Despite increasing signs that the rapid run-up of the last eight years is slowing, San Diego County’s median home price has crossed the half-million-dollar mark for the first time.
Coupled with rising interest rates (which have risen to a two-year high of 6.31%) and a suddenly soaring foreclosure notice rate (up nearly 40% for the third quarter compared with a year ago) industry analysts said San Diego’s housing boom seems to be coming to a quiet end.
The bubble isn’t bursting, but it’s losing steam.
The slowing market affects desperate sellers the most. The market is full of people offering additional incentives (such as cars) in order to sell.
On the flip side, buyers aren’t afraid to come in with offers below the asking price.
Most prices today are variable-range. Offers are coming in at the low end and even below. Buyers definitely are being aggressive, and there are a lot of people out looking for property. It definitely is going to continue to be soft. There is a lot of inventory.
The local median (the midpoint of all sales with half above and half below that figure) is likely to waiver around the $500,000 mark for the foreseeable future. At current appreciation rates, it would take four years to cross the $600,000 mark. It took only 22 months to go from $400,000 to $500,000.
It means, if anything, that the market may plateau and go into a bit of a lull. But really, there is no indication of any dire decline.
The new housing market in recent months has seen the median price sag, mainly due to the resurgence in lower priced condo conversions. The county’s short supply of housing is going to keep real estate prices strong in the long run however.
The real estate market is cyclical. It is very interest-rate driven. Level-offs and slowdowns are healthy. They are expected events after a boom. Even in the best of times, there is always economic stress.
While homeownership remains a sound long-term investment, San Diego County buyers who expect to make a quick profit are probably out of luck.
Slowing rates of appreciation, a growing inventory, and incentives offered by builders are all the signs of moderation: s he said. But prices weakening doesn’t mean that prices are retreating. The message to the home buyer is, if their primary motivation is investment, they probably have missed the wave.