Home Prices are on the Rise-First Time Since 2007

According to a recent report on CNNMoney.com, prices of residential homes in the US have hit bottom and are now on the rise.   Nationally, values gained 0.2% year-over-year, to top at a median sales price of $149,300 for the second quarter according to Zillow.com.  June marks the fourth consecutive month prices have increased.  

Recovery Trend in Real Estate

It is important to note that although widely popular, Zillow calculates their data a bit differently.   Foreclosed home sales, as well as bank owned sales, are not calculated in Zillow’s data.  However short sales are.  Therefore to better understand residential housing markets price trends I recommend looking at other sources as well, such as the very reliable, the S&P/Case-Shiller Home Price Indices.

The S&P/Case-Shiller Home Price Indices, which is the leading measure for our national residential housing market also reported home prices grew by 2.2% in May over April for both the 10 and 20 City Composite they monitor.  This is pretty exciting news for homeowners, prospective buyers and investors in San Diego as well as throughout the US.

“With May’s data, we saw a continuing trend of rising home prices for the spring,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “On a monthly basis, all 20 cities and both Composites posted positive returns and 17 of those cities saw those rates of change increase compared to what was observed for April. Seventeen of the 20 cities and both Composites also saw improved annual rates of return. We have observed two consecutive months of increasing home prices and overall improvements in monthly and annual returns; however, we need to remember that spring and early summer are seasonally strong buying months so this trend must continue throughout the summer and into the fall.”

David Blitzer goes on to point out, “June data for existing home sales, new home sales, housing starts and mortgage default rates were a bit mixed, but all are better than their year-ago levels. The housing market seems to be stabilizing, but we are definitely in a wait-and-see mode for the next few months.”

However you monitor the real estate housing market recovery, one thing is for certain- positive news such as this is a welcome change.  If you are currently looking to purchase either an investment property and/or residential property here in San Diego, you most certainly have felt the fierce competition, the lack of available homes, and perhaps even participated in a bidding war yourself.  Let’s face it, with incredibly low interest rates, rising rent costs, and historically low prices, sometimes buying the perfect home does mean you have to budge a bit.  And San Diego is definitely beginning to see its fair share of real estate pricing gains, especially our most desirable neighborhoods such as Scripps Ranch, Rancho Bernardo, Hillcrest, University Heights and the College area.

Even though this is good news, and believe me very good news from where I sit, I caution all investors and home buyers in San Diego to exercise caution and remember do not get in over your head.  During a bidding war it is very easy to get emotionally involved and bid more than you truly feel comfortable doing.  It’s an emotional, complex and competitive market out there in San Diego.  That is why I sit down with all my clients at the beginning of their search to better understand their goals.  A good Realtor will keep you focused even when the emotions start to get high and the bidding war begins.

Research, preparation, education and a strong real estate professional on your side is the key to investing in San Diego’s real estate market.  San Diego is a beautiful city, with many wonderful attributes and if you play your cards right, not only will you be happy for years to come, but just might make the smartest investment of your life time.

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