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It was Mark Twain who coined the phrase “History Repeats Itself” but it was George Santayana who observed that “Those who cannot remember the past are condemned to repeat it”. So as we venture into the 2012 real estate market, we believe that in the months and years to come we will look back at 2011 and identify it as the point at which our local real estate market bottomed and provided buyers with the opportunity so many have been looking for.
For those of us who experienced the last major market correction in 1992-1997, the start of 2012 has the distinct feel that we have reached a turning point. The question is who will take advantage of this unique buying opportunity and take “the plunge” in the face of uncertainty. As we pointed out in last year’s forecast San Diego continues to lead the nation in its recovery, both in the area of jobs and housing, and if history repeats itself then the outlook for our county will only get brighter. Nothing has more impact on home prices than jobs and incomes, and to date San Diego has recovered 37% of the jobs lost in the recession and the ratio of home prices-to-income are within 2% of the all-time lows seen in 1997. All this is very encouraging moving forward.
The other major indicator of housing strength is the rental prices and vacancies. Right now coastal North County is experiencing a very strong rental market with rents increasing and vacancies at record lows. Throw in record low interest rates and we find ourselves at a point where the “rent vs. buy” question is now pointing many to buy once again. Just as we stressed last year there will be pockets of strength and areas to avoid in 2012. Carmel Valley continues to be a great choice based on schools, new commercial development and limited new construction. As the graph above indicates Carmel Valley has now seen 2 straight years of higher prices and yet affordability is still very low. Homes priced below the $1.2 million point have low inventory right now which bodes well for prices, while higher priced areas including Rancho Santa Fe are still sluggish, though showing some signs of a turnaround.
Taking our cues from the new home builders who have started releasing homes again, and the fact that we are in an election year, we are cautiously optimistic that 2012 will be a year where we see a slow but steady recovery in our local real estate market. Make no mistake though – there will not be the double digit price gains of the past, and the recovery will be very gradual with some inevitable dips along the way.
To find out the best strategies for buying or selling a home in a complex market, please call the Dalzell Group at (858) 755-7740 for a private consultation.
Jim and his wife Jo, have lived in Carmel Valley since 1987 and first got into the real estate business in 1992 after a successful career in the construction industry in South Africa. Kevin Dalzell joined the Dalzell Group Real Estate team in 2002 after playing professional rugby in Europe (represented the U.S. in two Rugby World Cups) and is now living with his wife, Nina, in Solana Beach. Ryan Dalzell coordinates the team’s marketing program, and he joined the group in 2004 after working as a flight instructor. Ryan lives in Carmel Valley with his wife Julie and their 3 children. Amber Worsham recently joined the team as the new Marketing Manager & Transaction Coordinator. With over five years of experience in marketing real estate in Coastal North County, Amber provides us with extensive expertise in the print, internet and direct marketing aspects of the business.