Job Growth in San Diego County is now positive for three months in a row! While the unemployment rate dropped last month, it still remains over 10%. Government jobs, aided by short term Census workers, lead the job categories in new hires. Jobs in the Trade, Transportation and Utilities category have shown the biggest losses this year.

Inventories of new homes available for sale continue to shrink. At the end of March, there were only 325 new single family detached homes(spread over 75 projects) and 751 attached homes (spread over 41 projects). That totals 1076 new homes currently available for sale, 613 of those homes are in high density condominium towers. Leaving only 463 new homes in suburban type projects. (MarketPointe Realty Advisors) Homes offered for resale are starting to show a growth in volume, driven in part by the near historically low volume available in the 4th Quarter of 2009, and the monthly average price increases throughout 2010.

Mortgage rates continue to drop! 4.8% for a 30 year, conforming, fixed rate loan is now available. The increasing fear of a financial crisis has drive money out of Europe and into the United States. The 10 year Treasury bond has dropped below 3.2%. New underwriting standards for home mortgages has increased confidence in the secondary markets and allowed mortgage rates to fall.

Tax Credits, at the Federal level and the California State level, have provided buyers with incentives to purchase homes. There is some fear that the Federal Tax Credit, which ended on April 30th, may have “pulled forward” buyers that would have been in the market during this summer. There has been a noticeable drop off in traffic at new home communities, and a slowing in sales on the resale side in May. This could be attributed to the closing of the Federal Tax Credit.

Affordability continues to be strong in San Diego housing. Approximately 47% of the families in San Diego can afford the median priced home. While this number is low in comparison to national standards, for San Diego any affordability rate around 50% in the past 40 years has proven to be a signal of a good time to purchase.

Consumer confidence continues to grow. Three consecutive months of growing consumer confidence is a positive indicator for the economy. But, holding back the growing consumer confidence is a dramatic negative turn in the investor confidence. Investor confidence is not directly linked to consumers, but the purchase of a home is the largest investment most people will make in their lives. If their confidence is shaken by anything, they will not make the investment. Troubles with the stock markets, the European financial crisis and world conflicts are also keeping home buyers on the sidelines.

When all this news is taken into consideration, we see a strong potential for new home sales growth, but a fuzzy picture on when it will actually begin. 2009 was the bottom for San Diego real estate. 2010 is a turn around year. We just don’t know if that turn around will happen this summer or at year end.

I won’t reiterate all the warnings I gave you, review all the evidence that was presented or the opinions that were offered. This is not a third grade classroom.

All I will say is, the following headline was printed in the Portland Real Estate Examiner yesterday: “Housing Prises are on the rise! Have you missed the bottom?” The article discusses a report by the Altos Research entitled “Real-Time Housing Market Update“, published July 13, 2009. The highlights of this report show that the average price of the current month listings of homes for sale in San Diego was UP 6.0% IN ONE MONTH (from May to June, note it is July 30th today)!

The body of the report goes on to say that the average price of currently listed homes in San Diego was UP 16.5% OVER THE LAST THREE MONTHS! Now I realize that the average listing price is not necessarily reflective of what the house will actually sell for, but a 16.5% increase in three months is not a sign that pricing is going down!

Let’s go back to June 28th, when S&P/Case-Shiller (the most conservative of real estate analysts) announced that the average price of a home sold in May was 0.4% higher than the average price sold in April, for San Diego County. Or June 4th, when IHS Global Insight reported that housing prices in San Diego were 21% below normal. Or May 22nd, when Professor Robert J. Gordon, an economist working on the Business Cycle Dating Committee of the National Bureau of Economic Analysis (the group designated by the US Government to officially designate the start and end of recessions and other economic cycles), stated the recession is over right now! Or March 18th, when MDA Dataquick announced that the overall median price of homes sold in San Diego went up during the month of February.

Okay, I apologize. I told you I wouldn’t say “I told you so.” And, I told you I wouldn’t reiterate all the warnings I gave you, but I did that too! I’m not trying to be a smarty-pants, I’m trying to point out that our friends in the media are usually months behind when it comes to reporting on trends in real estate. (Note S&P/Case-Shiller are talking about April and May prices on July 28th!) I am living this real estate world everyday.

I will tell you that inventories of new homes and resale homes are down dramatically, especially in the more affordable price ranges. I will tell you that many homes are getting multiple offers and in a number of situations, offers of more than the sellers are asking. I will tell you that new home builders have greatly curtailed their production and that resale homes are very slow in coming to market. All these signs point to a situation where demand will exceed supply and that will push up housing prices.

FiServ, (who brings you the S&P/Case-Shiller Index), is projecting an 8.3% increase in the average price of a home sold in San Diego during 2010. That is a big time increase!

As with all real estate information, it comes down to location, location, location. Not every community in San Diego will see an 8.3% increase next year. You need to know your community and the factors impacting real estate in your community. But, I will say it once again, as a general statement … San Diego Home Prices are Going Up … You May Have Missed the Bottom.

As reported by Roger Showley of the San Diego Union Tribune, IHS believes the median price of a single family home in San Diego County is now almost $88,000 less than one would expect, if a normalized market had been in place since 1985.

This analysis has been reviewed by economists across the country. Professor Norm Miller from the University of San Diego found the approach reasonable and believes that home pricing will trend back towards a more normalized value, according to the article.

I brought the issue of normalized prices up in my March 18th posting … “San Diego Home Prices Go Up!“. Historically, we have seen “over corrections” in the pricing of the residential real estate market as we near the bottom of an economic recession. San Diego experienced this phenomena in the early 1990’s and now we see history is repeating itself.

Again, situations like this provide home buyers with excellent opportunities. When combined with historically low mortgage rates and tax credits, the deals get even better. Visit a new Brookfield Community to learn more about these historic values.

Are we there yet?

Are we there yet?

MDA Data Quick reported yesterday that the overall median price of a San Diego home went UP in February. This is the first time in ten months, and prior to that blip, you need to look back to June of 2007 to find a month-over-month increase in median home prices.

You also have to look back to June of 07 to find the last year-over-year decrease in the number of sales for a given month. That means the number of homes sold in San Diego county has increased every month (compared to the same month a year before) for 20 consecutive months. This is good news for San Diego real estate sales!

The San Diego Association of Realtors said there were 14,733 active listings as of yesterday. A similar comparison would take you back to January 2006 to find a number that low. Even with 52% of the home sales coming from foreclosed homes in February of 2009, you have to go back 3 years to find a time when the number of homes listed for sale was lower than what was reported yesterday.

The Realtors also said the number of listing represented about a 7.3 month inventory for available homes in San Diego. In February of 2008, the inventory stood at 13.7 months! As inventory continues to drop and sales continue to rise, the balance between the number of homes available and the number of buyers looking for homes will flip. Traditionally, a 5 to 6 month inventory is called a “balanced inventory”.

Add into this mix, historically low mortgage rates, State and Federal tax credits for buying homes and increased loan limits. The more you look at the trends, the more likely you are to agree, were are reaching stability in the San Diego home market. And, the opportunities presented by this market are quickly being absorbed.

So what does this all mean? Well, I come back to my first question in this post … Are we there yet?