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| | | THE RISE AND FALL OF REAL ESTATE BRINGS FORCLOSURE
AND BANKRUPTCY WOES TO SAN DIEGANS |  In the last 4 years and starting around the year 2001 San Diego saw one the hottest real estate markets in the country work its magic as the entire country saw it's opportunity to purchase a little space in the best climate in the US.
Interest rates and lax approval criteria from the banking industry allowed people to extend to new heights in their borrowing potential. With Interest rates at 40 year lows, the drive to buy was on full throtle . People were borrowing 500K, 800K, 1M dollars for homes that sold 150% of their prices just 2-3 years prior.
The news media both in San Diego and around the country call this a feeding frenze of buying. Some went so far as to start calling it a bubble. They called it a boom! What ever you call it, it was crazy.
In 2006 we saw a cooling off of the market with buyers withdrawing and speculators stuck with homes (inventory) they needed to turnover (flip). At the end of Dec. there was an increase in buyer interest. The market may have cooled just enough to get people interested again. The homes for sale in the county in 2007 reached all time highs as many home owners saw their equity running away from them. Prices dropped as much as 20%.
This author is waiting to see what happens next as many of the 5 year variable rate loans finish their term this year as do some other loan packages dreamed up during the gold rush. If these loan amounts were more than comfortable when they were taken then an increase in a couple points won't hurt. If the buyer was close to max they could extend when they took the loan the new figure could cramp their style a bit. The thought that one could sell is a bit daunting as prospective sellers survey the market and see so many others getting out and discounting the homes next door.
The first half of 2007 is going to be telling of what we believe is the market for the next couple years. It should shake out sellers and identify buyers representitive of people in the market. I suspect we'll see the savers that were priced out of the market in 2004 and 2005 looking for a deal and sellers trying to get away from an overleveraged home burdoned with credit card debt and equity loans. Most sellers have enough equity from price increases to prevent a forclosure or a bankruptcy
It might be time to start placing offers on homes you want. The problem is people are not aware this could be the best time to start looking and thinking about putting in offers they can afford.
Some link resources supporting this article:
Buffet Speaks in the Housing Market
http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/index.htm
Wall Street Journal Real Estate Journal on housing slowdown
http://www.realestatejournal.com/buysell/markettrends/20060510-morrissey.html
Wall Street Journal Real Estate Slowdown survival guide
http://online.wsj.com/public/article/SB115204791463597636-dwtqavFBN5w_kTARC8T9SKB_Fs_20060711.html
Bankruptcy in California - Resolving debt after the home equity loan is gone
http://chapter7.com/directory/California_Bankruptcy/ |
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| | | Published On | By | | Sunday, February 11, 2007 22:37:24 | Dave Blinder
www.blinder.com |
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