Oceanside, San Diego Real Estate Update - Aug 08
Posted on Sep 2nd, 2008
Talk about change! The residential Oceanside, San Diego Real Estate Market has heated up dramatically in the past few months. Prices are down as much as 30% from the same month last year. For homes priced less than $450,000, there is a rush on home purchases. In this article, this is the price range I will address because it seems to be where there is the most activity.
First, let’s address “short sales”. A “short sale” is when the property owner can no longer afford the monthly payments and has decided to go into default. There is about a 6 month period before the closure actually occurs. In this period of time the property can be listed for sale. When an offer is submitted on the property, the offer is accepted by the seller and forwarded to the bank. It is up to the bank to accept, reject, or negotiate the offer. If you are looking to buy a property that is a “short sale”, here is what to expect. The homes will be priced aggressively by the listing agents. This insures maximum exposure and traffic to the property. The key for the listing agent and property owner is to procure an offer because the banks will not respond without one. So the properties are very aggressively priced. Buyers and investors look at the low prices and jump at the opportunity to purchase. Then the buyers have to wait, often months, to get a response from the bank. Sometimes they are disappointed because the bank decides to foreclose.
If you are a buyer looking to purchase a “short sale” be sure you are working with an experienced agent. An experienced agent not only advises you correctly, they should also insure the agent representing the seller is handling the transaction properly. The agent handling the sale must be persistent with the bank. Most often “short sale” properties don’t close escrow quickly because it can take months for the banks to respond
I will coin a phrase and say we are in a “dysfunctional sellers market” or a dysfunctional “buyers market”. Traditionally a “sellers market” is a period of time when there are fewer properties on the market, prices are strong and lots of buyers. This creates an environment where there are multiple offers and properties sell quickly. The list price or close to it is often obtained. Well, today there are lots of buyers, prices are weak and there are lots of properties on the market… So as you can see, it is different. For these properties, are we in a “sellers market” or a “buyers market”?
Another segment of the market is bank owned properties. This market has also heated up substantially. Each bank has their own approach to selling their properties. Most of them will price the properties aggressively to sell them quickly. Some will fix them up, while others will bring them to the market in dismal condition. Again, for properties in the $450,000 and under market, it is commonplace to have multiple offers within the first two weeks of the property being listed. If you are looking to buy a property that is bank owned, you may encounter a bidding situation. Some of the bank owned properties are starting to sell above the list price. The key to successfully purchasing a bank owned property is to act quickly and be sure your offer is at market.
Most of the banks want their properties to be on the market at least seven days before they respond to an offer. This way they hope to receive multiple offers. In this situation they can maximize the price. They then can counter all the buyers’ offers with “Give us your highest and best price”. Again, is it a buyer’s or seller’s market? Multiple offers to buy but at steeply reduced prices.
Timing when you buy in the real estate industry is vital. There is a saying in the commercial and residential real estate market “When you buy it is “location, location, location”. In addition I would add “Timing, timing, timing”. Buyers that purchased property 2 or 3 years ago paid top dollar for their property. If they purchased for the short term they will be disappointed when they sell the property. If they purchased the property for a 8, to 10 year or longer period they will be fine.
Due to its size and different segments, the residential real estate market can be complex. A buyer may have had a friend purchase a “short sale” property several months ago. Based on the success of their friends today’s buyer expect the same results. If they move quickly they can have the same success, but it is not guaranteed. The “short sale” market in todays’ market is much more competitive. It all goes back to the “supply and demand” factor. Overall, there is a lot of supply. But remember there are micro-markets that have tremendous demand.
Now. let’s address privately owned properties that are not “short sale” or bank owned priced in the $450,000 and under price range. These sellers are usually highly motivated. They understand that prices have fallen dramatically in the past few years and it is not the best of times to sell. Therefore they must price their properties accordingly if they expect to be successful. These properties are favorably positioned to sell quickly. Many buyers and real estate agents prefer these properties. They can get quicker responses and the sellers are usually easier to work with. Substantiating this fact when a property is not a “short sale” and is privately owned; the listing agent will prominently note this on the multiple listing.
If you step back from the market and analyze it from a buyer’s standpoint, properties are priced substantially less than they were a few years ago and are being perceived as bargains. There are still some buyers that are still waiting to see if the market has indeed reached bottom. But how do they know? It is said the only way to tell if the market has reached rock bottom is when prices have leveled off or have started climbing. So you really don’t know until it happens. I believe we are getting close.
Steve Blair, Realty Executives, is a broker and a Realtor. He has over 20 years of experience in the real estate market. His focus is on listing homes for ready buyers. He also works with buyers making sure they are pre-qualified and ready to purchase. For a free consultation, Steve can be reached at 760.216.8008. Steveblair7@yahoo.com www.homesweetsandiego.com
