So How’s Your Market?

There is good news and bad news , which would you like first?

Here is the Good News.

* During the month of August, there are 263 Active Listings in RB ( Rancho Bernardo). The Average Price is $899,718 and the Median Price is $668,880.  There were 53 Listings Pending Close of Escrow and 46 Sold Listings during the month. The Average Sold Listing was $694,993 and the median sold was $564,450.

A Recap of the Year to Date Sales shows we had 246 sold homes so far with the high selling price of $4,000000 and the low of $324,900. As you can see, we have a wide variety of single family homes ranging in size from 1200 sq ft to over 9,000.

On the Attached Home side of the housing market we have the following activity that took place in August. There are 58 Active Attached Listings through the end of August. The Average List price was $272,370 and the Median List Price was $278,000. There were 10 Listing Pending Close of Escrow ranging in price from $132,500 to $383,000. The 4 Attached Properties that Sold ranged from $145,000 to  $499,876.

A Recap of the Year to Date Sales shows we had 138 Attached Homes Sales with a High Selling Price of $689,000 and a Low Selling Price of $125,000 for 540 sq ft. The Average Selling price was 261,249 for 1,163 sq ft and the Median Sales Price year to date was 234,950 for 1092 sq ft.

That was the Good News! Ready for the Bad News? Home prices are tending up and there is strong evidence that interest rates will likely be going up as well. Sitting and waiting for a better deal in Rancho Bernardo is not likely to happen so if you are considering a new Home or Condo, now is time to get in the market.

*Data obtained from Sandicor MLS and believed to be correct but not gauranteed.

The October San Diego Housing Market report indicates that while the median sales prices for resales have increased slightly, the number of sales last month have dropped and over the last year they have done so rather significantly.

The year over year San Diego Median Home Prices changes from October 2009 through October 2010 suggest that there have been increases across the board in Single Family and  Condominium resale prices and especially in new homes sale prices. The median prices increased 2.5% ( $369,000) for Single family homes, up 2.38% ( $215,000) for condominiums and a whopping 21.12 % ($486,000) for new homes. These combined gave the county a 2.92% ( $334,500) boost to the median price of all combined types of sales.

The sales numbers year over year however show  a significant drop in the number of sales in all three categories. The resale numbers for Single Family homes sold was 1659 sales county wide, a drop of 24.83% year over year while the total Condominiums resales of 822 was a drop of  24.86% year over year. New homes sales of 269 similarly dropped over 27.30% year over year.  The over market change in San Diego county reflect that there was 2750 total sales in all categories for October, a drop of 25.09 % in the housing sales figures for the 12 month period of October 2009 through October 2010.

We have seem over the last year some price stability even while the number of sales are dropping. It has been speculated by others that the overall economic picture on employment and the increasing number of distressed properties may very well have a disrupting affect on the price stability gained thus far and could show up in the coming markets. While I remain optimistic, statistically at least, the current downward trend in sales continues while the prices rise slightly because we have a well balanced inventory. If the inventory expands greatly and the sales don’t improve, that will have the most marked affect causing values to decline, not so much the short sales as the experts suggest. So I am using Lenn Harley’s caveat statement, ” I am No expert” . Anyway, once demand starts to improve, that will bode well for New Home construction ( think jobs) . But the total of 269 new home sales in October was the lowest reported since 1988 and continues to be slow. This compares to 1,829 new homes sales as reported in April of 2004. We forget how much things have already changed while looking for any glimmers of hope of things getting better.

The question many homeowners ask me is what is my forecast for the coming year. My “positive spin” on that forecast is this. I don’t have any idea when we will see things really change but there is expected to be a lot of pent-up demand for homes in all categories once the market indicators show that job stability is returning and the general economic anemia is ending. Here are a few of things that might spur that to happen. Un-employment numbers dropping significantly and increased jobs in the key market centers, interest rates remaining low and a rise in overall consumer confidence. I remain guardedly optimistic that we will see some of these things beginning to show up by mid 2011.

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.

According to Zillow, San Diego home prices year over year have increased 3.5 % and other reliable analysts agree that San Diego’s bottom was met and prices are on the rise and now lead the nation. Out of 27 major market areas, San Diego lead the way of the 6 top markets showing ayear over year increase in price followed by 4 other California markets.

Good news for Homeowners and for home ownership. It seems pretty clear that if prices are going to continue to rise, short of any great new economic downturn on the horizon, this is a very good time to buy with prices still low and interest rates still affordable. Single family homes are up on average 4.5 % over the past year and condominiums were 2.2 %.

Buyers that want to buy a home at the ground floor level would be well served now to get back into the market and make hay will sun shines, which it does most of the year here in San Diego. There are still some very good bargains out there but the inventory is low and hasn’t had much increase in inventory. Think in terms of supply and demand and take action now.

I would highly recommend San Diego Buyers to realize that the time is now if you still want in at the bottom.

]]> http://therealestatetextbook.com/2010/05/11/1235/feed/ 0 http://therealestatetextbook.com/2009/05/11/971/ http://therealestatetextbook.com/2009/05/11/971/#comments Tue, 12 May 2009 01:14:48 +0000 William Johnson http://therealestatetextbook.com/?p=971 A San Diego Treasure, The Rancho Bernardo Winery. This past weekend I had the good fortune of attending the Bi-Annual Rancho Bernardo Winery Arts and Crafts Fair.

For those of you who live in San Diego that don’t know of this place, it is one of the oldest continually operating wineries in southern California. And for those who don’t live here, this needs to be on your itinerary the next time you visit.

The Rancho Bernardo Winery was founded back in 1889 on what was a Spanish Land Grant, the winery was opened and operated until Prohibition. The winery is located in a valley that used to be covered with vineyards and with the advent of Prohibition, the winery went up for sale. When it was purchased in 1927 by  Vincent Rizzo, the harvest was then used to produce grape juice and sacramental wine. After Prohibition ended, the winery became a major wine producing company along with it’s famed Cold Pressed Virgin Olive oil made from the many olive trees that were found on the property.

As the valley began to grow and the land was purchased for residential development, the vineyards disappeared and today, the Rancho Bernardo Winery imports most of its wine making grapes from around the county and state. In 1962 when Ross Rizzo, the son of the founder took over the winery, he turned it into what it is today, a destination.

When you visit the Rancho Bernardo Winery, you will be overtaken with the vast amount of antiquities found everywhere on the property, even to include a museum. There are over a dozen village shops, a wine tasting room, a coffee shop, an award winning cafe and more charm than you can fit into an afternoon.

The Arts and Crafts Fair was filled to capacity with local artists showing their creations. I was taken with several of them for their unique design qualities as well as with the artist themselves.

Two artists that create these sculptures from gourds really caught my eye.

Ruth Phillips and Vickie Echols proudly display their creations. Each artist creates their unique pieces using the gourd as inspiration and from there, their artistry takes over and you can see here for yourself, each one is its own little unique masterpiece.

Ms. Vickie Echols (on the left) creates beautiful object d’arts using gourds as the core of the piece then enhanced with a woven reed type material. Many of her pieces have a distinct Southwestern influence. Each one is totally unique and a real stand out.

Ruth Phillips also uses gourds in her designs ( one of my favorites that first got my attention is the purple gourd pictured here) some of which also have the look of metal sculptures like her bird collection. Ruth’s Bird designs are made completely from gourds or cuttings from gourds finished in metallic finishes that would simulate aged and weathered bronze. These pieces are truly stunning! Both Vicki and Ruth will showing at the 13th Annual Gourd and Fiber Art Show May 17th through June 28th, 2009 at the Falbrook Art Center.

Another artist, Susan Smith, who I had the pleasure of visiting with is a world traveler and has her art studio in Spanish Village in Balboa Park. Susan uses computer software to create her work by enhancing her photography creating the affects of oil, acyclic and water colors. One of my favorite pieces that Susan has done is shown below titled “Vernazza II” ~ Cinque Terre. Her technique is called Fauxtography. A true Artist and a lovely person to boot. Susan can be reached at susankphotography@yahoo.com

Throughout the entire Arts and Crafts Fair, there are so many wonderful items reflecting some of the outstanding talent to be found here in San Diego. I was taken with a very novel idea of unique garden art as presented by “Creative Garden Art”.

The artist uses old chairs, furniture, antique objects from decades past and creates some of most unusual garden planters you will ever see.

Planting chair seats might never have occurred to you but when see them, it is little wonder everyone wants one. For things already designed or custom commissions, Creative Garden Arts can be reached at 1-760-724-8906

One of the biggest and permanent contributors of art at the Winery is the Stone and Glassworks Studio at the RB Winery.

Since the glass blowing and artistry takes place right there on the site, wandering into their gallery and design studio display will delight the senses. Some of the more creative and beautiful glass works I have ever seen can be found here. James Stone is the Master Glass Artist and using the word “master” would be no stretch at all. To see the magic he creates is something you will likely never forget. Take a look at one of his most recent glass wall sculptures and be dazzled with a love seat in glass.  James can be reached at his studio 858-485-7701

With so many wonderful art and crafts, this show is such a wonderful representation of the many Arts and Crafts artists we have here in San Diego.

This show will be repeated this October and I would recommend strongly that if you have never been here, that you should make this a priority. And it will be perfect timing for the Christmas Holidays.

There is plenty of parking nearby and come early and plan to stay for lunch and enjoy the wonderful settings, antiquities, the art and crafts, the food and don’t forget to visit one of the most fabulous bakeries in all of San Diego.

The Bon Bon Bakery and Chocolates. Their offerings are so outstanding and beautiful they rightfully belong in the art show itself.  Here is just a little sample to tempt you. The genius behind these amazing delights is Joanne Hansen.

No photograph could ever do justice to these colorful chocolates, exquisitely hand decorated. The cakes and pastries are nothing short of amazing and  the collection of chocolates will certainly whet your sweet tooth. For special orders call JoAnne at 858-592-0570

From the time you walk through the gates at the Rancho Bernado Winery, you will be awe struck with its lush vineyards and the mediterannean influence of the gardens in this exquisite setting.

The antiquities are found over the entire poperty and you will see things that you have likely never seen before. Please plan to do a wine tasting and visit the museum. In short, plan to make a day of it and you will walk away having experienced one of “San Diego’s Best Kept Secrets“.

With our economic system in a tailspin, for the older generation hit the hardest by declining fortunes coupled with the rise of unemployment, property values and retirement investments,there may be yet another way for them to tap into the greater amount of their home equity in these hard times.

For home owners that are age 62 or older and have a good amount of equity, Reverse Mortgages may be their Golden Egg that helps them through the tough times and ensures they can stay in their homes.

While there are scores of Reverse Mortgage offerings out there from  private companies and even some state and local government types, the federally insured Home Equity Conversion Mortgage might be a good place to start in the discovery of the costs and requirements to see if the idea of a Reverse Mortgage is your Golden Egg.

An FHA Reverse Mortgage, was granted a higher loan limit last fall that currently stands at $417,000.

Some of options of the reverse mortgage is that it can give these older home owners various ways to take the loan. It can be an equity line of credit, lump sum payment or a combination of both, all the while they can remain in the home without the burden of making mortgage payments. And the costs and types of loans will most likely vary greatly.

Below is a general overview of the requirements for an FHA approved reverse mortgage, fully guaranteed by the federal government ( Federal Housing Administration, Housing and Urban Development, Department of Veteran affairs).

Requirements:

Must be 62 years of age or older
Property must be your principle residence
Agree to be counseled by Home Equity Mortgage Counselor *
Have enough equity in the property

The Amount of Mortgage is based upon:

Age of youngest borrower ( must be at least 62 years of age )
Either the appraised value or Home Equity Conversion Mortgage Limit ( whichever is less )
Current mortgage interest rates

Financial Qualifications:

There is no income or credit evaluations needed of the borrower (s)
Costs associated with the Reverse Mortgage may be a part of the financing
No payment is required unless residence is sold, residence changes from being the primary residence or borrower passes away

Eligible Property Requirements:

Property must meet the minimum FHA property standards
Must be a single family home or 1-4 unit home with one unit occupied by the borrower as his/her principle residence
If the property is a condominium it must be on the FHA approved list
If the property is a manufactured home, it must meet the minimum FHA standards for manufactured homes

*The purpose for the counseling is to determine if eligibility requirements can be met, what the financial implications and alternatives would be for the reverse mortgage and also what kinds of costs are involved. At that time, the provisions of the mortgage are presented with what circumstances will trigger the mortgage to become due and payable. After the counseling session, the Borrower(s) will be best able to make the determination if the reverse mortgage would be of benefit and ultimately meet their needs.

San Diego Water Supply

Finally San Diego got some rain.  Over 2 inches of it in most places last week.  But don’t let this lull you into thinking that the need for water conservation has somehow ended.  It hasn’t.

The reservoirs are very low, there are going to be cutbacks in the supply of water we purchase, the water rates are going up again and we will not be able to fill the need for water.

So what does all this mean to you the consumer here in San Diego?  It spells the greater possibility of M-A-D-A-T-O-R-Y water restrictions.

For a lot of years running, San Diego, in fact all of California’s population has been exploding.  Developments of every sort are filling up the land.  People have been migrating in large numbers to California.  Meanwhile, we have not added one sustainable drop of water to the supply.

It has to strike you ( sooner if not later ) that with our droughts and no other means for water, at some point there won’t be enough to spread around.  Thinking you might need to shower with bottled water from Costco.  Not going to happen.

There must be ways to cut back on consumption voluntarily or the alternative way, if there is any hope of stretching supplies.  So it’s either we do it voluntarily or it will be mandated.  The former would be preferable to having your water supplies cut off or greatly curtailed.

Here are some ideas to help you -there are a lot of other ways to cut down your water usage.

1. When running water to get to the hot water – don’t let that water go down the drain.  Capture it in buckets for use on your plans for your landscaping.
2. Turn off the water when brushing your teeth.
3. Fix leaking faucets or toilets that continue to run.
4. Take shorter showers.
5. In all flow restrictors on all faucets and showers.
6. Replace the old toilets with new low flow toilets.
7. Cut your yard watering down by one half.
8. Use a car washing service that recycles their water use.
9. Use the dishwasher only when full – same with the clothes washer.
10. Replace a portion on the lawn with drought resistant plants and use mulch around trees and shrubs to keep the moisture from elaborating.

We must all take this seriously if we are going to affect the outcome anytime soon. It is not going to easier by delaying this. We either cut back or they will cut out. You get to choose. I hope you will choose wisely.

This report includes all residential property, Active, Pending, Sold, Expired and Off Market in all price ranges in all zip codes of San Diego County.

In each category is shown the total number of units, the average price and the total dollar volume.

Category            # 0f Properties        Average Price        Total Dollar Volume

Active Listings               18,198                $739,774                  $13,462,407.252

Pending Close                  6,180                $414,659                    $2,562,596,620

Sold Listings                    7,219                $462,355                    $3,337,740,745

Expired                            2,619                 $684,376                   $1,774,482,468

Cancelled                         2,881                $581,813                    $1,676,203,252

Looking back, 2007 has been a most unusual year. The housing market has seen a lot of correction and some real disappointments coupled with some mostly obscured indicators that the market is actually improving.

As we begin this year that will have the media being dominated by election year prognostication, there will also be many words printed about the housing market and the direction the media intends to emphasize as the year progresses. There will no doubt be further effort to undermine any efforts of recognizing this market as a glass half full. But the best investors world wide have always recognized the golden opportunities that lie at the heart of the medias effort to portray any weakness in the markets as death knells. The best usually pick up the gauntlet and run with it to find even more new riches at the expense of the weakened and weary current holders of the assets.

Read the rest of this entry »

This mornings headlines in Business news around the country contain his projections for the bottoming out of home prices to continue through 2008 with credit problems to remain elevated well into 2009.

Many of my ActiveRain readers compliment me for finding the positive in our markets and usually highlighting the glass half full scenario instead of the opposite viewpoint.

The stock market over the last few days is responding to the Moodys study which Mark based his forecast on.

I will give you the highlights of Marks forecast. What is interesting to me is that most of this has been heard in the press for quite some time. I think the impact is that Moodys is lending their voice to make the previous forecasts a bit more concrete. back and forth. One month things are improving, the next, the economy is projected with a lot more pain but at least he doesnt see a possible recession.

• Home prices will fall 10% from the peak, more in the regions of CA., AZ,and Washington DC.
• Home sales could bottom later this year. But it will be 2010 before the market returns to Normal
• Investors are projected to lose about 113 Billion as the 460 Billion worth of mortgages default.
• 20% of the sub-prime mortgages in 2006 will fail. it was noted that a significant number of these borrowers never made a single payment.
• 2.5 million first mortgages will default this year and next.
• US economy will grow less than 3% annualized through 2009
• Prediction that consumer spending will slow and will continue on that trend.

I did report that in yesterdays post that Wall Street packed up those sub-prime mortgages and marketed them as tradeable securities. What I didnt discuss in that post was that some of these major hedge funds are stumbling. Mark suggested that if another major hedge funds stumbles that there is a one in five chance of a Global liquidity drying up.

A one in five chance. The last time I did math, that was a 20% chance. We have had a 20% chance forecast of rain here in California for months and not a drop of rain has fallen. I suppose you shouldnt dismiss the argument completely but I sure wouldnt want to bet a $100 with a 20% chance of winning, would you?

I would report then that there is 80% chance that such a thing will not happen. Which odds do you like better? 20% or 80%.

One of the nice things thats happening for me as I discover my own voice in this blogging world is that I am beginning to get the hang of collecting data and drawing my own conclusions and not always having to believe what others and their the glass is half empty and we are likely to spill the rest of it type of scenario. I have held for a lot a years that the real estate markets go up and down but one thing is certain. There are no less people in the world and the last time I looked , God hadnt made any more land. So we all are trying to fit into tighter spaces.

People have always wanted their own piece of the land and I dont think that will change any time soon. Fluctuations in normal market cycles are to be expected and have to be persevered. If the markets only went up, a small garage would cost a million dollars soon. Better if that happens when we all make a million dollars a month income. For now, lets just park the car in the garage and not be so concerned what it is going to be worth when bread is hits $25 a loaf.

It might never happen, meanwhile I do know our lives are happening every day. We should all live them as best we can and keep out wits about us. We dont have to buy into projections just because they seem to fit the news patterns. Buying in pretty much assures a self fulfilling prophecy, doesnt it? Burying our heads in the sand doesnt help much either. Become aware !

There is yet another scenario that needs to thrown out here for discussion on another upcoming post. Is this whole housing crisis actually be shaped intentionally and not so much by accident? There has been talk for at least a few years about new tax system proposals, flat taxes, in particular where it concerns the deductibility of mortgage interest.

This same economist in an interview in 2005 with CNN felt that people might be over investing in real estate and as one of the interviewee’s noted, one way that the excessive investment in real estate might be curbed would be a restructuring of the tax code that would make it less appealing, particularly if the mortgage interest was not tax deductible any more.

This same economist for Moodys seemed to feel at that time that people have done very well buying homes and that they need to get used to the idea that things are going to change. I wonder if that Is that what we are now seeing, a sort of preparing for that type of change? Maybe in 2008 with a new administration and New Congress? Keep your eyes and ears open, there may be more to all this than we thought .