Where are home prices going in RB and Poway?
Posted by James McNabb | Visited 268 times, 1 so far today | Leave A Comment »
What do the newspapers say?
For those of us who scan the newspaper and other media for housing trends, there was an interesting article on the front page of the January 3rd 2010 Union-Tribune concerning San Diego county that read “HOUSING PICTURE NOT ALL GLOOMY”. Many points were made but I especially liked one comment in particular. The article stated “…that all but a handful of neighborhoods have bounced back from their lows of 2006…and …three are less than 20 percent from their peaks – Scripps Ranch, Rancho Penasquitos and eastern Rancho Bernardo”. Earlier, in the December 30 Business Section of the San Diego Union Tribune, it stated “COUNTY HOUSING INDEX UP AGAIN”. This article was based on a press release dated December 29th by S&P/Case-Shiller concerning home price indices. Basically it stated that there have been nine months of improvement beginning in early 2009. The article goes on to point out that there are some concerns because the recent gains are relatively flat and some readers might think that home prices will take a second dip. The article goes on to say that the Fed policy we have today is stable and consistent and should prevent such a down turn. The article also reminds us that San Diego has reported six consecutive months of positive returns.
So what do these articles really tell us? One trend is quite evident when reviewing the data and that trend during the later part of 2009 has been clearly “up” for most North County areas and for most price ranges. What about some other pundits, do they all agree? Listed below are some recent headlines and statements:
- DataQuick – Southland home sales up again, drop in median price smallest in 2 years.
- San Diego Union Tribune – New home sales rise 6%.
- Leslie Appleton Young – California has hit and passed the bottom of the real estate cycle.
- San Diego Union Tribune – San Diego seen as better off than other areas.
- NAR and National Association of Home Builders – $8,000 for a first-time home buyer credit extended and $6,500 for a repeat home buyer. (Certain conditions must be met)
- Bloomberg – We are looking at (over) eight consecutive months of increases in the statewide median and we are seeing multiple offers on many homes for sale.
- And per the December 28th Business section of the San Diego Union Tribune, “Consumer spending is up over last year”.
On the cautionary side:
- Unemployment remains high at 12.5 percent.
- Foreclosures (in October) represented 41 percent of sales.
- Federal tax credits are scheduled to end in the first half of next year.
- It’s gong to be a slow recovery per Leslie Appleton Young.
- The California Association of Realtors projects fewer sales in 2010.
- The market may be swamped by a wave of foreclosures in 2010.
There are more headlines like these, but does that mean we should just keep waiting for clearer signals? Of course not. It’s actually a good time to get serious, and if buying or selling is in your future plans, it might be time to call us and evaluate the possibilities in areas that are of interest to you. Each of us will only really know if we hit the bottom after it happens and we look back and think about “….what we might have done”.
Let’s look in more detail at two of our North County local communities:
Rancho Bernardo-
The above statements are basically broad brush and each zip code and price range can be quite different. For example, take that portion of zip codes 92128 and 92127 that only include detached homes in Rancho Bernardo. At the peak of the market the median was about $625,000 in both Rancho Bernardo zip code areas in 2005. Early this year the medians were about $537,000 and $500,000 respectively which is up from a year ago in both areas. The 92127 zip includes a number of newer and more expensive areas including Santaluz, Crosby Ranch, 4S Ranch and Del Sur but these four communities are not part of our RB projections. These newer communities were all built beginning in the 2000 time period. Crosby Ranch and Del Sur didn’t actually begin selling homes until the 2005 – 2006 time frames. The last page shows the RB median sales prices for both 92128 and 92127 for the years 2000 thru 2009.
Poway-
While Poway is literally next to Rancho Bernardo, it is not part of the city of San Diego. According to a recent News Journal article the number of residents in Poway is just over 51,000 and all indications are that it will only have a very modest growth in the future. Rancho Bernardo is estimated to have about 43,000 residents and about one quarter of them are over 55 years of age. In Poway seniors make up only 11 percent of the population and it is expected that given present trends, seniors will make up about 18 percent by 2030.
Given the unique configuration of neighborhoods, we believe it would be more informative to divide Poway into two median price categories. There are a number of excellent high end property neighborhoods and there are a larger number of homes priced in a more moderate range. The chart below portrays two price categories for Poway. One of them is for detached homes up to $750,000 and the second is for homes above $750,000. The high median for the moderate homes is about $535,000 and it occurred during the 2005 time frame. The low median was about $386,000 in 2008 and it has been increasing steadily for the last half of 2009. Now it is closer to $430,000, a significant increase.
The top median for detached high end homes in Poway was about $1,125,000 in 2006. The low was about $907,000 and that has shown up in the second half of 2009. Note that the shape of the curve for high end properties appears somewhat erratic. Because there are not as many properties available for averaging, this means that it only takes a few very expensive homes to significantly impact the shape of the curve. Even considering this, it illustrates that the median price of a high end home peaked around the 2006 time period and has fallen rapidly over the past several years.
The whole story–
And finally, these are statistics and they never tell the whole story. Nothing can take the place of a property that is made ready to sell. This is especially true in high end properties. The trend in buyers today is that they don’t want to redo a house. They want the kitchen, floors, bathrooms, windows etc. to be already upgraded and if these things are not already done, then they want a real financial bargain. In the final analysis, recent selling prices in the immediate neighborhood also continue to play a very important role in establishing a selling price. Unfortunately it doesn’t matter to a buyer if the comparable property was a distressed sale or not. Buying now looks like it is about as good as it is going to get, and selling appears to be on the way back. Just contact us at jimmcnabb@san.rr.com or call 858-442-3658 as we would appreciate your inputs and questions.
