San Diego Real Estate

Recently with all the foreclosures in the U.S. housing market there have been a lot of people who are looking at purchasing real estate at the public auctions.  San Diego County has 3 locations where san diego foreclosures go to sale daily.  The three locations are San Diego, Oceanside, and El Cajon.

The first thing most people who are looking to purchase at the trustee sale need to know is how the auctions work.  Many come to the auction thinking they can get financing for the property. This is a complete myth.  Trustee Sales are all cash purchases.  No money? No property. You can’t believe how often some people come with cashier’s checks for $100,000 only to bid up a property to $190,000 then ask to get financing.  What are they thinking?  Then the property has to go up for auction again.  It can be very frustrating for those who buy trustee sales professionally.

The second most important thing to know at the trustee sale is whether you are purchasing the correct property and the correct trust deed?  If not, you might be in for a rude awakening.  This type of mistake usually is never made by professional buyers, but I have seen many bid on trust deeds they thought was a first lien, only to find out later it was a second trust deed.  Oops, a very costly mistake.

The basic trustee sale occurs like this.  The auctioneer usually announces all the postponements and cancellation of sales first.  Any new postponements or cancellation gets announce as the sale continues.  After all the postponements and cancellations are finally announced.  The sale of active trust deeds start.  The auctioneer will read out the disclosures, address, trustee sale number, etc.  The opening bid will be announce for that property.  Anyone who now wishes to buy this property now needs to get qualified.  The process of getting qualified is simple.  Show the auctioneer the money.

Each property is then auctioned off one by one.  If no third party bids on a property with an opening bid, the property is sold to the beneficiary (usually the bank).  What is the difference between the published bid and the opening bid?  The published bid is usually what is still owed on the property. In the currently market.  The published bid is quite often much higher than the property is worth.  The opening bid is what the beneficiary usually will take for the property.  Many lenders will lower the opening bid quite considerably in order to incentivize investors to purchase the trust deed.

All trustee sales on foreclosed properties are as is, without any guarantees or warranties.  The property is sold subject to any and all liens.  This means if you buy a property there is a junior lien. You will be responsible for all liens that are above or superior to the trust deed you just purchase.  There are also some things such as property taxes or mechanics liens that stick with the property.  Also, if there is an occupant in the property, it will be your responsibility to get them out. The bank won’t do that for you.

The best advice I can give anyone who is looking to purchase at the trustee sale. Is do your homework very carefully and know what you are doing.  It’s very risky and there are a lot of things the average person doesn’t know.  A mistake can be very costly.

The week of September 26 started off on Tuesday. The most recent update on the S&P Case-Shiller Home Price Index came out. The report is a collection of prices for all 20 major metro areas, including our own, San Diego.

On Wednesday the Mortgage Bankers’ Association released their statistics on mortgage lender applications. This is one of the several common indicators of economic stability in real estate.

San Diego Real Estate market might not be doing so great. But the local San Diego government is going to make over $66 million this year compared to last on property taxes. Revenue for the entire year is expected to be $4.54 billion total.

While today’s market looks drastically different from how it was during its peak a few years ago. Today’s market shows many signs that it is a great time to buy. With foreclosures and short sales driving prices of properties down it makes purchasing a real estate very affordable.  Current interest rates are near record lows help shrinking mortgage premiums for buyers. Even with the influx of distressed properties into the market there are many signs that point to price stabilization in the near future.

Recent home prices are very low compared to the prices that it was at a few years ago. According to Moody’s analytics the ratio of home prices to household incomes have dropped 20.9 % from the fifteen year average. Affordability of homes have dropped significantly making home buying much easier than before. The number of distressed properties in the market it has lowered the prices of houses lower.

The current interest rate as of June 24^th, 2011 according to Yahoo Real estate is 3.944% for a fifteen year fixed mortgage and 4.699% for a 30 year fixed mortgage. Both interest rates are near 50 year lows. According to NSDCAR’s Homedex in May 2011 the median price of a home in North San Diego County was $380,000. That means with a 30 year fixed mortgage at 4.55% apr and 20% down payment the approximate monthly payment would be $1500. To put this in perspective $380,000 can fetch a 2500 square foot  - 4 bedroom 3 bathroom house in San Marcos, CA, which can rent for approximately $2700 per month.

There are many signs that point towards its stabilization and rise, even with the current shape that real estate market is in. Moody’s Analytics predicts that the number of distressed sales by the fall by the end of 2013. Diminishing numbers in distressed properties will lead to stable home prices. Moody’s Analytics also shows that the average price of homes decreased only 0.7% this past year if distressed properties are not taken into account. A very promising indication of what the market could look like without distressed properties in the housing market. In recent years the home development market has become very stagnant and this trend will continue. This will only help stabilize home prices by limiting the inventory of properties in the market. The diminishing number of distressed sales as well as a decrease in new homes entering the market, point to a more stable market and higher home prices in the near future.

There are many perks in owning a home versus renting an apartment or house. As a homebuyer you are able to file for tax deductions on the interest that is paid on your mortgage. Homeowners can also benefit from tax deductions on annual payments on property taxes. Owning your own home means you have the freedom to upgrade and customize your home without permission of a landlord. The mortgage payments will help build equity on the property while paying rent will only lead to building the landlords’ equity.

Diminishing numbers of new homes entering the market, decreased distressed sales, record low interest rates, and very affordable home prices now is the time to buy.