After the housing crisis in 2008, people never looked the same way when it comes to the acquisition of a house. The San Diego housing market is starting to boom again, and many people are left wondering, “is San Diego housing market going to crash?”
Well, our combined 12 years of experience with real state tell us that no, it is not going to crash. We have indicators that show the stability of the market, and w’re going to talk about these indicators.
In just one year, we saw an increase of almost 26% in housing prices in San Diego. That makes it one of the most profitable housing markets around, and there is still plenty of space for it to grow.
Whether you own a house in San Diego already or are thinking about acquiring one, we are here to put your mind at ease. Let us show you those indicators and make it clear why we don’t believe the San Diego housing market is not going to crash.
San Diego Housing Market: Why is it not Going to Crash?
There are a few indicators that show that the market is stable, and it will continue being so for a while. The 2008 bubble has taught the banks valuable lessons, and they have learned from their mistakes, and this is actually our first indicator.
Mortgage Loan Scrutiny
The increase in scrutiny of bank when it comes to the approval of mortgage loans is completely different from 2008.
Currently, one has to provide not only the basics (like proof of employment and good credit scores), but also proof of cash reserves and sometimes even profit statements from accountants, in the case of small business owners.
At any given point, the underwriters can ask for a letter of explanation (LOX) regarding any subject they think might affect your ability to maintain your mortgage payments.
Basically, it is not as easy as it once was to get a mortgage loan. The banks are now ensuring that the backbone of the market is solid. That is a solid indicator of the true stability of the housing market, presently and in the future.
Federal Foreclosure Moratorium Lifted = New Houses Available
In similar fashion, the foreclosure moratorium has kept people from having to foreclosure their homes due to the COVID-19 crisis. But now the moratorium is lifted and people have to make their payments again.
Even though the government is still offering lines of credit to help struggling homeowners, those are met with the same level of scrutiny to make sure people still can afford their house for the foreseeable future.
Basically, both government and banks are working in conjunction to make sure the bubble won’t happen again by making sure the mortgage payments can be met post pandemic.
The lift of the moratorium will undoubtedly (and unfortunately) force homeowner to foreclosure their property and leave it vacant for people who can actually afford the house.
Supply of Buyers in San Diego
It feels weird to talk about “supply of buyers”, doesn’t it? But trust us, that is the best way to approach the buying-selling dynamics of the housing market.
There is no point in having a lot of products if there’s no one to buy it. That’s economy 101 for you right there. And, of course, things are not different when it comes to the housing market.
Bubbles happen when this law of supply and demand goes wild. Too many buyers and not enough houses can create price jumps, and things can go downhill real fast.
Fortunately, that is not the case for San Diego. Even in a post-pandemic scenario, there are still plenty of people interested in buying houses in the region.
Low Mortgage Interest Rate
For some people, the simple mention of “mortgage interest rates” brings back horrible 2008 memories. We don’t judge these people, and don’t judge their fear of happening again.
In 2008, the rise in interest rates kept mortgages going up while the property value was going down. What’s keeping it from happening again?
Well, for starters, as we previously mentioned, banks have learned their lessons. People are no longer encouraged to buy homes they know they can’t afford and, unlike before, now the lenders are very much worried about that.
Also, it is not like we don’t expect a rise in rates. On July, rates were about 2.8%, and we expect those to go a full percent to 3.8% on July next years. But still, those rates are incredibly low even with inflation predictions.
San Diego House Turnover
Turnover happens when a homeowner moves and has to sell their house.
A region with a low turnover rate indicates that people are not moving away, which affects the sales volumes. However, San Diego has a very special aspect to its housing market: the high demographic of military population.
Due to the nature of the profession, military homeowners have to move a lot, and that keeps a healthy turnover environment, with houses constantly being bought and sold.
San Diego has many military bases and a very high demographic of military residents. This high turnover effect, combined with the job stability of the profession, makes up for a very stable and secure housing market in the region.
Buying Houses in San Diego
All those indicators point to the fact that the San Diego housing market is not going to crash. America’s finest city will keep being fine for years to come, and keep being one of the safest places to invest in real estate.
Acquiring a house in the region is always a good idea, and you can always contact us here at the Real Estate Jedi team to help you with that.
Jed and Jamile form a wonderful team that has been working in the real estate market for the past 12 years with a high satisfaction rate from many homeowners.
Give us a call or text us anytime at (619) 431-4133.
