October 14, 2006

San Diego’s real estate market is experiencing mortgage foreclosure rates not seen for the past eight years, two monitoring companies reported yesterday.

Locally based DataQuick Information Systems said foreclosures in San Diego real estate totaled 171 last month, more than 10 times what they were a year ago and the highest since 1998. Similarly, the number of default notices – the first step lenders take toward foreclosure – was 872, nearly triple the 334 filed in September 2005.

Meanwhile, RealtyTrac, based in Irvine, reported San Diego real estate default notices totaled 1,236, up from 287 a year ago, and notices of trust-deed sales – the final notice before foreclosure – were at 247, up from 56 over the same period.

Although the rising trend reported by the two companies is the same, the raw numbers reported by each differ because they track foreclosure rates differently, executives at each firm said.

But median home prices for San Diego real estate has been raising at a slower rate in the past two years and last month they actually declined on a year-over-year basis for single-family resale homes, DataQuick reported earlier this week.

Foreclosures posted last month typically followed up with notices of default, filed by lenders last December after three months of nonpayment. The percentage of those December defaults going to foreclosures last month was 35.6 percent, more than seven times the 5 percent rate a year ago.

The latest default and foreclosure figures in San Diego real estate still represent a fraction of the number recorded a decade ago during San Diego's last economic downturn. The highest number of foreclosures during that period, 420, occurred in January 1997, just as housing prices were starting to rise. The highest number of default notices, 1,794, was filed in January 1996.

RealtyTrac said California posted the biggest increase in foreclosure activity of any state last month and nearly three times the number reported a year ago. The total – including all levels of foreclosure short of the actual sale – was 14,806, 13.2 percent of the total nationwide of 112,210.

RealtyTrac also said few defaults end up in foreclosure, with homes ending up in the hands of lenders. The recent increases reflect the first wave of defaults and foreclosures stemming from the rise in adjustable-rate mortgages whose interest rates are rising too fast for some borrowers to afford.

In San Diego last month, for example, only 62 properties were classified as REO or real estate owned by banks. Still, that was six times the 10 REOs counted in September 2005, according to RealtyTrac. At the peak of the buying boom, as many as 35 percent of borrowers nationally, were signing up for ARMs. In San Diego real estate the figure sometimes exceeded 70 percent, DataQuick has reported.

October 16, 2006

For the second straight month, local single-family home values failed to appreciate in September when compared with a year earlier, and home sales plummeted 34 percent from the same month in 2005, according to a new report compiled for the North San Diego County Association of Realtors.

The total amount of dollars changing hands in the single-family San Diego real estate market fell almost as much, by 32 percent, from $721.8 million in September 2005 to $494.4 million last month, the report showed. The median price of a single-family home in September was $620,000.

The San Diego condominium market didn't fare much better. Both the number of sales and the dollar volume plunged 36 percent year over year, the North County Realtors group reported. The median-priced condominium was $395,000 in September.

But North County condo values did manage to hold their value much better than the rest of San Diego County, appreciating 3 percent year over year while elsewhere the median price sank by more than 10 percent.

Chuck Smiar, president of the North San Diego Association of Realtors, said the market is going through a watch and wait period where both buyers and sellers are watching and waiting to see which direction prices are going to go.

Gus Faucher, director of macroeconomics at Moody's Economy.com in West Chester, Pa., said San Diego’s cooling real estate market is something that national analysts have been expecting. Faucher said his company has predicted county home values to decline by 8.5 percent by the second quarter of 2008. San Diego real estate has never been particularly affordable, but it has gotten much worse, he said. There has been such a huge run-up in prices that the market can't support it, and that's going to put downward pressure on prices.

Faucher said that between 1985 and 2000, a family making the median income in San Diego County could afford a home with a price tag equal to 80 percent of the median home value. Now, he said, the median-income family can afford a home priced at only 47 percent of the median. That means that your average family just can't buy a house there, he said. And that's a problem.

So, is the bubble bursting? No. Is there a little air coming out of it? Yes.

October 13, 2006

October 4, 2006

With San Diego home sales slowing and inventories of unsold homes rising, a new report predicts that housing prices will fall in about a third of the metropolitan areas in the United States, including San Diego.


But the forecast by Moody's Economy.com, a private research firm, doesn't predict a crash in housing prices in a vast majority of the nation's cities, including San Diego’s real estate.

The report, released yesterday, projects prices for new and resale single-family homes to drop 8.5 percent in San Diego from the market peak at the end of 2005 to the first half of 2008, when the real estate market is predicted to hit bottom.

Prices have already declined locally in the first and second quarters of this year, said Brian Carey, an economist with Economy.com who worked on the report.


Sellers, particularly new-home developers, have been cutting prices as homes have lingered on the market and buyer demand has slowed.

Condos were excluded from Economy.com's forecast because it lacked good data, Carey said.

In areas like San Diego, however, condos may be more vulnerable than single-family homes to steep price declines because of the unprecedented construction of new units downtown and elsewhere, as well as a glut of condo conversions either for sale today or planned in the near future.

“We realize the condo market could be hit harder,” Carey said.

The median home value for San Diego homes, adjusted for inflation, rose to $567,000 from $249,000 between 2000 and 2005, according to the U.S. Census Bureau. It was the largest increase among the country's biggest cities.

Nationwide, Economy.com projects that the median sales price for an existing home will decline in 2007 by 3.6 percent, which would be the first decline for an entire year in home prices since the Great Depression of the 1930s.

The report projected that 133 of the nation's 379 metropolitan areas would suffer price declines.

That is quite a contrast from the past five years when low mortgage rates pushed sales to five consecutive annual records, and prices in the hottest sales areas skyrocketed.

The forecast is included in a 195-page report, “Housing at the Tipping Point.”

Some analysts are worried that the slowdown could become so severe that it could drag the entire country into a recession, much like the bursting of the stock market bubble in 2000 led to the 2001 slump.

October 6, 2006

9/25/2006

With the San Diego real estate market slowing due to decreased demand and increased supply of listings, the once-robust sellers’ market is transitioning to a buyers’ market, say experts. It was just a few months ago that record home sales had frenzied buyers bidding over the asking price all over San Diego. Now buyers are negotiating the price and weeding through the large number of incentives from sellers that vie to close the sale.

The National Association of Realtors forecasts a nationwide drop in home sales of 8 percent in 2006, followed by a 2 percent decline in 2007. In addition, the NAR reported that 2006 might be the first year since 1968 that home prices fall below the inflation rate for the year.

A Return To Normal

The NAR projects this year to boast the third highest sales on record nationwide. San Diego real estate is coming off of five consecutive years of record sales. The turn is just from an unprecedented market to a more normal market. A normal market means going back to basics that include paying closer attention to the look of a property, healthy negotiations between buyer and seller and sometimes offering financial incentives to increase the number of buyers who can afford properties.

California has faced chronic housing shortages and housing affordability issues for decades, said the San Diego Association of Realtors. The SDAR estimates that just 30 percent of Californians can afford the median-priced home in the state compared with 55 percent nationwide. The median price of an existing, single-family detached home in the state during July was $567,360, according to the California Association of Realtors.

Let The Seller Beware

In San Diego real estate, the number of households that can afford the median is even lower — only one in 10 households can afford to buy the median-priced, single-family resale home with a 30-year, fixed rate loan. The median price for all homes in San Diego County in August was $482,000, according to figures released Sept. 13 by DataQuick Information Systems.

SDAR President Charles Jolly confirmed that the market is slowing locally. San Diego real estate is a buyers’ market with more listings for buyers to choose from. The industry is adapting to the slowdown. Builders are slowing housing starts and offering incentives on completed models; agents and brokers are working harder and retraining; and asking prices are dropping. Prices are not going to fall into the basement here in San Diego real estate, not with the demand, but he does see sales reverting back to the norm of five years ago. We got a little spoiled here in the past few years with houses selling in two days with multiple bidders, said Jolly, who added that listings on average sell in three to four months now.

September 26, 2006

September 16, 2006

Traditionally, homebuyers could look to two forms of mortgages – fixed rate and adjustable mortgages. While there are now many more options, this article takes a look at the adjustable rate mortgage.

What is an ARM Loan?

An adjustable rate mortgage ARM is a basic mortgage with one important exception. With an ARM, your interest rate will start low but typically move up throughout the link of the loan. The timing of the movements is dictated by the terms of the loan. The rate may be adjusted every month, but more typical periods are every six or twelve months. Most adjustable rate mortgages also have a cap on the amount the interest rate can be raised in a particular period.

A homebuyer has to be very careful when selecting an adjustable rate mortgage. Buying a home necessarily involves budgeting out how much of a monthly mortgage rate you can afford to pay. With an ARM, you have to keep in mind that your monthly payment amount will go up if the interest rate does the same. While you may be able to afford the loan now, what happens if the rate jumps two percent over the next two years?

In the current San Diego real estate market, potential rate increases are a troubling issue. In areas where the real estate market is dramatically appreciating, homebuyers are using ARM loans to get into homes. Put another way, they are using ARM loans to get a mortgage payment they can afford without giving real consideration to rate increases in the future. Mortgage interest rates have been at historic lows for the last few years. What is going to happen to all of these people when rates rise? It could make the savings and loans crisis of the late 80s look like small potatoes.

If you are considering an adjustable rate mortgage, make sure you do the research. Find out how often the rates can increase and by how much. Try to determine whether you can afford payments if the rates go up significantly over the next few years. With Greenspan retiring, now is the time to be very careful when taking on mortgage debt.

September 18, 2006

9/15/2006

San Diego’s once overheated real estate market is cooling down — a perfect time for consumers to take advantage of this new buyer’s market. That’s the word from the Building Industry Association of San Diego and the San Diego Association of Realtors. On Sept. 15, they announced the launch of a print and radio ad campaign, running through 2006, to educate consumers on the power of homeownership and why they should buy now.

I am encouraged that we have a buyer’s market for the first time in five years, said Charles Jolly, SDAR president. Buyers can finally negotiate a better price and get a historically low mortgage rate. Also on Sept. 15, representatives from the SDAR and the BIA are joining Mayor Jerry Sanders, the San Diego Housing Federation, the San Diego Organizing Project and the California BIA at the Promenade at Spectrum in San Diego to discuss local housing needs and possible solutions.

According to data released before the event:

• While 70 percent of families are homeowners nationwide, only 55 percent of San Diegans have achieved the American Dream.
• San Diego real estate is among the least affordable housing market in the nation, and its homeownership rate has declined since 1994.
• According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, San Diego real estate is the sixth least affordable metro area in the United States.

The organizations attending the Sept. 15 event are calling for a collaborative approach at the local level, combined with state reforms, to help reverse this trend. Getting California to the national average and delivering increased homeownership opportunities has the potential to generate billions of dollars each year in state and local property tax revenues, which could fund transportation, education and public safety improvements, said Steve Doyle, past president of the CBIA.

The Sept. 15 event is part of the CBIA’s 2006 Campaign for California Homeownership. This statewide initiative is designed to advocate for public policy reforms that would help 1.6 million families become homeowners — the number needed to bring California up to the national average, according to the CBIA.

September 18, 2006

September 13, 2006

San Diego County's real estate market continued to cool last month, with overall prices down 2.2 percent from August 2005. It was the third straight month of year-over-year price declines, the research firm DataQuick Information Systems reported yesterday. It also was the slowest August in terms of sales volume since 1997.

Skip Wilkinson said that although the three-bedroom Clairemont home near Balboa and Genesee avenues is in good condition, few potential buyers have shown an interest since it went on the market in April. The initial asking price was $599,000. The median price for all homes in August was $482,000 for 3,666 sales, compared with a median price of $493,000 and 5,379 sales in August 2005. August was also the 26th consecutive month in which the total number of homes sold fell on a year-over-year basis. The year-over-year decline in total sales last month was 31.8 percent, the biggest for any month in 11 years.

The county's median price for all types of housing peaked in November 2005 at $518,000. Although the San Diego real estate market has been edging downward, DataQuick analyst Andrew LePage said the region's home prices don't appear to be headed for a steep drop in the near future. You are not in free fall, he said.

G.U. Krueger, an Irvine-based economist who specializes in housing issues, said buyers seem unwilling to pay asking prices, while sellers are reluctant to lower their expectations. We are in this tug of war between sellers and buyers, which is keeping home prices relatively stable, even though they are declining, he said.

Skip Wilkinson, a 53-year-old firefighter who lives in Temecula, knows all about the stalemate. He says the decision not to sell his retired father's home in Clairemont a year ago, when the San Diego real estate market was soaring, is costing him dearly. At the time, his father, now 80 and living in Florida, wasn't ready to move. If I was to sell this a year ago it probably would have sold in a few days, he said. The rising interest rates have slowed the San Diego real estate market way down. I reduced it to $550,000 about two months ago. Still, there is no one looking at it. I have had maybe seven people in six months. I expected it to keep going up, he said of the housing market. It didn't. On Monday, Wilkinson slashed the price to $499,000.

For homeowners who saw their property values double between 2000 and 2005, a key issue is how much equity they will be able to keep in the months ahead. Ryan Ratcliff, an economist for the UCLA Anderson Forecast, said San Diego County's economy remains strong, making a plunge in home prices unlikely. He expects prices to continue to slowly drop and flatten as the pace of sales slows. Without a recession, the home market should see more of the same, he said.

DataQuick reported that resale condominium sales volumes were down almost 39 percent countywide from August 2005. Economists say downtown San Diego's condominiums are vulnerable to price drops because of the high number of speculators in the market. LePage said the median price of resale condos in the 92101 ZIP code last month was $585,000, a decline of 1.5 percent from August of last year. The median represents the midpoint of all sales, with half above and half below that figure.

Drops in resale condo prices may be attributable, in part, to the conversion of apartments to modestly priced condos. The number of resale condo sales downtown dropped from 83 in August 2005 to 42 last month. New downtown housing, which consists of condos, dropped from a median of $654,000 to $495,000 during the same period. There were only 31 units sold in August of this year compared with 160 a year earlier.

Along with falling prices, sellers must cope with longer times on the market. The San Diego Association of Realtors reported an average time on the market for attached homes in August of 74 days, a 42 percent increase over last year and a 10.4 percent rise over the previous month. For detached homes, the average time on the market was 66 days, a 38 percent increase over August 2005 and a 5 percent increase over last month. The association reported a home inventory of 22,785 active listings for residential properties last week, compared with 14,273 listings a year earlier. Charles Jolly, president of the local Realtors' group, described the changing market as a return to normalcy after five years of a superheated market.

Kathy Butler, a longtime real estate agent, recently began marketing Skip Wilkinson's home. She says many sellers are having a hard time accepting declining prices. Like Wilkinson, they are chasing the market down. By the time they realize their price is too high, the market has fallen further. David Berson, chief economist for mortgage giant Fannie Mae, said he is having the same problem. He has had to adjust his national projections downward.

The actual numbers keep coming in weaker than we expected, Berson said. The leading indicators of housing activity continue to point downward. Purchase applications from the weekly Mortgage Bankers Association survey continue to edge down. The National Association of Home Builders' confidence index is at the lowest level since early 1991, when we were going into a recession. That doesn't mean prices in San Diego County will continue to slide, he said. The job market remains strong and mortgage rates are still well below historical averages, he added.

Less optimistic, Butler said real estate agents and sellers should brace themselves for the possibility of a long downward trend. California's home market tends to run in cycles, she said. The cycles last for years, not for months. Butler said. We need to realistically figure this will go on for a while. Gary Kent, an agent who works with Butler, said he tells home buyers that the days of buying and selling properties quickly for fast profits are over for the near future. I am advising my clients not to buy now if you are planning to resell in a year or two, because you probably won't make any money.


September 18, 2006

September 12, 2006

SAN DIEGO – No longer sizzling, the San Diego real estate market continued to cool down last month, as overall residential prices declined 2.2percent from August 2005.

It was the third straight month of year-over-year price declines, the DataQuick Information Systems research firm reported Tuesday. It also was the slowest August in terms of sales since 1997.
The median price for all homes in August was $482,000 for 3,666 sales. That compared to a median price of $493,000 and 5,379 sales in August 2005. August sales totals rose 8.8 percent from July of this year, compared with a 12.9 percent gain from July to August in 2005.
San Diego’s real estate median price for all types of housing peaked in November 2005 at $518,000.
Despite the slowing pace of the San Diego real estate market, DataQuick analyst Andrew LePage said the region doesn't appear to be headed for a steep drop in home prices in the near future.
You are not in free fall, he said. There was a big decline in sales between June and July that begged the question. The answer for now is no.
San Diego’s real estate sales picked up a bit in August, but it was the slowest August in almost a decade.
The year-over-year decline in total sales was the largest for any month in 11 years, since April 1995, when total sales fell 32.5 percent from the prior year, LePage said. Ryan Ratcliff, economist for the UCLA Anderson Forecast, said San Diego County's economy remains strong, making a plunge in home prices unlikely.
We have had three months of year-over year price declines, but I don't think that is the bottom falling out of the San Diego real estate market, Ratcliff said. The resale market only sees significant drops in recession periods.
He expects prices to continue to slowly drop and flatten as the pace of sales slows. Without a recession, he said, the San Diego real estate market should see more of the same.

September 14, 2006

August 10,2006









NORTH COUNTY -- It may have been a torrid month as far as the weather was concerned, but July was ice-cold in the North County housing market.









Continuing a slowdown that has persisted throughout the year, sales of single-family houses last month plunged 31 percent from July 2005 and sales of condominiums fell 28 percent during the same time period, according to a report released Wednesday by the North San Diego County Association of Realtors.




Last month, the local housing market posted its second-worst performance of 2006, one eclipsed only by June's 37 percent year-over-year plunge in single-family home sales.









Real estate analysts said the drop isn't cause for alarm. They said the market is just settling down after its quick 2005 pace, and fewer people are buying because the investors are gone.









However, a San Diego economist who tracks trends in real estate and publishes a newsletter advising investors on when and when not to buy, said the decline is a clear indication that the housing market is entering a downturn.









"Prices have reached a point where they simply can't go any higher," said Robert Campbell, who publishes the online Campbell Real Estate Timing Letter. "We are on the down side of the cycle. This movie has replayed for the last 40 years. This shouldn't surprise anybody."









Market activity also fell sharply in July by another measure, the total dollar value of sales.









Brown said total money changing hands for single-family homes was $634,821,476, down almost 25 percent from the $839,877,471 that changed hands in July 2005.









In the condo market, a total of $103,455,116 changed hands, he said. The number represented a dip of 33 percent from the July 2005 total of $155,770,529.









When it came to the key market indicator of inventory, the number of single-family homes on the market swelled to 6,482 last month, the association report showed. Coupled with the 727 homes that sold, that meant North County had a nine-month supply of houses in July, up sharply from the six-month supply it had in March.









There is an even bigger glut of condos.









With 2,645 condos listed in North County in July and only 257 of them selling, the area had a 10-month supply of town houses and other owned shared-wall housing.









The median condo price fell 10 percent year over year to $359,000 in July, the report stated.









Meanwhile, single-family values continued to hold up ---- barely. Year over year, the median price edged up less than 2 percent, to $635,000 in July. That represented a decline from the all-time high of $650,000 a month earlier.






August 10, 2006

August 01,2006



Second-quarter foreclosure activity in the state rose at its fastest pace in at least 14 years, including a 98.9 percent jump in San Diego County, a real estate information service reported today.



Despite the surge in default notices over the same quarter last year, actual foreclosures remained below normal levels, according to La Jolla-based DataQuick Information Systems.



"This is an important trend to watch but doesn't strike us as ominous," said Marshall Prentice, president of DataQuick. "The increase was a statistical certainty because the number of defaults had fallen to such extreme lows. We would have to see defaults roughly double from today's level before they would begin to impact home values much."





According to DataQuick, lenders sent 20,752 default notices to California homeowners from April to June. That's a 10.5 percent increase over the previous quarter and a 67.2 percent jump over the same period last year. The year-over-year increase was the largest for any quarter since DataQuick began tracking defaults in 1992.



In San Diego County, lenders sent 1,778 default notices in the second quarter, a 98.9 percent jump over the same quarter of 2005, when 894 notices were sent.



Prentice said other factors influencing the default rate are the amount of equity people have in their properties, the type of mortgage and how long people have had the mortgage.



Only about 7 percent of homeowners who find themselves in default actually lose their homes to foreclosure, DataQuick reported.



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August 3, 2006

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