Good News for the San Diego Housing Market

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Good News for the San Diego Housing Market

May 28th, 2008 categories: Real Estate Finance

As of June 1, 2008, Fannie Mae and Freddie Mac are removing their declining market policy. This policy penalized certain communities, including San Diego, by labeling them as “declining” markets and requiring that borrowers put down an additional 5% down payment.

Critics of the policy including the National Association of Realtors, claim that this policy further depressed sales and real estate values in markets considered declining. As of June 1, Fannie Mae and Freddie Mac will charge borrowers the same minimum down payment in all markets.

Ending a policy that stigmatizes certain communities should help stabilize the credit markets. However, it is yet to be seen if the Private Mortgage Insurers will follow suit. If Fannie Mae and Freddie Mac are willing to purchase loans with minimum down payments but the mortgage insurers will not insure them, then lenders will not be able to grant the minimum down payment loans.

In the meantime, borrowers can are apply for loans from the Federal Housing Administration. F.H.A. loans which offer minimum down payments and have no declining market restrictions.

Provided that the mortgage insurers will insure high loan to value loans, the removal of the declining market policy should help the San Diego market as more borrowers can once again qualify for financing. According to Kirk Houston, of the Houston Appraisal Group in San Diego, many areas in San Diego are showing signs of increased activity and sometimes increased sales prices. He comments that he has seen some bank owned properties even sell above the asking price as multiple buyers made offers on the same property.

Now definitely seems like a good time to invest in San Diego. We are most likely at, or near, the bottom of the price fall, interest rates are low and our rental market it strong.

Lysa Catlin
CMC Finance
(858) 456-3000

This entry was posted on Wednesday, May 28th, 2008 at 10:04 am and is filed under Real Estate Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Austin REALTOR Sam Chapman June 5th, 2008 at 9:34 am
So that is good news for buyers, but how is the overall market? I am reading about increased sales in some markets and am hearing very little about California.
Denny Oh June 5th, 2008 at 11:02 am
Sam,

Things seem to be picking up here as well. YTD, Downtown San Diego has sold 234 listings, with another 131 currently pending. We have 606 active listings on the MLS, which on average, sell within 70 days.

Our average sales price is just under $613K and things seem to be moving. The biggest struggle, is with properties in the $200-350K range.