5 p.m., Aug. 25
Is the party over for rising real estate values?
Housing sales numbers from the California Association of Realtors and foreclosure-tracking outfit Property Radar are in, neither painting a particularly optimistic picture.
Following rising interest rates, overall home sales slumped in August, and the median home price in San Diego County backed off slightly, from $483,800 to $482,470. That’s still almost 24 percent higher than last year’s median of $389,540, according to the Association.
The percentage of foreclosures as compared to the overall market, however, shrunk slightly as compared to July, though foreclosure activity is still more prevalent than it was a year ago, possibly indicating that default sales are picking up as banks react to the Homeowners’ Bill of Rights legal statues enacted in California on January 1.
Although foreclosures are down nearly 50 percent and sales in which an owner has equity are up by a comparable amount, nearly a quarter of all real estate transactions are still “distress sales,” including both foreclosures and short sales, indicating that the last wave of the housing crisis has not yet subsided.
Meanwhile, rapidly rising interest rates coupled with stagnant or declining wages for most employees could spell trouble ahead, as investors exit the market and traditional buyers are priced out of the market. Soon-to-be-introduced federal programs regarding “qualified mortgages” will make financing even more difficult to obtain, and with a dearth of buyers the latest run-up could be close to collapse.
Nationwide, industry insiders are already noticing a significant drop in the number of potential buyers even looking for homes, with Lawrence Yun, chief economist for the National Association of Realtors, predicting a 12-to-18-month sales slump.