Predictions for San Diego Real Estate
As always, I'm reading and researching for information about real estate in order to better understand the market and share with my clients, friends and others. It has been interesting reading all the articles about what 2014 will be in the real estate market nationwide, as well as in our own backyard of San Diego County. So, what did I learn from the various sources, such as Forbes, Money, Real Estate Market Report, The Daily Transcript/SanDiegoSource, Zillow, Business Journal, FiscalTimes and others…..
1. Housing Inventory
San Diego inventory is very low this January; however, many are predicting that we will have an increase of homes available due to home constructiion and rising prices this Spring
2. Home Prices
Zillow says the country is still 16 percent from its peak and that home appreciation in San Diego will be 6.2 percent. Alan Nevin of Xpera Group is predicting 6 to 8 percent appreciation for 2014.
3. Mortgage Interest Rates
According to Zillow, Forbes and with the comments from the new Fed Reserve chief Janet Yellen, mortgage rates are predicted to rise to at least 5% by July. Hopefully, that will be the top for interest rates this year.
4. Home Construction Will Increase
In the last few years, home builders have started construction on various developments from in-fill properties along the coast and in the downtown area to the larger deveopments from Escondido to Chula Vista.
5. Luxury Real Estate Market Booming
There has been an increase in the number of homes sold in the last year over the $1 million mark and many predict that it will continue…. including the home builders who have many projects under construction well above that price.
6. Mortgage Requirements
The new Dodd-Frank mortgage regulations went into effect on January 10, 2013 that are aimed at preventing risky borrowers and mortgage products from the real estate market.
7. Home Affordability
The increase in home prices in 2013 has caused San Diego's home affordability index to rise…. and it now will take 33 percent of a person's income to buy a median-priced home meaning less people will be able to afford a home.
8. Decreasing Foreclosures
In San Diego, there are about 15 percent of the homeowners with negative equity, according to Zillow. It has decreased substantially, allowing many homeowners to sell and move on with their lives. I am seeing fewer homes come on the market that are short sales or even REO's.
There were a few quirky ideas that I'll pass on….
1. That mortgages will be easier to get…. rising rates means lender's will compete for buyers by potentially lossening their lending standards. Gee, what about the Dodd-Frank Act?
2. The Flippers are back in the market…. they are looking to the luxury market to buy those old, tired homes in Rancho Santa Fe and other communities and remodel for a profit. This is a great possibility for those investors who have the ability for a "luxury" remodel and not the hasty, gloss it over remodels in the lower-priced homes.