How to Spot the San Clemente Housing Rebound
Posted on July 26, 2008 by Matt.
This article from CNN Money provides great insight on how to spot if the San Clemente housing market is rebounding. First thing everyone needs to remember is real estate is localized and should not be simply compared to how the national housing market is performing. With this being said, keeping track of a few key indicators should give you the buyer or seller a sense if a turnaround is coming:
- Local Job Market - unemployment staying steady or decreasing will help the market recover quicker
- Inventory on the Market - a significant reduction in inventory and an increase in sales will help prices stabilize. Inventory levels in a steady market is approximately six months and homes on average stay on the market for 90 days. More importantly, verify San Clemente real estate market is returning to its pre-bubble levels
- Home Prices Falling at a Slower Pace - Three months of smaller price drops should provide confidence the market is shifting
- Is it Cheaper to Rent than to Own - the price-to-rent ratio (home purchase price / annual rent) should come back in line with pre-housing boom levels
- Are Houses More Affordable - If people cannot afford to buy then sales won't rise, so checking if the affordability index is rising in San Clemente is pertinent
- Foreclosures - The number of San Clemente foreclosures is a definite sign of the health of the market, however, this is a lagging indicator as it can take six months or more from when a homeowner first defaults and goes into foreclosure. Defaults have occured because prices are falling and homeowners have no equity to refinance, and therefore, these individuals will need to see prices not only stabilize but rise for this to change. However, this means that the market will have already started recovering by the time foreclosures start falling so be careful using just this as a gage to get into the market.