San Diego Housing in Now Affordable

It's been many years since investors looked at our local housing market and viewed it as 'affordable'. (In this case, I'm referring to professional investors and not the lazy day, get rich quick who helped drive the market so high during the Bubble). Now, from my favorite local source of news Voice of San Diego comes this story:

San Diego Home Prices Reasonable At Last

Yes, you read that headline right. In aggregate, and based on their historical relationships with local rents and incomes, San Diego County home prices are reasonable. Not cheap, but reasonable. For the rest of the story, go here:

Voice of San Diego

There is another insight into the current market I find interesting, and it has to do with 'what' type of houses are selling and why. If you guessed foreclosed properties, you're correct. And as best stated the other day in a piece called Existing Home Sales: Turnover Rate:

The turnover rate during the housing bubble was boosted by:

Speculative buying by flippers.

Speculative buying by homeowners (using excessive leverage).

Move up buying, especially by Baby Boomers.

Although slowing, the turnover rate is still above the median for the last 40 years and substantially above previous troughs. Both types of speculative buying are over for now. And the Baby Boomers have probably bought move up homes, and the next major move for the Boomers will be downsizing in retirement (still a number of years away).

And finally - and probably a very important point - homeowners with negative equity, who manage to avoid foreclosure, will be stuck in their homes for years.

All of the above suggests the turnover rate - and existing home sales - will fall further, perhaps much further.

Read more at: Turnover

And finally, on the good news side (perhaps ironic):

Mountain House, Calif., in which more than 90 percent of owners owed more than their house was worth in 2008, is feeling less glum these days -- you can tell by the Little League participation, which has gone from 178 to 220 kids in a year.

More importantly, the bidding war has returned to the real estate scene, with one family jostling with 12 others for a $299,000 5-bedroom home. (They lost, and the house eventually went for 30 percent above asking.)

The exurb: It's not dead yet!

View post at Curbed.com. That's why I love San Diego with all of it's potential!