Recently, in the U-T business section, there was a featured story that stated homes sales surge and home prices rise in San Diego in April.
Just from that alone, the sign is that the housing market is now going in the right direction. However, this may not be true. The truth is there are many different stories all centered on the housing market. One day you will read foreclosures are down, the next short sales are down, and then home prices are slightly up. Everyone reads this as good news and the housing market is on the road to healing.
Before you start believing all this, you really need to learn more about the root of the problem and what it does to the housing market in San Diego. The current standings in San Diego are as follows.
As reported by zillow.com, 36% of homeowners are underwater in San Diego County.
Foreclosures are truly down in the San Diego County; however, this only means that the defaults are finally clearing out.
Wave of Foreclosures Coming
It is estimated that another wave of foreclosures is coming. These foreclosures are going to affect borrowers that took out Option-Arm and Alt-A mortgages. These loans gave home buyers low interest rates and low monthly payments. What is going to bring on more foreclosures is that the low interest rates on these loans are going to be reset this year and again in 2013. This can increase the mortgage payment around 50%. The home values are now at a 10 year low and due to the increase in the mortgage payments, many homeowners will decide on defaults or short sales as they will not be able to afford the higher payments.
It is estimated that Carmel Valley is going to be the hardest hit in the foreclosures upcoming. The main reason is that during the construction boom from 2000 to 2008, many homes were purchased with no down payment or small down payment, which means homeowners do not have a lot of equity in the home. The median income in Carmel Valley is $90,000 with higher end salary families have been able to stand firm, things are on the swing to change.
The news may not be great; however, San Diego County has a way to go before the housing market will be back on track. There are going to be more foreclosures, more short sales, more strategic defaults and possibly a flat line or decline in property values. Once all this occurs, San Diego will then begin to see some healing in the housing market. Just pay attention to the news in the housing market. If you notice several months of good news, then you can rest assured the worst is over and healing is on the way. A few good stories once in awhile are a false euphoria and may not last.
Now is the time to purchase a home in San Diego at wonderful prices. Contact one of our local Realtors today at (888) 865-5055 to find your new dream home.