San Diego Foreclosures Dwindling; Prices Rising
June 17th, 2009 Categories: La Jolla Real Estate, San Diego Foreclosures, San Diego Market Trends, San Diego Real Estate
San Diego Sunrise
Carlsbad, Ca–Things are starting to brighten for the San Diego real estate market.
Home buying in San Diego may have dipped 4 percent in May, but that is likely due to the dwindling number of foreclosures available in San Diego County. And according to MDA Dataquick, the median price of homes in San Diego has increased by $5,000 since April’s report. The median home price here now stands at $295,000, substantially above the recent $280,000 low in January, 2009.
Some speculate that the rise in San Diego County’s median home prices might simply reflect the the diminished number of low-priced foreclosure sales–and inventory. With 27.2 percent fewer listings than a year ago, home buying pressure is increasing. Also spurring this buying activity is the fear of rising mortgage rates and the $8000 tax credit for first time home buyers that is set to expire later this year.
Anecdotally, we are also seeing an uptick in the sale of higher-end properties, which could also contributes to the rosier statistics. For example, we recently listed and sold a $2.25 million La Jolla condo (464 Prospect) in four days–for cash and with a 15-day closing (and have other high end buyers in the wings).
It appears that traffic at all San Diego coastal listings has increased exponentially in the last couple of months–and sales are also picking up.
This doesn’t mean that further price declines won’t be occurring at San Diego’s luxury real estate market, but prices do seem to be leveling out within our balmy coastal band.–Roberta Murphy
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Majority Can Afford a Home in California–at Last!
February 19th, 2009 Categories: Carlsbad Real Estate, Oceanside real estate, San Diego Market Trends, San Diego Real Estate
First time home buyers throughout the California might be rejoicing with this positive real estate news just released by the California Association of Realtors:
The percentage of households who can afford to purchase entry-level housing has rocketed to 59 percent in the fourth quarter of 2008, compared to a more paltry 33 percent just a year earlier.
What does this mean? On a broad level, it means that the minimum household income needed to purchase a California entry-level home of $248,030 in the last quarter of 2008 was $48,900. Thanks to lower home prices and interest rates, first time home buyers are faring better than a year earlier, when minimum income requirement was $83,700.
How does this translate for first time home buyers in the San Diego area, where we once had some of the highest-priced housing in the state?
San Diego’s Housing Affordable Index stands at 56 percent, just a slight dip under California’s overall Index. That translates to a minimum qualifying income of $55,800–and compares to an affordability index of 31 percent in the 4th quarter of 2007. Predictably, San Diego’s affordable real estate inventory continued to grow from the third to the fourth quarter of 2008–when the third quarter had an index a full five points lower than the next and stood at 51 percent.
Anecdotally, we are seeing a very congested market at the lower price points in San Diego’s North County. Investors are competing with anxious home buyers to snag these real estate bargains as soon as they hit the market–and for good reason. Rents and mortgage payments are as close to par as they have been since the last century. With tax benefits and potential tax credits, renters might become home owners for not much difference in monthly outlay.
Investors, on the other hand, can have tenants covering most of the mortgage and can hold their real estate investment until market conditions improve.
And that leaves real estate agents juggling multiple offers on just about all San Diego single family homes priced under $250,000. And from what I hear from Sacramento Realtor Gena Riede, market conditions there are also becoming more active as San Francisco and Bay area investors flock to the Sacraamento area to place multiple offers on multiple bargains.
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Could Today's Federal Reserve Meeting Improve San Diego Home Affordability?
January 28th, 2009 Categories: San Diego Market Trends, San Diego News, San Diego Real Estate
The Federal Open Market Committee adjourns from its 2-day meeting today–and San Diego home owners and buyers should pay attention.
The monetary policy-setting group is expected leave the Fed Funds Rate within its current target range of 0.00-0.250 percent.
This is the lowest range for the Fed Funds Rate in history and, frankly, there’s very little room left to go lower.
Therefore, markets aren’t really concerned about what happens to the benchmark lending rate today. Markets will instead focus on the Fed’s proposals to revive (if not save) the U.S. economy.
In its post-FOMC press release last month, the Federal Reserve pledged to “employ all available tools” to get the economy rolling in the right direction. Some of those tools were already in play, including making direct loans to large companies and buying bad debts from commercial bank balance sheets.
But since that meeting, the Fed has put its money where its press release is. Earlier this year, the Fed started a program to buy $500 billion in mortgage-backed debt and those ongoing purchases are part of what’s keeping mortgage rates relatively low. The Fed has since made it easier for member banks to borrow money, too.
Each of these steps is meant to pour much-needed fuel into the U.S. economic engine. The Fed is also pledging to keep trying new approaches–at least until something works. And this is what mortgage markets–and San Diego mortgage brokers– will be concerned with today.
If the Fed’s next stimulus plan is judged ineffective or too costly, mortgage markets will likely sell off, causing San DIego mortgage rates to rise and making housing payments even more expensive. The jump could be somewhat sudden because Fed announcements are often met with emotional, knee-jerk reactions.
By contrast, if the Fed’s next steps are seen as being on target, we can expect mortgage rates to fall only slightly. To some extent, this outcome is already priced into rates as of this morning.
The FOMC’s official press release hits at 2:15 PM ET.
(Image courtesy: The New York Times)
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San Diego Real Estate Escapes "Weakest Markets"
January 8th, 2009 Categories: San Diego Market Trends, San Diego News, San Diego Real Estate
It should come as a big relief to San Diego home owners and current buyers of San Diego real estate that San Diego and its surrounding communities escaped Moody’s recent compilation of the 25 Weakest Real Estate Markets in the United States
Las Vegas has the most dismal forecast, with a 42.6 percent drop in values expected between the second quarter of 2008 and late 2009, when the Las Vegas real estate market is expected to bottom. Miami runs a close second, with a 42.4 percent drop expected into late 2010, followed by Palm Bay, FL with an expected 41.4 percent drop, with same expected recovery time as Miami.
Florida accounts for 10 slots in the Weakest Markets lists, while California only grabs five, with all expected to be in recovery mode at the end of 2009. Among those cities–with expected percentage drops in parentheses– are Santa Ana (-29.1), Stockton (-27.7), Los Angeles (-27.2), Fresno (-26.7), and Riverside (-26.4).
Florida’s losing cities, in addition to Miami and Palm Bay, are Fort Lauderdale (-36.6), Jacksonville (-33.6), Bradenton (-33.6), Cape Coral (-25.6), Deltona (-27.9), Tampa (-30.4), West Palm Beach (-31.8) and Orlando (-32.3). All these Florida cities are expected to recover between the end of this year and late 2010.
A decline in demand for second homes in the mountains may account for the declines in Provo, Utah (-33.9), Salt Lake City (-29.3) and Boise Citiy, Idaho (-32.2), where recovery in not expected until 2011.
Others on the list are Honolulu (-30.9 until early 2011), as well as Camden, NJ (-25.7) and Newark, NJ (-25.6), which are expected to begin recovery at the end of 2009.
Also on the list are Tucson (-32.9) and metro Phoenix (-31.1), who also have an expected recovery in late 2009.
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San Diego Real Estate News Upbeat: Sorta
December 11th, 2008 Categories: Market Trends, San Diego Market Trends, San Diego News, San Diego Real Estate
San Diego real estate news isn’t all that bad.
Sales of single family resale homes rose for the fifth month in a row, gaining around 40 percent in November, 2008 compared to the same month last year. And compared to 2007, San Diego area home sales for 2008 are up 8.2 percent.
But metro San Diego median home prices tell another story.
While sales may be rising, prices are dropping and that’s due to the plethora of short sales, foreclosures and desperation deals. Overall, median home prices in San Diego were off 6.8 percent in October–and off a full 35.6 percent year-over-year . Average prices are equally interesting: Off 13.4 percent month-over-month, and off 40.7 percent compared to November, 2007– according to Rick Campbell and rereport.com
A fair and reasonable conclusion?
Sales are rising because real estate prices are dropping. This in turn attracts first time home buyers, investors and those buyers who have been waiting in the wings for opportunities like these.
Please understand these are global numbers for all of San Diego and not taken into account are the myriad micro markets–where local statistics may vary greatly from those presented here.
If you are interested in detailed statistics for a particular zip code in San Diego County, just email roberta (at) SanDiegoPreviews.com or call 760-402-9101 and we’ll send them to you.
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4 Ways to Stabilize the Real Estate Market
November 13th, 2008 Categories: San Diego Market Trends, San Diego News, San Diego Real Estate
by Roberta Murphy
The San Diego real estate market may not be as bad as Detroit’s–or those in Las Vegas, Sacramento or Miami–but the real estate market here could use a some resuscitation.
I am usually inclined to agree with those who believe markets are self-correcting and should be left to their own cleansing processes, but the economic heart attack gripping the world today calls for drastic treatment.
Recognizing that billion$ flowing into insurance companies and banks will do little to directly stabilize our real estate markets, the National Association of Realtors (NAR) suggests the following four steps to aid in recovery:
The Four Point Plan
The most recent economic stimulus bill, the Emergency Economic Stabilization Act, was a good first step towards stabilizing our nation’s economy. Unfortunately, a number of the Act’s provisions have not proven to be as useful at stabilizing the nation’s housing markets as was first thought.
Congress may consider second economic stimulus bill this month. If they do, there are a number of changes that could help to provide more stability to the nation’s real estate markets which most agree is a necessary step towards recovery.
The National Association of Realtors (NAR) is urging Congress to include the following provisions in any future legislation:
- Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement. The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers. As a result, the credit has not been widely used or proven effective at stimulating sales.
- Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.
- Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don’t just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.
- Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage on the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.
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San Diego Real Estate Independents
November 1st, 2008 Categories: San Diego, San Diego Market Trends, San Diego News, San Diego Real Estate
The plural of anecdote is not data , (J.K. Galbreath), but sometimes anecdotal evidence evolves into verifiable data–especially when the landscape is littered with dead canaries.
In this case, I am referring to casualties in real estate brokerage–particularly in the San Diego real estate market. For the last couple of decades, we heard the warnings and saw lots of anecdotal evidence that small brokerages and Mom and Pop realty shops were being absorbed by big blue franchises such as Prudential, Coldwell Banker, ReMax and the like.
Few thinking of starting a real estate brokerage business in those days would consider doing so without an umbilical cord tied to one of the big franchises. In exchange for around 6 percent of an office’s commission flow (and substantial buy-in fees), the franchise provided national advertising, referrals–and strict guidelines for local operations. Everything from signs to stationery to office location were subject to franchise approval.
For 25 years, real estate franchises dominated the landscape and data suggested that it would be nigh to impossible to exist without the franchise umbilical cord–and that independent real estate companies would go the way of the blacksmith, the eight track player and full service gas stations.
But then the real estate market crashed–and crashed hard. Consolidation became the guiding buzzword (anecdotally and in the San Diego real estate market that I observe) as offices closed merged and downsized. In Coronado, I hear, there were once four offices representing a certain franchise. There is now one.
In fact, because of so many office closures, one might think that it would be difficult to find a real estate office in San Diego, but that is not the case–because a surprising phenomena has been occurring during the last couple of years:
The proliferation of the independent real estate brokerage.
When San Diego’s real estate market shattered, homes may have remained intact, but in defiance of conventional wisdom, small independent brokerages proliferated. Most broke away from large San Diego franchises like Prudential California Realty, Coldwell Banker Residential Brokerage, various Century 21 offices, ReMax and the like.
I’m not sure hard numbers exist, but the anecdotal evidence does. New real estate companies with fun names are dotting the once orderly landscape. Kris and Steve Berg broke away from Prudential California Realty and San Diego Castles Realty and formed –and we are currently in escrow with Pineapple Hut Realty. Then, of course, when Sotheby’s International Realty closed its doors in San Diego, we decided to transform Sotheby’s Murphy Group into San Diego Previews Real Estate.
And I swear there are hundreds dozens of other real estate brokers who have done the same thing.
And rather than sending 6 percent of our earnings up a one-way umbilical cord, we can now spend that money locally and better serve our clients with the money saved. Additionally, the internet has drastically changed the way people shop for homes. Savvy home sellers are demanding a strong online presence for their homes–and also know that Google may tell them more about their prospective Realtor® than any glossy flip chart or resume.
Five years ago, none of us expected that we would be selling homes five years out for less than what they sold for then. Nor did we expect our franchise brokerages to be closing doors and offices.
But someone wiser than I once commented about change and how to avoid ulcers by adapting to what life throws your way:
If you fall in the mud puddle, check your pockets for fish.
….and of course, to be grateful for the unexpected gifts that come our way.
You may also be interested in reading:
When the Tails Wags the Dog
Tips for San DIego Home Buyers
Weasels in the Chicken Coop: Loan Fraud in San Diego
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Let's Resurrect Assumable Loans
September 29th, 2008 Categories: San Diego Foreclosures, San Diego Market Trends, San Diego Real Estate
The health of the San Diego real estate market hinges not only on home buyer demand, but also the ability of buyers to secure financing. At the same time, lenders are overwhelmed with short sales and foreclosures that hurt not only their balance sheets, but tear down neighborhood values as well.
It’s become an ugly cycle that needs serious correction–and I can’t help but wonder about reviving assumable loans in our real estate markets.
Years ago, as a Texas Realtor, a good percentage of our transactions involved the buyer’s assumption of the seller’s existing loan. Some of those loans were fully assumable, while others required lender approval.
How did this work?
Let’s use a simple example: Seller Jones has an outstanding mortgage balance of $150,000 and is willing to accept a $195,000 sales price. Buyer Smith pays $45,000 plus closing fees and assumes the existing financing. Seller leaves with that amount, less closing costs. Future mortgage payments are now made by Buyer Smith.
In some cases, lenders (and sometimes the Seller) would offer secondary financing to help with the difference between asking and sales price–as long as the buyers had a cash stake in the deal. And sometimes, to help facilitate a transaction, real estate agents took part or all of their commissions as a note.
I can’t help but wonder why mortgage lenders don’t revive the assumable loan, help kick start the real estate market, and save at least a portion of their own and investors’ portfolios in the process?
In many cases, sellers have no equity. Why not allow them to offer their mortgage debt (or renegotiated debt) as assumable financing for potential buyers? Lenders might be relieved to have mortgage payments brought current–and might even require the new buyer to deposit two or three month’s payments with them as insurance against future default.
By allowing assumable financing, lenders would fare much better vis-à-vis short sales and foreclosures–and more homeowners would be able to save their credit and exit their situations with dignity. Most lenders now force homeowners to be in default with their mortgage before they will even consider a short sale or modification of terms.
It just makes sense to get the mortgage debt seamlessly transferred before it ever goes default.
And with strangled liquidity in financial markets, it makes more sense than ever to transfer debt rather than forcing buyers to secure new financing–which may or may not be available.
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Bobcats Take Possession of Southern California Home
September 7th, 2008 Categories: San Diego Foreclosures, San Diego Market Trends, San Diego Real Estate
San Diego real estate hasn’t quite gone to the dogs–yet (though some inland neighborhoods may be coming close).
But Riverside County’s real estate market is another animal entirely.
It seems a family of bobcats has moved into a vacant and foreclosed Lake Elsinore home, according to blogger Peter Viles with L.A. Land Blog (Los Angeles Times). Viles quotes LA Times David Kelly:
(Lake Elsinore) Neighbors first noticed the feline squatters Aug. 27 hanging out on a side wall of the empty house in the Tuscany Hills development…. The foreclosed home is one of several on the block. Its lawn is brown but still being watered by the sprinklers. The house sits right up against barren, chaparral-covered hills.
At least two adult bobcats and perhaps a litter of young ones appear to be occupying the house. Residents have mixed emotions about their new neighbors.
Human locals don’t appear very upset over their new neighbors, and some even appear to delight in their presence. Some of the funny comments from readers, though, are a hoot:
They could have easily qualified for a loan last year….now they just squat.
There are still some fat cats benefiting from the real estate market.
They could have easily qualified for a loan last year. Now they just squat.
This will be one REO with a bonus for the lender.
Cats on a bank-owned roof: Bobcats claim foreclosed house | L.A. Land | Los Angeles Times
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A Most Unorthodox Market: Bob Dyson
September 1st, 2008 Categories: Del Mar Real Estate, San Diego Foreclosures, San Diego Market Trends, San Diego News, San Diego Real Estate
by Roberta Murphy
Last Thursday, I had the opportunity to sit across from Bob Dyson at his office in Del Mar and listen to this real estate legend discuss today’s real estate market. We were also fortunate to have Chris Dyson videotaping much of the discussion, which we have divided into four segments.
At the start of our interview, Bob Dyson said these are the worst conditions he has seen during his 40 years in the real estate business–citing symptoms such as lack of buyer confidence and the drastic deflation in certain real estate markets–including San Diego, of course, along with the rest of California, Nevada, Arizona and Florida.
The causes stem from irresponsible mortgage lending practices from 2003 to 2007 and the resultant and reactionary tightening of mortgage funds. Dyson simply calls it a “lending debacle.”
At the same time,he says, there is a large and growing backlog of buyers who want to buy–and are just waiting for reassurance that the real estate market has really bottomed, or is at least close to that point.
See below (and stay tuned for a radical solution):
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