Another Bubble in Carmel Valley Real Estate?

Carmel Valley housing prices in February were up 12.5 percent from a year ago, due in large part to falling foreclosure inventory and tight inventory.  Prices in the first couple months of 2013 show no signs of slowing down.  So, it begs the question… Are prices increasing too quickly and is there risk of another bubble?

With price gains of almost 5% per month so far in 2013, it’s clear that the current pace of appreciation is not sustainable and one easily can make an argument that we are seeing a new bubble inflating right before our eyes.  Insatiable demand and low interest rates are reminiscent of the 2000-2005 boom years that created the last bubble.  But there are two key components of a bubble that are not present today…shadow inventory and loose lending.

We have not seen a relaxation in lending standards that fuels a bubble.  Cash investors continue to play a big part in San Diego and for those getting financing, we see that appraisers are being very conservative on values, which means the banks will not lend on inflated prices.  Then there is still a significant shadow inventory that is sure to find its way to the market and keep prices in check.  As prices rise, more and more “underwater” homeowners will be positioned to sell and investors will look to cash in on profitable investment properties.  This will naturally take some of the “air” out of any bubble that might be forming.

The good news for Carmel Valley homeowners is that prices will continue to rise in 2013, though the pace of gains will slow after the spring, but this will make it challenging for first time buyers who run the risk of being priced out of 92130.  For move up buyers there has never been a better opportunity in Carmel Valley than right now… given that inventory is higher for homes above $1.2 million, sellers can get top dollar for their home and value pricing for the move up property.

If you’re considering selling, call the Dalzell Group at (858) 755-7740 for the most comprehensive customized marketing plan designed to achieve your home’s highest possible value!
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 Jim and his wife Jo, have lived in Carmel Valley since 1987 and first got into the real estate business in 1992 after a successful career in the construction industry in South Africa.  Kevin Dalzell joined the Dalzell Group Real Estate team in 2002 after playing professional rugby  in Europe (represented the U.S. in two Rugby World Cups) and is now living with his wife, Nina, in Solana Beach.  Ryan Dalzell coordinates the team’s marketing program, and he joined the group in 2004 after working as a flight instructor.  Ryan lives in Carmel Valley with his wife Julie and their 3 children.  Amber Worsham recently joined the team as the new Marketing Manager & Transaction Coordinator.  With over five years of experience in marketing real estate in Coastal North County, Amber provides us with extensive expertise in the print, internet and direct marketing aspects of the business.