Tj Stroben

With foreclosure rates on the rise in all neighborhoods and communities it is reasonable to say that ALL homes, ALL home owners and ALL regional economies are affected by the foreclosure market.

Not all foreclosure news is bad. On one hand, price adjustments mandated by the declining market may have been devastating to banks, recent home purchasers, and prospective sellers; it has also opened doors for many who had previously been priced out of the housing market when home values were at their highest. The foreclosure market offers bargain pricing and buyers are taking notice as many areas are reporting a dramatic increase in the number of units selling rather than an increase in median home prices. According to Foreclosure Truth, nationwide affordability has increased by 24%.

Accompanying the pending home sales data was the National Association of Realtors'release of its Housing Affordability Index, which reached an all-time high in December (dating back to 1970), rising by 10.9% to 158.8. (The affordability index gauges the relationship between home prices, mortgage interest rates and family income.)

For perspective, the HAI reached a 20-year low of 102.70 in June 2006, which was one of many red flags signaling trouble in the housing sector. Lower mortgage rates, a first time buyers tax credit, combined with an increase in loan applications is evidence that the climate for homebuyers has improved from previous years.

Decling Home Values Continue to Encourage Buyers

Most obvious is the weakening of home values due to this increase of foreclosures, as bank owned homes are devalued at a greater rate than homes that are not in distress. As soon as a property becomes a foreclosure it is worth less money. Today's buyers and investors are bargain hunters. They too, are aware of the effect that foreclosures bring lower sales prices, making them less willing to pay top dollar for any property.

When a Realtor or an appraiser looks at the market value of a home they look for at least three comparable homes that are nearby and have sold in the last year. Whether there is one or a dozen, foreclosures, not only affect that market, they become that market.

Foreclosures indirectly influence the conventional home seller as well. REO, or bank owned homes, may be vacant for long periods of time and are generally in disrepair. Homeowners, who are not in distress, may be forced to compete for a sale with homes that have been abandoned or neglected, while their home has been carefully maintained and cared for. They are then forced to reduce asking prices to meet the current market, or they will experience extended market times as they wait for "realistic" offers.

An additional possibility, is that if the neighborhood has convergence of bank owned homes, then it's the banks, themselves, that are forced to continually reduce the asking prices of homes in their portfolios to insure a quick sale, again driving home sales and values even lower.

According the Woodstock Institute each foreclosure of a conventional mortgage within an eighth of a mile (essentially a city block) of single-family homes results a decline in property value between 0.9 and 1.136 percent. Less conservative estimates also show that each conventional foreclosure between an eighth and quarter of a mile leads to an additional 0.325 percent decline in single-family property values.

So, foreclosures are here to stay. For how long will be determined by the same exact financial mechanisms that created this frenzy. Some may look at this market as the opportunity of a lifetime, while others are forced to make life altering decisions during this time, the social, moral, economic issues it has created will continued to be analyzed for years to come.

When planning your San Diego Staycation don't forget to include gas in your budget calculations. Currently, gas prices around SD range from $4.13 to $4.85. As you travel around SD being a local tourist, you may be able to take advantage of a better petrol price that what is offered in your neighborhood!

It doesn't make sense to go out of your way to drive to one of these stations just to save a few bucks, but by all means, if you are driving down from North County to Seaworld and be able to save $.72/gal less.

Keep this site in mind when you are looking for the best gas prices in your area.

BEST GAS PRICES IN SAN DIEGO

One of San Diego's most affable citizens and favorite weather forecaster, Loren Nancarrow, refers constantly to our area's microclimates. His nightly forecasts include the outlook for each of our many regions. Locals know and visitors learn quickly that temperature and weather conditions vary in our county from north to south, and more dramatically, from west to east. This may surprise many visitors and tourists, as well as disappoint, if they come expecting our famous sunshine and mild weather everywhere - every time.

It is surprising is how many different weather scenarios we can experience daily in our county. For example, I live in Carlsbad, which is in North San Diego County, and is beach side, meaning west. The office I work in is 20 miles to the east. Those two temperatures alone can vary ten to fifteen degrees from home to office most any day of the year.

These microclimates and real estate prices have a lot in common.

I think of Loren and his microclimates often when I am making property comparisons and valuations for my clients.

Zip by zip, property values are dependent on which side of the lines of division they fall. This gets further complicated as municipalities with multiple zip codes might have their own mini-real estate-microclimates. Just like the weather they each come with differing degrees of appreciation or depreciation - within their own city limits!

This gives all new meaning to location, location, location, while at the same time, giving a plausible explanation why we can't predict if the bottom has hit, or if not, when it will hit. It may have hit one zip, and yet to hit another. One zip seems to be off the charts when it comes to number of units sold and appreciation, while the zip code next door property values are devastated.

Just when you think you have one month's sales statistics figures out, the next month's come out, contradicting what you just digesting.

These changing housing market climate variations can effect;

• Homeowners that wish or need to sell.
• Homeowners who wish to refinance out of a bad loan.
• Buyers choices and deciding on fair market value.
• Buyers trying to get a fair appraisal.

This is an opportunity market for many and a life altering market for others.

With so many things to consider, it is more important that ever to consult a professional.

Rates are down, affordability is up, choices are many AND I am currently negotiating great deals for my clients.

Call and ask me how!

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