Local Brokers Optimistic That Market is at BottomREAL ESTATE: Lack Of Inventory Favors Sellers; Credit Still Tight Monday, April 30, 2012
A couple of recent housing reports provide optimism about the state of San Diego’s market, and suggest that the bottom has been reached.
“Do I think we’ve hit the bottom? Honestly, I can’t tell you that, but if we’re not there, we’re very close to it,” said David Cabot, president of Prudential California Realty. Cabot and several other brokers say the local market is showing a lack of inventory, which could signal an advantage to sellers and rising prices.
“We’re seeing inventory that is much lower than it was about a year ago,” Cabot said. “And we’re seeing multiple offers on many properties.”
Mark Goldman, a mortgage broker with C2 Financial Corp. and a lecturer at San Diego State University, confirmed Cabot’s observations.
“Of homebuyers who are pre-approved (for a mortgage loan), they’re having a heck of a time finding houses to make offers,” Goldman said.
The most recent housing report from Dataquick, a La Jolla-based research firm, showed sales of homes in Southern California increased nearly 3 percent in March compared with the prior year’s March. In San Diego, home sales rose by 5.7 percent to 3,237.
The median home price last month in San Diego was $320,500, down 1.4 percent from March 2011. Goldman said the drop of that size is likely caused by a higher number of lower priced homes sold and is an insignificant change. He said the local market has been bottoming out in recent months.
The inventory available for buyers has waned in recent months and is resulting in plenty of competition when traditional equity sales (as opposed to distressed sales) are posted, said Rick Ungar, a broker with Casa Bella Realty Services in Carlsbad.
A recent sale of a house in Paradise Hills generated four offers within 48 hours of its posting, indicating that there is intense competition for a reasonably priced property, he said. Given the interest, Ungar advised his client (the seller) to counter with an increase above the initial $219,000 asking price. The eventual buyer increased the offer on the house that sold for $241,000, he said.
While the pool of potential buyers has greatly expanded, finding financing is still tough for many, Ungar said.
“People need to be squeaky clean,” he said, referring to credit history. “You have to have good income, good credit scores and liquidity.”
Cabot noted that banks have definitely tightened on extending credit, and potential buyers need much higher credit scores than before the Great Recession. “They’re looking for above 710 or 725,” Cabot said. “If it’s 600 it will be challenging … Then you will need to be clean in every other area.”