Rancho Bernardo 2010 Housing Forecast
Posted by James McNabb | Visited 321 times, 1 so far today | Currently 3 Comments »
What is a forecast?
The dictionary definition of forecast is “to contrive, or seek to predict, or to serve as a prophesy”. Of the many things we would all like to predict with some reasonable accuracy would be the coming housing market, especially in California. Every day we get a prediction of sorts from our local newspaper, the TV, the internet and of course our friends and neighbors. For example last week at breakfast I found an article with the headline “Data on homes show upswing in three sectors”. Naturally I wanted to find out what these three sectors were. According to the article they were “Home manufacturing, (general) construction and contracts to buy”. Well that news certainly made my breakfast much more enjoyable. But later while I was taking the newspapers out and getting them ready for the boy scouts to pickup I noticed a headline from last week and it read “Slow home-price rebound seen”. That lifted my spirits even more. Then I noticed the headline for the next day. It read “Stocks fall a third day; new home sales down” and that left me a little confused. But the good new continues. The most recent headlines read “Homeowner rescue proposed” and better yet, “Skies to be bluer for local real estate”.
Reliable sources
Not that we don’t believe everything that we read in the newspaper, but there certainly are a lot of “good” headlines lately. Now let’s look into what we believe to be reliable sources of information on the coming housing market. One very good source is the recent presentation given by the California Association of Realtors (CAR) last month specifically October 7th at the California Realtors Expo at the San Jose Convention Center. A Power Point CAR 2010 Housing Presentation was given by Leslie Appleton-Young the CAR Vice President and Chief Economist. James Liptak, the President of CAR, added his insight to the coming housing market. Several highlights from these presentations were:
- The number of resales will be down slightly from 2009
- The median price will be up slightly by about 3%
- Interest rates will begin to move up
- The low end of the market will continue to attract first time home buyers and investors – this is a good thing
- Sellers at the high end will still face challenges due in part to the inability of home buyers to secure financing
- The peak of the California market came in 2006/2007 and in August of this year the median price was down almost 40% in San Diego. Check out this chart: California Median Prices
Are there still opportunities out there? You bet! The dictionary defines opportunity as “a combination of circumstances favorable for the purpose”. So the question is can we identify any favorable circumstances for the greater San Diego housing market in 2010 and beyond? Well the answer is yes and here are some examples taken from recent articles written by Steve Rodgers, the President and owner of Windermere Real Estate, as well as from recent information provided by CAR and the National Association of Realtors:
- San Diego is one of four cities that that can expect to have a better than average price gain over the next two years.
- San Diego is always ranked as one of the top ranked tourist destinations in the US.
- By any measure mortgage rates continue to be low.
- The $8,000 first time homebuyer credit has been extended until April 30th 2010 but escrow must close by July 1st.
- In addition, a new tax credit of $6,500 will be available for buyers who have lived in their home consecutively for 5 of the past 8 years.
- New housing permits are way down and that is basically good for the resale market.
And significantly, many homebuyers are now looking at home ownership as an investment in the future, not just a way to make a buck on a quick resale.
Zip 92128 vs California
Let’s take a more detailed look at Rancho Bernardo, including Carmel Mountain and Sabre Springs, and consider how it compares with the housing market in all of California as portrayed in the Median Sales Price chart shown below. The graph shows the median selling price of single family homes in zip code 92128 from 2002 until October 31 of this year and for the State of California. The blue line represents 92128 and the red line represents all of California. The data used for 92128 was obtained from the San Diego Association of Realtors Multiple Listing Service, i.e. the MLS. A few things are worth noting. First, for several years the price of homes in greater Rancho Bernardo increased at about the same rate as the rest of the state. But selling prices began to level off before the peak was hit in the state of California. Most significantly the prices did not fall as precipitously as they did in the rest of the state. We believe this indicates good stability in this area. And finally, note the clear beginning of a turn-around in 2009 for the 92128 zip code area. All areas and zip codes are different and therefore it is important to work with a knowledgeable Realtor familiar with an area such that he or she can give you reliable information. We look forward to a brighter year!
nice post Jim keep up the great work!
Truly a great post…you’re right on and a pleasure to work with!
I am so impressed by you Jim! Thanks for the information on the Rancho Bernardo market.