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San Elijo Hills & Old Creek Ranch- 2018 Real Estate Market Update

Wednesday, October 24, 2018   /   by Tim Minjares

San Elijo Hills & Old Creek Ranch- 2018 Real Estate Market Update



[caption id="" align="alignright" width="194"]As Seen in Share February 2018 As seen in Share February 2018[/caption]

By Nicolas Jonville, Jonville Team - Keller Williams Realty
It’s that time of year again for our market update. 2018 marks our 16th year serving the neighborhood and we have experienced all kinds of market conditions. Home prices have now returned to the boom levels of a decade ago, exceeding them in some of our neighborhoods. We will review the current market situation to gauge what direction this market is likely to be heading.

2017 was another strong year

The US home prices grew by 5.5% in 2017, according to the National Association of Realtors. In comparison, California home prices grew by 4%, while San Diego County over-performed, showing a year-over-year median price increase of 9%, but a decrease in number of units sold by 2.3%, according to Infosparks, mostly due to the tight inventory.

Our San Elijo Hills & Old Creek Ranch markets for townhomes/condos increased by 7.6%, up $35,000 ($491,000 average price in Dec. 2017) and a 4% increase for single family residences, up $33,000 ($853,000 average price in Dec. 2017). The number of condo sales increased by 8%, to 141 units, while the number of detached home sales decreased by over 9%, to 192 units, again due to low inventory.

[caption id="" align="alignleft" width="486"]Real Estate Stats 2017 Real Estate Price Increases for San Elijo Hills and Old Creek Ranch[/caption]

The low inventory level has been the main driver for the 2016 & 2017 price increases, with far more buyers than properties available for sale, frequently creating multiple offer situations. The insufficient level of new construction in the entry and mid-level sector has been supporting this lack of supply while the desirability of our neighborhoods and schools, combined with low interest rates, have been fueling the buyer demand.

Prices at their highest level…is this another bubble?

On the surface, today’s housing market looks suspiciously similar to the pre-recession years, with fast rising home prices now at a record high. However, a deeper analytical assessment reveals major differences backed by economic fundamentals.

2018 opportunities

In comparison to pre-recession years:

• We are experiencing inventory levels that have been down for several years now, and that trend is expected to continue in 2018. However, there are differences between the larger more expensive properties and the entry and mid-level: in our local market, properties priced above $850,000 had an average inventory level of 1.5 months, while lower priced properties had less than 3 weeks worth of inventory.

• Lending standards today are the tightest they have been in nearly 20 years. In comparison, the crisis 10 years ago was fueled by foreclosures and short sales, often due to loans that borrowers should have not been able to obtain or loan programs that should have never existed.

• Flipping or investment purchases became increasingly mainstream with amateur investors taking on multiple loans. Today’s tight lending environment supports a much stronger foundation of real estate ownership.

• Record low unemployment levels and our diversified growing regional economy is another pilar against a downturn of the real estate market, and millennial job growth has also contributed to rising demand.

The low interest rates are keeping the demand high and the homes relatively affordable, with a 30 year mortgage rate around 4% (but expected to increase by about 0.5% this year, still remaining near low historical levels).

According to recent statistics, only around 5% of 92078 homeowners have negative equity, another protection against a meltdown of our local real estate market.

The average rent increase in 2017 shows another 5% gain, causing more renters to consider a home purchase.

The new tax bill will allow some to benefit from more disposable income. The National Association of Home Builders Chief Economist Robert Dietz says:  “The income effect of that is that most people are getting a tax cut—which should help (buyer) demand.”

2018 challenges

Regarding the new tax bill, NAR/National Association of Realtors reports changes that could be challenging the market:

• The final tax bill reduces the limit on deductible mortgage debt to $750,000 for new purchase loans taken out after 12/14/17 and it allows for only a now reduced itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. “Most homeowners fall below that amount, so the impact of the change will be minimal in most places” says Lawrence Yun, chief economist at the National Association of Realtors (The above is not to be taken as tax advice: It is important to reach out to your tax professional to inquire about the validity of these changes and how they apply to your personal situation).

• It is important to note that any global crisis, economic or political conflicts, create uncertainty and could result in a buyer freeze, therefore affecting the market.

Our 2018 market expectations

The economic outlook looks bright for our region, with a strong diversified economy and a real estate market more affordable than most other California coastal areas, thus showing a “boost” reserve for San Diego.

This year, we are expecting much of the appreciation to happen in the 1st part of 2018, and likely earlier than previous years, due to low inventory driving prices upwards. Larger more expensive home will likely be stable in price, with higher inventory and less demand, while entry and mid-level properties will likely increase by 3 to 5%. The summer and fall will likely level off with a higher inventory of homes for sale, a reduction in demand and mortgage rate increases. Our proven strategy with our clients has been to study the micro-market specific to their property very closely, and to enter the market at the ideal time with a precise price and marketing strategy.

Locally, the desirability of our neighborhoods, top schools and relative affordability compared to nearby Carlsbad and other coastal communities will be contributing to the growth this year and in the coming years. The development of the town center, giving life to the original vision, will certainly help in supporting the growth of our home values.

Strategies for 2018 

3 main reasons to buy this year:

• Rates are expected to increase again…beat them to the punch!

• Prices are climbing and no major downturn is expected, and rents keep creeping up. History shows that acquiring real estate properties with long term strategy is a very strong wealth building strategy.

• Inventory levels are expected to increase thus offering more choice.

5 main reasons to sell early this year if you are planning on selling in 2018

• Historically low rates are still fueling the buyer demand, but they are expected to rise later this year.

• Tight inventory and high demand makes it a sellers’ market, and inventory is expected to rise…less inventory means less competition.

• Home prices are still increasing but expected to slow down.

• Buyers have cash available for down-payment, due to the strong economy and stock market levels.

• More and more millennials are committing to a home purchase at this time, thus fueling the buyer demand.

If you are staying put:

• Consider refinancing if your rate is above current levels.

• Consider improving your home and keep maintaining it properly.  We can assist with current trends and preferred contractors.

In a fast-paced market, many strategies allow for sellers to achieve record breaking sales within a short market time, while still allowing to secure a replacement home. It is essential to implement a comprehensive strategy, prepare, price and market your home effectively…beyond the community and county borders. Our experience, market knowledge and connections allow us to have the winning edge for both buyers and sellers in a very competitive market. Our hyper-local knowledge, experience and affiliation with Keller Williams Realty International has provided broad marketing exposure for our clients’ benefit. Located in the heart of San Elijo, we are always available to provide advice and services for your needs in or outside the community. ••

:: CONTACT US TODAY FOR A PERSONALIZED REAL ESTATE CONSULTATION ::

Nicolas Jonville, Owner/Broker Associate of The Jonville Team with Keller Williams Realty at 1501 San Elijo Rd, Suite 101 in San Elijo Hills, between Epoch and Postal Annex,
760-471-5098, Mail@JonvilleTeam.com,
www.SEHproperties.com,
(BRE Lic# 01410224/01417209)
Jonville Team | Keller Williams
1501 San Elijo Rd S. Suite 101-102
San Marcos, CA 92078
760-471-5098
DRE# 01410224
KW BRE# 01417209

Based on information from California Regional Multiple Listing Service, Inc. as of November 17, 2018. This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.
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