The Inside Story of the San Diego & Eastlake Real Estate Market

“If I had only sold a few years earlier, I would’ve made a fortune.” A San Diego, California Resident

It was late 2005 and I was attending a real estate meeting at our local real estate investing club in San Diego. The parking lot was full with flashy cars and the crowd was buzzing with excitement.

Crushing Markets
At the time I had been an active investor for a little over a year and I was already becoming callous to some of the pitchmen at these types of events.

This time was different.

As we waited in line to show our membership cards, a short, stocky man with a great smile walked through the line and handed out a stack of papers.

On the cover of the handouts, the words jumped, California Countdown and The Coming California Real Estate Crash.

The man who handed out the flyers and spoke that night is named Bruce Norris and from that time until now, Bruce would become one of the most respected real estate investors and professionals in Southern California as he would accurately predict the recent Southern California real estate crash.

Bruce Norris is an active investor, hard money lender, and real estate educator with over 29 years experience. Bruce has been involved in over 2,000 real estate transactions as a buyer, seller, builder, and money partner.  Renowned for his ability to forecast long-term real estate market trends and timing, the release of The California Comeback report in 1997 gained him much notoriety and its accuracy of the extensive report led many California investors to financial freedom.

His January 2006 release, The California Crash, was an in-depth look into the California market correction and the statistics behind Bruce’s predictions.  Bruce speaks and debates throughout California and has been a guest speaker at the California Association of Realtors, Inman, Housing Wire, California Builders Industry Association, California Association of Mortgage Bankers, REOMac, the Real Estate Research Council, and several local and national investment clubs.

Bruce was right on the mark with his predictions.  And with Bruce’s information, thousands of investors all over Southern California crushed the markets and cashed in on their equity and prospered during one of the biggest bull markets in our nation’s history.

Is that the end of the tunnel or just another train coming?
Five years later and major changes have occurred.

DQNews - “Bay Area June Home Sales Send Mixed Signals” (7-15-10)

Los Angeles Times – “U.S. home foreclosures reach record high in second quarter” (7-15-10)

San Francisco Chronicle – “Mortgage rates remain at lowest level in decades” (7-15-10)

Housing Wire – “Value of JPMorgan Government-Backed REO Triples Since 2009? (7-15-10)

Orange County Register –  (7-15-10)“18% more hotels in financial distress”

DQNews - “California June Home Sales” (7-15-10)

While much data given by “experts” appear to show improvement through the markets, there are a couple of factors that virtually every “expert” misses when conveying actual real estate markets.  Shadow Inventory.

Shadow Inventory
The “shadow inventory” of homes includes all delinquent loans and real-estate owned (REO) property that has not reached the market.  While nobody knows for sure the exact amount of Shadow Inventory, some sources estimate the inventory to be approximately 2 million and 8 million homes in the US.

What Impact Does Shadow Inventory have On Real Estate?
As soon as real estate sales improve, banks will unload their inventory to sell.  This will continue to worsen markets as there will be more inventory then demand.  It could take years before all the shadow inventory is sold off, which means prices will be lower than what they could be.

Broken Dreams and Empty Promises
One of the more compelling factors to this giant fiasco is the fact that many homeowners are living without paying a mortgage.

Due to the banks huge inventory of foreclosures, surprisingly the homeowners are allowed to wait (up to 18-24 months) before the banks take action.

This means that on top of the enormous amount of Shadow Inventory, there are underwater properties where the banks haven’t even started the foreclosure process.

What a mess.

Is Now a Good Time To Buy…Or Should I Wait?”
The real estate market improves when you create demand

• Natural demand via migration
• Natural demand via household creation
• Natural demand via price increases
• Forced demand by generous lending policies
• Forced demand by lax immigration policies and/or amnesty

My Synopsis With Standard Disclaimer
It is my opinion that until we clear the Shadow Inventory, and fix our employment challenges, the local Real Estate sector will continue to be plagued by declining house prices.

While the federal and state tax credits have helped real estate prices in the short term, I predict that higher end housing (over 1+ million) will continue to fall causing downward pressure over most of the markets and sub-markets.

There is no easy answer to buy or not buy in San Diego.

Factors such as childrens’ schools, employment, incomes, retirement planning all come into play.  In some cases it makes absolute sense to buy.  In other cases it makes sense to rent and wait it out.

If you have questions regarding this article or would like some guidance on the local markets, call me at: 866-985-2220.

Mark Archer, Founder of Sandoghomes.com is a damn fine fellow, and friend of the community, and former painter, landscaper, lemonade vendor, merchant mariner, navy pilot, flight instructor, hitchhiker, marathoner,triathlete, wrestler, yacht grinder, tugboat deckhand, college football player.

Mark Archer served eleven years of active duty as a U.S. Navy Helicopter Pilot. After graduating from Navy flight school in Pensacola, FL, Mark joined HS-6 (HELANTISUBRON SIX).

While with HS-6, Mark deployed with Carrier Air Wing 11 (CVW-11) on the USS CARL VINSON (CVN-72) and USS NIMITZ (CVN-68) in Support of Operation ENDURING FREEDOM and Operation IRAQI FREEDOM.

In 2004 Mark found, negotiated and flipped a pending foreclosure property to a real estate investor and completed his first “No Money Down” real estate deal in San Diego. He also saved the homeowner from foreclosure and referred her to a reputable credit repair agency.

Since then, Mark has been hooked with real estate and real estate investing and has owned and controlled properties in five different states.

In 2006, Mark earned his California real estate license and currently serves as a real estate associate and REALTOR® with Keller Williams in UTC, LaJolla.

As a Real Estate advisor, Mark assists homeowners on market conditions and how to price their homes for top dollar.

As a real estate advisor and individual investor, Mark assists investors and developers with real estate investments and developments.

Mark believes in community service, serves as youth football coach and volunteers with various charitable organizations.

His reputation as a hard working professional draws referrals from his clients and his knowledge of the current market helps him serve their needs.

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Posted by Eastlaketimes on Jul 22 2010. Filed under Eastlake Real Estate. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry