Consumer confidence appears to be on the rise in San Diego County from our point-of-view in the real estate trenches. We have noticed a significant increase in market activity as both buyers and sellers feel more comfortable in "getting off the fence" and moving forward with their real estate plans.

Although the fall and winter are typically considered slow months for real estate, we experienced a flurry of activity during the end of 2009 as first-time home buyers were eager to take advantage of the first-time home buyer tax credit. Market activity slowed slightly after the holiday season, but has been bustling for us ever since the beginning of January 2010. This increase in market activity can partly be attributed to factors such as the extension of the first-time home buyer credit and interest rates remaining at historic lows. Entry-level home prices have raised slightly due to the high demand from first-time home buyers and the lack of inventory, while prices for mid-level plus homes appear to be stabilizing but remain down from past years.

Recently, we have been meeting with sellers who are also ready to move forward with their real estate plans. There seems to be a current trend of baby boomers who are either looking to down-size to be closer to family, move due to job transfers or settle down in their retirement destinations. 

Our listing inventory continues to increase and our sales for the first quarter have been up, which leads us to believe that the spring market has come earlier this year. These recent sales have all been traditional sales and not distressed properties; therefore it appears we have reached a period of market stabilization. How long these trends will last and what we can expect in the months to come, remains to be seen.

Below are some interesting 2009-2010 market statistics and highlights from the California Association of Realtors, which discusses the current market outlook and forecast.

2009-2010 State of the California Housing Market - Highlights

Outlook and Forecast

With buyers returning to the market to take advantage of the discount home prices, government tax credits, and interest rates, the existing home market in California experienced strong sales throughout 2009. As expected, distressed properties generated more interest from buyers because of their deeply discounted prices, but many home sellers of non-distressed properties responded promptly and cut their price accordingly to stay competitive in the market.  Sales of all homes increased, inventory fell to below-normal levels, and home prices adjusted upward in response to tight inventory levels.

The State of the California Housing Market report takes a comprehensive look at these recent developments in the California real estate market and provides an outlook for 2010. In particular, the report examines the impact of the federal first-time buyer tax credit on home buyers, analyzes the sales trends of distressed and non-distressed properties, and takes a closer look at the surge in the share of FHA-insured loans.

Key Findings

• The share of first-time buyers surged from 35.9 percent in 2008 to 47.0 percent in 2009, and increased for the third consecutive year. The proportion of first-time buyers exceeded the long-run average of 38.6 percent, and the share was the highest since 1995 when more than half of all buyers were first-timers.

 

• The federal tax credit was a big factor in many first-time buyers' decision to purchase a home, as 69 percent of those surveyed said that the federal tax credit was either "very important" or "most important" in their home buying decision.

 

• Many first-time buyers were interested in distressed properties with deeply discounted price tags. In fact, over half of all first-time buyers (51.3 percent) either bought an REO/foreclosed property or a short sale in 2009.

 

• Low home prices not only encouraged first-time buyers to purchase their entry-level home, but also lured investors who wanted to add a piece of real estate to their portfolio. Home buyers who purchased their properties primarily for investment purposes and tax considerations increased from 14.0 percent in 2008 to 16.8 percent in 2009.

 

• Prices of distressed properties fell more sharply in 2009 than did prices of non-distressed properties. The median price of distressed properties declined 24.2 percent from $330,000 in 2008 to $250,000 in 2009, while the median price of non-distressed properties dropped 10.4 percent from $541,000 in 2008 to $485,000 in 2009.

 

• Sellers who planned on purchasing another home, or had already bought another home, declined from 43.1 percent in 2008 to 39.4 percent in 2009. The share of home sellers who expressed an intention to repurchase peaked at 74 percent in 2004 and has declined in each of the subsequent five years.

 

• The rapid growth in FHA-insured loans continued in 2009, with its share of total first mortgages soaring from 18.9 percent in 2008 to 32 percent in 2009. VA loans, meanwhile, adjusted slightly upward from 2.7 percent in 2008 to 4.7 percent in 2009.

 

• One-third (32.9 percent) of all sellers sold their home with a loss in 2009, a jump from the 22.2 percent recorded in 2008. It was the highest on record since C.A.R started tracking net cash losses, and was more than triple the long-run average of 9.3 percent.

 Source: California Association of Realtors (http://www.car.org/marketdata/currentresearch/2009-2010stateofthecalifornia/)

 For more information on market conditions in your neighborhood contact us directly at: http://www.barbarastuart.net/contact.php to schedule a personal market analysis.

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