Is There a Real Estate Bubble in San Diego?
This is a hot topic for San Diego Real Estate Agents. I think there is a bubble but the question is will it pop? The inventory of homes for sale in San Diego California has risen to a troubling level over the past year. There are just not enough buyers out there to buy all of the homes that are available for sale. The new home communities in San Diego aren’t helping much either. They’re sitting on a lot of inventory as well and are offering some great incentives to buyers to buy their homes. They are also offering commissions to teal estate agents to bring their buyers in to buy a new home. This is serious competition to the resale home market in San Diego. The fact that interest rates are going up only compound the problem. What I have found that if the home is priced correctly for the market that San Diego is currently in, the home sells. Home owners selling in San Diego have been used to huge home value gains in San Diego and think that their home is worth a lot more than it really is and are not willing to sell it cheap. This helps cause the market times to soar.
posted by Dawn Lewis | 10:34 AM
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The Median Home Price Does Not Matter At All
Everyone knows that the median home price in San Diego is well above $500,000. The high median home price is often cited as being the main reason that San Diego is unaffordable for first time home buyers. Taken at face value, the statement appears to make sense. Upon further examination however, that statement proves to be incorrect and very misleading. The major reason that the statement misses the mark is that first time home buyers almost never buy homes near the median price. The median price does not apply to them at all. First time home buyers are buying homes priced much lower than the median. Typical San Diego first time home buyers purchase condos in the range of $200K to the low $300Ks. Houses bought by San Diego’s first time home buyers are normally priced in the low $400Ks. It is rare for a first-time home buyer in San Diego County to purchase a home near $500,000. An important point to remember is that first time home buyers are purchasing starter homes, not their dream homes.
The median price is defined as the price point at which half of the homes are sold above and half are sold below. First time home buyers normally purchase nowhere near the median price. A price point that is much more indicative of affordability for first time home buyers would be the median price of home in the overall lower half of home prices.
Other factors that make homes considerably more affordable than many renters think are the tax advantages of owning and the increased availability of first time home buyer assistance programs. The tax advantage can typically put an extra $200 to $400 of additional after-tax money into a new home owner’s pocket every month. First time home buyer financial assistance programs enable nearly any renter with reasonable income, responsible use of credit, and a little money saved up to become a home owner.
The real concern for the first time home buyer should not be the median home price but what overall payment would the buyer feel comfortable with and whether any acceptable homes are available in that price range.
by Mark Harmon
www.1866SwiftSource.com
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