For the past few months I’ve noticed something a little different.
At first it was like the faint smell of ozone that indicates a storm is brewing. Lately it has become something a little more blatant, an oversized pink pachyderm perhaps. As a lot of you may already know by now, the San Diego real estate market has dramatically changed. Opportunities for home buyers abound and a segment of homebuyers that were previously priced out of the market are in the game – and there are no holds barred.
Welcome back to the real estate market first time home buyers and investors! It looks a little different this time around, requiring things like money down and decent credit. But those who play by the new rules will be amply rewarded. But be careful, it’s an aggressive game right now with lots of players. There are several factors that have made this segment of the market very attractive. First off, housing affordability has surpassed the 50% mark for the first time since the mid ‘90s. This is due to historically low interest rates and three years of declining home values.
Throw in an $8,000 tax credit from the American Recovery and Reinvestment Act and a moratorium or two on foreclosures and you have a seller’s market for available inventory for most first time home buyers. For example, the Carlsbad real estate market currently has 98 available listings in our system for under $500,000, with 54 that have gone pending and 51 contingent in the last 30 days. (As of 6/23/09) When there are more buyers than sellers, it is a seller’s market.
Since cash is king, a lot of these yearning first time home buyers are getting bullied out of the market by investors who are jumping on the opportunity for positive cash flow and a promising outlook on a long term investment. When a bank is looking at ten or more offers on an REO (aka Foreclosure) and nine of them are FHA, VA and conventional financing, the one offer that is all cash usually wins. Banks don’t want to take on the additional risk for a loan contingency and FHA/VA appraisals. In general they would rather have a solid cash buyer at a reasonable price than a higher priced financed deal.
So how do you navigate around this challenging yet opportunistic real estate market in San Diego? Have an experienced professional on your side. What we are seeing in this market is challenging enough for us professionals, so it’s probably not in your best interest to buy something without a professional making your interest their interest. Furthermore, don’t get too picky.
Get in the market!
This is going to be the real estate market that in hindsight we wish we all had taken advantage of. I’m not saying to live in a property that you’re not comfortable living in, but your first home doesn’t have to be your dream home. Regardless of what you buy, if you’re a first time home buyer, you’ll be able to take advantage of the tax credit (until December 1, 2009), the tax benefits (speak to your accountant), pride of ownership and if you stay in the home long enough, equity.
Your success in making a move in this market will be due to your understanding of the market. Let your San Diego realtors help you get there.
Steve Scheckner, REALTOR
Team 73 Degrees - Keller Williams Realty