Today's San Diego Union contains an article on the front page with a headline that "S. D. County home prices inch higher." While this is certainly welcome news, it hardly serves as notice of the end of falling prices and is not enough to make settling divorce cases easier.
The statistics cited in the article refer to median home prices in the county - for those non-math majors, that means that one-half of the houses sold are above, and one-half below that median number. The increase, if you can call it that, is .5%, year to year for October. That can easily be a statistical anomoly, and not reflect an actual increase in prices, although the article does reflect a 2% increase in the number of sales - of course that increase is from the extremely desperate days of October, 2008, just before the election, when it seemed our financial world was about to end, which is probably not a good guide post from which to measure the market.
What I notice in my family law practice is that houses at the very bottom of the market are selling as a few buyers think they can pick up a rental propery cheap [especially based on early 2005 prices].
In one case, we have two houses to value; one in the $300,000 range, and one nearer $700,000. Because of delays, we've had two appraisals of each house - the same appraiser says that the less expensive house has actually increase in value about 10% in the last year, while it is opinion that the higher priced house remains unchanged. With the median at $325,000 [according to the article], it may just be that the bottom end has firmed up as buyers think they are getting a bargain, while the number of foreclosures and repossessed houses continues to keep the overall market soft.
Those few friends who are looking at houses in the range above $700,000, are finding they can buy nearly new, custom built houses far below the cost of construction - one friend remarked that the top end is equivalent of being given a free lot, then a discounted bid on building - he's interested in moving, but is really picky because he finds so much from which to choose - he doesn't have to suffer noise problems or bad layouts, as there are other houses on the market.
Before taking a step into buying a new house, think carefully. We may not be at the bottom. And, remember, one factor in keeping the bottom firm is that interest rates on these sub-jumbo loans remain very low, and money is available to many buyers in that price range. That does not necessarily mean that people are trading up, only that houses at the bottom are becoming attractive to investors, while pricing remaining a gamble. If interest rates rise, prices will drop. As always, be sure you have the financial stability to keep the property you buy even if housing prices and rental values drop, and interest rates go up.
