#1 Key To Purchasing Real Estate in the San Diego Market
If you were listening to the real estate "rose-colored glasses "crowd, in 2006 you would have heard "It's not a slowdown and there is NO bubble. The San Diego market is just going back to 'normal.' It's an excellent time to buy with out the market frenzy of multiple offers & buyers paying over the asking prices."
In 2007 you would have heard, "It's a normal correction to a buyer's market. Many great San Diego home buys, compared to the past year or two, are available if you act fast.
In 2008 (early August '08) the headline in the San Diego Buying Guide read: "Buyers are out in record numbers." Question: Record numbers compared to what time frame? Perhaps a more appropriate headline would have been: "San Diego buyer’s activity increasing because of demand for foreclosure & short sale properties at 40 to 50% below their 2005 highs."
Therefore, in my humble opinion, the #1 key for buying a home in San Diego today, is waiting patiently for the market to tell you that it has bottomed. I'm not talking about a one or two month blip here, or the Industry talking heads saying to act fast, but real, documented facts of a bottoming process occurring.
Sure, you might lose some of the upside, but you would be able to sleep at night. Buying simply because property looks cheap as opposed to last week, last month or the last year, is the majority thinking. With that reasoning, you would be have been buying all the way down in 2006, 2007 & 2008.
I would venture to say the vast majority of San Diego home buyers in the first quarter of this year have seen their 'great buys' suddenly not looking so great. Not considering closing cost, I'd guess the majority who purchased property in the last quarter of 2007 or first quarter of 2008 who had to sell today, would suffer a significant loss. As just one example, the July '08 condo average re-sales for the San Diego Zip code 92115 showed a value drop of over 50% vs. July 2007.
A few of our recent past posts on the state of the San Diego real estate market were:
San Diego California Home Sellers Lose Big
The San Diego California Real Estate Great Depression
Believe the local San Diego ‘experts’ that subprime delinquencies are slowing?
San Diego County Foreclosures up 125% from 2007
Jumbo Financing and the Impact on The San Diego Real Estate Market
Another Look at the June Rise in Pending Home Sales
San Diego real estate home sales
The San Diego California Real Estate Great Depression
San Diego California real estate property values in many neighborhoods have now surpassed the average nationwide 30% drop seen during the1930's.
San Diego California resale condominium appreciation
In the table below, www.brokerforyou.com looked at selected San Diego neighborhoods that
had 10 or more closed sales in July 2008 & 2007.
The sales data was compiled by DataQuick Information Systems & published in the 8-24-08 edition of the San Diego Union-Tribune.
One should keep in mind the above chart is just for a one year period (July 2007 vs. July 2008) and
San Diego home values topped out around the Summer of 2005!
Below is a similar chart Brokerforyou.com produced and published in 2007 & comparing San Diego condo values from July 2006 to July 2007.
When one compares the condo value drops from the above chart with our latest chart for 2008, the magnitude of the real value loss can be clearly seen. As an example, in Clairemont for the latest one year period the value loss was 36.2%. Now add that to the approximately 20% loss show directly above, and we have a two year loss of just over 56%! The college area condo value drop from 2006 to 2007 was very modest. But, for the latest one year period alone it was down a starraging 51.6%!
Lastly, I would note that these figures do not take into account the very prevalent seller concession (usually payment of thousands in the buyer's closing costs) necessitated by an ultra strong buyers market place.
A few of our related prior posts were:
Yale Professor … House Price Decline Could Be Worse than Great Depression
Survey Says Home Values Must Fall Another 14%
Jumbo Financing and the Impact on The San Diego Real Estate Market
Believe the local San Diego ‘experts’ that subprime delinquencies are slowing?
More homeowners than ever are selling at a loss!
San Diego County Foreclosures up 125% from 2007