Why Aren't More Buyers Taking Advantage of the Current Prices in San Diego?

I have been pondering the question in the title of this blog entry for quite some time. As a San Diego native I guess I’ve grown up seeing my city’s housing price history and can remember the “good ol’ days” when pretty much anyone in the city and county could afford to purchase their own little piece of paradise.

Boy have times changed since those days growing up in Chula Vista when places like Eastlake, Otay Ranch, Ocean View Hills Rancho Del Rey and other new communities were just vast fields of over grown weeds. OMG!  Did I just date myself?

I know to most buyers, especially those that moved here from another part of the country, the prices seem high even in the current market environment. More often than not they compare the prices to the prices from the part of the country or the last place they resided and in more cases than not they’re lower.

Then again if someone moved from say LA, Chicago, NYC, etc. would this be true?  Probably not and in addition some of these cities offer far less square footage for the dollar.

Having helped a wide and diverse pool of people in various price ranges I have done back ground research for many of them on properties they’re considering purchasing and have seen the difference in prices. Current prices are down from the unrealistic boom from around 04′ through 06′ and are more in line with reality; so why aren’t people taking advantage of these fantastic opportunities?  That’s the 64 million dollar question.

One prime example that come to mind is a search for a home in the million dollar range in La Jolla and what I discovered was made my potential buyer very happy to discover the amount he would be saving now compared to the last owner’s purchase price. This home was built in 1972 and has been remodeled several times because it doesn’t look like Mrs. Brady has lived there. Following the sale’s price history I discovered that this home had sold back in 2004 for $769K and that’s a pretty good price for a 4 bedroom 3 full bath home in 92037.

Let’s move forward to June of 2005 which was the next time this property changed owners.  Any guess what this same home sold for then?  How’s $1,575,000.00 for the very same property.  I’d venture to say that the seller made a very handsome sum of profit on that deal.

Can anyone name something else you get to use and make money on it when you go to sell it?  When you’ve had a garage sale has anyone paid you more for a used item than what it would be worth when it was new?  How about a car?  What you’re thinking is that most of this appreciation can be attributed to the buying fever back in those times and I’d say that you’re probably correct.

Let’s fast forward to now.  So the person who bought the home in 2005 does a remodel and complete upgrade of the home the owner develops some type of financial difficulty that makes him pursue a short sale of the property.  Unable to sell the property after listing it several times the lien holder moves ahead and forecloses on the property.

 The bank then places the property on the market as an REO (Real Estate Owned)/Foreclosure in the 1st quarter of 2010. It takes only two weeks fro the property to go off the market and more impressively 36 days for it to close escrow.

Want to guess the sale price? It was listed at $974,900.00 and sold for $1,055,000.00 which means that the most recent buyer saved a whopping $520,000.00; now that’s what I call a deal!

I know that most people wouldn’t categorize this example as a deal because most would feel that if the buyer would have waited he could have bought the property for a price closer to the 2004 price. Well guess again because it sold for about 8% above asking price which is also about 32% higher than the 2004 sold price.

 Still think this isn’t a great deal?  I would propose that the numbers don’t lie and by no means am I saying this is always the case but recently this theory is proven more and more.

So I ask you, do you still think San Diego’s real estate market is as bad as the rest of the nation or for that matter as bad as the news likes to report?