Where does the San Diego real estate market seem to be headed for 2012? Once again at this time of year, when all the pundits come out with their forecast, it’s the rare individual that does not go along with the real estate industry’s proverbial ‘now’s the time to buy’ mantra. I’m going to be part of the 1% who deviates from the traditional ‘by now before you’re priced out of the market’ end of the year talking points.
I bet you have an idea where I’m going with my report for the Outlook for home values in 2012.
Now let’s look at 2012 for San Diego home values. Back in the summer of ’05, one of the main factors for my calling a market drop was the drop in sales activity while home values continued to increase basically because of the lag time in reporting. Well, I believe the same could be occurring now, except in reverse!
What I see for San Diego real estate in 2012.
My opinions here are basically geared toward the San Carlos, SDSU neighborhoods westward through the Claremont and Pacific Beach neighborhoods.
With sales increasing (hopefully this trend will stay in place) I believe the San Diego housing market will finally see home values stabilize in 2012.
I’m not calling for some slingshot snap-back in home values next year. I’m calling for, to be precise, the continued modest decline in San Diego resale home prices through at least the first half of 2012. Naturally, barring some major detrimental economic news either here or in Europe, I think the second half of 2012 could see some solid base building, with perhaps, some modest single-digit appreciation by year’s end.
There continues to be talk about pent-up buyers to getting into the market. The theory goes that many potential first-time buyers and move up buyers have been holding off getting into the market and once they see some improvement will rush back in a big way. I said this in a number of prior posts, and I’ll say it again now: I believe there is pent-up demand in today’s real estate market! The ‘you can never go wrong buying real estate’ crowd has this pent-up demand theory 180 degrees backwards! Personally, I see it not as pent-up demand to buy, but just the reverse! Yes, pent-up demand to sell!
I’ve seen many current San Diego homeowners who have seen their home values drop 30% or more during the last six years who would love to recapture a small amount of that decline. They could then move on to a home more suitable for their current family and economic situation. When we finally do see some modest San Diego home value appreciation, I believe we’ll see a lot more inventory become available from these homeowners.
I usually end these forecast by saying that I hope I’m wrong and things turn out better for homeowners that I’m forecasting. I’d like home prices to make a sharp upswing in 2012, but with the magnitude and longevity of San Diego’s real estate home value bust, I don’t really believe that there is NO chance for such a fairytale snap-back.