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San Diego County home values declined 0.1% between March and April, compared with a 1.5% decline between February and March. For the last year, San Diego home values are down 20%, according to the Standard & Poor's/Case-Shiller home indexes, released this morning (June 30). Seven cities experienced a year-on-year decline larger than San Diego's 20. That's more than it has been in some time. Yearly prices plunged 35.3% in Phoenix, 32.2% in Las Vegas, and 28% in San Francisco. All told, the 20-city composite, which includes San Diego, dropped 18.1% over the last year, compared with a 18.7% yearly decline for March. S&P economist David M. Blitzer says the pace of decline in residential real estate slowed in April, but he cautioned. "we are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here."

San Diego home values are now down 42.3% from their all-time high in November of 2005.

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valueinvestingisdead June 30, 2009 @ 8:33 a.m.

A 42.5% drop since 2005! That is beyond staggering. If you put 25% down, were an honest, upstanding individual, bought a $600,000 house, you not only have lost your $150,000 down payment but now owe $105,000 or more considering it would take Realtor fees to get you out.


Visduh June 30, 2009 @ 8:49 a.m.

Many observers concluded that San Diego home prices were the most highly inflated of any US metro area. That was based on the prices vs. incomes, and the tiny percentage of households able to qualify to buy at the top. There is plenty of reason to question those conclusions, and the main one was that if so few could afford them, what was continuing to push those prices to the stratosphere?

With those prices so high at the top in 2005, one has to conclude that SD prices should fall farther than most or all US metro areas before they get back in line. It is not as if the supply is stable either. A drive through San Elijo Hills this past weekend revealed dozens of BIG homes nearing completion. These were in the half-million-plus price category. Who can afford them, especially now? And who would want to tackle the obligation in an economy and job market like today's?

Only if this price stability persists through summer and into the fall will it mean that home prices in SD have bottomed. Overall, there is something about this picture that doesn't add up. Current values, as valueinvestingisdead points out, have many homeowners under water. If/when they have to bail out, won't that put even more pressure on prices by adding to the supply? I cannot avoid concluding that those prices will come down even more in coming months. Ah well, we will see, won't we?


Don Bauder June 30, 2009 @ 10:27 a.m.

Response to post #1: Look on the bright side. It's been around 42% for a couple of months now. Best, Don Bauder


Don Bauder June 30, 2009 @ 10:30 a.m.

Response to post #2: I, for one, do not expect SD home prices to bottom out over the next few months. More and more foreclosures and short sales lie on the horizon. Best, Don Bauder


SurfPuppy619 June 30, 2009 @ 2:49 p.m.

1.#1.A 42.5% drop since 2005!

I estimated a 30% drop, Don said it would be more.

Don won that by a country mile.


Don Bauder July 1, 2009 @ 7:19 a.m.

Response to post #5: Now the question is this: with the rate of decline seemingly -- repeat, seemingly -- declining, how much further will it drop? Best, Don Bauder


Ponzi July 1, 2009 @ 10:51 a.m.

There are a substantial number of homes that are technically in default but the lenders have not filed Notices or Default and are not aggressively foreclosing. Nothing is going to change with most of those loans in the meantime, these are just a waiting game and silent stand-off between the delinquent homeowners and banks.

I am familiar with several instances of people living in homes that they are not paying the mortgage but have also not received a notice of default. In one case they have not paid the mortgage in over a year. The less desirable the neighborhood (and value of dwelling) the slower the lenders are to foreclose.

Perhaps because the banks are in upheaval, a foreclosure moratorium, or just general chaos in the ownership of the mortgage assets? Who knows, but here is a big bottom on that iceberg and when those foreclosures start hitting the stability of home prices is going to take a major hit and certainly drop a good 10% to 20% or more again.


Ponzi July 1, 2009 @ 11:02 a.m.

I offer two example from a friend in Lemon Grove. A 3 bedroom home that was appraised at $450,000 in 2005 recently sold for $114,000 in a foreclosure sale. The previous owner took on a remodeling project that was never finished (ran out of money and lost his job) so this house is a real fixer upper. But still $114,000 for a single family home on a decent Cul de Sac walking distance to schools?

Another example is a friend of my family. An 80 year old woman who bought her home in the 1960’s and owned it free and clear. Her daughter got her real estate license and started to buy and flip homes during the real estate frenzy. She hit up her mother for a $300,000 loan and her mother (against everyone else’s advice) took out a HELOC for $300K against the $420,000 appraisal of her Paradise Valley home. Well the daughter has crashed and burns and has no money. All her flips ended up in foreclosure and nobody is paying her moms HELOC payments since 2007. That home has been in default for over a year but no official notice has been recorded. The value of the home is now estimated at $190,000. She mom will be homeless with no cash to walk away with once the lenders finally book this from bad loan to an REO.


SurfPuppy619 July 1, 2009 @ 1:48 p.m.

She mom will be homeless with no cash to walk away with once the lenders finally book this from bad loan to an REO.

By Ponzi

That is hard to read and not be very very angry.


Don Bauder July 1, 2009 @ 4:04 p.m.

Response to post #7: The largest banks are broke. Many of the smaller ones are doing OK. Banks do not want those homes; it's a financial drain to try to sell them. The homeowners not paying the mortgage are getting a slick deal, as long as it lasts. Short sales (in which banks take a haircut by taking less than full value for the mortgage) are also a pain for the banks, and a logistical mare's nest. Best, Don Bauder


Don Bauder July 1, 2009 @ 4:08 p.m.

Response to post #8: There are some great bargains out there on short sales and foreclosed homes. Short term interest rates are near zero and long rates are not too bad now. Best, Don Bauder


Don Bauder July 1, 2009 @ 4:10 p.m.

Response to post #9: Those kinds of stories are popping up around the country. Best, Don Bauder


valueinvestingisdead July 1, 2009 @ 6:29 p.m.

I will add to the story. A friend of mine was laid off from Scudder and went into the mortgage loan business. He all of a sudden was making $20,000/month. He decided to get on the RE freight train and bought property after property. Eventually, he owned 7 houses and had a net worth of $2 million. (Value of houses minus amt. owed). Well, 2 years later and a huge RE crash later, he lost all the homes, had on paper a negative $650,000 net worth, lost his mortgage job and now lives in his parent's basement. He cannot find a job despite having both a college degree and experience. He is dead broke.


Don Bauder July 1, 2009 @ 9:25 p.m.

Response to post #13: There are many stories like that out there. Best, Don Bauder


SurfPuppy619 July 2, 2009 @ 6:09 p.m.

I will add to the story. A friend of mine was laid off from Scudder and went into the mortgage loan business. He all of a sudden was making $20,000/month.

I know of very FEW inexperienced real estate agents/brokers making anywhere near that kind of money-at the absolute height of the market-although it is common for people to make such inflated statements.

In fact I know very few commercial real estate brokers, who have 10+ years experience, that made that much money in the very best markets. I would estimate the number at less than 5%, and that 5% were very experienced.

Real etsate is one of the most competitive professions in the business world, and it is rough. Very few newbies are going to make even a moderate income starting out, unless they are connected and are being fed business (which happens pretty often in RE).


Don Bauder July 2, 2009 @ 7:51 p.m.

Response to post #15: When the market is hot, a lot of amateurs flood into the business. Best, Don bauder


Ponzi July 5, 2009 @ 9:49 a.m.

Response to 16.

Yes, and all the La Jolla and Del Mar housewives are back to homemaking waiting for the next housing bubble to dust off their licenses.


Don Bauder July 5, 2009 @ 5:12 p.m.

Response to post #17: They may wind up being Desperate Housewives. It could be a long time before the housing bubble inflates again. You can say, however, that the government is working on filling the market with air anew. But I don't think people are ready to bite again any time soon. Best, Don Bauder


mikekench Aug. 11, 2009 @ 6:20 p.m.

It is nice to see that home price drops have started to decline. Hopefully the real estate market is ready to make a turn around. Mike at http://sandiegocamortgage.net


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