San Diego Housing Solutions

• Market Update

              

Investors

There will be a severe cleaning out of waste and inefficiency in all the US and world markets, including real estate.  This cleaning out will continue until a return to the market value fundamentals.

 

A look at the bigger picture will show that even if there is to be a global economic catastrophe, the United States is the most politically stable nation in the world, and that would attract the smart human and financial capital to flock to her protective shores.

 

A historical review will show that real estate is a great hedge against inflation, in addition to being a great investment for the following traditional reasons:

 

1. Cash Flow
2. Appreciation
3. Tax Benefits
4. Leverage and Pay Down

 

California will experience overall residential price declines until at least 2010 and probably 2011.  The sub 200k priced homes will ‘bottom out’ before the mid and luxury home market, and that will cause the ‘median price’ to keep falling even though the majority of the home supply will have bottomed out.

 

As population increases, housing demand increases, and when the supply of buyers exceeds the supply of homes, prices will start to rise.  When prices start back up, builders will begin building again and prices will quickly jump past replacement cost prices. As the economy strengthens, lending guidelines will loosen and everyone will begin to feel good about real estate again.

 

As referenced in the market timing section of the “2009 to 2010 Real Estate Investing Guide,” buyers go through different psychological phases in the buying process, with the low being despair / resignation and the high being mindless euphoria. California, and especially the costal communities, has an emotional appeal that magnifies the usual despair / euphoria-decision making process that adds momentum to the price swings which make California the truly ‘golden state’ for investors.  

 

Although there are many great areas to invest in California, we believe San Diego has the best overall opportunities, based on product availability, short term product need, regional economic stability, perceived value, future product need and regional population / job estimates.

 

Based on the local area of government’s (SANDAG) estimates, San Diego County between 2010 and 2020 will increase in population from 3.2 million to 3.6 million, and between 2020 and 2030 will continue up to 3.98 million, a nearly 30% increase!  This population increase will require adding over 25% or 200,000 housing units (single family, multifamily, mobile homes) to existing numbers.  Even with this increase in housing units the single family home vacancy rate is expected to decline to below 3% from the current 5-6% rate.   

 

Although ‘cheaper’ deals can be found in portions of LA and Riverside County, San Diego is a safer investment zone because of the steady government and pharmaceutical employer base, the large and predictable price swings in safe neighborhoods and the general San Diego ‘attraction factor’ that creates the emotional draw and resulting price booms San Diego enjoys so much.

 

Through our research and experience we have isolated specific markets that are both the safest to invest in and also have the largest market price swings due to the emotional buying patterns of California home owners and speculators.  The following is a partial neighborhood breakdown we use as part of our market timing and target property selection investment strategy.     

 

Neighborhood Category – Single Family  – San Diego County 

Type	Description / Location example
Extreme Luxury	Extreme!  Best of the best… beach, bluff, hilltop, multi-level penthouse, etc. La Jolla Farms-ocean bluff, Rancho Santa Fe estate,
Super Luxury	Best location, best views, best orientation, fine craftsmanship, big, stunning La Jolla hills/shores, Fairbanks Ranch, Cielo,
Luxury	Great location, great views, quality craftsmanship, large, impressive, unique La Jolla, Pt. Loma, PB/MB water, Mission Hills, Mt Helix and location specific canyon / view properties in Coronado, Carlsbad, Encinitas, Poway Hills, etc.
A	Very good; location/schools/parks, above average construction, well kept Del Cerro, Sabre Springs, Tierrasanta, Rancho Penasquitos,
B	Good; location/schools/parks, average construction, occasional unkept areas Mesa, Allied Gardens, Serra Mesa, San Carlos, North Park,
C	Average; location/schools, fewer parks, more crime, more multi-family, more unkept areas, rougher look, more overhead power lines, narrower street, etc. Paradise Hills, South Park, Spring Valley,
D	Below average; location/schools, few parks/community perks, run down, little  homeowner pride, some boarded up homes/multi-family, some areas not safe at night, more liquor stores, more crime, more rough looking and feeling.     City Heights, Barrio Logan,
F	Not safe during day, unrestricted crime. Many boarded up homes. Currently no ‘F’ neighborhoods in San Diego County

 

 

Neighborhood Price ‘snap shots’ of 2006 & 2009

Type	2006	2009	* 2011	* 20xx (top)
Extreme Luxury	7 Million +	5 Million +	* See Full Report for: - 2011 price predictions - ‘Top of the Market’ - Previous low $’s - Price Changes - Target Properties - More…
Super Luxury	2-5 Million	2-4 Million
Luxury	900 – 2M	700 – 2M
A	400 – 800	300 – 600
B	300 – 500	200 – 400
C	300 – 500	150 – 300
D	250 – 400	100 – 300

 

*  If you like what you are reading and want more information then contact us and we’ll send to you a complimentary copy of “2009 to 2010 Real Estate Investing Guide,” which includes:

Fill out the form below

Make sure you have the latest edition:  April 2009 Revision

 

There has already been a historically tremendous transfer of wealth and the pendulum is now starting on its way up…  Are you ready?

 

 

 

♦ Investors ♦ Home •  Loan Mod •  Legal •  Short Sale •  Foreclosure •  EXTRAS •  CONTACT