San Diego home prices shot up 5.1% March over February. Does that mean we are in the clear? San Diego is one of only 3 of the top markets showing strong signs of recovery. The inventory of homes in San Diego County is approaching record lows. That is a huge upward push on prices  (you remember the laws of supply and demand right). Many properties get multiple offers (I’ve heard one as high as 20!) within the first 2 or 3 days on the market.

What is going on? Well….. there are lots of buyers and interest rates are still at record lows. There has been a small softening in lender requirements (a little easier to get a mortgage).

Now ….just to find a house (even a condo). That is the tough part. Nothing for sale.

We can say one thing. Everything that comes on the market is selling quickly and at the high end of its market value. There definitely is a upward pressure on price. But…..although buyers are willing to pay higher than market value, the appraisals are coming in at lagging market value. If the buyer can’t mke up the difference , the property is going to someone else.

Any buyer with cash really has a huge advantage right now, they can raise the market values across the board.

So….where are all the sellers? The foreclosures are predominantly in the far north, far west and far south suburbs. Not much going on in metro. Short sales? They will still be out there and be around for a while but with the tax relief expiring in December, many have already accomplished this task if they are going to.

Many other potential sellers have refinanced and locked in incredibly low rates and have seen their payments fall. Those that couldn’t refinance have accomplished a loan modification.  Again, a  great payment now, they are not going to sell.

Who is left? Not too many, and very few willing to sell at the current value structure. How about new construction?

When was the last time you saw more than 2 cranes in San Diego? Although there are a few builders around town, a real influx of new homes hasn’t happened yet. (they too want to wait for the prices to go up).

Everything is pointing to double digit increses in home prices in either 2014 or 2015. Let’s say it will be 3 to 5% the balance of 2012, 5 to 8 % in 2013 and being the optomist that I am 13 to 17 % in 2014. If credit gets looser and appraisers adjust to the market, these estimates may be low.

So what’s the point? If you still want to try and get a great deal, in San Diego  -  buy now!!!   If you can find something. For most, the bargain hunt at the bottom has passed them by. Make sure your Realtor shows you everything that comes on the market and be prepared to pay above the list price. Remember however, this will still be a great price at an incredible monthly payment. The interest rate is still your best friend, keep it around for 30 years!

If you still want to short sell, or know somebody who does … and you want to beat the December 31st deadline,  please check out shortsaledignity.com .

You will find information on many foreclosure alternatives. In the meantime, go buy something!