225 $359K $287 55

san diego housing market updatePrices continued to rise in San Diego (now 17% year-over-year), while inventory seems to finally be catching up with demand. There are currently 6700 active listings in San Diego county. There were nearly 6000 last month and only 4000 earlier this year. Properties newly for sale also continued to sell very rapidly, with a mere 27 days on market.

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Here’s Why Your Should Buy Or Sell A Home Now!

San Diego homeowners who’ve wanted to sell have loved the recent news of rising home prices (up around 20% from a year ago), easier lending terms for buyers and general economic improvement that encourages house hunting. But will rising interest rates can undercut home prices?

Like buyers, sellers need to get a move on before rising rates make buying a home more expensive. Sellers should be careful not to wait too long. Rising mortgage rates are hardly a crisis, as they’re still low by historical standards, but prospective sellers should keep the rate and price relationship in mind as they plot their strategies.

Historical Mortgage Rates

Historical Mortgage Rates

Unfortunately, it’s impossible to say the exact effect on prices of a 1, 2 or 3 percentage point rise in mortgage rates, as so many factors affect home values. But the principle is simple enough: Rising rates make monthly payments bigger, reducing the maximum buyers can spend. That, inevitably, affects prices to some degree.

Rising rates, of course, also have a psychological effect, causing some buyers to wait for rates to come down and making others give up the search altogether. Others may think they better “hurry up and buy” before rates go even higher. Recent data and trends suggest buyers are pulling back a bit now, disturbed by recent rate increases. But in coming months, many may change their minds, realizing that even if they missed the cheapest deals, rates are still low — and lower than they’re likely to be in a year.

This Mortgage Calculator can help you see the relationship between prices and interest rates.

Here is an example: A person with a $4,000 monthly income could afford a monthly payment no higher than $805. That would support a $134,267 mortgage at a 6% rate. Change the rate to 4.5%, about today’s level for the 30-year fixed-rate loan, and the maximum mortgage jumps to $158,876.

So, if rates were to rise from today’s 4.5% to 6%, a historical average rate, this buyer would have $24,609 less to spend. Looked at another way, a 1.5 point increase in mortgage rate would reduce this buyer’s buying power by about 18%.Mortgage-Interest-Rates-Round-Up-for-Saturday-August-101

If that seems surprising, note that raising the rate to 6% from 4.5% is a 33% increase, producing a much larger monthly payment for a given loan size.

As mentioned, this just illustrates the principle, and it doesn’t mean home prices would fall 18% if mortgage rates rise. For one thing, a seller needs only one buyer, and there may be plenty of others who can afford the home even with higher rates. After all, not every buyer applies for the biggest loan that would be permitted. Those planning to spend less than the maximum may still be able to afford the home with the higher payment.

Today, the would-be seller should be on the lookout for a sweet spot in market conditions. That will be the point at which home prices have gone up from today’s level, but mortgage rates remain low enough to bring lots of buyers into the market.

If price gains start to level off (which it seems like they are in the San Diego market), the seller should probably get the home on the market quickly, or rising rates could shave the sales price.

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The All-Important Home Inspection

For San Diego home buyers, finding the right home can be an exciting time.  So exciting that sometimes home buyers forget some essential steps.  One of the most important steps in the whole home buying process is the home inspection. This is especially important in the case of purchasing an older home. A great majority of homes in Southern California were built in the 1950’s. Many still have original plumbing and electrical systems that likely have issues. Of course, your home inspector can guide you to separate the minor issues from the costly, major ones.

Before the sale is closed and the deed transferred, it’s highly recommended to have a professional inspection done anytime you purchase a home. A full report can be completed in about two hours and will leave you with peace of mind and an awareness of potential issues in your future home. You may even choose to have a professional licensed in asbestos, lead, chemicals, pool/spa, roof, mold, mildew, or pests inspect the home, too, to notify you of any unknown dangers.

Home inspections typically cover the following:

  • Walls
  • Ceilings
  • Floors
  • Roof
  • Windows
  • Plumbing
  • Electrical
  • Water supply and pressure
  • Gas lines

Landscaping, walkways and driveways will also be evaluated.  An inspector will note grading and drainage.  Any exposed general framing in beams, attics, roofing, HVAC and plumbing systems will be inspected, as well. Generally speaking the age and condition of roofing materials, plumbing and rain gutters will be noted, too, giving you an idea of your home’s maintenance history. Water heaters, fireplaces and the sprinkler systems, if applicable, should also be evaluated, as should appliances, alarms, and smoke detectors being left in the home to ensure a safe move-in.

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