It has been a very busy start to the week with respect to the world of real estate.
1) San Diego luxury home values declined in the second quarter versus the first quarter of the year, but increased 2.5% from the previous year. Most of the gain is due to the restriction in the supply of homes, but some people that home prices in this category will decline again.
2) Appraisal issues are still creating some problems for transactions successfully closing, but it’s becoming less of a problem. According to an article in the San Diego Daily Transcript, appraisers were having a difficult time in May and June coming up with good comparable properties to use in their reports to justify the rising home prices. However, now that those months are behind us, appraisers have more closed sales to use for their appraisals. Still, with such a relatively low level of homes available for sale, expect this trend to continue for the near term.
3) Investors are purchasing homes at record levels. According to an article in the San Diego U-T, a total of 1,030 properties were sold in June to absentee buyers, mainly investors and buyers of second homes. These statistics are courtesy of DataQuick. That’s the highest level of absentee-buyer activity since 1,089 in June 2005. Many of the homes these investors are buying are via auction at the courthouse steps, preventing the homes from becoming foreclosures. Other homes are short sales that are priced below market. In both instances, the investors are refurbishing the homes and either holding on to them (as rental properties) or turning them for a profit. Investors are actually helping the real estate market recovery. Rather than allowing communities to suffer from foreclosures that are in poor condition and bringing down the area home prices, investors are adding value and helping stabilize home prices. It will be interesting to see if this trend continues, and for how long, as the market continues its recovery.
Prudential California Realty
North San Diego County and Carlsbad Real Estate