Home Loans and Home Buying in San Diego

By Sheryl Landrum
Local Lender Columnist
Dec 22, 2008
San Diego has the dubious distinction of being among the most undervalued communities in its home market right now--making it an opportune time for borrowers to buy a home in one of the nation's most popular cities. However, before jumping in your real estate agent's car, take some time and learn about the San Diego housing market and today's mortgage market as well.

San Diego home buyers score low home prices and mortgage interest rates.

The San Diego Union Tribune states that of the 4,318 San Diego homes unloaded between June 22 and August 22, two-thirds sold at a loss. Also making news is the fact in certain ZIP codes up to 90% of the homes sold were foreclosures.

What caused this massive loss and sell-off? The area certainly didn't decline in desirability, the weather didn't get lousy, and the schools didn't become hell-holes. It was a rush to make a quick buck and too many investors buying at the top of an unsustainable market. In fact, DataQuick analyst Andrew LePage said that three-fourths of losses in San Diego were incurred by those who bought after property prices topped out in 2005.

The only sure thing is uncertainty. Kelly Cunningham, economist and senior fellow at the San Diego Institute for Policy Research, questions San Diego's future. This slump, the biggest since the Great Depression of the 1930s, forces new issues: Where will people live after losing their homes? How can middle class families afford homes even at the lower prices--given new tougher lending standards? What happens when the market picks up, demand exceeds supply, and there is nothing new under construction?

While overnight spec profits may be a thing of the past, long-term home value will not abandon San Diego. With mortgage interest rates dropping as well, the sellers' loss may be your gain. However, don't expect San Diego home prices to stay down for too long. San Diego has a diverse economic base for job seekers and zoning density requirements and restrictions keep new home building at a minimum.

San Diego families need to examine their options given today's parameters and form a long-term plan for successful home ownership and investment. Financial planners, accountants, and lending professionals can all help.

Sources:
SignOnSanDiego

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