Everywhere there’s signs…of potential health in the Temecula, Murrieta Housing Market

Filed under: Qualifying for a Mortgage Loan, Real Estate Investing, The Temecula/San Diego Market

There is news every day, on every news channel about how unhealthy the housing market is.  The buzz words are shadow inventory, removal of Fannie Mae and Freddie Mac, strategic foreclosure, negative equity, etc.  There are many headwinds blowing in the face of today’s real estate markets.  That said, I want to point out some signs that might be showing up in your market that may differentiate your market from the national numbers.

First, and one of my favorites, is to look at where median home prices are today relative to a long term trend line.  Below is a chart from Investortools.com that illustrates nearly 50 years of median and average home prices.  You can clearly see the severe housing bubble we are in the midst of deflating that started in about 2004.  I have drawn a trend line on the chart to show how we are almost back on that 50 year trend.  Keep in mind this chart represents national data for the US.  I have looked at very similar charts for many granular markets in Temecula, CA and Murrieta, CA and these markets are now at or below the trend line.  It is hard to deny trends with this much data and could be signifying a bottom.  I would say that, if you are in a market that is at or under the trend line there are strong buy signs.


The good ole’ rent vs buy comparison is also important to keep an eye on.  There are several markets I watch closely in Temecula and Murrieta where it is cheaper to buy than it is to rent in today’s market.  With a minimal down payment, not even taking into account the tax deduction for mortgage interest into account and assuming little to no home value appreciation, it’s quite surprising how the numbers fall.  Everyone has to live somewhere, if it’s cheaper to buy and you feel like you will be able to settle into a house for a minimum of 3-5 years, buying the way to go in many markets.  It’s well worth exploring the financing options so you know the possibilities.

Don’t forget about today’s mortgage interest rates either.  Always remember, a 1% increase in interest rates equals about a 10% drop in purchase price if you keep the payment the same.  If you have a $2000 principal and interest payment you don’t want to exceed, but interest rates go up by 1%, you would have to look at houses that are 10% lower listing prices.  I have talked about this a ton over the past year or so.  Don’t ignore the fact that we are still handing out 30 year fixed mortgages in the high 4% range.

I don’t believe for a second that it is going to be smooth sailing from here in Temecula and Murrieta real estate and the path to a complete, national recovery is paved with beautiful flower and puppies.  Everything I mentioned in the opening is a potential bump in the road.  But keep in mind there has never been a market where the future direction of values was crystal clear.  To further discuss the dynamics of your specific market, please give me a call.

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