Since the market’s downturn in 2007, housing prices have dropped significantly in California and across the country to record-breaking lows. This, coupled with extremely low interest rates have made 2011 and continue to make 2012 a great time for first-time home buyers and investors alike to purchase real estate. But things are beginning to shift – ever so slowly, but consistent enough to establish a trend that can be used as a predictor of the future.
2012 has been witness to a significant reduction in inventory. As many banks have streamlined their short-sale processes, they shift their focus to these types of sales in lieu of the forbidden foreclosures which all too often leave both the bank and the homeowner with the greatest possible loss. Foreclosures are also detrimental to the overall value of the neighborhood, as the low cost of these distressed homes, while advantageous to the eager-eyed investor, reduce the market value of the surrounding properties. Foreclosures are down 40% over the past year in San Diego County. Likewise, total inventory of single family homes and condos is down over 40% from the 2011 summer peak (9,141 vs 15,949).
Low inventory and low interest rates continually create “multiple offer” situations in San Diego County where the demand for homes is greater than the supply. This environment, particularly going into the time of the year when inventory is seasonably low, has seemingly shifted the upper hand to the seller. In a reflection back to Econ 101, we know that increased demand usually translates to an increase in price and this is exactly the trend that has been established in 2012. Statistics from Data Quick show that Median Sales Prices of homes in San Diego have increased 18.55% in Oct 2012 over the same month a year ago for detached homes and 12.67% during the same period for attached homes. Lastly, average days on the market have decreased 23% in the past year from 100 to 81.
Therefore, while there remain many “good” opportunities still to be had, the number of the “great” opportunities may be shrinking as the decrease in supply and steady demand drive up home prices. If you have been holding off the sale of your home, now just may be the time to make the move!