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2013 Real Estate Review: San Diego, CA

It’s the fresh start to a new year, a great time to reflect and review the 2013 real estate market for San Diego, CA and get an idea of how the trends will bridge into 2014.San Diego California neighborhood sunset
Interest rates dropped to  historic lows in 2013, igniting some of the highest housing appreciation in San Diego County since the early 2000’s.

2013 also narrowed San Diego housing inventory, which awarded home owners the advantage of increased home values.

Loan officer and real-estate lecturer at SDSU, Mark Goldman, stated that “Last year, we saw home values catch up to where they should have been if we didn’t have that market correction in the last of the 2000s.”

A reported 42,702 homes were purchased last year by San Diego home buyers, a slight increase from 2012 but the most since 2006 which was the last full year before the Great Recession.

This proved to be a great time for real estate investors who in June benefited from the profits of a 24.1 percent annual appreciation to a median price of $420,000, which equated to a post-Great Recession record.

Real estate investors and buyers who came in with cash offers had the biggest advantage in 2013 – and once again made up for a big chunk of the market – making up 30.5 percent of homes sold, only slightly below the 32.2 percent in 2012. In fact a 7.1 percent of homes sales in San Diego County were comprised of flipping, or buying a property and selling it within a six month period. According to DataQuick, that percentage was a record high post the Great-Recession.

In 2013, foreclosure resales made up 7.5 percent of San Diego’s housing market, a considerable downstream from the 18.7 percent in 2012 and 29.7 percent in 2011. And according to DataQuick, short sales accounted for 17.2 percent of the market, another dramatic decrease from the 28.9 percent in 2012.

However with the inventory of distressed properties, foreclosures and short sales dropping dramatically in in the latter part of 2013, the house-flipping trend is not expected to continue. This shift will likely urge real estate investors to buy, then rent out properties as opposed to flipping/renovating for a quick re-sale in 2014.

The saturation of real estate investors with cash offers took it’s toll on hopeful homebuyers (with loans) looking to take advantage of the attractively-low property pricing and interest rates. Buyers with home loans simply couldn’t compete with the onslaught of cash offers, which typically equate to a quick close – a much more enticing incentive for sellers because it typically equates to a done deal.

With distressed property inventory – a big the draw for house flippers – at a low in the latter part of 2013, the market opened up to prospective home buyers who were looking to purchase with a loan. But with property inventory narrowing, home values began to rise and so did interest rates which meant homebuyers had to borrow more money. This also meant higher mortgage rates.

A typical monthly payment in 2013 was around $1,534 – which was a 23 percent increase from the previous year’s $1,245, calculated by DataQuick based on a 20 percent down payment at the annual median price, for a 30-year fixed-rate mortgage at Freddie Mac’s average for the year. Interest rates for a 30-year fixed mortgage began the year at 3.34 percent, then ended at 4.48 percent – which is still a historic low.

Despite the roller coaster ride, the overall the 2013 median price for a home finalized at $402,500, and increase of 18.4 percent from 2012. All in all, still a great time to buy a home.

As a recap – San Diegans bought 26,921 resale single-family homes, 12,484 resale condos and 3,297 new homes, decent escalations from 2012. Condos saw the greatest appreciation from 2012, rising 28.3 percent to a median $295,000. Single-family home values rose to a median $440,000, a plus of 18.92 percent from 2012. The median price of a new home was $514,000, up from $446,000 in 2012.

As we enter 2014, the housing market in San Diego is predicted to balance and stabilize. Real estate experts predict between a 3.5 and 7 percent increase. While it seems San Diego home values will continue to increase, the upward trend will likely be more gradual due to higher interest rates.

Sonja Huter is a premiere specialist of luxury real estate in greater San Diego.

If you’re in the market for properties in La Jolla, Del Mar, Rancho Santa Fe and other elite coastal communities in north San Diego County contact Sonja Huter Real Estate ::: Bus: 858-759-5724 | Cell: 619-246-2606 |  Email: sonja@sonjahuter.com