In a valiant but largely unsuccessful effort to raise the morale of San Diegans, the Union Tribune published an article last week announcing that median home prices in San Diego rose for the first time in a year. As it states in the article, “MDA DataQuick reported yesterday (March 16th) that the overall median price rose $5,000 to $285,000 the first monthly increase since last April, while active listings fell to their lowest level in three years.” Wooohoooo! We’ve finally hit the BOTTOM!……right? Well let me ask you…does it feel like we’ve hit bottom? Exactly. We’ve got a ways to go yet. But the glint of stability that the Union Tribune refers to lies in the fact that while we haven’t hit bottom, an increase in median prices does provide signs that the decline is slowing.
Norm Miller, a real estate professor at the University of San Diego, was interviewed by Union Tribune writer Roger Showley, and made clear his thoughts on the matter: “In 2009 we’re not going to have the kind of disaster we had in 2007 or ’08. The softening will slow and better markets are going to stabilize sooner. Those with a lot of foreclosures–they’ll continue to decline.” Thank you Mr. Miller, this makes perfect sense. After-all, foreclosures greatly affect the values of the homes in the surrounding neighborhood. A neighborhood with a lot of foreclosures will continue to decline in value until those properties are bought up and lived in once again. Areas like La Jolla, Del Mar, and Pacific Beach, where active foreclosure listings are in the teens will stabilize much sooner than say, El Cajon, which currently has over 100 active foreclosure listings and this does not count properties that have filed for foreclosure.
So while a rise in median prices does indicate a slight glimmer of hope for the future, we must keep everything in perspective. Each town and neighborhood is being affected differently. Here’s another thought to chew on: A great deal of the foreclosures in San Diego have occurred as a result of a 2 or 3 year adjustable loan coming up for adjustment. Argent, the last bank who was offering 2 or 3 year adjustable Subprime loans, went under in August of 2007. Therefore, in this next year, the last of those loans will come up for adjustment and we’ll at least finally be rid of a root cause for so many foreclosed homes. My glimmer of hope is that the absolute bottom can’t be too far behind that.
By Andrew Brentan
Good article, I agree that we probably aren’t at the bottom just yet, but we are close. I’m not sure anyone can tell us exactly when we have hit bottom until we are already on the way up. I tell my buyers that they need to focus on finding the “right home” in this market, and that with the historic cheap interest rates, it is a good time to buy.
As a matter of fact, it’s probably the best time to purchase in the last 30 years. With values down and rates so cheap, that’s a great combination.
Dave Tap Tapper
Realtor
Cashin Company San Mateo Ca.
My husband and I were looking to buy and we were told that we are not at the bottom and just to rent another year to see what happens with the economy and housing. No one know for sure what is going to happen but we took the advice of this person and have decided to wait about a year or so to buy.
Great little article – helped us to feel even better about are decision.
Well, it’s like I said, some neighborhoods haven’t reached bottom yet, and some are very close (if they’re not already there) based on the amount of foreclosures in the area. BUT, you should also consider the fact that, bottomed out or not, mortgage rates are ridiculously low. I don’t think they can get any lower. So just keep in mind that if you’re looking to postpone buying a home, there is a good chance that mortgage rates won’t be quite as low as they are now when you’re ready to buy. Thanks for the comment!
I agree with you that every neighborhood is affected in different ways and not that there is a constant percentage or effect on every city or town. I think there is not much to fuss about and get excited on somethin like this, if every city or town in every state has increases in median home prices, then I think this would be the time that we should have a party.
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Great post to share with everyone. Is it a great time to buy? Well, it depends, as always, on lots of factors, but if you are qulified, have down payment saved, emergency funds in place in case of a job lay off, and have found the right home for you, then there are GREAT deals to get out there.
When deciding if it is a good time to buy it does really depend on your personal situation. Are there deals? Yes-great ones really. But none of that matters unless you are financially able to own a home-when you are, then no matter what, it is a good time to buy FOR YOU.
Well..ok I need to ask this given below…Median home price % increases? If the median home price represents the price where half of the homes sold above that price and half sold below it in a given market (a seemingly more conservative estimate than average home price which could be skewed by very expensive home sales), could one multiply their home purchase price by the % change in median home price to arrive at a fairly accurate estimate of what their home is presently worth? For example, if the median home price has gone up 25% over the past five years, would multiplying my purchase price by 25% give me an accurate estimate of the present day value of my house? Thanks in advance..!!!
Unfortunately, it’s not that easy to arrive at an accurate estimate of your home. But your question harps on the ever-important point that depending on its context, “Median Home Prices” can be an obsolete statistic. The reason being is that in many cases the Median Home Price takes into account an enormous area; certainly too big of an area to obtain any useful information on how much your home is worth. The median home prices discussed in this blog pertained to San Diego County. The only real way to get an accurate estimate of your home’s value is to look at your neighborhood and adjacent neighborhoods with similar properties as yours, see how they compare to your home, and then find out what they are being listed for and what they are selling for.
I agree that a rise in the median home price is relatively meaningless. This can reflect a change in the mix of homes sold as much as changing prices. I agree the housing market has further to fall overall, but I believe it is near bottom in some segments. Check out my blog at http://eimre.blogspot.com/ for my more detailed comments.