What's Happening in the San Diego Housing Market?
New home sales dropped in February to record low levels across the US and San Diego shares in the new statistics. So what's behind all this as re-sales and prices vacillate only a little up and down each month giving the appearance of a more stable housing market.
Distressed properties , specifically the REO's are being sold at prices that make it difficult for Builders' to compete. Builders have to pay some very high fees to local governments that makes it somewhat problematic to come out of the ground unless current market prices can justify doing so.
Builders like any other business have to make a profit to continue to be in business.
From all accounts, at least here in San Diego, the lower sales, may be just an aberration and not a trend that should be of concern. What is also needing to be considered is that San Diego Building permits in San Diego county are actually up triple digits. In fact San Diego is a standout in the state where building permit numbers are down double digits.
You may remember a post that I wrote this past month referring to an article by Kenneth Harney about the new Federal Housing Report and the de-emphasis on home ownership and a new focus on multi family homes and apartments.
It seems the builders got that message clearly enough as the big increase in building permits were actually for multi-family and apartments and not single family homes.
The Single family home permits dropped. So there is a sort of mixed message here. On one hand we will likely see more jobs return to the construction industry here in the county. And we see that investors are still making up a sizable percentage of the re-sale ( distressed ) homes sales, and when you couple this with the difficulty of many would be Buyers in qualifying and securing home loans, my reaction is that the pendulum is beginning to swing too far in the other direction. My prediction for a robust Spring and Summer housing re-sale market is beginning to raise some doubt that I might have been a bit too optimistic.