Local Realtors hopeful about 2010
By Joe Tash
ContributorReal estate professionals in areas in and around Del Mar are looking for markets to stabilize and even improve slightly in 2010, but such factors as rising interest rates and a potential wave of new foreclosures could put a damper on things.
Some mortgage experts are forecasting a rise in interest rates as early as this spring. As of this week, 30-year, fixed-rate mortgages were averaging about 5.25 percent, according to national surveys.
Bob Angello, a broker with Willis Allen Real Estate in Del Mar, said pundits are predicting that rates could climb above 6 percent by March.
“The truth is, anyone looking to buy, move up or refinance must do it before spring. Interest rates are at an all-time low,” he said. “Once the government stops purchasing mortgage-backed securities, which is the reason (rates) are low ... then the rates will rise. History tells us once they start to rise, they will do so quickly and dramatically.”
“As long as homeowner distress does not rebound and recent federal government programs designed to avert foreclosure have some success, a more conventional recovery in the residential sector should be underway this year,” said Mark Schniepp, author of the UCLA Anderson Forecast’s San Diego report.
“By mid- to late 2010, the recovery of the broader San Diego County economy should be more convincing and 2011 will be a year of above average economic growth including job and income creation,” Schniepp said.
Factors such as buyer demand — and available inventory — can and do vary from community to community, and by the level of home prices. For example, in communities where homes are available for $500,000 or less, inventory is low and prices could increase in 2010, according to local real estate professionals. However, inventory remains high and demand sluggish in some higher-end communities where homes sell for $2 million or above.
“Overall prices have rolled back to the 2004 to 2005 range, which seems to be a floor. Prices have not dropped any lower nor are they predicted to,” said Shawn Hethcock, of Willis Allen’s Shawn Hethcock and Shawn Rodger team in Del Mar.
“Overall market activity in January 2010 was significantly better than activity for the same period in January 2009,” she said. “Looking back to January 2008, the sales volumes were comparable to the sales volumes in January 2010. The primary difference between 2008 and 2010 market activity is in the level of optimism. The general belief in 2010 is that the worst may be behind us,” Hethcock said.
“The focus of a buyer should always be on the underlying long term ‘value’ of a property, not the list price or percentage reduction that can be gotten off the list price,” she said. “The ‘good’ properties always sell for a premium in comparison to the market average.”
The start of a recovery?
Among the factors that could put pressure on higher-end markets is the relative difficulty of obtaining so-called jumbo loans, due to tighter lending requirements established by banks.
Amy Green, co-owner of Coastal Premier Properties, based in Carmel Valley, said the prospect of rising interest rates, while potentially dealing a blow to the housing market, could stimulate demand in the short-term.
“The threat of interest rates going up may help put a little drive into them, motivate (buyers),” Green said. “My advice is if they see something and the numbers work, it’s your home, so go for it.”
Those seeking to buy properties and “flip” them for a quick profit face the biggest risk, Green said. “Some will do well, but if there’s a big release of inventory, they could get caught.”
More sales predicted
Supply outstrips demand in Rancho Santa Fe for homes in the $2 million-$3 million range, and for homes above $3 million, said Mike Taylor of Dougherty & Taylor Prudential California Real Estate in Rancho Santa Fe. Demand in the Ranch reached an all-time low in 2009, with 148 sales of homes on the multiple listing service, or MLS.
The number of annual home sales in Rancho Santa Fe has declined steadily since 2004, when 352 sales were recorded, Taylor said.
“I think in terms of number of sales, we are broaching the bottom. The ones who do want to sell will find the price that entices buyers off the sideline. I would predict we will see more sales at still adjusting prices,” Taylor said.
“I do think 2010 will be the year when we start to feel ourselves coming out of everything. I think it’s going to be a great time to buy,” Taylor said.
Jason Barry, of Barry Estates Inc. in Rancho Santa Fe, said “time will tell” if interest rates do indeed rise in 2010.
Buyers ‘looking for a deal’
But for now, Barry said, prices have dropped and demand has increased.
A year ago, Barry said, buyers were scared away from the housing market by the fallout from the financial meltdown on Wall Street. Since then, he said, many people in the financial services industry have recouped much of the money they lost and are coming back.
“They’re feeling better about it. Sentiment has changed,” Barry said.
If the stock market remains strong, demand will increase, which could lead to slight price increases in the housing market, Barry said.