There has been much conflicting news lately about the real estate market – reports saying it continues to improve, others claim many fear we are heading toward another bubble. Let’s look at some of the latest news in the real estate industry…see for yourself what you think.
Home Sales Increases: We have all read about home sales increasing in the last year, especially since the start of Summer/end of Spring. Realology reported that sales increased 29% in the third quarter, but does not expect a similar number for Q4. This is understandable, as Q4 generally is the slowest part of the year for home sales due to the holidays and resulting lower inventory levels.
Furthermore, indications that home sales are gaining momentum in big cities such as Los Angeles and Las Vegas point to possible dilemmas as we head into what will likely soon become a buyer’s market (the biggest being that many buyers could be forced out of the market if prices are higher).
More Households Have Emerged from Negative Equity: According to the National Association of Realtors, 2.5 million households have emerged from negative equity situations as of the second quarter of this year – the result of rising prices. This has a big effect on the future foreclosure market, and many of these previously underwater borrowers will be able to sell their homes and buy those that are affordable. This could contribute to more inventory in the coming months – Spring may be a busy time in many area markets.
New Construction is Improving: Building continues to be on the rise, and many builders are selling out quickly. Multi-family complexes in some parts of California are selling out before they are even completed, and the Wall Street Journal reported that properties built for rental purposes are even hotter. Many single family new construction homes here in San Diego county similarly have been selling quickly, often months before completion.
Shifting Neighborhood Preferences: A study by the National Association of Realtors found that 60% of Americans surveyed prefer to live in neighborhoods that are “walkable” – those with a mixture of homes and businesses, or mixed-use developments. The survey was comprised of 1500 Americans. 55% of those surveyed said the would prefer to have a smaller home and yard in order to be able to live in a walkable community. Here in North San Diego there are several communities that continue to be very popular mixed-use neighborhoods amongst buyers, like Bressi Ranch in Carlsbad and San Elijo Hills in San Marcos.
Buyers Face Tighter Lending Standards: It is no secret that loans have been harder to obtain for some time. According to the National Association of Realtors, tough lending standards are still making an impact upon would-be buyers. Single home buyers have a more difficult change of obtaining a loan over dual-income borrowers. The overall number of single buyers has declined in the last few years, but if we are to continue down the housing recovery path we will need to provide more opportunities for financing to all kinds of borrowers. Recent studies by NAR show that almost 9 out of 10 purchasers obtain financing.