Fewer homes for sale amidst falling mortgage rates has led North County San Diego's real estate market to a temporary seller's market, defined as a period when buyer demand for housing exceeds available supply.
A seller's market gives those selling property an opportunity to secure a higher price, sell faster and/or negotiate superior terms than compared to recent comparable sales.
Although it has only a fraction of the strength of the extreme seller's market that took place from 2004 to 2005, and is possibly only temporary, the current seller's market is being confirmed with several key metrics used daily by real estate practitioners.
Experienced brokers will tell you that a real estate market is rarely ever an 'even' market. It either favors the buyer or the seller. And this guides pricing and expectations in a home sale.
An important component to a successful real estate transaction is properly measuring demand for a given property. This cannot be determined by directly querying potential homebuyers and comparing them against the number of homes. Homebuyers do not register on a central database.
Professionals use several key metrics to define their local market. A metric used is the average time-on-market or how long a typical home takes to sell.
Average market time in the Carlsbad market is 34 days for a traditional single family home sale (no short sales). This compared to an average 60 days a year prior and 90 days during the 2007 to 2009 Carlsbad market.
Another metric to watch how close comparable homes are selling to their asking price. In today's market, homes are selling at 98 percent of asking price, an average discount of only $15,000 off current asking prices of Carlsbad homes priced under $1 million. Last year, the average was 97 percent. This is important as the average asking price for a Carlsbad home is now higher than in 2011.
The average asking price for homes between 2,000 square feet and 4,000 square feet in Carlsbad between June and September 2011 was $705,000 with a sale price of $682,000. This year, during the same time period, the asking price rose to $717,000 with a $700,000 sale price. Remember, this average home sold in half the time.
Although these facts pertain to Carlsbad,the numbers are similar elsewhere in North County San Diego.
Government intervention into the mortgage market has pushed rates to never-before-seen lows. Average 30-year fixed rates are at around 3.5 percent.
This has dramatically lowered average monthly home payments and made higher local home prices 'affordable'.
Most will find Carlsbad homes as high as $800,000 less costly than renting a comparable home.
The current market is making even career renters question a continued course of action. North County's rental market has seen strong demand for rental housing resulting in higher rents and fewer available rentals.
Property managers are noting a dozen applicants within the first week of showing their property. More than 50 percent of the property for sale in North San Diego county has been distressed property; either a short-sale or foreclosure.
With a foreclosure, the homeowner is typically unable to borrow and buy another home for five years. Short-sellers have to wait two years. These are people that still need a place to live. The competitive rental market has also created housing demand from investors.
Investors have been successful in securing rental returns rarely seen in real estate. Lower home prices, higher rents and cheap money are enabling 10- to 12-percent returns on a cash home purchase. And some will borrow 75 percent of the home's value at a 4.25 percent rate and use the leverage to push their returns much higher.
October is traditionally the start of a slowdown in local real estate. Sales begin to decline from summer months, while school and holidays take center stage. However, the current market is showing no signs of following tradition as demand remains high and supply stays low.
Lund can be reached at
[email protected]
A seller's market gives those selling property an opportunity to secure a higher price, sell faster and/or negotiate superior terms than compared to recent comparable sales.
Although it has only a fraction of the strength of the extreme seller's market that took place from 2004 to 2005, and is possibly only temporary, the current seller's market is being confirmed with several key metrics used daily by real estate practitioners.
Experienced brokers will tell you that a real estate market is rarely ever an 'even' market. It either favors the buyer or the seller. And this guides pricing and expectations in a home sale.
An important component to a successful real estate transaction is properly measuring demand for a given property. This cannot be determined by directly querying potential homebuyers and comparing them against the number of homes. Homebuyers do not register on a central database.
Professionals use several key metrics to define their local market. A metric used is the average time-on-market or how long a typical home takes to sell.
Average market time in the Carlsbad market is 34 days for a traditional single family home sale (no short sales). This compared to an average 60 days a year prior and 90 days during the 2007 to 2009 Carlsbad market.
Another metric to watch how close comparable homes are selling to their asking price. In today's market, homes are selling at 98 percent of asking price, an average discount of only $15,000 off current asking prices of Carlsbad homes priced under $1 million. Last year, the average was 97 percent. This is important as the average asking price for a Carlsbad home is now higher than in 2011.
The average asking price for homes between 2,000 square feet and 4,000 square feet in Carlsbad between June and September 2011 was $705,000 with a sale price of $682,000. This year, during the same time period, the asking price rose to $717,000 with a $700,000 sale price. Remember, this average home sold in half the time.
Although these facts pertain to Carlsbad,the numbers are similar elsewhere in North County San Diego.
Government intervention into the mortgage market has pushed rates to never-before-seen lows. Average 30-year fixed rates are at around 3.5 percent.
This has dramatically lowered average monthly home payments and made higher local home prices 'affordable'.
Most will find Carlsbad homes as high as $800,000 less costly than renting a comparable home.
The current market is making even career renters question a continued course of action. North County's rental market has seen strong demand for rental housing resulting in higher rents and fewer available rentals.
Property managers are noting a dozen applicants within the first week of showing their property. More than 50 percent of the property for sale in North San Diego county has been distressed property; either a short-sale or foreclosure.
With a foreclosure, the homeowner is typically unable to borrow and buy another home for five years. Short-sellers have to wait two years. These are people that still need a place to live. The competitive rental market has also created housing demand from investors.
Investors have been successful in securing rental returns rarely seen in real estate. Lower home prices, higher rents and cheap money are enabling 10- to 12-percent returns on a cash home purchase. And some will borrow 75 percent of the home's value at a 4.25 percent rate and use the leverage to push their returns much higher.
October is traditionally the start of a slowdown in local real estate. Sales begin to decline from summer months, while school and holidays take center stage. However, the current market is showing no signs of following tradition as demand remains high and supply stays low.
Lund can be reached at
[email protected]