The local real estate market is cooking with gas, and it’s only the middle of February. In other parts of the US, the markets are heavily influenced by the seasons and weather. In San Diego, we have mild to little fluctuation in either. As a result, buyers are out in force, perhaps driven by low interest rates.  Or, maybe the silencing of political issues with the Presidential election and inauguration behind us. Or, more likely, the desire to purchase real estate is making buyers realize that there is no time like the present. Time is of the essence – a true principle when it comes to real estate. Some of our neighborhoods are thin on inventory, which creates unusual demand for each new listing. Priced correctly, a clean and well maintained home or condo will draw attention. Some of the metro areas, like Kensington, Mission Hills, South Park, North Park, Bay Park, are feeling like it’s 2005 again. Is that a good thing? For sellers, of course. For buyers, know your hold time to make the best decision; intentions to own for 10 years is a different ballgame than plans to own then sell in 2 to 3 years. Be ready: have lender pre approval; have deposit money liquid; schedule a house tour as soon as it hits the market; have your pen handy to write an offer. Knowing the neighborhood as well as the recent closed sales is key to making a decision to write an offer. Because when the train leaves the station, you want to be on it.

I have been sharing the ongoing story of San Diego’s market recovery by virtue of thin inventory and multiple offers in several neighborhoods in the county. Turns out this trend is also evident in other markets as well. The biggest issue for San Diego: we are essentially out of developable land. Aside from purchasing existing real estate and tearing it down and building new, there are limited opportunities to build and meet the housing demands of a growing population. This equates to price appreciation. Great for current homeowners, and not so great for buyers. On the plus for buyers: We still have record low interest rates, so I encourage clients to put this to their advantage.

Of the 252 housing markets in the United States, 183 of those have rebounded from the lows of the Great Recession. A study from AOL Real Estate, which utilized a new housing report from Zillow.com, identified the best of those markets. Here are the top 5: L.A., Miami-Fort Lauderdale, San Francisco, San Jose, CA, Sacramento, CA.  These market areas are projected to rise the most in value in the next 12 months.

A bright light has emerged upon the housing market in the form of sustained sales with an upwards price trajectory. Most of our neighborhoods have very low inventory, and combined with low, low interest rates, there is competition out there folks. Good news for sellers, and a call to action for buyers to be ready to place offers with proof of funds and a loan pre approval letter.

The middle market still needs the most support at this point. This segment of the marketplace has always helped fuel upper end sales, as buyers moved up in price and product. However, with jumbo loans in place (above $417,000) combined with homes not appraising at a minimum of 80% loan to value, there are no options to refinance without bringing large sums of cash to the table. Of course, the main purpose of the refinance is to lower the debt service, so cash to close is a non-starter. The option to modify the loan by lowering the interest rate, therefore removing the need for an appraisal as the basis of value, also is a non-starter because the premise of a modification is hardship on the part of the homeowner.  This is no longer a story of financial hardship for most. The foreclosures and the distress sales of the recent past are effectively behind us in California.

So, if a borrower could refinance and effect a monthly savings of $300 to $600, those funds could potentially be reinvested into the economy by a simple interest rate reduction. Will it happen? Not without some governmental action requiring lenders or Fannie/Freddie to do so. In terms of ultimate benefit to the overall good, to the economy, action of this nature would be smart & successful at little cost to the loan originators and servicers.