San Diego Real Estate Market Values Will Continue to Decline Into 2008

From the Real Estate Investment Center

California Foreclosure Rates Could Exceed 55 Percent

California mortgage defaults going into foreclosure are pushing 40% and could exceed the 1983 levels of 55% according to a recent article in the San Diego publication, SignonSanDiego.com.  What a difference from 2005, when only 13% of defaulted mortgages went into foreclosure.

The foreclosures on subprime loans will continue to push down home prices through 2008.  S&P forecasts that by Q1 of 2008, national average homes prices will be down 8 percent from 2006 prices.  This would be the largest drop in postwar history, pushing past the 6.9 percent drop during the 1990's recession.

San Diego County Inventory at 8 Month Supply

Places like San Diego County may fall even more since it was a bubble market.  San Diego County currently has 8 months worth of inventory on the market and the number of homes going into foreclosure increased from 842 in June 2006 to 2,564 in June 2007.

Prime and Alt-A mortgages may also contribute to the foreclosure rate because many of these borrowers obtained risky, teaser-rate, type loans, and those interest rates will be adjusting upwards, too.

Bruce Norris, the head of the Norris Group, a real estate investment firm in Riverside said, "There's no doubt that there will be a tremendous increase in foreclosures.  I'm not being negative, just very realistic.  This is a mathematical certainty at this point."

It may take 18 months for the problems related to the adjustable-rate mortgages and other risky loans to be resolved through foreclosures and "short sales" if you consider there were 18 consecutive months when a large percentage of these risky loan types were funded, according to Norris.  The majority of these loans will adjust in the next 6-24 months.

San Diego Economic Outlook Gloomy

Wells Fargo economist, Scott Anderson, revealed that the growth rate for employment in San Diego County has been slowing since it peaked in the late 1990's.  In 1997 and 1998, local payrolls were growing at about 5 percent per year.  In the past five years, local jobs have been growing less than 2 percent per year.  2007 job growth will only be about half a percent.

People aren't moving into the county like they used to, partly because of the high home prices.  Since 2003, more people have moved out of San Diego than have moved in.  Anderson projects this trend will last through 2008. 

Get Your Money Out of Bubbleville and Invest in Real Estate in Bargaintown

Money can be made in real estate, but you have to be selective.  You need to carefully select the right real estate market, the right property type, loan terms and you have to BUY IT RIGHT. You'll make the most money if you buy correctly.  

• Buy discount real estate property – foreclosures, pre-foreclosures, tax sales, real estate auctions, real estate repos and other distressed-seller opportunities.

• Consider commercial real estate investments – apartment buildings, retail centers, storage unit facilities, office buildings.  I have provided you with an awesome commercial loan resource at my website to buy these properties with as little as 10% down (even 5% down on certain property types).

• Buy in Bargainville – the next hot emerging real estate markets across the country. 

• Get a mentor.  Learn from real estate investing experts who have already done this successfully.  There are a number of them featured in the Real Estate Investing Guide Section of my website.

Source: http://www.signonsandiego.com/news/business/calbreath/20070715-9999-1b15dean.html

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