San Diego Housing Bubble?

Maybe it’s because I am so old or so deeply immersed in the real estate industry, but I’m skeptical of the things I have been reading or seeing on television. I am not convinced we are experiencing a housing bubble. I believe it is more likely a long overdue and badly needed market correction.

In 2008, I was fresh out of a police uniform and a brand new REALTOR. I was able to experience first hand what a housing crash felt like. San Diego went from boom to bust and I personally assisted both buyers in the down market and the unfortunate sellers who unloaded their homes through the short sale process. It was not fun.

The federal guidelines on federally insured home loans remain in effect since that debacle and it gives me a strong sense of security that home loans are solid. To me, what we are experiencing now does not feel like the bottom is falling out of our home values. Keep in mind that in comparison to northern California, our homes have been historically undervalued.

As the owner of Shay Realtors Inc. and a real estate broker, I talk to lenders, buyers, sellers, and industry experts on a daily basis. What I see and hear paints a different picture than the Goldman Sac’s report.

Goldman Sach’s has very smart people there with much more education and experience in the financial sector then myself. Afterall, it took me only ten short years while working around the clock at SDPD to get my degree from San Diego State University in Vocational Education. I do not claim to be a financial advisor or an economics major. Before you make any decisions on any invstmens I strongly recommend you speak to professionals in these fields and charter a course for you and your family. This article is strictly my opinion of the current San Diego housing market.

That being said, I have learned to follow my gut and I think many of the reports I have been reading are based on looking in the rear view mirror instead of out the front window. It’s true that the figures and graphs are accurate and that home prices have softened, market time has increased, while home inventory remains low. Please review the Altos Report specific to 92127 located on the center pages of this newspaper for more details.

During late summer and the fall of 2022, many of the homes being listed would go “pending” then they would fall out of escrow just to be re-listed. The volatile and uncertain housing market was a great time to buy a home and several of our clients were able to purchase homes well below their actual market value.

In my opinion the housing market appears to have become more stabilized and balanced the playing field between buyers and sellers. Talking to multiple lenders all of them have told me in the last 30 days their number of home loan applications for new buyers have skyrocketed. That is a strong indicator that buyers are getting ready to step off the sidelines and back into the home buying game. In addition, we are starting to see more homes going pending quickly with some even receiving multiple offers. That has not been the case for about eight months.

With the Feds recently raising benchmark interest rates by .25%, the home loan rates appear to be coming down and the stock market is responding favorably. Hopefully the CPI (Consumer Price Index) which measures consumer inflation will continue to slow so that interest rates can adjust downward.

I would not be surprised to see another run of the housing bulls, as people feel more comfortable with six percent interest rates and the pent up demand for home buyers meets increased home inventory for sale.

That being said, I admit I have been wrong before. I once thought it was a pretty good idea to release a large white parachute that I had tied to the handlebars of my little brother Joe’s black and yellow BIg Wheel in the middle of a high desert windstorm.

Joe held on to me as I tried to steer and it was incredible fun until we we both left the planet earth and were pulled into the dust filled sky in Albuquerque, New Mexico.

Luckily, we had our football helmets and pads on so we had no broken bones and we had a great story to tell.

Like that sunny day in our hometown, I believe that the housing story will also have a surprising ending.

I have told many or our clients that generally speaking their homes are worth more now than they will be in six months. There is very limited home inventory and if your home is properly prepared, marketed, and negotiated you will do just fine.

If you decide to hold I do not see that as a bad play either as people love living in San Diego and rentals in the nicer areas of San Diego seem to be accelerating. This is important because sellers have an option to rent their homes so they could stay current with their mortgages.

As an example, One Paseo Apartment Complex on Del Mar Heights Rd. in Carmel Valley is a great place to live. A few years ago their one bedroom apartments were renting for $2,900 a month. I just checked this week and their one bedroom apartments are now leasing for $4,300 a month and out of over 600 apartments there were only a handful available. One Paseo’s larger three bedroom attached townhomes are renting for over $10,000 a month and they have currently available.

Even before I read Goldman Sac’s article, one of my friends on the phone told me the projected cities to experience a housing crash were San Diego, California; San Jose, California; Austin, Texas, and Phoenix, Arizona. It immediately did not make sense to me. I recall looking at my phone and wondering if he had ever heard the below song they used to sing on Sesame Street.

One of these things is not like the others, One of these things just doesn’t belong, Can you tell which thing is not like the others By the time I finish my song?

I love Austin, Texas. It is one of my favorite cities. The people, the food, drink,and music is incredible. The traffic engineering pattern was a wreck five years ago and with all the influx of new Austonians I doubt that has gotten any better. There are also incredible ice storms in the winter in Austin and it is hot and humid in the summer. Now think of Phoenix or San Jose. Would you rank any of these three cities higher than San Diego?

How many of us step off a plane in San Diego arriving from anywhere in the world, take a deep breath of that fresh ocean air and say, “Boy it’s great to be home?” I bet most of us do.

I believe San Diego is significantly different from any of the other cities. After all, none of them are blessed with our incredible warriors and their heroic families that make up our industrial military complex. With increasing world tensions, I do not see the U.S. government cutting back on our budgets for defense. Add on our incredible weather, diverse culture, a high level of safety, plus a solid base of technology companies including Qulacomm, Apple and many others that call San Diego home and I believe we have a winning hand.

The other important thing to note is that unlike years past many of the homes sold over the last few year’s were purchased by large hedge funds. They saw how much money was being made by people that simply wanted a roof over their heads and they wanted to get into the action. I really wonder if this dynamic impacts the current story being told.

MONITOR THE VALUE OF YOUR HOME!

So if the loans are solid and people are still moving here as rentals indicate, why would we be facing widespread foreclosures? It just does not make sense to me. The truth will play out in the next year and my biggest piece of advice I have for each of you is to monitor the value of your home.

One of the best products I have found to do so is Home Bot. It costs nothing and will track the value of your home and send you an email once a month with an unpdated evaluation of your home’s value. There are also other reports available free of charge if you so choose.

If you scan the link below it will take you to a page where you can easily enter your home address and find out your approximate current home value. You do not have to put your phone number in or email address. You never have to worry about anyone from Shay Realtors calling you. We NEVER cold call anyone.

In closing, I wish you and your family the best of luck.

If you have any questions or comments do not hesitate to reach out to me or any of our outstanding our multilingual team of wprofessional REALTORS.

Cheers,