Real estate agents tend to hear the same questions over and over. From buyers: “Is this a good time to buy?” From sellers: “What are you going to do to make sure my house sells at the best possible price?”
If you are considering buying or selling real estate in San Diego, you are likely asking yourself similar questions. Sellers want to feel confident every step is being taken to keep their property exposed to the market to get the maximum price possible. Buyers want to get the most from their investment.
So what is happening in Dan Diego today? Is it a buyer’s or seller’s market? According to at least one experienced local real estate agent, the market is reaching an interesting balance that both sides should take advantage of. Lydia Bilic is an agent for Coldwell Banker who has had her brokerage license over a decade. She also has extensive experience within the mortgage industry giving her even better insight and understanding of the real estate market.
It has not been an easy road for the attractive Eastern European immigrant who speaks with a charming accent. It is clear that her desire to assist her clients have been the biggest impetus to her success. She strongly believes that helping her clients in making wise and informed decisions is the key to affluent home ownership. She views the San Diego real estate market very pragmatically.
According to Bilic, typically you would want to see about 10,000 homes on the San Diego market to see it as “balanced”. A year to 18 months ago there were only about 4,000-5,000 homes listed for sale. “That was obviously a seller’s market” Bilic says. “Buyers were bidding on the homes without even getting a chance to preview it, just to get a chance to become home owners.” During this period, a listing agent would many times receive a dozen offers within a few days.
Today, the number of houses on the market is about 9,000. The prices have stabilized and interest rates are still historically low. Those factors have helped the affordability index to go up.
What is affordability?” Bilic explains it as “a percentage of average priced homes available for sale that families with a median income can afford.” It’s based on residual income per household. “Today in San Diego, the affordability index is over 70%. That tells you that 70% of families can buy a home that is priced at the average sale price in San Diego.”
“Another important factor for buyers is continuous rent increases. Renters are paying more but many of these potential first time home buyers are still under impression that a 20% down payment is needed to get into the housing market. Many have never heard of Federal Housing Administration Loans (FHA) which are available with 3.5% down.” Bilic goes on to explain “There are programs with down payment assistance so practically, no down payment is required. On top of it, there is a huge tax benefit of owning real estate. Many times a first time home buyer will compare monthly mortgage payments vs. monthly rent payments without even realizing how much they would save at the end of the year on paid property tax and interest rate credits.”
It takes knowledge, personality, skills and character to serve and succeed in all markets. Buyers may not be able to find the “steal” they may have dreamed about, but now they can visit many available homes for sale, get educated, perform diligent comparisons, run analytics and most likely be in a good position to negotiate the prices.
For the sellers, it’s a huge relief to learn that markets bounce back. Since the real estate bubble in 2005, a huge percentage of homes for sale were short sales and foreclosures. It’s a process where lenders agree to sell the properties for less than the balance on the home loan. The process was lengthy and frequently those properties were neglected by home owners for a long period of time. Just one distressed home was enough for a condominium complex to dramatically decline in value. Some complexes had 50 to 70% of distressed properties with “upside-down” equity. Foreclosures and short sales are insignificant in today’s real estate market, leveling prices.
Last October, the median sale price in San Diego was $440,000. That is up from $403,000 a year earlier, which was up from 2012’s $345,000. This price increase is hugely influenced by high affordability and the diminishing numbers of distressed homes for sale.
With a help of a skillful and knowledgeable real estate agent, sellers should not worry about not getting the right amount for their homes. Whether or not to stage the home for sale, invest in remodel, upgrades or repairs remains the subject of many conversations among sellers. Bilic explains that “each home is unique and therefore it requires a specific and very distinct approach.” She uses her extraordinary attention to details and an eye for design as tools to get a property at full potential.
San Diego is an amazing place to live and it is comforting in many ways to realize the market here has become more balanced. It provides both buyers and sellers an opportunity to maximize their real estate investment or as Bilic said, “to get buyers and sellers where they want to be.”