The San Diego County Real Estate Market Trends Report

Market Overview

	Mortgage Rates to Rise, Sooner rather than Later
The Fed plans to stop buying mortgage-backed securities the end of March. The general consensus among mortgage brokers is rates will have to rise to attract new buyers of MBS if the Fed does stop buying. After reaching a low last November, the rate for 30-year fixed mortgages has already risen .25%-.375% in anticipation. The only MBS that are being sold right now are those backed by Fannie Mae and Freddie Mac because they are backed by the U. S. government, at least for loans up to $625,500 in our area. The question becomes, who is going to buy MBS and at what price? With money market and treasuries yielding between 1%-2%, MBS are looking much more attractive to Wall Street, private investors and foreign governments. But, at some point, the Fed will have to start selling their MBS which will drive prices down and yields up. Local mortgage brokers expect rates to rise one-half point fairly quickly after the Fed stops buying. Many think mortgage rates will hit 6% by the end of the year. That said, the biggest problem facing the local market right now is lack of quality inventory: quality meaning priced right and in the best neighborhoods. From all accounts, there is a lot of pent-up demand, especially in the entry-level market. Bank-owned property and private, re-sale homes properly priced are still receiving multiple offers. MONTHLY STATISTICS The median price for single-family, re-sale home rose 11.1% in February, year-over-year, for the sixth month in a row. This is the highest year-over-year increase since March 2005. Home sales were down for the second month in a row: 7.6%. Pending sales were down for the third month in a row, dropping 56.7%, while inventory was down 14.7% from last February. The median price for condos rose 15.7% from February 2009. Condo sales were off 0.5%. Pending sales were down 23% and inventory was up for the sixth month in a row, gaining 17.1% year-over-year. Remember, the real estate market is a matter of neighborhoods and houses. No two are the same. For complete information on a particular neighborhood or property, call me.

MONTHLY STATISTICS