Investors ‘Bidding Up’ Real Estate in San Diego County
June 18th, 2008 categories: Our Market
It’s official…The Real Estate investor is back in San Diego County. In fact, there is so much activity that in many cases prices are actually being bid up by multiple offers. This shift is being driven by lenders off-loading their foreclosed portfolios at bargin-basement prices. According to the San Diego Association of Realtors, sales of homes priced under $417,000 in May were triple what they were in 2007 and the majority of these properties are foreclosures. Investors are so prevalent in the market today that first-time home buyers are finding it difficult, if not impossible, to compete.
DataQuick Information Systems reported that one-third of the 2,475 existing home sales in April were foreclosed properties and in May, an additional 1,977 were listed for sale, according to Foreclosureradar.com. Today, there are over 12,000 additional homes in some state of default which could extend this feeding frenzy through the end of 2008.
Many lenders are now turning to auctions as a way to unload their foreclosed properties that are not selling on the open market. REDC, an auction company, holds three to four auctions nationally every day. They have an event scheduled for June 22, 2008 at the San Diego Convention Center where they plan to sell more than 220 properties currently held by Countrywide Financial, Bear, Sterns & Co., Washington Mutual Inc. and the like. Homes sold at auction typically fetch an average of a ten to twenty percent discount below the Broker’s Price Opinion but many homes can sell for retail and in some cases, higher than estimated market value and the listing price.
It’s important for people to have a plan before they decide to buy a home at auction. First they must do their due diligence and learn everything they can about the properties to be auctioned. The REDC website offers information available online but if there is a property that one is interested in, further investigation is warranted. The City in which the property is located can be helpful in discovering what structures have been permitted on the site. Many title companies also offer information on their websites that can be useful. Most importantly, the interested buyer must have a price ceiling in mind that is thought through and committed to. For many buyers, it will be easy to get caught up in the frenzy of the auction which may lead to over-paying for the property. It’s important to remember, these auctions are choreographed to incite spending and excite prospective buyers. Emotions and distractions can cause buyers to pay more than they should. Plus, on top of the price of the home, there’s the ‘marketing fee’ charged by the auction company.
While foreclosures are up considerably in San Diego County, it’s important to note that 70 percent of all foreclosures are concentrated in 10 of San Diego’s 90 neighborhoods. The foreclosure ‘hot spots’ are Otay Ranch, Spring Valley, Escondido and areas of Oceanside and Vista. While these neighborhoods will take some time to recover from the resultant price depreciation caused by the sheer number of foreclosures in the area, many of San Diego’s higher-end locales have held on to their value to a much higher degree.
If you are in the market for an investment property or you are vying for your first home, let JB Home Sellers help you find the right home at the right price. It’s a very competitive market and we can help you get a piece of it. There’s no time to waste- call us today.
