A Mixed Bag for the SD Housing Market

Since we are heading into the third month of the year, I thought we should discuss the “Elusive Shadow Inventory” that everybody has been talking about for at least a year.

According to Schiller data, home builders are re-openning or start new projects across the county.  There were eight new projects started in San Diego last month.  The county showed home prices that were 2.7% higher at the end of 2009 than they were in 2008.  That all being said there are not a lot of homes for sale right now.  The overall number of homes sold dropped 28% !  Where’s the inventory??  With 1/3 of San Diego homeowners currently underwater in their mortgages, that’s over 200,000 properties that should be, but are not, on the market!

According to the MLS , there are currently 9,243 homes actively for sale in San Diego County.  But there are also 7,260 homeowners who have recieved at least one default notice, and another 10,221 homes headed for the auction block.  Of these 17,500 homes, none have gone back to the bank as of yet!

What does that mean to San Diego’s housing market? This market could go anywhere in the next quarter.  It’s hard to know for certain what is going to happen.  With such a large inventory that is unknown, it is anybody’s guess as to what we’re heading for!  I think it will depend on how many homeowners will get their loans modified, or just end up with a short sale or foreclosure.  I feel that with so many people having no equity in their homes, these people will lean towards short sale/foreclosure versus modifying a loan and hanging on to something that will take years to get back in the black. This will result in a large number of houses on the market.

As always, I welcome your thoughts on this…

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