The original mission of proving the market was moving down via posting about the price action of specific properties has been met. I still intend to blog from time to time about specific properties or other items of interest so check back.
It's New Years Eve and there is very little time to update the blog with analysis of last year's predictions before we uncork 2008. Stay tuned for another post on predictions for next year.
The Predictions
1.) San Diego property will continue to decline in value with condos continuing to lead the movement down. This decrease will range from 5-25%.I think it's very safe to say that this value range decrease came to pass for all but a very small portion of unique properties.
2.) Downtown condos will depreciate another 10-25% in another slow and orderly decline similar to how 2006 played out. Quality will be key in terms of holding value.Again, this also came to pass. Quality condos did fair better than the marginal condos, apartment conversions in particular.
3.) At least one more downtown condo project will go rental before completion. As noted on this blog the former Broadway Lofts condominiums has reverted to a rental project. A potential candidate for going the rental route is Solara Lofts which is an office building conversion project that should be finished by early summer, since sales haven't started yet it may be prudent for them to pull the development off of the market until prices stabilize.While Solara Lofts did not convert to rentals, the SmartCorner project is advertising new condos as rentals on Craigslist.
4.) The massive number of new urban condos coming will continue to impact price declines in the attached sector of the market, however since many of the developers will decide to carry inventory for 3-6 months after project completion and since the natural tendency for construction projects to take longer than scheduled the inventory increase and price declines continue into 2008.There are many unsold new developer units on that are not listed for sale as well as new units at Aria and Electra coming onto the market, this prediction while hard to quantify is arguably taking place and as predicted will persist into 2008.
My closing comments for last year:
In summary the decline trend continues for 2007 with a bottom in the market pushed out past the coming year. A significant wildcard are interest rates which could drive a quicker decline if the one two punch of materially higher rates combined with adjustable mortgage resets combines to drive more foreclosure and short sale activityWhile interest rates didn't go up much the major credit market problems related to the housing correction did in fact drive short sale and foreclosure activity in 2007 which clearly added to the price declines experienced in 2007.
All in all it's been a very interesting year in San Diego real estate
5 comments:
Nice job, Mr. Brightside!
Thanks for the "wrap up."
Also, your blog has been a source of encouragement for me during an otherwise frustrating wait for downtown SDO prices to return to "normal".
We have been watching the downtown condos a a few months (with the thought of possibly purchasing in the next 6-8 months), and it is clear that Aqua Vista has an enormous number of foreclosures, units for sale, and units for rent. It leads me to the question: what is wrong with this building that it is being hit particularly hard? Any insights would be appreciated.
Hi Spad,
Acqua Vista was going to be rental apartments so the quality is entry level. Many of the units have been remodeled which mitigates that a bit.
Other reasons this building is having issues is that it came to market as the near peak in prices and since it's entry level many of the buyers were pretty leveraged first time buyers.
I would not be afraid of the building for myself but buying there would require a very good deal.
Hope this helps, post any other questions or feel free to email me at the address above.
In 2004 CNN published an article about Robert and Yvonne Cromer, two San Diegans who had acquired several million in real estate. They were able to acquire these properties even though Robert only earned $50,000 per year as a hotel manager and Yvonne was a stay at home mom with no earnings. Well, it now appears, based on the San Diego County Recorder's website, that the Cromer's San Diego properties went into foreclosure in December, 2007.
The original article is located on the web at http://money.cnn.com/2004/05/12/real_estate/investment_prop/tycoon_cromer/index.htm
Do you guys think the fall on condo's will stop? I think it will continue to rise as time passes. Since they can't meet the payment, they have no choice but to face the forecloure
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