Tuesday, March 29, 2011

Southern California housing market is flat in February

The median home price increased 1.9% in February from January to $275,000. That was unchanged from the same month a year earlier, according to DataQuick Information Systems of San Diego.

Sales climbed 2.1% in February, the first hike in 3 months, after being down 0.6% in January and down 6.4% from February 2010. Nevertheless, a total of 14,369 newly built and previously owned houses and condominiums sold in Southern California last month, the lowest for a February since 2008.

Robert Kleinhenz, deputy chief economist with the California Assn. of Realtors, said that there seems to be a lot of pent-up demand. Once the economy improves and people begin to feel more confident about their employment situations, then sales could increase significantly. Aside from their concerns over the direction of the economy, potential buyers face difficulties getting a mortgage.

Earlier we saw house flippers dominate the foreclosure market, these days everyone with cash is jumping into real estate as an investment to try to beat inflation. Cash-heavy investors are likely to continue to constitute a big part of the market in coming months because these buyers can close deals faster than regular buyers, who must wait for their loans to be approved by banks.

Investors scooping up properties at low price points are keeping prices down. The numbers on a rental condo seem to be crunching out at these levels showing a rough 6-7% back-of-napkin return. An average two bedroom condo rents for about $1400-$1500, and can be acquired for between $190,000-$210,000 at this time. Annual property taxes are between 1.1-1.25% of sales price. HOA dues at about $250/month on average. Annual insurance on a condo for rent policy runs about $160/month. Of course, specific numbers are different. Please give me a call if you are thinking of investing and I can answer your questions regarding actual costs based on the specific location of the condo.

For Buying or Selling, You Need a professional that gives you straight answers. For more information on buying, selling, or renting out an income property in San Diego, please call Frank Rashid's cell phone at (858) 676-5250 or email him at rashid@rashidrealty.com. More to follow within the next couple of weeks.

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