📌 In this video I want to break down why the San Diego real estate market at this time in 2020 is not like the San Diego real estate market in 2007 around this time.
📝 In previous recent videos to you I have revealed the best tactics to use buying a house for cash, broke down how I see the current mortgage markets, what I am seeing on the ground in terms of real estate trends, San Diego mortgage rates hitting all time lows, and the most recent housing stats that are updated in real time.
📝 I want to be very clear - I call things as I see them from over 20 years doing real estate, loans, and investing, not only in San Diego, but several overseas locations as well. You might agree, disagree, or have different takes. Everyone has a different standpoint depending on different life factors.
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➡️ Fact #1 - Inventory at Peak Was 26,166 in August 2006 and is 4,512 as of August 2020
📝 Those numbers speak for themselves - inventory is down over 80% from the highs in August 2006 to the highs in August 2020. This is something I have been forecasting, predicting, and telling my clients for quite some time - that I expected this summer, with Covid, elections, etc to be the lowest on record. With much lower inventory, and not enough for buyers, that leads to a tight market, prices rising, and more buyers than sellers. I get it "what if inventory goes up" - well, use numbers. If it goes up 10%, or 20% or 100% in inventory, that's nothing. We are still drastically low on homes for sale - as are most semi decent major cities.
➡️ Fact #2 - Mortgage rates were 5.82% as of August 2006 and are 3.02% as of July 2020
📝 We see mortgage rates go up, down, stay the same, but have trended greatly down in the last 14 years if we look at the market as a whole. For those not quite quick enough at math - rates have almost been cut in *half* as of 14 years ago on a 30 year fixed loan. With so many people saying rates could "never go lower" over my 20+ years doing mortgage - all of them were wrong. Here's what rates can do - go higher, lower, or stay the same. Anyone whom tells you otherwise doesn't understand basic numbers.
➡️ Fact #3 - Homes are More Affordable
📝 In August 2005 the max medium price was right around $515,000 at 5.82% interest which means it's $3028 for principal and interest if it was 100% financing at this price. Today at $635,000 medium price at 3.02% interest which means it's $2.684 per month principal and interest. Yes, I get if we add in property taxes and homeowners insurance it sways the numbers a bit - but, taxes and HOI and can different on where you live, property type, etc. So, in the mortgage business we deal with principal and interest numbers.
➡️ Fact #4 - Access to All Loan Types for Financing
📝 In 2004/2005 most of the riskier no doc/low doc/stated doc type loans were going away. Lenders stopped making these loans available, which means buyers could not get them, which means less buyers. We also had prepayment penalties on most loans. And, these might have been for 30 years - but, most were fixed for 6 months, 12 months, 2 years, 3 years, etc - then, adjusted after that. Today, we have all types of financing available - 103% financing, $0 down VA, $0 down USDA, 3% down conventional, 3.5% down FHA, 10% down jumbo, and plenty of options for self employed or outside the box of traditional mortgages. If you missed it - read my latest on the San Diego mortgage rates.
➡️ Fact #5 - More People, More Money, More Outside Buyers, Older Population
📝 We have plenty of people that have been in the stock market with more liquid money, we have more people that have lived in San Diego over the last 8 years that have owned, built up equity, and are selling, and upgrading. We have plenty of people due to Covid, and wanting more peaceful areas, moving from larger cities outside of San Diego as it's known for climate, things to do, and more tranquil. With plenty more buyers, than homes available, and that's not even close, it remains an unbelievably tight market.
❓ What do you think?
📝 Did I miss any facts?
📝 Leave a comment below - or, text/call me at (760) 297-4539
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