You Should Be…In the Know

Year-over-year prices are down in San Diego. I expect we’ll see a little more of this, then some upswing in the last quarter of the year.

Standard & Poor’s Case Schilling Home Price Index shows a 4% decrease in San Diego prices from March 2010 to March 2011.

“Distressed sales” are still flooding the market and credit is a tight as ever, but there’s another factor contributing to the decrease. Last year at this time, many California first-time homebuyers had access to federal and state tax credits. Of course those incentives caused an increase in the number of buyers or a rush by people who would have purchased eventually, but hurried to get in on the credits.

Those incentives dried up by the second quarter of 2010 and we dropped down to a less-than-normal number of buyers in the market.

This means that we are comparing current prices with to those of an incentive-rush period. By the end of September this year, we will be comparing prices to a more “normal” market period of last year. I won’t be surpised to see local newspaper headlines reporting an increase in home prices.

Crossing my fingers…I HOPE I’m right.

Where are real estate prices headed in 2011? Experts have differing opinions. See the California Assoc. of Realtor’s highlights below.

• In terms of home prices, the experts differed slightly with the majority predicting that home prices will remain flat throughout 2011. Ms. Appleton-Young predicts home prices will rise 2 percent this year, while a foreclosure expert predicts housing prices to decline 5 percent in 2011.

• According to Ms. Appleton-Young, there is little chance of home prices returning to their previous peak levels anytime soon. “We are in a slow-moving recovery with prices stabilized at the moderate and low end,” she said. “We are still seeing price attrition and price softening at the upper ends of the market.”

• California’s recovery will hinge on location, according to Richard Green, director of the USC Lusk Center for Real Estate. Areas between El Centro and Sacramento likely will not see a return to peak prices for a long time. However, places like La Jolla, Laguna, Huntington Beach, Atherton, Palo Alto, the city of San Francisco, and Marin County could experience a return to their peak prices within the next five years, according to Mr. Green.

• Foreclosure expert Bruce Norris of the Norris Group believes the market is being artificially boosted by government programs and is set to fall further this year. Mr. Norris believes the demand for housing is most-needed for a sustainable recovery.

• California’s coastal markets will make a return once the job market improves, according to Emile Haddad, chief executive at FivePoint Communities Inc. In turn, that will lift consumer confidence. However, California’s inland areas are more likely to lag behind, and builders will have to reconsider the kind of product they offer in certain places.
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Complete Article from LA Times