Before making any home improvements consider the cost vs recouping value.
The California Association of Realtors reports that remodeling a kitchen, a bathroom addition, adding square footage, and a deck addition are the upgrades to your home that will recoup at least 50% of their cost.
San Diego home prices are increasing at a staggering rate, where double-digit increases are not uncommon.
The San Diego Association of Realtors (SDAR) compared detached homes sold in the first quarter of 2013 against detached sold for the same period of 2012. The top 10 Zip Codes with the highest increase in median dollar per square foot exceeded 25% price gain. Solana beach and East San Diego experienced more than 35% price gain. Very active marketplace, let’s look at all 10 zip codes.
What do we make out of these numbers? Housing Inventory is 40% down from a year ago, home prices are at least 20% higher from last year, and 30-year fixed rates are in the 3% range. This confirms that San Diego is in a seller’s market.
San Diego home prices can’t keep increasing at the same rate. In order to sustain double digits growth salaries will need to increase. Also, interest rates will eventually increase, a jump from 3% to 5% will definitely affect affordability.
As of today, many listings are getting multiple offers, and many of them are cash offers. On the other hand, buyers, are having a tuff time getting their offers accepted and they have to make concessions.
It is a very dynamic San Diego market, and we are looking forward to what is next for the rest of the year.
California housing permits on the rise, as reported by the National Association of home Builders (NAHB). Some California metro areas have shown consecutive improvement for at least the last six months from their respective lowest points in housing permits, employment and house prices.
Many of us don’t know the difference between median price and average price, or why median price is used more often. Let’s analyze the following data from a San Diego neighborhood with the following 9 sold homes to find out.
The median is where out of these 9 homes we have four homes priced lower, and four are priced higher, the median price is $325,000. On the other hand, the average price is calculated by adding all 9 homes and dividing them by 9, this is $5,631,000 / 9 = $625,666.
Median price: $325,000 Average price: $625,666
Median price is best used when analyzing a general area such a zip code, a city, or when there is a big discrepancy in price, such our example above.
Average price provides a sense of ‘true’ value when all homes are close in sale price and are of similar style, size, etc. Homes in a condo complex, or track housing communities would be the best candidates to use average price.
When local news speak about the ‘San Diego housing market’, they analyzes countywide sale prices where multimillion dollar homes and entry level condos are all consider. As shown in our example above, in that case median price gives us a better perspective.
When there are sizable discrepancies in sale prices the median does a better justices. When properties are close in sale price and comparable in all respects, average works best.
The San Diego housing market has been in a correction for the last 5 years. Many homeowners are waiting for San Diego property values to come back to pre 2005. Unfortunately, that is not happening, and it is not surprising, considering the changes in home financing, local unemployment and buyers’ lack of confidence in the market.
Interesting enough, inventories for San Diego homes and condos are low. Traditionally low inventory meant higher prices, but in today’s environment not only we no longer have stated income financing but any “great deal” is purchased by investors paying cash, leaving traditional residential homeowners out of luck.