First Tuesday, which is a real estate oriented journal offers an update on both the Southern and Northern California real estate markets.  Many people ask, “Is it time to buy San Diego real estate?’   According to First Tuesday research, home sales volume of single family residences (SRFs) on a month-to-month suggest 2011-2016 will continue to be a bumpy ride.  Both volume and prices slipped a little during the first six months of 2011, and may continue a slight dip through the end of 2011.  Prices may increase a bit in early 2012 due to our shrinking foreclosures and low interest rates.

Since California’s homebuyer confidence is tied to our employment growth, it is understandable that we will not see much change until the employment changes.  California politicians have a history of driving businesses out of California due to regulations and taxes.  Will this ever change?  I am not sure. Every politician thinks their job is to make more rules and laws.  Unfortunately many of these politicians have no clue about business and they end up doing more harm than help.  Because we have about 30% of California homeowners underwater where their mortgages are higher than the value of their home, we find many owners are just sitting tight.  Some lenders will cooperate with these owners if there is a short sale (where the lender takes less than is owed), but other lenders seem, in my opinion, to go out of their way to be uncooperative in closing a short sale.  This is only my experience, based on our first-hand experience, but personally I sometimes think the inmates are running the asylum.  Of course, that is politically incorrect to say, but that is the beauty of having an opinion.  You can be politically incorrect sometimes.

Buyers who purchased 3 to 5 years ago are having a hard time accepting their homes are not worth what they want them to be worth.  Sellers still tend to overprice their home or condo, and then become frustrated when the property doesn’t sell.  Realtors who allow their sellers to do this are really not helping their owners.  They are just listing properties for sale.  It is our job to be truthful.  If an owner selects another real estate agent based on the price they are told, there is little we can do about that, as frustrating as it can be.

2008 and 2009 are the years where large number of foreclosures (REO’s) began to arrive en mass in the California and San Diego marketplace.  Along with these REO’s, investors started to surface.  In every market, there are buyers who sit on the sidelines, increase their cash savings, and wait to purchase when they feel the time is right.  Lender REO’s are still a force in the marketplace, and some of the lenders who wouldn’t work with the owners on shortsales, are now dumping their foreclosures under the pricing they could have received had they cooperated with a short sale.   Investors began purchasing these properties, and those buying San Diego real estate, started to experience some price increases.  During this timeframe we also had the First Time Homebuyer tax credits and these programs helped increase sales volumes.

Now that homebuyer credits have ended, and investors have seen prices increase past their “good deal quotient”, sales have dropped back somewhat.  The lower priced markets in San Diego seem to have hit bottom, but the mid-range properties are still experiencing softness.  This lull in sales volume is predicted to continue into 2013 but should pick up once the economy picks up steam.  I hear many people say that things will change once we have the Presidential election.  That’s a no brainer.  Things are always changing.  If the current President is reelected, things will go one way, and if another President is elected, chances are the economy will move in a new direction.  The current direction pretty much stinks, so we can hope for better housing days.  In addition, the Super Committee in Congress (super only in their own minds I think), may try to tamper with interest deductions for homeowners.  That is an unknown activity that may stifle home sales.

The bottomline to all of our housing woes circles back to jobs.  The American Dream is alive and well.  People who have jobs tend to want to own their own home or condo.  San Diego real estate buyers are the same as everyone else.  Once jobs increase, housing will increase.  There is some cause for hope:

1.  Lower income taxes in 2011 for most people who pay taxes.  (Unless of course the Super Committee botches this)

2.  Hopefully we are going to see consistent job gains.

3.  Loan modifications may become easier, thus keeping homeowners in their homes.  Victoria just received an excellent loan modification from Chase.

4.  Prices in affordable ranges for buyers

5.  Increased short sales thus helping to clear out upside down mortgages.

6.  Growing consumer confidence.

We know that there is a lot of doom and gloom out there, but we are bullish on the real estate market.  People still move to California.  Weather is a factor for selecting a place to live.  You may have the perfect 3br/2ba home that is 2000 square feet, but if it is stuck in the middle of a blizzard, it doesn’t enhance your lifestyle.  California still appeals to those who love temperate weather.  San Diego real estate continues to sell because interest rates are low and home prices are low.

This is a series of articles by Sharyn and Victoria Crown, San Diego real estate agents.  If you would like to search for San Diego real estate to buy, visit our San Diego Home Search site.

Related posts:

1. It Is Time to Buy San Diego Real Estate!
2. Lakeside Real Estate Market
3. Coronado Home Sales Statistics
4. San Diego Real Estate and the QRM
5. Does San Diego Have a Housing Chill?