30 years of median home price data for the San Diego area show homes still may be over-priced, and ready for further price declines in 2010.
Homeowners in Valley Center, CA. are reeling from the past three years of price declines, but a long term look at prices in San Diego County gives the clear impression that 2010 may not be the end of falling prices, short sales, and foreclosures.
Now that it’s officially 2010 I can answer the question I keep hearing, “What do you think will happen to home prices this year?”
Everyone knows there was a “Bubble” in housing prices, but what does that really mean?
Here is a chart of 30 years of median sale prices in San Diego that should give us a clear picture:
If you’ve ever bought stocks or bonds you’ve seen this statement on the prospectus, “Past performance does not guarnatee future results”, but past performance IS something you consider when you buy.
This price information is from the National Association of Realtors data bank, and is very accurate.
If you think about it, these median sale prices represent the collective wisdom of every person that bought a home in San Diego County during the past 30 years. That’s a lot more powerful that any prediction by a single analyst.
The dashed red line on the chart is very important. It shows the average appreciation rate for home for 20 years, 1979 to 1999. This average appreciation happened BEFORE the bubble years…and it should be accurate for prediction home values in 2010.
You can already see the huge fall from the peak year of 2004, but median home prices are still 14% over the historic appreciation rate.
This tells me we still have a 14% adjustment to make, and I believe you will see most of that during 2010. The lower priced homes in Valley Center, and all over the County, have stable prices today, but the middle and upper priced homes are still falling in price every month.
It’s really a simple equation…economics 101…when supply exceeds demand prices fall. Right now very few owners are able to sell without losing huge amounts of money…we’re all trapped on “Equity Island“…with ARM loans…and that lack of move-up buyers will drive prices lower for the 2000 sf. to 3000 sf. homes that make up the majorityof houses in Valley Center.
What does this mean for Valley Center homeowners facing foreclosure or short sale situations?
The housing tax credit temporarily “pumped-up” the market, and short sales are expected to increase dramatically through 2010. Homes are selling quickly today with multiple offers. Since any definiency in your loan payoff will be put back on you as a 1099, and treated as ordinary income, short sellers need to get the highest amount they can to avoid potential income tax…and if a short sale is your best option to avoid foreclosure this is a good time to sell a home.
Please take a look at the other posts here…learn all you can, and if you have any questions please dont hesitate to call or email.
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