Coastal San Diego Living

San Diego Real Estate: It's Time To Buy Again

by Tisha Carney 11. April 2011 15:34

Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.

If all the noise you're hearing about housing has you totally confused, join the crowd. One day you'll read that owning a home has never been more affordable. The next day you'll see news that housing starts have plunged to nearly their lowest level in half a century. After four years of falling prices and surging foreclosures, it's hard to know what to think. In an interview with Fortune, Karl Case (creator of the widely followed S&P/Case-Shiller Home Price indices) indicated "The lack of new home building is a huge help that a lot of people are ignoring," says Case. "People think I'm crazy to be optimistic, but housing is looking like the little engine that could." San Diego Housing is back

To see where real estate is truly headed, it's critical to keep your eye firmly on the fundamentals that, over time, always determine the course of prices and construction. During the last decade's historic run-up in prices, Fortune repeatedly warned that things were moving too fast. In a cover story titled "Is the Housing Boom Over?," this writer's analysis found that the basic forces that govern the market -- the cost of owning vs. renting and the level of new construction -- were in bubble territory. Eventually reality set in, and prices plummeted. Our current view focuses on those same fundamentals -- only now they're pointing in the opposite direction.

So let's state it simply and forcibly: HOUSING IS BACK!

A recent study by Metrostudy covers 19 states, or around 65% of the U.S. housing market, including all the ones hardest hit by the crash: Florida, California, Arizona, and Nevada. The company's client list includes virtually every major homebuilder and bank. The key figures that Metrostudy collects, and that those clients prize, are the number of homes that are vacant and for sale in each city, and the number of months it takes to sell all of them. Together those figures measure inventory -- the key metric in determining whether a market has a surplus or a shortage of new housing.

San Diego housing is back

Today we are witnessing an extraordinary reversal of the new-home glut that helped sink prices just a few years ago. In the 41 cities Metrostudy covers, a total of 78,000 houses are now either vacant and for sale, or under construction. That's less than one-fourth of the 343,000 units in those two categories at the peak of the frenzy in mid-2006, and well below the level of a decade ago. That means we are going to see an incredible shortage of inventory in the near future.

Two basic factors are laying the foundation for dramatic recovery in residential real estate:

  1. The historic drop in new construction.
  2. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets.

The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will result in raising prices in the San Diego real estate market.

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Economy | Buying Real Estate | Real Estate News | San Diego Real Estate

What Is The Future of FHA Financing in San Diego?

by Tisha Carney 7. April 2011 17:37
fha loans

Use of FHA-insured loans in San Diego has soared over the years because they're popular with first time home buyers. Also, the subprime lending meltdown and credit crunch made non-government-insured home loans, especially low-down-payment mortgages, more difficult to obtain, making FHA the best choice.

With FHA loans, borrowers still get the loan from a mortgage broker but the loan is insured by the federal government. Don Earman, the branch manager at Benchmark Mortgage Inc., explains the lender advances the money in the beginning but then it sells the loan to what's called Ginnie Mae, or the Government National Mortgage Association.  Ginnie Mae then reimburses the lender.

Earman says between 30 and 35 percent of the loans through his office are FHA insured.

"The basic FHA program, I don't see it going away, it should continue. It's a very good program, it helps a lot of people get into houses that otherwise wouldn't be able to," says Earman.

A conventional loan will generally start to tack on higher rates for someone with a credit score below 720. With an FHA loan, your score can be as low as a 640 without the higher rates low credit scores may cause.

FHA loans also allow for other perks such as smaller down payments and the ability to have the down payment paid by someone else as a gift.

Earman explains most lenders ultimately aren't going to lend any of the money unless the FHA insures them. "I'm hoping within a few weeks they'll get this done, but you never know," comments Earman.

Fewer borrowers in San Diego used FHA loans to buy homes in February, mirroring drops seen throughout the country.

fha updateIn the U.S., the percentage of people using the government-issued mortgages in February fell to its lowest point in 27 months, according to a DataQuick Information Systems review of 20 major metro areas. The company's analysts say the biggest reason for the decreases is stricter lending rules for low down payments loans.

FHA use was highest in Orlando, at 43.2 percent and lowest in Honolulu at 10.3 percent. San Diego's percentage was 24.4 percent, ranking it 16th among the 20 areas.

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San Diego Employment Continues Positive Steady Increase

by Tisha Carney 28. March 2011 11:50

San Diego’s Employment increased by 5,200 jobs in February and by 19,200 jobs over the past year. The unemployment rate in the San Diego County wassan diego unemployment rate decreases 10.1 percent in February, down from a revised 10.4 percent in January 2011, and below the year-ago estimate of 10.6 percent, reports the state Employment Development Department.

This compares with an unadjusted unemployment rate of 12.3 percent for California and 9.5 percent for the nation during the same period.

In San Diego between January 2011 and February 2011, professional and business services reported the greatest month-over gain, adding 1,800 jobs in San Diego (10,700 for the past year).

Other notable increases included the following: thumbnailCAW0L7C1

  • Leisure and hospitality industry increased by some 1,700 jobs (4,300 for the past year)
  • Educational and health services industry increased by some 1,200 jobs (3,800 for the year)
  • Government  jobs in San Diego increased by 900 (1,900 for the year)

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Warren Buffet on Home Ownership: Now Is The Time To Purchase As Affordability Has Never Been Better

by Tisha Carney 22. March 2011 07:28

In Buffett's most recent letter to his company's shareholders, he made ahome ownership makes sense for americans striking declaration of his feelings about owning a home: "home ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates."  Warren Buffet just so happens to be the third richest human being on the planet.

Buffett believes now is the time to purchase as affordability has never been better. And he’s right that a home is a very strong investment, with abundant yields, both financial and emotional. According to a recent survey, the American Dream of homeownership lives on in the hearts of the 72 percent of Americans who say owning the place they live is a part of their personal American Dream.

Here are 3 basic steps Buffett urges every American who owns a home - or wants to - to include in their approach to home ownership:

san diego home ownership1.  Ditch your "dream home" for a practical pad. When it comes to homes and mortgages, bigger is not always better.  What is better is to buy a home that makes sense for your family's future and its finances. In Buffett's own words, "a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender . . . facilitates his fantasy."  Instead of buying dream homes, Buffett went on, the goal should be to buy a home you can afford.

2.  When you buy, plan to hold. Warren Buffett is worth $50 billion, and he still lives in the home he bought 52 years ago - for $31,500. Many Americans got caught in the housing crash when they took on mortgages they could only sustain for a short period of time, then weren't able to refinance as expected. Buffett's stock investing advice has long been to avoid making investments you can't hold for at least 10 years. Likewise, buying a home should be done with a long-term plan to avoid catastrophe when home values fluctuate in the short term.

3.  Mortgages should have fixed, affordable payments. In his shareholder letter, Buffett points out that a housing company he holds has done vastly better than other real estate and mortgage industry players and attributes their success to the fact that "our approach was simply to get a meaningful down-payment and gear fixed monthly payments to a sensible percentage of income."

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