Featured in the February 2015 SHARE San Elijo Hills
Everywhere you look, you can find a chart or graph that shows we have turned a corner in the housing market, but what does all of this big data really mean for you and your family? While information is endless, it is the interpretation of that data that really matters.
With so many conflicting headlines and statements floating out there, it can give you a headache. It’s not uncommon to read an article today that says to buy now as interest rates remain low and yet, in the same article, it will caution sellers that rising interest rates will slow the market. How do you sort it all out?
Let’s start with the fact that there is no such thing as a “normal” market. Too many factors can turn the housing market quickly: interest rates, supply and demand, qualification requirements, new construction competition and the volatility of different housing sectors.
Here’s what we know:
North County continues to experience increasing median prices that began back in the summer of 2012. With some of the best beaches in San Diego County, great schools, good shopping and popular restaurants, we will continue to be a desirable destination for families with our attractive home prices and affordability.
Our local market has continued an upward trend due to our high performing schools, housing values and outdoor amenities.
The affordability percentage for all homes in North San Diego County increased to 33% in November 2014, as reported by the North San Diego County Association of REALTORS in their most recent HomeDex report. Real job growth is a key driver in housing and we are fortunate to have a diversity of sectors here in San Diego that keeps relocation flowing into our market.
New construction has started again and many builders are optimistic about the future. In a recent interview I did with Bill Davidson, President of Davidson Communities on the American Dream TV show, he said, “We’ve come through probably the worst recession I’ve ever seen in my career and we are slowly coming out of it. I think we have 4 to 5 good years ahead of us.”
What is happening in new construction is typically an indicator of what you will see in resale. Having builders back is a good sign for existing home sales. Often, we will see four sales in the resale market for every new construction sale in San Diego County.
Millennials will play a big part in the housing forecast for 2015. The slow return of young Americans to housing that have been delaying getting married and having children due to college loan debt, lower level job opportunities and high rents has kept the recovery from happening faster. As we know, this first time home buyer purchase is what will start to push “move up” segments in the higher price points, whether new construction or resale. In a recent statement, Dr. Stan Humphries, Chief Economist for Zillow predicted that millennial buyers (under the age of 35) will become the largest group of buyers overtaking Gen X (35-50 years old) by the end of 2015.
So, housing prices look to be steadily increasing, rates remain low for now, but may slowly increase, first time home buyers will be returning to the market allowing opportunity for the move up/down segments to happen, what does all this mean for you?
Is this the time for you and your family to move locally? Do you need more space? Want a bigger garage? Dreaming of a pool? Now is the time to discuss the equity you have and the goal you want to achieve.
We often see that purchasing a different home at today’s interest rates that has the upgrades and amenities you are looking for can often be a better financial strategy than using up cash reserves or taking out home equity loans to get what you want.
Listing price is often a strategy, but at the end of the transaction, the net proceeds and achieving the next purchase is what really matters. Also, the cyclical nature of our market and timing is extremely important. Working with a local expert is critical to achieving optimal results.
Have you thought about real estate as part of your family’s college planning? We have assisted many local families in the purchase of an investment property for each of their children. As the property grows in equity, when their children are ready to go to college, they can sell the property and have a lump sum of proceeds. Most of these properties are also cash flowing on a monthly basis which is reinvested in other college planning funds.
On the other hand, for some, being able to purchase a property and lock in an incredible interest rate now for their children, while having someone else pay the mortgage over the next several years and being able to hand them keys at some point in the future is the goal. Either way, it is a strategy that we believe will pay hugely for these families down the road.
Diversification and leveraging real estate for retirement is also a consideration. Many financial and wealth planning consultants encourage their clients to diversify their assets in long-term planning. Real estate and the healthy housing condition in North County make it an attractive option. A wise person once said, “They aren’t making any more dirt.”
As always, we recommend talking with your financial adviser about what makes sense for you and your portfolio. We are here to assist and be a resource in those conversations.
2015 is going to be an interesting year in real estate to say the least. The good news is, there are options and opportunities in the market and homeowners are i an offensive position, rather than a defensive one. We are optimistic and excited about what lies ahead for our community and the surrounding area.
Whether you are thinking about buying or selling, there are many factors that will weigh in your decisions. We are experts in our local market and have built a solid business based on results. Through proper planning and strategy, we can help you reach your goals. Your neighbors have trusted us for over 10 years and you can, too.