Cheap money, scarce property and a new construction boom:  Carlsbad has just ended an exhilarating year in real estate.  After coming from a record year in sales over 2,300 in 2003, the year started with some doubt of whether the fast appreciating market of the last years would continue.  As the interest rates dropped to a record low and the ability to purchase real estate became available to more homebuyers than ever before, all doubts were laid to rest. 

The Spring saw a scarcity of available property.  Fueled the fear that interest rates would change and the ability to buy would be lost, buyers scrambled for available property.  The ‘March Madness’ was marked by fast rising housing prices as buyers outbid each other. 
 

New Construction

Buyers had an array of new housing developments to choose from in 2004.  Year-end figures reveal a 15% increase in residential construction from 2003, permitting 1,475 units in 2004.  The large master planned communities such as Bressi Ranch and Villages of La Costa account for a lion’s share of the new units.  Although still a minority of Carlsbad new construction, 40% of all residential construction consisted of condominiums and apartments.  In all, the City has approved 6,590 units for construction since 2000.  From more information visit the City website:  http://www.ci.carlsbad.ca.us/

Moving Up

Interest rates dropped below 5.0%, and changed the buying power of consumers dramatically.  Because of the great appreciation that occurred between 2002 and 2004, homeowners were able to take advantage of the two year tax rule and roll up their equity into larger homes without significantly affecting their monthly payment and lifestyle.  The low interest rates also gave buyers, previously unable to afford the large cost, the ability to purchase a property in Carlsbad.

Interest Only Loans

As housing prices continued to rise, consumers looked to their lenders for the ability to finance their dream home.  The interest-only loan came into vogue and became a large majority of new loans in San Diego County.  Giving the option to pay only the interest on their loan, buyers could decide when to pay down on their principle and found the lower payment a necessary counter to their large purchase. 

Range Pricing

In 1995, a new concept of pricing homes was unveiled on the San Diego Market.  To counter a slower sales market, a few savvy agents adopted a pricing technique of setting a low and a high price.  The strategy, dubbed ‘range-pricing’, was met with some resistance.  However as the results from using a range showed homes selling in less time and more money, the number of homes sold using a range price grew.   In 2004, range-pricing became the preferred method of pricing homes in San Diego County, accounting for over 23,000 sales and 56% of the market.