Foreclosures are a hot topic right now! Are they up? Are they down? How are they compared to last year at this time, last month? There are a lot of questions because some look at the foreclosure rate as a potential indicator into whether we’re “nearing the bottom,” skimming right along, or nowhere near it. At 92101 Urban Living we like to keep you, the buyer or seller, up to date with articles we stumble upon in our everyday quest to understand the constant changes in the market.

In this November 10 article posted in MarketWatch, U.S. Foreclosures Index: October Foreclosures Drop Dramatically to Near 2008 Lows, we’re able to get some current numbers on the state of foreclosures.

According to the U.S. Foreclosure Index from ForeclosureS.com, foreclosures fell for the second month in a row in October to nationwide lows not seen since last February. October pre-foreclosure filings were off more than 10% from August’s highs, and nearly 7% from September numbers. And these falling October numbers were true for about half the states in the U.S. Foreclosure Index.

Another number that’s down are properties repossessed by lenders following foreclosures coming in at 22% off from Septembers high, the lowest monthly total since May.

It’s important to note that pre-foreclosure filings do not end up in foreclosure but property information specialists at ForeclosureS.com base its U.S. Foreclosure Index on the number of formal notices filed against a property during the foreclosure process. This can include notice of default, notice of foreclosure auction, and/or notice of REO.

Almost one-third of the 1.76 million pre-foreclosure filings so far this year are in 10 counties out of the more than 1,300 nationwide included in the ForeclosureS.com database. Of these 10, San Diego is not one.

These numbers would lead one to believe that San Diego is not as affected as other counties, however, more than 255,000 completed foreclosures this year to date are in 10 counties, too. Of these, San Diego is included.

The clearest indication of trends comes by looking at nationwide foreclosures based on the number of filings out of every 1,000 households.

- 11.5 out of every 1,000 households nationwide have been repossessed by lenders following foreclosure YTD based on REO filings. That’s up 71.63% from the same time a year ago.

- 24.6 of every 1,000 have had to deal with pre-foreclosure fillings YTD, up 71.53% from 2007 YTD.

Alexis McGee is the author of The ForeclosureS.com Guide to Advanced Investing Techniques You Won’t Learn anywhere Else, and The ForeclosureS.com Guide to Making Huge Profits Investing in Pre-foreclosures without Selling Your Soul.

Despite these startling percentage rates, McGee states, “Prices are low and current government backed mortgages are making homes more affordable than ever. Plus lenders are finally getting realistic and unloading REO’s at cut-rate prices. The deals are happening. Whether you’re a would-be homeowner or property investor now is a great time to buy discounted properties from motivated sellers.”

So, if you’re in the market for a Downtown San Diego Condo or Loft property one might deduce that now is the time to take advantage of discounts rarely offered. The argument can be made that there is some time to act, however, the sooner the ball gets rolling the more informed and ready you will be to make that purchase.

Given the current state of the economic and real estate industries it’s easy for us as buyers, sellers, brokers, developers and the like to adopt an increasingly negative outlook. Doug Wilson, the founder and CEO of Doug Wilson Construction, however, does not wish to participate. In the November, 2008 issue of the San Diego Metropolitan, Wilson recently authored the article, Creating a City of Change: Today’s Capital Crisis is a Blip. The article summarizes as follows.

Wilson has seen “massive changes” take place in San Diego’s urban core since his arrival in 1984. Such changes began with he and his two partner’s development of Symphony Towers, the city’s largest privately financed mixed-use development at that time. Changes similar to Symphony Towers have been reproduced over the last 25 years changing Downtown into what Wilson calls “a world-class commercial, entertainment and residential center.”

Wilson attributes these changes to both planned and unplanned factors taking place in the Downtown San Diego market. The planned aspects come from organization of one of the largest Downtown redevelopment programs of any city. The unplanned come from both social and economic conditions.

Socially, Wilson believes that the children of those who “fled to the suburbs a generation or two ago” are growing tired of the constraints of this lifestyle and crave the new up-and-coming excitement that Downtown is creating. To accommodate these desires Wilson’s company pioneered Parkloft, the first for-sale condo/loft development in East Village. (Located directly behind our offices at 92101 Urban Living) As resident’s and re-locaters have seen, East Village has been transformed from what was an old warehouse type neighborhood into a current day “urban village.”

Wilson also believes “that Downtown has become a vacation home market,” and that “The Mark is attracting a growing number of [these] out-of-town buyers.”

In addition to the social factors affecting change, it’s also pertinent to analyze the economic facts as well. Given the current state of Wall Street and the mortgage markets, Wilson believes that “the 92101 real estate market is on pause…” and “that not much will happen for the next two to three years.” So, yes, development is on hold for the time being. However, this is good for our Downtown market in that we don’t see the saturation that some have feared. See a previous 92101 Urban Living blog with these numbers titled: Downtown San Diego Resale Market Analysis. Wilson believes “we’re looking at a substantial pent-up demand brewing in Downtown for-sale housing.”

Wilson’s confidence gets additional steam from the Downtown rental market and its increasing rents indicating that demand is high. His confidence is also generated from the numbers; the average price per square foot has almost doubled from 2000 to 2007.  There will soon be a shortage of units coupled with a thinning number of high-quality development sites and therefore “there’s every reason to believe that appreciation will continue.”

And the trump card? Wilson is secure in the idea that everyday, no matter the market conditions, San Diego will always be able to offer one thing many other cities cannot: Location. Wilson says, “It may not be in vogue to be optimistic about the future of Downtown San Diego’s housing market. But I am.”

In the October 28th edition of SignOnSanDiego.com, Staff Writer Roger Showley illustrates the recent drop in the home price index in San Diego County: Home price index still tumbling in San Diego. This is an important article for you, the homebuyer, in that it helps to make the decision whether now is the time to buy that Downtown San Diego Condo or Loft you’ve had your eye on.

For the last three years San Diego has experienced a housing slide and we know that eventually it will hit bottom; but the questions are determining when and will we know we’re there? With the Standard & Poor’s/Case-Shiller Home Price Index showing prices in San Diego County down 25.8 percent in August from a year earlier there is hesitation stating that we’re close.

More recently, from the months of July to August, San Diego prices dropped 2.3 percent placing us at fourth-highest out of the 20 cities tracked.

One of the tools used to forecast the bottom is sales volume. When we do see sales increase, meaning buyers are becoming more comfortable with the thought of buying, the obvious supply and demand rule goes into effect. In the past three months sales in San Diego were up after a 48-month slide, according to the MDA DataQuick figures. Though, it’s important to note, that through September sales were still around 10 percent below those of last year. According to Lawrence Yun, chief economist of the National Association of Realtors, “This is the first and necessary step before anything else stabilizes.” Basically, more buyers mean fewer homes on the market which eventually leads to price stabilization.

Something to consider is that though the bottom may be near, there are still issues in the financial market that will undoubtedly affect home buying. Some believe that the market is still treacherous and may continue to get worse.

Still yet, MDA DataQuick’s September numbers state that median prices dropped to $328,000 last month, down from $350,000 in August. Market observers continue to support the idea that San Diego prices will keep falling, level out by the second or third quarter of next year and then start to rise slowly in 2010.

A key issue that makes it difficult to know what will actually happen is the backlog of distressed properties for sale. Last month the proportion of all homes sold that were foreclosed hit a 47.3 percent record. Some believe as long as these properties continue to be put on the market, prices are unlikely to stabilize.

As of recent, foreclosures have had two straight month-over-month declines; and defaults have been dropping for five consecutive months.

To point out the positives: The San Diego Association of Realtors reported six straight months with a declining number of active listings, suggesting an increase in demand. Also, in some areas, investors are reportedly buying up dozens of foreclosure properties indicating that some professionals may feel the bottom is near. In addition, the GDP rose 2.8 percent in the second quarter.  The Housing Opportunity Index reached 31.1 in the second quarter, meaning 31.1 percent of homes for sale were affordable to median-income households; this compared to just 9.6 a year earlier.

To point out the negatives: There is a low level of housing permits and we’re seeing the slowest pace since the 90’s. Job losses are threatening housing recovery as San Diego’s unemployment rate was 6.4 percent last month, up from 4.8 just a year ago.

All in all, “If buyers start coming back and people absorb the inventory,” says Yun, “that will be one shining light that begins to show other sectors of the economy can now begin to grow.”

As our office has been around for the real estate boom just years ago and now, as we’re living through the slump just as you, we encourage our buyers to do their homework. Now may or may not be the right time to buy for you. There are clearly many aspects to consider but it all comes down to your comfort level. As consultants, we will do our best to arm you with the tools you need to make the best decision for you. There are many useful blogs and articles posted on our site that reference the state of the real estate market, we recommend checking those out for a broad picture view.
 

This month’s issue of the San Diego Metropolitan was devoted specifically to the 92101 zip code and Downtown San Diego Real Estate. There was an interesting article written by Dennis Serraglio (a representative of BOSA Development) entitled: Bigger and Better Homes. 92101 Urban Living comments on statistics pertaining to the analysis of the Downtown San Diego Real Estate market in: Myth 2: There is a Glut of Inventory in Downtown San Diego. It’s always interesting to see and hear the developer analysis of the resale market.

Dennis Sarraglio comments that while sales are currently down in downtown San Diego, so is the rate of residential developments. There are currently 340 resale listings compared to last year’s 550 at this time. (92101 Urban Living would like to make note that this number is net given the subtraction of short sale, distressed properties and sales offices). This reduction in inventory will undoubtedly cause a turnaround in the market within the next 6-8 months. When this inventory dries up we will see condo prices begin to increase.

Additionally, future developments will begin to pop up in downtown outskirts because most of the core has already been developed. We will see these future projects both north and east causing these areas to see revitalization. Add to that the improvements of the North Embarcadero Plan and you can see the potential for some desirable neighborhoods.

These future projects will also boast averages of 1600 sq ft due to the influx of wealthy second home buyers from

Dr. Sherry Cooper from BMO Financial Group was interviewed by the Associated Press on October 8th, 2008. The clip is entitled “The Financial Crisis: What lies ahead in 2009?”

In this video, Dr. Cooper provides an general overview of some general steps that the Federal Government must take to correct the current financial crisis and prevent it from happening again.

According to the Associated Press today, “The Federal Reserve, trying to jump-start lending, dropped its federal funds rate to 1.5 percent. Even so, most experts don’t see economic recovery until there’s stability in the housing market, banks are lending freely and employment improves.”

Is it me, or does Dr. Cooper sound nervous in this video?

I haven’t quite figured out why the caption 10 seconds into this video indicates Toronto.

Maybe she has already moved to Canada.

What do you think of Dr. Cooper’s use of the word “Firstly” toward the end of the video?

-Pete Thistle, pete@92101urbanliving.com

According to SignOnSanDiego.com, “Officials have approved the first phase of a plan for redesigned streets, landscaping, lighting and public amenities along North Harbor Drive. The first phase is expected to cost $28 million, with the overall plan costing $200 million.” For the full story, read Jeanette Steele’s San Diego Union Tribune article written on October 6th, 2008 by clicking on “Bayfront face-lift concept takes wing.”

The picture above is a bird’s-eye virtual view seen from the bay. Jacarandas and towering palms will be the visual focal points of the first phase of the North Embarcadero Visionary Plan.

Check out other virtual pictures of Downtown San Diego’s future waterfront by clicking here.

See where all the architectural elements will be located along Harbor Drive by clicking here.

Gotta love public commentary! It seems that the court of public opinion is not so positive about some of the architectural design elements. What do you think? Check out other people’s thoughts on SignOnSanDiego’s website by clicking here. Then click on the photo next to the existing commentary, scroll to the bottom, and write your own!

Let us know what you think by submitting a comment to us below. We love receiving all of your mail! -Pete Thistle, pete@92101urbanliving.com

In today’s Union Tribune the article states that three years ago, San Diego was one of the most overvalued markets by 39%. Three years later, with the distressed property market on the rise, San Diego is now considered one of these most undervalued markets in the nation. A market is deemed undervalued when it falls 15% below what is considered fair value. If this isn’t a buyer’s market I don’t know what is.

As you have read in previous blogs on our site, there is a proposal for a deck to be built and house convention center space, as well as a new stadium for the San Diego Chargers. It will also be a stadium that could hold a World Cup event, Olympic events and a great venue for concerts.

Concerns: Building something of this magnitude when we still need to get a library built. It will take away from Port production and increase the threat of an attack on our city. All viable concerns. But our city is already a target. It’s San Diego. We house the Nuclear sub program. Everyone wants to be here. Why not make the developers kick in to the Library fund as a stipulation as well. Also, it will be built as a deck over existing working waterfront space.

Benefits: It will add more space and fill a need for the expansion of convention center space. It will incorporate space for the Port to still act as a working waterfront as well. It is a huge deck! We’ve all seen what a stadium does for the growth of a neighborhood and what it attracts. Is it all bad to add a multiplex stadium/hotel/convention center/Venue for World games while still keeping the existing working waterfront?

Opinions come from both sides. I like the idea of having sports venues close to home. As far as football is concerned, it is only 8 times a year with the possibility of maybe two or three extra Sunday’s if we are in the playoffs. Not to mention it would definitely be a Superbowl candidate as San Diego is every decade. It would allow for the International Rugby League Events, World Cup style Soccer events and even could be, with some forsight, a world stage for Tennis as well. It is a multifunctional Stadium.

It is right on the line for the Coaster and the trolley. It is South of Harbor Dr., so it is “in the neighborhood without being in the neighborhood”. You can’t compare this with the neigborhood around RFK in Washington, D.C. either. Completely different plan altogether. The pedestrian bridge will already be in as well, making it easy to access for the locals.

So, I really had one thought from the “opposition” side and about a million thoughts from the “pros side”. Oh well. It would be great to have, and would enhance the appearance of Downtown San Diego even more. Imagine coming into Harbor on a cruise ship, and your view is the numerous high rise towers like Harbor Club,  The Pinnacle Museum Tower, along with the Manchester Grand Hyatt, and the San Diego Convention Center. It is then you will see Petco Park not too far from the new Chargers Stadium.

NFL, NBA, NHL, even the Olympics in Downtown San Diego?  Well, that is the proposal, and it is a big one at roughly a proposed $2 billion.  Check out the Article entitled “Developers: Terminal deck could solve woes”  The site is the 10th Ave. Marine Terminal just south east of the San Diego Convention Center…some of the most valuable property in all of Downtown San Diego.  The proposal is this:  “Developing a 96-acre deck over the 10th Avenue Marine Terminal could allow for a new sports arena or stadium, allow for expansion of the convention center and bring new tax revenue in from the waterfront.”  The possibilities for use of the site could include a football stadium for the San Diego Chargers, sports arena for NBA and NHL, the expansion of the San Diego Convention Center, and hotel development– or a combination of some or all of the above!   This land is currently occupied by a working port terminal.  Traditionally, the Port represents one of the most formidable opponents to pro-development of these very valuable areas.  They argue the jobs taken away from Port workers would be replaced by lesser paying jobs.  I can see that, but could you imagine the impact a development like this could have on the value of Downtown, and San Diego in general.  This would solidify our position as major U.S. national city, and if done correctly put us on the map internationally.  The project is scheduled to go before a vote November 14 of this year.  I look forward to hearing more about this idea, even though I think it is going to be a long shot at best.  Check out the Project Renderings provided by The Union Tribune Documents.

Financing continues to be a challenge in today’s Real Estate Market.  We see that the conditions and documentation that underwriters have been asking for is getting more and more rigid.  As real estate brokers, we try to get investors to consider equally the two sides of the “deal”.  Most of the time, we can’t do what we do until the financing side of the loan is taken care of.  Also, we challenge those investors who are trying to “time the market” to consider the affect that higher interest rates have on their monthly cash flow.  Often times, if real estate values drop slightly but interest rates increase, it may actually cost an investor more each month for even a lower priced property. 
All the analysts and investors have been keeping a sharp eye on the state of the financing market these days.  In fact, there has been a lot of talk of the mortgage industry in the recent weeks…more than normal.  With the recent issues surrounding Indy Mac (failed financing bank), it is good to know that Wells Fargo Bank, N.A. is still the only bank in the U.S., and one of the two banks worldwide, to have the highest possible AAA credit rating from both Moody’s Investors Service, and Standard & Poor’s.  How many more banks are going to have trouble and eventually fail?  It is hard to tell at this point.  As Downtown San Diego Realtors, we have found the Wells product to be very competitive in pricing for high-rise complexes.  Often times, Well Fargo does not need a full condo certification for funding…they just require a limited review of the HOA.  In non-real estate terms, this just means there are decreased contingencies that could potentially hinder funding of a loan.  Usually, these funding issues happen in the 11th hour of the deal.  This makes everyone nervous. 
When looking at interest rates that deal with residential housing financing, the bond market is generally the most important.  This month’s bond market opened well into the negative as investors continue to shy away from the inflation-threatened securities.  The stock markets reflect mixed results, as increased trading put the bond market’s down, and pushed mortgage rates higher.  There are a couple of reports scheduled for release in the coming weeks that can affect mortgage related bonds and rates.  None however, are considered extremely important to the markets. The release of June’s and July’s Leading Economic Indicators (LEI) will have insight on the housing sales, big-ticket item manufacturing activity, and the Fed Beige Book which breaks down economic activity in the U.S. by region. 
Well, if you made it this far into the blog, you are probably wondering what the bottom line is…right?  Some mortgage commentators, with fear of continued rising rates, state to be cautious if still floating an interest rate.  Also, real estate consultants recommend taking advantage of “good deals” before interest rates increase to a level that prices monthly mortgages out of reach for the average homeowner.