San Diego Real Estate 2010 Year In Review
Real Estate in San Diego has had an ebb and flow throughout the year with some significant positive signs indicating that the market has finally hit bottom and we are on track to see small gains in pricing. Real Estate home sales have been mostly declining since the tax credits expired but the signs are there for gradual increases in the number of sales as well.
While the Federal tax credits stimulated Buyers to rush into buying homes to take advantage, it seriously impacted the future demand through the balance of the year. While they rushed to Buy, after the credit expired, the urgency seemed to vaporize. That in spit of record low rates that normally would have created a frenzy.
Currently even with interests rates in the low 4's, getting through the stringent qualifications has left many not fulfilled in their quest for home ownership.We have seen a continued decline in home building with the much reduced demand. One sign of encouragement in the new home category is that building permit are on the rise. While that is helpful, the long term effect of those un-built homes is that eventually the demand for housing will far exceed supply once again and we are likely to see a bidding up in home prices.
The commercial sector of real estate has been in the doldrums for some time now and will likely see that continue for the next few years. Because of the general under performing economy, business are not expanding. New retail operations have also been contracting with the reciprocal rise in Internet consumption.
The corporate leasing picture is also similarly challenged with an over supply of leasable space and with the corporate and tech industries streamlining it's operations and not expanding it's employee base. The longer term trends in this category will have a market affect on future building of leasable space as well as the amount of outside storage associated with it.
The most significant affect on the housing market in 2010 was that the delays for clearing out much of the distressed housing market in the way of foreclosures and the more preferred short sale purchases. Unfortunately these often below market sales will continue to influence the overall housing market for the next couple years. As for the artificially delayed foreclosures, the piper will eventually call his due and this trend will continue to harm the recovery even as some of the overall economic signs improve.
The interest rates have been kept artificially low and as these rates seek the more normal level based on supply and demand of funds, they will as they increase put more pressure on the pricing and that feeds into the original problem faced over the last 5 years. Mortgage amounts exceeding the equity and that will likely open the door for more distressed sales, not less.
When all things are considered though, it is still an excellent time to buy real estate, commercial and investment as well as residential. With prices and rates very low, if a Buyer wants to live in San Diego, the present time, as uncomfortable as it may seem, is still the best time to get your piece of the real estate pie while it still remains affordable.