During January 2011, the housing market in San Diego County was spurred on by investors interested in distressed properties. Investors will swoop into any market with distressed real estate. After all, investors are in the game for the profit rather than the ideal of home ownership.
Even during 2010, ‘properties in turmoil’ accounted for 59% of resales in San Diego County. In fact, distressed real estate has been a presence in the San Diego housing market for the past three or four years. In the first month of this year, investors drove the sales figures in San Diego.
According to DataQuick Information Systems, however, home prices and sales rose in San Diego County during February. The region saw 2,330 sales in February – an increase of 2,248 (or 3.6%) from January. Transactions fell 5.5% from this time last year.
The median price has increased to $308,000 from $304,000 in January. Yet the median price dropped 4.3% from $322,000 last year. Single-family homes make up the most of the county’s housing. The median price in this category fell 0.7% in February from the previous month. This activity points to a flattening market.
According to DataQuick analyst, Andrew LePage, February’s monthly rise in sales and flat prices result from numerous short sales and foreclosures. More than half (at least 55%) of February’s resales were distressed real estate including single-family homes and condos.
Foreclosures added up to 34% (an increase from 32.8% in January). As well, at least 21% were short sales. January saw a similar number of short sales. DataQuick numbers indicate a significant increase in short sales during the past three years.
In 2010, short sales made up 20.5% of resales in the county. During 2009, short sales had accounted for only 15.7% of resales. Short sales include deals where the sale price is less than the mortgage balance. Lepage gives his perspective on the situation with short sales in San Diego County.
“They’re increasing by a lot. If processing foreclosures gets a lot more expensive, then we should expect a lot more short sales and loan modifications,” explains Andrew LePage, DataQuick analyst.
During February, 30.6% of homes were purchased through cash transactions. The level of cash transactions has not been so high in the county since 1988. Of course, cash investors go hand-in-hand marke with housing markets including distressed properties.
Indeed, luxury distressed properties in San Diego are attracting buyers interested in all-cash transactions. Low prices for upscale homes and stock portfolios with promise are driving purchases of high-end but distressed homes. If buyers can afford a luxury home at bargain prices, they jump at the chance.
Obviously, home sellers welcome cash buyers. Investors are always the first group on scene in a market like the current one. Individual buyers might wait to purchase or could have trouble getting conventional mortgages.
Absentee buyers (purchasers who will probably never live in the county) purchased 23.8% of area properties during February. DataQuick research indicates that percentage is a record high. Of course, the firm has been keeping records of absentee buyers only since 2000. Yet within this decade, DataQuick has never seen this number of absentee purchasers. The average percentage for this group of home buyers has been 16% during the past ten years.
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SignOnSanDiego.com; S.D. home prices, sales slightly up in February; Lily Leung; March 15, 2011
Image courtesy of mynewcaliforniahome.com