Alan Gin had to comment on the latest SDAR report:
The median price of detached resale homes in San Diego County rose for the fifth straight month in August, while sales dipped slightly.
A report from the San Diego Association of Realtors (SDAR) showed the median price of a detached single-family home sold rose 0.8 percent from $372,000 to $375,000.
Attached homes, such as condominiums and townhomes, had their median price rise nearly 8 percent from $210,000 in July to $226,000 in June.
Mulitple bids on lower-priced properties is driving up the median price, said Alan Gin, University of San Diego economics professor.
The five-month trend may show that the market has hit bottom, or even shows proof that the housing market has turned the corner, he said.
But it does not mean the local economy as a whole is out of the woods.
Gin said the positive news in the housing market is a good sign, but questions about unemployment linger.
Should unemployment continue to rise and a new wave of foreclosures enters the market at an inopportune time, Gin said the housing market could take a turn for the worse.
However, he said it is not likely.
Last time the median prices of attached and detached homes were this high were September 2008.
The total number of attached and detached homes was down 11.3 percent from August to July with 2,622 sales.
However, the drop off is not something to “take much stock in,” Gin said.
“I wouldn’t consider (an 11.3 percent decline in sales) a big change given that June and July were pretty big months in terms of housing,” he said.
He said an activity drop in August is a normal, seasonal change.
Last month’s sales were a 6 percent increase over August 2008.
Year-to-date, 2009 is out-pacing 2008 by almost 4,500 units sold, a 28 percent increase.
One thing that has been driving sales this year is the first-time homebuyer tax credit offered by the federal government.
The tax credit is equal to 10 percent of the home’s purchase price or $8,000 whichever is less. It expires on Dec. 1.
Erik Weichelt, president of SDAR, said Realtor associations, particularly in California, are pushing Congress to extend and expand the tax credit.
Aside from extending the deadline to sometime in 2010, Realtors are hoping to increase the limit of the credit to $15,000.
However, not much headway has been made lately as Congress has been focusing on other issues like healthcare, Weichelt said.
Six-year Realtor Jane Loveday said she started noticing buyers heating up the market in March; she added activity has been increasing steadily since.
Even more buyers have contacted her within the past few months, specifically trying to obtain the tax credit.
“I do have a couple of buyers who are specifically wanting to close by November 30 but whether they can find a property and get an accepted offer I can’t guarantee. That (the tax credit) is a huge stimulus to them.”
One of the problems facing potential buyers is a lack of inventory at lower price points.
Weichelt said there is less than a month and a half supply of inventory priced below $250,000.
He said almost every property that comes onto the multiple listing service in that price range has multiple offers on it within days.
Gin said that an activity drop is a normal, seasonal change?
Here are the total sales history for July and August. It looks like August is usually a big month for closings, culminating a summer’s hunt for homes:
All Residential MLS Sales, San Diego County
Normal drop-off? Sales haven’t slowed this much all decade between July and August. What does it mean?
Factors that could cause sales to drop more sharply than usual:
1. Fewer condos closing due to financing? Nope, condo sales last month were higher than August of the last 2 years.
2. Tougher financing? On the high-end yes, qualifying for jumbos is hard, but FHA loans have created a firestorm under $700K.
3. Higher rates? Nope, mortgage rates (5.68%) are lower this August than ever before.
I think sales are hampered by the lack of quality inventory, and many buyers are wondering if they should step up and pay more to win a bidding war. PROCEED WITH CAUTION. As REO listings are dripped out and anxious buyers jump on them, it’ll look like the market is getting hotter. But keep an eye on # of sales, and don’t listen to any of these cheerleaders who refuse to check facts before speaking!