San Diego’s housing affordability continues to climb
August 15th, 2009 Categories: Client Testimonials, Real Estate News, San Diego County Community News, San Diego county Real Estate News
SAN 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. Fortunately for buyers and investors that trend has continued and it was reported today by the San Diego Union Tribune that our local affordability rate is approximately 59%. Stop renting!!
According to the California Association of Realtors the average monthly cost of a first time buyer’s home in San Diego county would be approximately $1750 a month. Add to this the fact that with this comes the ability to write off close to $18,000 a year and there are very few reasons to continue to rent.
“The realty group(California Association of Realtors) defines a first-time home as one priced at 85 percent of the median for all single-family resale houses. The affordability level is based on what percentage of households, earning the qualifying median income, can afford those houses.
For San Diego, the latest figures showed a median price of $295,000, qualifying income of $52,550 and monthly housing payment of $1,750, including principal, interest, taxes and insurance. Nearly 60 percent of local households have the income necessary to buy such a house”- San Diego Union Tribune 8/15/2009**
When reading the article mentioned above, there are a couple things I do not agree with and have been writing about in my blog. The President of the San Diego association of Realtors has stated that we have reached our bottom and that in order to increase inventories to meet demand we need to start issuing more building permits in order to meet demand.
“But Weichert said the bottom seems to have been reached in starter-home prices, based on the overbidding and multiple offers for homes priced at $350,000 or less in recent months.
“That’s why a lot of us are talking with the cities about allowing us to get those building permits” for new homes issued, he said. “We don’t want to be in the same squeeze we were with the (limited) inventory that caused the prices to go through the roof.”
He was referring to the 2003-05 period when easy financing prompted frantic home buying and a reduction in the homes on the market. If builders can get more homes built in the near future, that would ease the demand and inflationary pressures, Weichert said.
In the resale market, dropping inventories might be pushing up prices as would-be sellers sit on the sidelines hoping their values will increase from the low levels reached in the wake of the bursting housing bubble.
“We need more inventory — that will be helpful,” Weichert said. **
In the past couple months I have written about the artificial conditions being caused by the foreclosure moratoriums as well as how these are playing into our low inventory resale market inventory.
“The biggest flaw with continuing these moratoriums is we need to flush this inventory now. Continuing to push the negative consequences of foreclosures in to the future is not a solution and often times can actually make a borrowers situation worse. Additionally, it can create the appearance of a much healthier, while false, economy that citizens then base financial situations on.”- thisisbrian.com, 6/16/2009
“My take on the market at this point is the market will remain flat from this point. In order to maintain this stability, knowing there is a boat load of distressed properties not yet on the market, will be the continuation of these historically low interest rates as well as incentives such as the tax credit. There is a continuing strong appetite for San Diego properties at these price points and it is high demand that is propping up our market.
If we lose the incentives for buyers that currently exist in our market we could easily see a pricing decline approaching or surpassing that $280,000 median price we saw in January”- thisisbrian.com 7/16/2009
We have all of the inventory we need and according to the Los Angeles Times the backlog of distressed homes keeps growing.
“Repossessions were down 40% from a year earlier even though default notices were up and auction notices were flat. Lenders are delaying the final step in foreclosure. This is what’s creating the growing backlog of distressed properties.”- Los Angeles Times, 8/12/2009
We have the inventory. It just needs to make it to market.
