The Real Estate Marketing Insider (REMI) has recently found that the San Diego real estate inventory is in freefall. This could threaten the recovery of the industry in the area.
As a result of the low inventory of available homes in San Diego County, the area is seeing rising home prices, a situation potentially threatening for the recovery of the real estate industry in the area. REMI worries that the housing market could face a serious setback if housing demand drops and drives prices back down.
From October 2011 to October 2012, the number of homes for sale in San Diego County dropped almost 35 percent. According to the San Diego Association of Realtors, real estate inventory has fallen for 15 months in a row, and will continue to fall into the first quarter of 2013. The same association reported that the year-over-year price change for single-family homes has increased 13 percent.
According to the Home Buying Institute, mortgage rates are expected to remain low into the first part of 2013, mainly due to measures taken by the U.S. Federal Reserve, who will keep buying both mortgage-backed securities and Treasuries until late 2013.
Freddie Mac also announced that the average rate for a 30-year fixed mortgage is with 3.34% at the lowest in more than 40 years. This could be an incentive for San Diego home buyers in 2013, but San Diego’s housing inventory has fallen low enough to cause sharp rises in prices, which could put home buyers off.
Part of the problem is also that many home buyers are more focused on properties in neighborhoods near the coast, adjacent to San Diego’s beaches. But according to REMI, the most important factor in dwindling inventory levels is the spike in demand; as mortgage rates are now so low, and unemployment in San Diego is down more than 2 percent from 2010, buyers at all financial levels are seeking to buy.
If San Diego’s inventory will continue to fall, transactions above the asking price will become more common. REMI is worried, however, if home prices in the region continues to plummet, that San Diego may be due for another housing crisis.