Not always a raving fan of the positive indicators spin we have been seeing coming from our local mainstream media lately, I thought this morning’s article in the San Diego Union-Tribune was quite on target.
If you missed class, the notes go something like this:
- Sales are flat line sluggish.
- In San Diego County, the median sale price was up approximately 13% year-over-year for February.
- A spot-on quote was delivered from Chapman University’s Esmael Adibi, “I don’t believe a single home has appreciated by 10 percent over this time. It’s due mostly to changes in the mix.”
Dang. As far as that last one goes, I think I have heard that somewhere before. Oh, yes. It was me.
Other fun facts from the article included:
- Foreclosure sales accounted for 42.3 percent of the resale market, below last year’s peak but several times the norm.
- Federal Housing Administration-insured loans accounted for 38.5 percent, compared with 0.6 percent three years ago, an indicator of how shaky home financing remains.
- All-cash buyers represented 18.9 percent of the market, down from 29.7 percent in January when investors dominated, but still above the 13.8 percent average going back 22 years.
- Flipping rates — reselling the same home between three weeks and six months after purchase — stood at 3.4 percent, more than double year-ago levels of 1.6 percent, another sign of high investor participation in the market.
- The typical monthly mortgage payment was $1,180, up from $1,172 in January and $1,114 a year earlier but 56.6 percent below the current cycle’s peak in July 2007.
And to further save you the trouble of reading the article, this is my favorite part. (It’s my favorite, because they agree with me.)
Putting all these factors together, (DataQuick President John) Walsh said home buying may not remain so favorable for long. “It’s possible the stars won’t line up this way again for many years,” he said. “With prices and mortgage interest rates this low, the cost of ownership is about as low as we’ve seen it in decades.”
The caveat is in the higher-priced home market. That, in my most humble opinion, will remain challenged for the foreseeable future until we work our way through the distressed sales at the low end representing a log-jam of dead-end moves. There is also the little matter of the employment rate. And our dependence on FHA loans. And interest rates.