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San Diego
Saturday, May 18, 2024

Residential Market Close to Bottoming Out, Assessor Says

Seizing upon a sliver of positive news that April home sales outpaced the previous month, county Assessor Gregory Smith told a gathering of real estate professionals recently that he believed the housing slump was coming to an end, and the market should start recovering by the end of 2008.

“I think we’re at or near the bottom, which means it’s a great time to buy property,” Smith told real estate agents at Home Expo 2008, held May 9-10 at the San Diego Convention Center.

The number of houses sold in April rose more than 38 percent, compared with March, to 1,443. The median price remained unchanged from March at $440,000, according to the Multiple Listing Service.

Smith, who said last week that his office is processing 300 reassessment applications a day from homeowners seeking tax relief on homes that have fallen below assessed value, said that the wave of foreclosures must first “burn off” in 2008 from lenders selling repossessed properties at a discount.

The conventional wisdom, he says, is that the market will have bottomed out in 2008, stay in a trough, and gradually recover starting in 2009-2010.

“We still have a tremendous amount (of foreclosures) out there before the market takes off,” he said.

However, two other variables must come together: Interest rates must fall below the “psychological” threshold of 6 percent and lenders must participate in the temporary lending increases by the Federal Housing Authority and Veterans Administration loan programs that allow $697,500 loan limits through the end of the year, Smith says.

One catch to the federal loan programs is that lenders and real estate agents are not familiar with them, said Lori Staehling, 2008 president of the San Diego Association of Realtors.

“In the last five years, lenders hadn’t used FHA/VA at all,” she said. “There was no need to deal with the hassle.”

Learning the new rules will take time. There are new documentation requirements, restrictions on which types of properties qualify (not condo conversions, for instance), and which borrowers qualify, lending professionals say.

“I think we’re all out here trying to figure it out,” said Rebecca Philpott, a San Diego mortgage adviser.

California foreclosures jumped from 12,000 in 2006 to 84,000 in 2007, and could top 100,000 by the end of the summer, according to Jeff Davi, state real estate commissioner.

He says that real estate agents should familiarize themselves with the foreclosure market and properties repossessed by banks called real estate owned properties.

“That’s the tail end of the downturn,” he said. “Now, they’re dropping the price. These are REO properties. Once we get through that, we’ll see a recovery.”


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