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So, how does San Diego real estate become undervalued? The standard reasoning holds that housing prices have dramatically dropped while incomes have increased. However, has income actually increased in San Diego? It all depends on who you talk to. State workers will tell you that no, income has not increased. In fact, state workers have had their income decrease relative to minimum wage. Although incomes have indeed increased in San Diego, this increase has not been substantial. The median household income for San Diego County in 2007 was $61,794, while the same figure for 2006 was $59,591 - barely a $2,000 increase. After adjusting for inflation, the county figure is roughly 0.5 percent higher than in 2006 – a statistically insignificant number. Additionally, if incomes were actually increasing, wouldn't that result in a decrease in foreclosures? Ironically the number of foreclosures has generally increased.
James Diffley, director of Global Insight's Regional Services Group believes that housing prices in San Diego have fallen below their true market value, and holds that in 2009 prices should stabilize, and start to increase again in 2010. Global Insight also noted that San Diego's last housing recession lasted 27 quarters, from 1990 to 1997. Prices, which were overvalued by 19 percent in the fourth quarter of 1989, dropped a total of 14 percent.
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However, as you can imagine, there are plenty who take predictions like this with a proverbial grain of salt. Norm Miller, academic programs director at the University of San Diego's Burnham-Moores Center for Real Estate, believes that Global Insight's undervaluation findings are meaningless for the case of San Diego. Miller says the prices referenced in the report are in fact based on the low-priced foreclosure homes currently dominating the market. Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University in Orange echoed this in predicting that Southern California's economic outlook will remain cloudy because of the housing downturn.
Of course, Diffley's prediction that housing prices will increase again in 2010 is in itself, pure speculation. As long as the media continues concentrate on the economic recession and the continuing rise in foreclosures, public confidence in the San Diego real estate market will continue to be shaky.
That said, let's return back to the question at hand:
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How much has your home depreciated? Unfortunately, the answer to this question can be very subjective. If the San Diego real estate market is indeed undervalued, then your home may have not depreciated that much. If you've lived in your home for many years and have improved it with renovations and/or remodeling, then in theory, your home has probably appreciated.
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But don't listen to what analysts say! Talk to an experienced realtor who specializes in your neighborhood. A realtor will be able to tell you exactly how much your home is worth!
Looking at what the homes in your neighborhood are listed for is no longer a viable means to determine market value. In order to find out exactly how much your home has depreciated you need to find out what the homes in the last 30-45 days have sold for. Traditionally, 6 months is the metric used for comparable sales. Given the sharply declining market, only the last 30 days is important in determining what a buyer will actually pay for the home, which is the true market value.
Call Andrew today at 858-342-9292 to find out an exact value on your home today.
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