Is San Diego becoming more affordable??? (bank owned, sale, loans)

[shannon94]

Originally Posted by Sassberto

Any affordability gained in a drop in home prices is readily being absorbed by difficult-to-get mortgages with downpayment requirements, rising gas prices, rising food prices, and job losses. It's a catch-22: home prices falling because of a recession, but the recession means lost jobs which mean you can't buy the house.

Affordable + San Diego = never gonna happen

Huh?.....That makes no sense!! Home prices aren't going to come down any further because of job losses? Last year many people on this forum were saying that whats happening NOW wasn't going to happen too.

As far as San Diego becoming affordable.....it's been there before.....no one's saying your going to get a house on the coast for 200k... but inland?......you bet.

[kettlepot]

Originally Posted by LookingtoLeave

With home prices dropping, do you think rental prices will drop as well? Do you also see wages better sustaining the cost of living in the future?

No. The opposite is happening. Rental rates are rising faster than the rate of inflation. The housing boom caused a lot of rental units to be converted into condos reducing the supply of rental housing. Also, as people await definitive proof that the housing bust has finished before buying the demand for rental housing has increased also pushing up rental costs.

It's this rising cost for rental housing that will put a floor under housing prices.

[mini_cute]

I grew up most of my life in Los Angeles and Orange Country and I am now living in San Diego. I can tell you from my observations growing up in So Cal and moving around a lot since I was a kid that home prices will not drop that much (in So Cal)! Particularly in high demand areas like San Diego. It doesn't take a lot of real estate savvy to understand it- it's really simple:

Any area that is desirable will not drop that much and will be expensive compared to the pay. The very minute the housing prices drop in a desirable area, people who have been waiting for that drop snatch it up. It is the law of supply and demand and demand is always increasing because the population is increasing and that means the pool of people who can afford them increases. Put it like this- coastal areas with good weather and big cities tend to have a high demand for housing and so they will never really be affordable ever again. If your dream is to live in So Cal, don't expect to see more affordable homes in 5-10 years- look at the long-term trend on a line graph of the housing prices in So Cal and you will see that it is steadily rising. Even though it may momentarily dip, it moves even higher up. It is like expecting gas prices to finally go back to what they were in 1999. It just isn't gonna happen, even if they drop 3 cents for a week. If you want to live in So Cal in the decent areas, you'd better take advantage of it soon when you think we've hit the trough in this housing drop because it will move farther up and out of reach soon enough.

Here is a graph of inflation-adjusted historical real estate prices in the U.S. While it may drop a bit more, I doubt it will be where prices were at in 1999. Thinking so would be in my opinion, just wishful thinking.

Graphs of inflation-adjusted, historical housing prices.

[Sassberto]

Originally Posted by shannon94

Huh?.....That makes no sense!! Home prices aren't going to come down any further because of job losses? Last year many people on this forum were saying that whats happening NOW wasn't going to happen too.

No, what I am saying is that the low prices come at a time of economic distress, so no matter how far they fall, it may or may not matter if you can't get a loan, lose your job, etc. There's kind of a lot of that going around right now.

And personally I do not think that even a 350k house is affordable to a huge number of people in this country, and if we at least use California and other major US coastal cities as any barometer, San Diego will never be affordable (like it was as recently as the 80's) again.

[shannon94]

I guess I would like to know what you think is going to happen to all these homes then?? No ones buying, incomes are not rising, credit is harder to get,.......what...are these homes just going to sit there gathering weeds???? Look what happened in the 90's in SD. This crisis is MUCH worse than that was.

350k? Yeah thats still outrageous to me (not the coastline of course). Homes are already dipping below that 350k mark in East County....and we haven't hit the bottom.

[Sassberto]

Originally Posted by shannon94

I guess I would like to know what you think is going to happen to all these homes then?? No ones buying, incomes are not rising, credit is harder to get,.......what...are these homes just going to sit there gathering weeds???? Look what happened in the 90's in SD. This crisis is MUCH worse than that was.

The houses are already sitting empty,gathering weeds. Take a drive down to a new development in Chula Vista if you want to see that. But who is going to leave a house empty? Only a very distressed homeowner, foreclosure victim, bank, etc. Anyone who can avoid selling right now is doing so.

Right now, you couldn't give away a house in Southern California. That is not an indicator of affordability, it is an indicator of economic distress. In fact, I would say that affordability overall - from food to gas to housing, is on an irreversible trend away from affordability.

The only person who benefits from a housing crash is someone with a lot of cash. For most Americans, and especially first-time home buyers, lots of cash is a luxury they don't have.

[Jaded]

Originally Posted by Sassberto

The houses are already sitting empty,gathering weeds. Take a drive down to a new development in Chula Vista if you want to see that. But who is going to leave a house empty? Only a very distressed homeowner, foreclosure victim, bank, etc. Anyone who can avoid selling right now is doing so.

Right now, you couldn't give away a house in Southern California. That is not an indicator of affordability, it is an indicator of economic distress. In fact, I would say that affordability overall - from food to gas to housing, is on an irreversible trend away from affordability.

The only person who benefits from a housing crash is someone with a lot of cash. For most Americans, and especially first-time home buyers, lots of cash is a luxury they don't have.

Well, to be accurate, San Diego is becoming more affordable because, traditionally, the barometer for affordability is housing costs.

Yes, gas prices, food prices, incidentals, etc. are on the rise, but they are more closely tied to the recession, Iraq War, and falling value of the dollar, then housing is right now. The housing crisis is actually separate from the economic recession - they are often lumped together, but really, each have their own "triggers." Affordability is defined by the cost of something, not the means to obtain it.

The housing boom may have served to stave off the recession for awhile, primarily because people lived off of the equity in their homes, but it is not the cause of the recession. It's a buyers market, and buyers markets are always "slower" than sellers markets. That's part of the definition of a buyers market...more homes than buyers.

So to say that not being able to "give away" a home in SoCal is an indicator of economic distress in a bit inaccurate. People aren't willing to "give away" their homes in hot markets because they still believe their homes are worth inflated prices! And that's where the banks come in. REOs are selling like hotcakes! My brother-in-law says his broker is getting 50 foreclosures a day from three top banks, each...and that's just three banks! The banks are accepting .40 to .50 cents on the dollar! The funding is available and people are being approved.

Bottomline. The banks will win. They always do. They cannot afford to NOT cut their losses on these foreclosures. They need the money to lend. In the end, the homeowners who hold out will do so at their own demise, when their homes are appraised again in a few years, the comps will no longer support the inflated prices at which they are trying to sell their homes now.

Regardless of the economy, people have to live somewhere. People have to buy food, and, in SoCal, they have to buy gas. The financial cuts will be taken elsewhere in everyone's lives. As far as unemployment, well, it's still historically low, at least for the time being.

[shannon94]

I understand what your saying....but it's obvious if to many homes are sitting there they are going to continue to come DOWN in price....(therefore more affordable) ....no bank is just going to let them sit there for ever. Even investors aren't going to buy until the "bottom" hits. Foreclosure sales at auctions are already declining......even when selling at 20% off of loan value. Guess they will have to come down a little more now won't they.

Guess I'm just not hearing you say that prices are going to continue to decline ....you don't like the word affordable...ok ...how about "cheaper"?

Wow!! What a mess!!........ Who knew??



No End in Sight for California Foreclosure Mess March Sees Record Levels of California Foreclosure Filings - Yahoo! News (broken link)


where does your brother work Jaded? .40 to .50 on the dollar? Don't think thats happening yet...but it won't surprise me when it does.

[kimmer]

We got lucky and sold our house in 29 days. Our buyer managed to get a good loan, was pre-approved, and put 20% down.

Our house is tiny and in our development, most of the homes for sale are either short sells or foreclosures. I think we were the only place that wasn't either of those!
Our realtor was telling us that even if you offer on a foreclosure, the bank can make all sorts of sketchy decisions about when the house can close, and what they will and won't fix on the house. We had a (foreclosure) house in our development that was pending for at least 3-4 months before the bank finally closed on the deal. In our area, the prices seem to have stabilized, at least for now.

All in all I think San Diego is still a good place to buy for the long-term if you can afford it.

[Jaded]

Originally Posted by shannon94

I understand what your saying....but it's obvious if to many homes are sitting there they are going to continue to come DOWN in price....(therefore more affordable) ....no bank is just going to let them sit there for ever. Even investors aren't going to buy until the "bottom" hits. Foreclosure sales at auctions are already declining......even when selling at 20% off of loan value. Guess they will have to come down a little more now won't they.

Guess I'm just not hearing you say that prices are going to continue to decline ....you don't like the word affordable...ok ...how about "cheaper"?

Wow!! What a mess!!........ Who knew??



No End in Sight for California Foreclosure Mess March Sees Record Levels of California Foreclosure Filings - Yahoo! News (broken link)


where does your brother work Jaded? .40 to .50 on the dollar? Don't think thats happening yet...but it won't surprise me when it does.

I don't have his card on me, but it's a real estate finance company that also sells homes. And yes, the price I quoted on the dollar is happening. Check this site out...one of many Foreclosure sites that allows you to sort by state and city. Most of the historically affluent areas have not been affected as much as newer communities.

It's because the banks have so many foreclosures; they have to sell them to raise cash that they are losing by not receiving the payments from the current owners. Also, banks need a certain amount of cash on hand and with the economy the way it is and many being heavily invested into mortages, they just don't have as much cash on hand as they did a few years ago.