So What is Going On?
by Jim Scott

May was certainly an interesting month for real estate in Mission Hills and San Diego. Prices paid for homes appear to be accelerating at a rapid pace.

In Mission Hills, for example, list prices for houses that went into escrow during April averaged $225 per square foot. The properties put under contract in May averaged $269 per square foot as an asking price! The average sale price per square foot in 1997 was $193.

It is entirely probable and more than likely that the May Surprise will not repeat itself this year. Sale prices have averaged $225 for 1998 through the end of May, fifteen percent higher than 1997, and should average under $235 for the year. 

Inventory Levels 
The amount of homes for sale remains at historic lows. This recovery is different than past recoveries. For example, 40% of the inventory in North Mission Hills is priced above $800,000. Second, and more important, the lowest priced home available, at this writing, is $529,000. The dearth of lower priced homes is creating the current buying frenzy in all price ranges. 

Buying Strategies 
Buyers should adjust their tactics to their particular price range. The market for mid to low priced homes is far more of a sellers' market than for homes priced over $800,000. 

Buyers should keep one fundamental fact in mind when bidding on properties below $800,000- the business cycle is the main determinant of real estate prices. We are in the early stages of the current recovery cycle. Do not lose a home you really want over five or ten thousand dollars. This would be poor advice during the mature phase of a particular cycle but for now buyers should maintain their focus on the larger picture. 

The Rest of the Year 
In my opinion, prices for the latter part of 1998 will not increase as fast as they have during the first five months of the year. Interest rates will surely rise and I believe a minor correction in the stock market is due. The latter would reduce the "wealth effect" which is a product of rising stock prices. More homes should appear on the market because of the recent price increases. 

Investing 
If you are looking for a partnership or sole ownership of high quality investment real estate, let me call your attention to the property featured this month. I believe this is a fantastic opportunity for an astute investor. 

Last month I received so many requests for my 35-page paper on investing in apartments in San Diego County that I am repeating my earlier offer for a complimentary copy. Please call and I will send you one. 

You can reach Jim Scott by email or at his office at 1111 Fort Stockton Drive. Jim's direct line is 885-9511. 

Jim has been a homeowner in Mission Hills since 1976. Scott & Quinn is the oldest full service real estate company in Mission Hills. There is also a professional property management team on staff.