New San Diego County real estate statistics are out. What are they saying about the state and direction of the market?
Contrary to many predictions, the San Diego County property market has proven to be anything but boring in 2015. We’ve seen the market growing healthier, and continuing to grow. So just how good is it? What does decoding the latest real estate data suggest is coming up next?
Let’s take a look at some important real estate data:
1. San Diego County Home Prices: The median county home price rose 5.8% for the first six months of 2015 versus the previous year, according to CoreLogic. The puts the midyear high at $488,000, or the highest since 2007.
2. Rising Rents: According to UT San Diego, local rents rose almost 10% by March 2015. That puts the average San Diego County rent at just under $1,600 per month. Still, that’s only about half of what a 1-bedroom apartment might cost in one of San Diego’s more distinguished buildings.
3. Affordability: Jobs, wages, and general economic health might be in a better position today, but affordability remains an issue. Renters, in particular, aren’t having an easy time. Renters now put almost 45% of their income towards rent. That’s almost 10% more than Zillow’s historical average. The good news is that low interest rates have kept homebuying more affordable. It’s almost 10% cheaper to buy a house in San Diego County – even when you include taxes, insurance, lawn care, and carpet cleaning.
4. Distressed Property Sales: CoreLogic proclaims that only 4.1% of sales in the first half of the year were REOs. That’s down from around 50% of sales in 2009. However, remember that there are also a lot more sales happening right now than there have been in a long time. While overall foreclosure filings may be very modest in the county, there is still a lot of distressed activity. In one San Diego County city, RealtyTrac reports 1 in every 30 housing units received a foreclosure filing in June 2015. Foreclosure auctions and bank repos were up year-over-year as of June 2015. Every month in the first half of the year saw more than 600 foreclosure filings in San Diego County, CA. So the balance is better, but there are still opportunities to find value.
5. Cash Buyers: CoreLogic says there were 4.3% fewer cash buyers as a percentage of all sales during the first half of the year. Again, this number may be deceiving due to the changing volume of sales and other dynamics. Among these is the fact that mortgage lending is loosening up, and interest rates have been lower.
6. Home Sales: The San Diego Association of Realtors reports listing inventory is down this year. Yet, sales volume is picking up. In fact, June set a new record of 4,467 units, the highest since 2006. That’s a great thing. Once firmly back on solid ground, the real growth can begin. This is when the other fundamentals catch up and spur new growth. The fact that we’ve added around $1.5B in home equity in the first six months of the year definitely backs that up. This is when we get to that tipping point, like in Phoenix where jobs and income begins to propel more consumer confidence and spending. That’s when real, sustainable advancement happens – not just recovery. Consider that the most expensive sale in the first half of the year was reportedly a La Jolla unit at just $14.3M. In the grand scheme of things, this shows tremendous room for growth.
2015 has proven that San Diego County real estate can outperform the doubters. There is still a great window of opportunity for flippers and buy and hold investors. It’s unlikely we’ve seen half of what local property can do. There’s no need to speculate. If you know your math and real estate data, there are some great moves to make. The question is whether you’ll make them on time or not.