San Diego Housing Market Has Been Steadily Improving-But Now It Is Slowing Down
July 17th, 2010 categories: Buying San Diego Real Estate, Investing in San Diego Real Estate, Local San Diego News You Can Use, Market and Forecast Updates For San Diego, San Diego Mortgage Banks and Loans Info, San Diego Real Estate, San Diego Real Estate News
San Diego Housing Market Has Been Steadily Improving-But Now It Is Slowing Down
Over the last 14 straight months, the San Diego Housing Market was improving. I reported so here on ActiveRain and on my Voice of San Diego Real Estate blog site with glee. So what is happening now? It would seem at first glance that the Federal Tax credit coupled along with state housing credits inspired most of the qualified buyers that were in the market to have already purchased leaving, us with a much smaller Buyer pool. And that doesn’t look to be increasing any time soon. Could that be a real possibility after having a steady increase in the improving numbers of home prices and sales? A possible cyclical change already?
According to Data Quick reporting, more money was spent last month on housing in Southern California in in the past 2 years. Home purchases are dropping significantly and with the historically low rates that haven’t been this low since the 1970’s, what could be going on?
We have had home price improvement for home sellers with the median price edging up 13.2 percent in the last year. The mix of homes from distressed to equity homes sales has improved from what was in the range of over 50% to about 33% currently. Higher home priced sales make up about 20.8% , which is up over last year , Investor and absentee buyers are currently making up about 19% of the sales. So that leaves up with 30% of the market made up of homes sales in the low priced category ( under $500K ) which is now lower than last year.
I suspect that Buyers are having a more difficult time of qualifying for the mortgages now. The requirements are getting more difficult to qualify so it may be that many more potential buyers are not eligible to purchase.
Here is another statistic that might help explain some of the change we are experiencing. Over the years , typically adjustable rate mortgages make up anywhere from 20 to 40 percent of the buyer pool at any one time. Today we are down to just a little over 6% of the mortgages are adjustable. Jumbo loans , even though the interest rates are available under 5%, qualifying requires extra high credit scores, at least 20% down and cash reserves.
The Buyer pool is still shrinking and that could spell some serious pricing problems ahead for sellers as we see the ratio of supply and demand make these dramatic changes. This is likely to add to the number of distressed homeowners entering the inventory market in coming months. It may be early for this statement but I am thinking that the idea that the housing market is going to float all boats and help get us out of the economic downturn might have been just wishful thinking.
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