San Diego’s first time home buyers are the benefactors
January 16th, 2009 Categories: Real Estate News, San Diego County Fixer of the Week, San Diego county Real Estate News
SAN DIEGO– While the news for existing homeowners continues to be less than positive, the benefactors of the current real estate climate are definitely San Diego’s first time home buyers.
It was only in the last 5 years that an older generation of San Diegans was questioning how there children were ever going to afford to buy a home in San Diego. There was a younger generation that flowed out of the state due to the impact of the hosing expense as it related to their income. While I am sure there were many areas around the country that saw this influx, it seemed as though those with the active lifestyle were heading to areas like Bend, Oregon and the Boise area of Idaho. Additionally there were those that saw such an appreciation in their homes here that they just “cashed out”. They were able to take their profits from their home sale and buy a home outright or with very little financing elsewhere.
Confronted with a lack of buildable land, astronomical housing prices and newly tightened lending policies, those wanting a house of their own are caught in a cultural and economic shift dictating where and how they will live.
They can move to Riverside County, where prices are lower but the commute is longer. They can leave the state, as thousands have done.
Or they can stay, and downsize their housing expectations, analysts say.
It’s a change that is reshaping the nature of homeownership here, even as housing prices pull back from their historic highs.
Some first-time buyers are postponing or even abandoning their goal of owning a single-family home, said Steve Doyle, president of Brookfield Homes’ San Diego region. Houses “are quickly becoming unaffordable. They are not realistic, not for the teacher, not for the fireman, not for the nurse.”– San Diego Union Tribune, March 25, 2007
The Good News for San Diego First Time Buyers
Well, times have changed and while there certainly is some pain for existing homeowners, these changes have created opportunity for the first time buyer.
Firstly, interest rates are hitting historic lows and these are straight 30 year fixed loans. No teaser or adjustable rates.
Last week JPMorgan Chase & Co. was advertising 30-year mortgages as low as 4.75 percent on its Web site, Wells Fargo & Co. has an offer for 4.875 percent and Bank of America Corp. has rates at 5 percent(Delawareonline.com,1/9/2009). While these offers are for borrowers with excellent credit who put 20 percent down, 20% down is certainly more doable these days. Currently Bankrate.com is showing the 30 year fixed rate at 5.10% on average.
Secondly, the San Diego housing price depreciation of 30–50% has certainly kicked the door open for many. I ecently wrote about the change in the affordability rate from a low of 4% in 2005 to a 32% rate in second quarter in 2008. Unfortunately, this depreciation and other economic conditions are causing many homeowners to lose their homes as short sales and foreclosures still rule the market.
I have been spending some time in the Eastlake area of Chula Vista. Newer homes, as current as 2008, that were selling for close to a million dollars 
are selling for $500,000 or less. There are townhomes that are on the market for seemingly less than what it would cost to build them. This is not uncommon of many areas, such as North Park, Clairemont/Bay Park and Oceanside, where I am working with new homebuyers.
Thirdly, in many areas there is an overabundance of homes for sale. Again, many of these homes, as high as 80% in some areas, are short sales or foreclosures and are vacant.
I have clients that joke about the “beeping houses”. This is caused by the batteries going out in the smoke detectors of these vacant homes, so they just beep every couple of minutes and it seems like this is the case in every home. Because of this it is VERY IMPORTANT to work with a someone you can trust and to do very thorough inspections and investigations. In the case of bank owned homes. you as the buyer will generally not receive any disclosures as the “bank” never lived in the home and therefore has no disclosures to make. In this situation, a knock on the neighbor’s door may be a great idea. Also, short sales can be a very long and discouraging process. The thing to remember is the person, asset manager, is deciding 
to lose potentially hundreds of thousands of dollars and you will be the benefactor. Be patient. Continue to look at homes, but be prepared to wait with littel or no communication.
If you are considering a home purchase, it is a great time to be a first time buyer in San Diego. I work with many first time buyers and would welcome the opportunity to help you. Contact me, Brian Long, with any questions you may have.
