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San Diego Housing Market May Bloom in Spring 2014

paper house cutouts falling into grass against blue skyThe San Diego housing market saw record lows in January 2014 as compared to 2013, according to DataQuick. But with winter coming to a close, the local housing market may begin to bloom this Spring.

The substantial price and sales increase we felt in 2013, though positive, lead us into 2014 with low housing inventory and a rise in overall home values/prices. Prospective buyers are now faced with higher price tags, higher interest rates, and tighter credit standards, yet limited housing inventory. This combo has presented some challenges for first-time homebuyers to qualify for a purchase. The economy as a whole is holding out for an increase in job growth, and in some areas (such as San Diego) a new supply of higher housing to help lift the housing market over this first quarter hump – the latter is where we see the potential silver lining.

“We’re starting to see a turning point in the market as we approach the spring home-buying season,” said Kevin Brown, president of the California Association of Realtors. “Home sellers realize that home prices are holding steady and are gearing up for the coming season by listing their homes for sale, while prospective homebuyers are getting more comfortable with stabilizing home prices and interest rates and are entering the market.”

This isn’t without the caveat that many homebuyers are also thinking twice before putting their homes up for sale. According to a recent report from Redfin, 39 percent of homeowners plan to purchase their next house and rent out their existing home instead of selling it. This only further limits the housing inventory available to homebuyers.

Now let’s get to the positives – while home builders are hitting a slight snag with build-able land availability, investors are seeing the opportunities and actively seeking them. Publicly traded home building companies shares are trading at notable highs. For example, KB Homes (NYSE: KBH), which has three communities in San Diego are trading near $20.50.This is a pretty dramatic increase from the $7 trading they were experiencing just a year and a half ago.

Another notable luxury home builder, Toll Brothers (NYSE: TOL), has more than doubled their increase after a multi-year low of $14 in September 2011 to the current price of $39.

“We continue to be very encouraged by the strength of our coastal California markets. Our growth in California, as well as significant expansion in Texas, should further diversify the company and spur growth as we move forward in 2014 and beyond,” said Douglas Yearley, CEO of Toll Brothers.

So as we enter into Spring 2014, things should start to look up for homebuyers. Let’s face it. Quarter one is typically a tough time. People are just recovering from the holidays and reflecting on 2013, and gearing up for tax time. As spring approaches, the sunlight inevitably brings us all out to play. And with investors fueling the prospects of new home developments (provided home builders can find the land!), the housing pulse could liven with some much needed activity equating to a huge plus for ALL!

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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