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 San Diego is poised for double digit increases in housing prices again. It may not happen in 2011 but will certainly happen before 2014 and look for more than a 50% increases in housing costs over the next 3 to 4 years.
Why so much optimism? Many reasons, no building is going on in San Diego, yet the population keeps increasing. People are still moving to this fine city in droves and the military plans only expansion in the area  which already is one of the largest military communities in the world.
Many of the wealthier Mexicans are moving in to San Diego County to get away from the drugs and violence taking over their communities.
Oh and San Diego is a huge college town and will continue to be. College towns always fare well during recessions. Biotech a major source of stability and is expanding and the small amount of manufacturing is stable and will remain. It is mostly defense oriented. San Diego has a huge convention and visitor business that will continue to grow.
But…..there are no residential units being built and none in the foreseeable future. With Pendleton to the north, the Ocean west, Desert east and Mexico to the south, San Diego County will need to build up much more than out.
Currently, it cost more to build the units in San Diego County than they can be sold for. So the builders have all left and we’re not sure when they will return.
It is true that as the prices increase, many of those who wanted to sell over the last few years will put their units on the market, but that won’t support the huge demand. As people pay the higher prices, the inventory will be gobbled up and there will be further upward pressure on price.
Right now in San Diego County there is a 3 month supply of inventory to meet current demand. Six months inventory is a balanced market so we are already starving for units to sell.
The moral of the story is, buy anything now! The interest rates are at the lowest in our lifetimes. The prices are still at amazingly low levels.
Call me and even with this low inventory, we’ll find something that will work for you.
Mortgage rates hit a record low last week on increasing worries of a second recession. The average conforming 30-year fixed mortgage rate dropped to 4.75%.
The last time mortgage rates were above 6% was in November 2008. At that time, the average rate was 6.33%, which meant a $200,000 loan would have carried a monthly payment of $1,241.86.
At today’s rates that payment would be $1,043.29, or a savings of $198 a month. Mortgage rates are closely related to yields on long-term government bonds, which have been in demand on increasing worries about the health of the global economy according to bankrate.com
“But despite the tremendous affordability brought about by record low mortgage rates and a sharp drop in home prices, consumers are reluctant to take the plunge into homeownership,” the group said.
So how many of the people you know will be passing on this once in a lifetime opportunity. These are record low interest rates. Actually they are now at lifetime lows. If you are renting, don’t….go buy something. If you’re in San Diego, call me. ( or anywhere else for that matter, I’ll still be able to help you.
More tomorrow!
Alan
 It was expected, but not this bad. All of the experts were prepared for a drop once the homebuyer tax credit lapsed at the end of April, but no one expected it to be close to a shocking decrease. According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April.
 It’s even off 15.9% from a year ago when the nation was barely emerging from the recession. Stats show it was the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001.
Lawrence Yun, NAR’s chief economist downplayed the damage a bit. According to him, customers rushed into deals to claim the credit, borrowing from May sales. Once the economic recovery comes into full swing, housing markets will heat up. Those conditions include much lower home prices and extremely favorable mortgage interest rates. The question is when — or if — the job market will ever bounce back. “We’re not creating jobs,” said Larson. “The housing problems now are being driven by broad economic problems.
On a different issue, RealtyTrac released a report that foreclosure sales took up 31% of all home sales in the US through the first quarter of 2010. According to the report, there were 88,000 pre-foreclosure sales, often short sales, in the first quarter, for an average discount from retail home prices of 14.7%. By comparison, REO discounts in the US averaged 34%. This really has changed much in the last 2 quarters.  Besides all of the added costs, the amount of recovery is even a more compelling reason for banks to want to allow the short sales instead of pushing to foreclosure.
The data basically just shows that there is still time to buy. Interest rates are still cooperating so go looking at some new homes or some investment property over the 4th of July weekend.
I hope everyone has a happy and most importantly a safe holiday!
More soon!
Alan
 The congress has extended the home buyer tax incentive closing date to September 30th. For everyone that met the initial guidelines and was under contract by June 30th but were unable to get the transaction closed, you now have a few more months to get the deal finalized. Mostly this applies to short sales since anyone under contract with a “normal sale” by april 30th is probably closed! ( yes there are exceptios, but now they can get it done too!)
There will be no gap between June 30 and the date the President signs the bill into law. It appears for now, that since California’s money is just about spent, that there might not be another round. The housing market is now left to make it on its own.
If you need all of the details on the federal tax credit, visit this site. For information on the California credit (technically still available) you can get all of the information here
More tomorrow,
Alan
This is a good thing. Nobody wants to have to go through this, but if the homeowner is not going to be able to make it, this is a great choice.
When you sell your home as a short sale it seems your credit will be damaged approximately 60-200 points, especially if you were delinquent on your mortgage prior to the closing of the sale. While this may not seem very attractive, it is far better than letting the property go into foreclosure which may damage your credit anywhere from 200-300+ points for up to 7 years. Unlike a foreclosure, the short sale will not remain on your report even close to 7 years and if you work on rebuilding your credit after the sale goes through, it could be as if the short sale never even took place.
If you know anybody heading to foreclosure, cut them off at the pass – have them call a Realtor immediately or just have them call me, I can refer them to a short sale expert in their area.
On another subject, many people who don’t qualify are trying to get the $8,000 federal tax credit
Some homebuyers are trying to claim the $8,000 tax credit even though they missed the deadline. To claim the credit, buyers had to sign contracts by April 30 and close the sales by June 30. But…. real estate agents say some buyers were demanding quick closing dates to meet the June 30 deadline, even though they failed to meet the April 30 deadline. And because the IRS doesn’t require paperwork specifically proving the contract date, they might get away with it. Claiming the credit does require more than sending in your taxes and asking for the money. Buyers have to fill out a special form and attach a copy of their settlement statement, which they receive at closing.
The settlement statement does not require the contract date — just the “date of purchase,” which is the closing date. I’m sure the IRS will have more to say on this soon.
If the credit applies to you, you can get most of your questions answered here.
Until Tomorrow
Alan
Don’t forget that next year the capital gains tax goes from 15% TO 20%. So sell it this year or think about doing an exchange in the future.
Don’t get too excited about the extension of the “closing” date on the Federal Tax incentive of $ 8,000, you still needed to be in escrow by April 30th. California still has the $10,000 tax credit for purchases before 12/31, however, there isn’t much money left. Act quickly! See all the details at the State’s website .
If you are looking at “National Numbers” to try and figure out what is going on in California, you need to look again. Check out California real estate statistics at the California Association of Realtors website. San Diego is leading the rest of the large markets by 3 to 6 months, but , we still can’t figure out exactly what San Diego is doing. Many of the forecasters think it is doing well though. Prices are still very low, but finding inventory is not that easy as many homeowners do not want to sell at current prices. Interest rates are still rediculously low.
 - SOCAL appears to be past the “bottom”
It looks like there already was a bottom and a small second bottom. Let’s see where it goes from here. See more CA stats at the Dataquick site
More tomorrow!
Alan
Many who are just walking away await a surprise down the road as lenders turn around and sue for the deficiency. This can happen in foreclosure or short sale. It is imperative that if you are having problems paying your mortgage that you communicate with the bank ( or have your realtor or attorney) communicate with the bank to work out a resolution.
There are 3 options all FAR better than foreclosure. A loan modification if you want to stay in the house, a short sale which will have a much lesser effect on your future than foreclosure or lastly a deed in lieu. In any of these solutions you must make sure to get in writing that the entire loan is settled and that the deficiency is wiped out through the process.
Keep in mind if there is a deficiency, the mortgage company may ( and probably will ) sell the deficiency to some vulture company for pennies on the dollar , who will harass you and threaten lawsuits, garnishments and the whole lot.
But following the days of the housing boom that created plenty of millionaire investors seemingly overnight, it’s not uncommon for borrowers to default on mortgages while still holding lucrative investments.
As the next wave of the housing crisis plays out, those most in danger of getting slapped with lawsuits include angry homeowners who ransack properties they’re losing in foreclosure and borrowers who walk away from “underwater” mortgages. In both cases, analysts say, banks will want to discourage other people from such behavior. These are prime targets and although banks deny it, the revenge factor may be huge.
Also remember, that a forgiven mortgage balance through 2012 is not considered taxable income on a primary residence as long as the debt was used to buy or improve the house. But borrowers who walk away from investment properties risk having to pay federal income taxes on the forgiven amount.
If you are having trouble and need any information at all about how to proceed , please contact me and I will gladly assist you or get you to somebody who can help! call me at 619.985.6528 or just go to our website.
Have an incredible day!
Alan
Even though the San Diego market is up from the bottom by 10% already, it is still not too late to take advantage of the low prices in housing.
San Diego was the only market in the country to rise last month!
If you were waiting to buy at the bottom, that ship has sailed. The state of CA is still offering the $10,000 tax credit until December and interest rates are still low, however, and most importantly the recovery of 10% from the bottom off of a 42% decrease from the peak means properties are still very affordable and deals are still available.
Here are the 2 articles for your pleasure!
http://www.voiceofsandiego.org/survival/article_95b62230-5215-11df-8b82-001cc4c03286.html
http://www.voiceofsandiego.org/housing/article_49d926d6-527a-11df-9165-001cc4c03286.html
Have an awesome day and if you’re ready to buy in SD – call me!!! Thanks
Homebuyers in California have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010 and close escrow by June 30, 2010.
Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes , and they purchase properties that have never been previously occupied as provided under California law.
Of course their are rules and requirements so we suggest you see your tax accountant to make sure you do everything “by the book”. In the mean time, call me and… Let’s go find a house
No, not if you don’t have to, but foreclosure is for the uninformed, or those who just don’t care. The short sale option is the only way to go if you can’t get a modification that you can afford. Sell the place and find yourself a nice rental for a short time and then take advantage of the market prices and interest rates and buy a place you CAN afford.
Here is an interesting article from CNN. http://money.cnn.com/2010/03/29/real_estate/short_sale_explosion/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29
Please call me if you have any questions at all!
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Contact Alan Alan Schmitt, MBA, Broker
ABR, CRS, GRI, e-Pro, SRES
Ascent Real Estate, Inc......
619-985-6528 Cell
Alan@AtHomeInSD.com
AtHomeInSD.com
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which already is one of the largest military communities in the world.
source of stability and is expanding and the small amount of manufacturing is stable and will remain. It is mostly defense oriented. San Diego has a huge convention and visitor business that will continue to grow.
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