With the housing market being depressed for quite a while now, every tiny bit of upswing causes analysts to get excited and talk about the market having "bottomed out". However, there are a few things to mention prior to announcing a market recovery, the most important being the Federal tax credit for home purchasers which will expire at the end of April.
These tax credits have certainly increased the number of home purchases, making the first months of this year more active than before. Once the tax credit expires, there will probably be a drop in the price of homes.
As for San Diego, there are not enough properties available for purchase. Prices have fallen sufficiently that investors and first time home purchasers are competing for homes that are in the moderate price range. Many of these homes draw fifteen to twenty or even more offers almost immediately after being put on the MLS.
Up to the present, this phenomenon has been largely due to the combination of lower prices and the Federal tax credit. Although the Federal tax credit ends on April 30, as of May 1, the California tax credit for home purchasers will come into effect. This tax credit will be up to ten thousand dollars with first time purchasers able to buy either a new or existing home and repeat purchasers able to only buy a new, never occupied home.
