Reports of banks holding inventory, not foreclosing on houses, and not filing notices of default have been troubling me when considering our San Diego, CA housing market. Especially so because of near constant reporting of how property values are going up, my own statistics that frequently show a scarcity of available properties, the recent sharp increase in multiple offer sales, and the increase in frequency of purchase prices that are above list prices, often significantly.
To try and get a clearer understanding of what is happening with our San Diego housing market, I decided to tackle the macro view of it myself. In considering what would give me the clearest understanding of what is happening, I decided that excluding bank sales would produce more accurate results. After all, bank sold properties often include a higher ratio of properties in sub-average condition and can be severely distressed and sold for significantly under-market prices.
What I found is that when considering the median sales price, San Diego is exactly where it was at this time last year: $450,000. San Diego has made no progress in terms of market appreciation. When considering the median price per square foot, San Diego property values have increased by 4.4% over the past year and are roughly equal to May of this year.
This data seems to suggest that the reports of property value increases could very well be due to a 43% decrease in the ratio of bank sales since this time last year which is also a reduction in distressed sales and sub-average condition sales, not an actual increase in resident-owned property values.
Please do your due diligence folks and consider these statistics when purchasing properties – and ESPECIALLY consider the number of bank owned properties, properties with notice of defaults filed, and properties in foreclosure in the area. That is the best indication of the potential for future property value decreases available. I would of course be happy to help. And remember, an appraisal ordered by the bank for your purchase is for the bank, not for you – even if you pay for it. It is generally wiser to get an appraisal BEFORE you make an offer. I have several options available that can help with your specific need and that can be completed quickly. Please visit http://www.diegoappraiser.com, call (619) 630-9273, or email brian@diegoappraiser.com.
Regarding bank owned or potentially bank owned properties being held off of the market or hidden from the market, does anyone out there have more insight into this? I would love to hear from you. The US government / taxpayers are supposed to be buying up toxic debt and I wonder if that has enabled banks to hold properties and halt foreclosure on some properties without the typical negative affects from non-payment by buyers or the holding costs incurred by not releasing them for sale in the open market.
Thank you for reading through this! Comments are welcome!
-Brian Ward
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