This is an email excerpt from a message to one of my clients today. The client appreciated the information, so I thought it would be good to share.
Are home prices still dropping in San Diego?
Yes. There was a slight increase in prices in certain pockets of San Diego in February, but it is not the beginning of a trend. The increase in prices was due to a temporary shortage of housing inventory. With all of the loan modification efforts underway, the lenders froze their foreclosure activity in November and December. That freeze created a shortage which drove some prices up, but it won't last.
The notices of default (NODs) filed in January in San Diego County were up 25% (3353 of them). It takes a few months to get from NOD to foreclosure sale, but that's an indication of more foreclosures on the way.
The median price in February 2008 was $430,000 and the median price in February 2009 was $325,000. Nobody knows the bottom of the market until it starts to climb again. As a buyer, the advantages of very low mortgage rates and the first-time buyer tax credit are significant right now. The most important question I ask buyers today is how long they intend to keep the property. If it's less than three years, this might not be the best time for that person to buy real estate. There are other factors, but planning to keep a property long-term is an important one because prices could continue to drop. If the buyer plans to live in the property or rent the property indefinitely, this is probably the best time to buy real estate in our lifetimes.
What type and size of home is available in the $225K to $350K price range?
This will largely depend on the neighborhood. Sarah has seen some of the single family homes in this price range in neighborhoods she likes, and I would be happy to email you the same information.
What options are available in the distressed sale arena, where we would be buying from a lender?
There are 10,984 foreclosure homes in San Diego right now. The average price of those homes is $266,000. Many of those need serious work, which can impact the lending options. We can deal with those on a case-by-case basis, and there are plenty of distressed property opportunities. Most lenders use real estate agents and third-party asset management companies to market their properties, and I have resources to find the others.
What do you think about us buying a duplex and renting one half of it?
I'm a big fan of two, three, and four-unit buildings. Anything above four units does not qualify for residential lending, and there are other complications. Getting someone else to pay part of your mortgage is great for long-term wealth building. I like to tell my clients to treat their real estate purchases like the game Monopoly. Just keep telling yourself, "four green houses, one red hotel, repeat."
Mangled Mortgage is the single best resource for agents working in battered real estate markets. Check it out today!
Comments(3)