Despite San Diego Foreclosures, Values Rose Over the Decade- By: John Cutts
Despite San Diego foreclosures in 2008 and 2009, the median home price in the area rose by 48.4 percent over a ten-year period from the year 2000, according to San Diego-based real estate analyst Andrew LePage.
Homeowners who purchased their homes in 2000 can see that their properties gained in value over the ten-year period despite drastic price drops over the past two years. For instance, a person who bought a house for $219,000 in the first months of 2000 can see that his property can now be sold for $325,000.
In University City, one family bought a large house in June 2000 for $432,000. They increased the loan a little when they took out an equity loan for repairs, but now they can sell their house for $850,000.
However, those who bought their houses during the boom cannot expect any gain. The prices they paid were overinflated. They also took out large equity loans to finance vacations, cars and other expenses because lenders made it easy for borrowers to take out loans.
Over the 10-year period, about 41,000 San Diego foreclosures were sold, out of a total sale of 510,000 residential units. Almost 121,000 homeowners were notified of default or foreclosure, in addition to thousands more feverishly negotiating short sales to save their homes from going into bank owned property listings.
According to LePage, lenders have learned their lessons and have tightened their lending policies, making it very difficult now for people to apply for home loans. The sharp increases in Fannie Mae foreclosures over the past months have prompted Fannie to review its approval policies.
Economists have mixed views on the San Diego housing market for 2010. University of California-San Diego economics professor James Hamilton said that home prices will not grow if incomes do not improve.
Former California State economics professor Robert Kleinhenz who is now economist of the California Association of Realtors said that peak prices may appear again in 2018 if price changes in San Diego continue their year-over-year improvements.
National University economist Kelly Cunningham said that because of the slowdown in residential building in the last two years, the city will again see an increased demand for new housing.
Beacon Economics co-founder Christopher Thornberg said that San Diego can recover more quickly than other cities because of its diversified economy.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.