If you have equity in your home and are considering selling it, there are several challenges you should be aware of. However, despite the challenges listed below, the San Diego real estate market continues to persist with 21,235 properties sold in 2011 (view trends).
1. Competing Foreclosures and Short-Sales
The abundance of distressed properties in putting downward pressure on home and condo prices. In either foreclosures or short-sales, the owner or decision-maker is usually a bank or some other institutional investor. These institutional investors are normally taking a substantial loss on the property, and therefore, are usually motivated to quickly sell the property, sometimes substantially below market value. Home sellers who have equity will need to consider the prices of competing foreclosure and short-sale homes when determining their asking price.
2. Home Buyer Fears
One question I often hear from prospective home buyers is “will prices drop any more.” My answer is, “no one knows for sure, but prices are extremely low now for the San Diego market.” Because of this concern about prices dropping further, home buyers in the market “want a good deal.” When sellers price their home, they should consider how buyers will perceive their asking price. If the home is in relatively good condition, and priced similar to other recent sales of similar homes in their neighborhood, the chances are good that buyers will consider their home.
3. Anxiety About Job Loss
Another concern I hear from many prospective buyers is uncertainty about their job. Some people who would like to buy right now, are delaying the purchase until they believe that the chances of losing their job is low.
4. Stable Low Interest Rates Can Decrease Motivation to Buy Now
There are many news reports describing the likelihood that interest rates will stay low for sometime. Ironically, this idea may actually dissuade some homebuyers from jumping in the market now. These buyers believe that there is no rush to buy a home now since interest rates will remain low for sometime to come.
5. Positive Factors
Despite the factors listed above, there are still many people buying homes and condos. In fact, from 2009 to 2011, over 21,000 properties sold each year in San Diego County as reported in the San Diego MLS. After all, everyone needs a place to live, and life events such as job relocation, divorce, and wanting to move closer to family all drive people to buy homes.
