downtown-san-diego-real-estate/fannie-freddie-scrap-declining-market-label/180/

All properties in 92101, previously considered as being geographically located in a declining market since last December by Fannie Mae [1] and Freddie Mac [2], will no longer be stymied with this stigma.

What does this mean for you?

If you happen to be shopping for a downtown condo, your lender will no longer have to ease you into the idea that a higher down payment will be required for your loan to be approved under Fannie Mae or Freddie Mac loan guidelines.

According to the May 25th 2008 article in San Diegos Union Tribune entitled Fannie, Freddie scrap declining-market label: Starting June 1, mortgage applicants who are underwritten by Fannie Mae’s automated system online will qualify for 3 percent minimum down payments, wherever the property is located. Borrowers whose applications require manual underwriting will pay 5 percent minimum down.

Fannie Mae indicated that it was able to move away from the declining markets policy because their latest version of Desktop Underwriter (DU) ver 7.0 will limit risk layering and assess each loan more precisely.

The rest of this article makes mention of private mortgage insurance (PMI) industry which has not yet removed the declining market label from their vocabulary. PMI is an additional monthly cost associated with Fannie or Freddie loans generally greater than 80% of the homes value. One traditional way that homebuyers have avoided PMI is to offer 2nd mortgages or Home Equity Lines of Credit (HELOCs) for the amount financed above 80%. There is still a shortage of these types of 2nd available to borrowers in todays mortgage marketplace. Nevertheless, removing the declining market stigma is a step in the right direction for 92101downtown condo financing in general.

A prior article written on April 27, 2008 in the San Diego Union Tribune entitled Declining market tag may threaten recovery offers more detail about the previous impact of the declining market stigma.

For more information concerning this article or questions about condo financing in general, please contact Pete Thistle at [email protected] Pete is a licensed broker with 92101 Urban Living. Pete also has many years of previous experience as a loan officer focused on downtown condo financing with Wells Fargo, Countrywide, and American Mortgage Express.

downtown-san-diego-real-estate/housing-crisis-over/177/

The Title of the Wall Street Journal Article is The Housing Crisis is Over. Could this actually be? A well respected national publication is suggesting that there is actually something positive on the horizon for Home Sales in the United States. Well, things are not that easy. I am positive that this topic will continue to be debated for months to come. However, new statistics and historical data regarding National Supply Inventories, Local Market Conditions, and Construction Activity show that the right conditions for improvement are starting to become note worthy. A decline in Home values combined with competitive mortgage rates allows buyers who have normally been priced out of the market a chance to take advantage of diverse supply inventories. As these inventories decrease, and as construction activity slows, the result will be a shift of the market values and perspectives.

We can see this trend in Downtown San Diego starting to develop. Construction Downtown is now limited to only three residential projects. As these and existing New Construction inventories start to be picked over, buyers must rely on the resale market to find the certain floor plans in specific price ranges. For a more detailed look at this trend, review our Blog on Downtown New Construction Inventories.

downtown-san-diego-real-estate/the-future-of-the-downtown-condominium-market/166/

We know no other condominium projects that will break ground in the next year. As high-rise projects require two years to complete, we do not anticipate the completion of any new high-rise projects until atleast 2011 or possibly 2012.

There are two factors that impact the future supply of condominiums downtown:

• First is the near absence of financing and equity capital-a situation abetted by the financial struggles of the major banks and investment institutions.
• Second, and of equal importance, is the rising costs of construction. The condominiums that are newly completed downtown, like The Mark andf The Legend, were bid out in 2004-2005. Since then, as a result of international demand for concrete and steel, the cost of construction has increased between $125-150 per square foot. New high-rise condominiums started today would in all likelyhood cost #350-400 per square foot.

To put that in context, a 1,500 square foot condominium in a newly completed building that sells today for $600 per square foot, or $900,000 would have to sell for as much as $1,100,000 if started today. As construction continue to rise, it is likely that the next round of condominiums downtown would be far more expensive.

Further, the supply of high quality condominium sites is near exhaustion, a situation that will make it even more difficult for developers to justify the type of pricing that will be necessary to build new product.

It is likely that most new condominium product in the forseeable future will be low-rise as the cost to produce that producxt would be significantly less than high-rise.

Therefore, it is highly probable that only high-rise condominiums in waterfront or inland premier locations will be built, as it is the only type of product that will generate the price per square foot necessary to warrant development.

We take position that until new high-rise condominiums can justify the heady pricing necessary for financial viability, there will be no new construction.

It also means that buying a condominium unit today makes economic sense because any new condominium to be built in the future will be priced far higher than the one bought today.

In 2006-2007 timeframe, almost 50 condominium projects were built downtown. Today, there are four projects under construction with none in the pipeline.

On balance, it is the opinion of Market Pointe Realty Advisors, and us here at 92101 Urban Living that downtown will continue to accelerate as a popular residential venue with demand outstripping supply over the next few years.

**all information/graphs provided by Market Pointe Realty Advisors**

downtown-san-diego-real-estate/inventory-of-new-units/156/

Currently, if you were to look at the toatl availability of unsold unit downtown that are in buildings that are either completed or under construction, the total would be 1,696 units. Of that total, 694, or 40% are units in the buildings that are under construction and won’t be delivered untill 2009. Another 176 units, or 10%, are in adaptive reuse or conversion projects. The balance, 826 units, comprising half of the inventory is in completed buildings.

From another perspective, if we look at the longer term view of unitsthat will be available for sale in the future, we find the current inventory and those projects under constructionsell out by the end of 2009–whch is likely–then there are no new condominium units to be deliverd in 2010 or 2011. It is likely that should have a solidifying effect on the downtown condominium market.