As the Southern California housing market has struggled under painfully low inventory levels, home builders are working to relieve those tensions by increasing their home starts. After a period of stagnancy, new-home construction has finally surged, hitting an eight-month high in July. With the increase in home starts, things continue to look up for the stock market and for an overall economic recovery for the nation.
According to the Commerce Department, housing starts jumped on the national level to a seasonally adjusted annual rate of 1,093,000, a 15.7 percent increase from June. This was impressive growth and highly lauded by real estate investors all over the country as the previous two months had shown dismal activity that indicated that home construction was actually declining.
With the strengthening housing market, the stock market is also continuing to look up. The Dow Jones industrial average showed some strength in rising by 80.85 points to close at 16,919.59 in July.
“This was a solid report,” IHS Global Insight economists Patrick Newport and Stephanie Karol wrote in an analysis reported on in the Los Angeles Times. “Builders’ optimism is picking up.”
Regionally, the West has shown to be a prime area for home construction. Home starts gained by 18.6 percent in July from June. Almost all regions across the country showed gains in home starts, the Midwest was the only region to fall. In Southern California, economist with John Burns Real Estate Consulting Pete Reeb, predicts that new-home sales will rise this year by about 5 percent, but have a long way to go in order to surpass last year’s numbers due to such a slow start to this year’s selling season.
San Diego Home Market Shows Strength
As housing starts get underway throughout Southern California, communities like San Diego stand to gain from the increase of inventory that these starts mean for the local housing market. Inventory has been the one weak point in Southern California, and especially in San Diego throughout the first half of the year.
According to Altos Research, a California-based real estate analytics company, inventory is on its way up in San Diego reaching a level of 1,907 properties listed on the market as of August 15. It seems San Diego home buyers would benefit from just a little more selection as Altos’ unique value called the Market Action Index is still indicating strong favor to home sellers.
The Market Action Index calculates from a neutral value of 30 whether buyers or sellers are in the driver’s seat. With an above-average value of 35.35, home sellers are in favor in this market indicating that inventory is too low to give buyers a strong enough foothold to negotiate for lower prices. As a result, prices have remained high for the region. As of August 15 the median single-family home value in San Diego came in at $650,311.
If you would like to learn more about San Diego luxury homes, please allow one of our expert property agents to show you the ropes in this great community.