San Diego housing affordability up over 800%
December 17th, 2008 Categories: Real Estate News, San Diego County Community News, San Diego county Real Estate News
SAN DIEGO– True story. San Diego housing prices continue to fall, unemployment continues to rise, more industries are lining up for the bailout money, new rescue programs and strategies are discussed and implemented, but underneath all of that; SAN DIEGO HOUSING AFFORDABILITY RATE HAS RISEN OVER 800%!!!
Yes, amongst all the bad news, sub 5% interest rates on conventional fixed loans and San Diego’s increasing housing affordability rate are the flip side of our negative economic coin and the welcome mat into the housing market for buyers.
When local housing price peaked in late 2005, the affordability index was at an all time low of less than 4%. However, as regional housing prices have been on their downward spiral, the affordability rate has been on the up escalator and was just over 31% in the second quarter of 2008. During the second quarter, the average home price was $342,000. Recent third quarter numbers showed our local housing prices continued down and stand near $272,000. This should translate into approximately a 4% increase in affordability.
FORCLOSURES AND SHORT SALES
“Bargains and bargain hunters have kept this market alive through some of the bleakest financial news in memory,” DataQuick President John Walsh said in a statement accompanying the figures.
“There’s this renewed sense that you can score a ‘deal’ – something that had been missing for many years. Last month’s Southland sales weren’t great, given they were the second lowest for any November in 16 years. But they could have been a lot worse.” -San Diego Union Tribune, 12/17/2008
Unfortunately for existing homeowners, foreclosures are the number one home sold and the primary mover of the pricing decline. For buyers, and buyers and sellers are usually at odds, foreclosures are your friend and the driver of our positive housing affordability rates. Additionally, while foreclosures and short sale transactions have been the prominent resale home in the recent past, the number of foreclosure homes sold climbed past 50% of the total number of homes sold for the first time in San Diego market history and set the mark at 52%.
While I can see this record number, 52%, challenged as a percentage of sales, I do not think we will see an increase in the number of foreclosures coming on the market in the near future and should therefore see a reduction in the actual number of homes sold. Because of this, taking a wait and see position may not be in your best interests if you are considering buying a home. Why I am suggesting this is not industry insider prodding, it is based on, the fact that most of the major lenders announced a moratorium on foreclosure proceedings last month. Because of this, the pipeline of these homes should slow down significantly as this provides free living arrangements for the homeowner who has already not been paying their mortgage. Would you go through the inconvenience of a short sale or 
move if you did not have to? I doubt they will either.
Now this is in no way an indicator of my belief that the foreclosure tide is on it’s way out, only that there should be a temporary reduction in the numbers coming on the market in the next 90 to 120 days. However, if the banks and the FED use this time wisely, we may actually see some real progress in the number of loan modifications and better use of the “bailout” money. This in turn could hopefully produce some positive measure of impact on the housing market for all and may actually permanently reduce the number of distressed home lisintgs.
If you have any questions, I can be reached at 760–415–3329 or brianalong@msn.com.
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[...] needed to process the enormous volume of files the banks had to wade through and I first wrote about it here in [...]
[...] DIEGO- In December of 2008 I wrote a post stating that the San Diego housing affordability rate had gone up in excess of 800% climbing from a low of 3.7% in 2005 to over 31% in 2008. [...]
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