Best Place to Get a New Mortgage? Home Prices are Under-Valued in San Diego

By Sheryl Landrum
Local Lender Columnist
Sep 16, 2008
San Diego is known as one of our most desirable places to live in the United States. Situated on the ocean yet close to the mountains as well, San Diego boasts a plethora of fun and leisurely activities, mild year round temperatures, a diverse economy, and scenic surroundings. If these qualities sound appealing to you, there is another fact about San Diego worth sharing; currently San Diego has the most undervalued housing market in California.

Mortgage Defaults and Higher Interest Rates Create an Undervalued Housing Market in San Diego

According to the San Diego Union Tribune, home valuation is "based on price to income ratios, mortgage interest rates, and historical trends in each metro area." San Diego's housing prices have dropped approximately 32% from their peak in 2005 while incomes have continued to rise. Higher interest rates, tougher mortgage underwriting guidelines, and high mortgage defaults have created a surplus of homes on the market, yet San Diego's economy is "not as depressed economically as some other regions of the country." The downturn in equity has turned San Diego's housing market from being "ranked as the 29th most overvalued market in 2005" to "the 33rd most-undervalued in the ranking of 330 metro areas" today. What else is predicted for San Diego's housing market?

Beautiful Cities like San Diego Don't Stay Down for Long

Risky mortgage financing and higher interest rates have caused mortgage foreclosures for many San Diegans. In July, 2008, 41% of all homes sold were in foreclosure, which brought home equity down for all. However, San Diego does not have much available land to build on and has a strong non-real estate economy as well, meaning San Diego's downturn will inevitably turn back to an upturn. Experts believe that a housing recovery is 6 to 18 months away in San Diego. If you are considering a move to one of the most desirable places in America, now is a perfect time to buy. What can you do to protect yourself when buying a home in San Diego or anywhere else?

Smart Mortgage Decisions Lead to More Secure Living in San Diego

The time is perfect for buying in beautiful San Diego; however, you need to buy smart. Foreclosures are currently high in San Diego and elsewhere in the country as homeowners stripped the equity out of their homes, or purchased homes without leaving any equity in them. Many of these homeowners also chose mortgages with adjustable rates having the potential for interest rate increases they could not afford. Protect yourself by talking to a trusted loan officer before committing to a home and ensure that the home loan you get allows you to enjoy the fun and leisure San Diego offers as well as some leeway through the cyclical nature of life and mortgage.

About the Author
Sheryl Landrum is a Loan Officer with General Mortgage in San Diego, California and a freelance writer specializing in mortgage issues.