San Diego Houses in 2015
The new year started out rather slow in the San Diego real estate market, but is quickly picking up pace. The number of closed sales of detached houses was up 1.3% in February from a year ago. The number of condominiums that closed escrow in February actually dropped 10.3% from a year ago. Both of these statistics reflect the biggest factor that is on everyone’s mind… which is the lack of inventory of homes for sale in San Diego County. The supply of detached houses for sale was down 14.3% compared to February 2014, while the number of condos for sale was down 16.6%. So with the inventory down, more people are closing purchases on a smaller number of homes for sale.
Moving forward into Spring 2015, there is a general expectation that housing inventory will increase, as it does every year when the winter months are past. Rising home prices have brought most home sellers out of the red and into the black, and the number of foreclosure properties in San Diego County has now dropped to its lowest level since the market correction hit in 2007. The average price of houses is now $665,060, and the average price of condominiums sold in the county is now $400,673.
Many people appear to now be rushing to buy a home before interest rates increase. But fortunately, the Chairman of the Federal Reserve, Janet Yellen, is no longer yellin’ to raise interest rates. But lest we get too relaxed about the future of mortgage financing, there are also rumors that FHA loans through Fannie Mae and Freddie Mac may become obsolete as the federal government has indicated that the mortgage giants have possibly become too big. If a policy is implemented to shift the bulk of mortgage financing back onto private banks, there is a possibility that 30-year fixed mortgages could be cut back in favor of shorter term loans. For example, 15-year fixed rate loans which carry lower interest rates but higher monthly mortgage payments for borrowers.
Fortunately the rumors about changes to the home mortgage system that we’ve all become used to are just that… still rumors. With the housing market recovery, loans made during the past several years are quite secured by the equity gains of the borrowers. Private banks can afford to loosen lending standards and again get more creative with mortgage financing. Some examples of this are 90% loan-to-value conventional mortgages with no Private Mortgage Insurance (PMI) and the return of secondary financing which is allowing some borrowers to put as little as 5% down payment on conventional loans.