There were quite a few rumblings yesterday about how April sales were down 9.2% in Southern California, with this justification – from the latimes.com:
“Sales have been far below average for quite a while and there’s little doubt there’s pent-up demand out there. But too many people still aren’t in the mood or in a position to buy,” DataQuick President John Walsh said. “They might be concerned about prices falling more, or can’t qualify for a loan.”
The ivory-tower types keep offering general ideas for the malaise, but around here the demand is strong – there’s just not enough sellers willing to get their price right.
April’s detached sales in North San Diego County Coastal:
Buyers are worried about more foreclosures and falling prices, but it’s not stopping them from buying if they can just find the right house, at the right price.
If you plan on staying in the house for at least 7 years and can still sleep soundly at night if the market drops 5% to 10% after your purchase (the worst scenario), it’s not a terrible time to buy in SDNCC if you can find a good deal (none of the OPTs). The same can’t be said about the rest the country though.
NCC is definitely more of a trophy property market. Probably as long as the stock market does well, NCC should hold up. At the county level sales have been down about 10% so whether it’s the lack of tax credits or just lack of qualified buyers, there’s some truth to Mr. Walsh’s comments.
If QCOM, ILMN, or UCSD announce a layoff I might worry about CV a little, but until something like that happens I expect things to go as they have been.
Summer Prediction; A few more Sellers with equity will soon realize they can tap into that pent-up demand by lowering prices just a little and get a quick sale. The problem will be they’ll need another place with what was likely a decision to downsize but will also want to stay in a good area.
Rents will be rising, and, young families with 4 year old recession babies will be looking for better & bigger digs. Probably all balancing out the market sideways as the inventory shifts to more elective sellers entering the market. Strengthening significantly in San Elijo Hills & New Encinitas.
I think Livin had it about right,
For Most of SD near High Tech and defense Job’s the Housing market is most likely not going to have a big moves anytime soon (biz as usual ) , for the more inland area’s I think it’s kind of a chicken/egg thing where people can’t move because they are mostly underwater , and the young can’t buy because they can’t get that construction Jobs, and there will be no construction Job’s until the guy underwater can sell to move (up/down/or-different)
In other words.
They want egg’s but they already cooked the chicken, or
They have chickens laying egg’s but they already cooked the rooster and all the chickens are getting old and laying less eggs.
Ok I give up.
Prices have still to come down.
Rental yields are too low.
The only thing keeping prices from falling further is low interest rates. They wont last beyond end of June imho. More turmoil for sellers is down the road.
It probably doesn’t help that gas prices are above $4/gal, either. Our dilemma is that the inventory is very weak in our price range for Carlsbad and that has us looking towards San Marcos. I have been keeping track of gas prices for the past 4+ years. I can’t view the data at the moment, but I want to say that $4/gal for gas has become a more frequent event. A more fuel efficient car may offset the high gas prices, but that savings is quickly eroded by the initial cost of the car when purchased new.
If a buyer is only concerned with purchasing in North County Coastal then gas prices can be considered moot. But for those buyers that are in a similar situation to us (how many?) then high gas prices really puts another constraint on selecting a house.
Gas could be a big factor as would traffic. But there aren’t too many options south of 56 without going to Santee. It also seems when gas hits $4/gallon the highways clear-out and the trains fill-up, which is another plus for Encinitas & Carlsbad with the Coaster. At this moment gas is dropping but a new reality of higher energy costs is at hand.
I’d also say only a few have enough equity to sell right now and only because smaller homes are cheaper and they can pocket some profit. Which is why the term “sideways” market seems to be catching-on.
Ironically, it is still cheaper for me to drive than to take the train. The train is $5 each way. This means that to take the train 20 working days out of the month, it would cost me $200 month. I spend $150 – $160/month on gas.
On financing these April sales:
2010: 21% were cash buys
2011: 25% were cash buys
@Just some guy,
The Compass card fare for 2-zone Coaster monthly pass is $150. It also includes Breeze buses, Sprinter, and San Diego Trolley, and MTS buses. You may be able to purchase pre-tax through your employer.
I think Fannie lowering their max loan from $729,750 to $625,000 a long with what everyone else said will at best make prices even in NCC flat for a long time. AND when Fannie gets wound down and the private mortgage market steps in, rates ain’t gonna be 4%. Plus possible changes in the mortgage interest tax write-offs for high income homeowners.
I see no reason to buy an expensive house for years and years. Why risk locking up that huge down payment when prices at best will be flat for years and at worst drift downward another 5 years? The only thing I would buy anywhere in SD would be low end positive cash flow rentals.
rates ain’t gonna be 4%
Agreed, and we established that in a subsequent post.
Your start rate will be 3.875%.