In the interview, Nevin is quick to admit that this is the first time he’s been optimistic about the San Diego housing market in about four years.  He points out that all seven of San Diego’s major economic driving forces were doing well(i.e. biotech, manufacturing, telecom, etc) and that the market has bottomed out and is moving forward.

Some interesting statistics mentioned were that San Diego’s unemployment rate has dropped from about 10.1%, to 8.9% in the last year and 23-25K jobs were created in 2011. Nevin also focused on the fact that vacancy rates are extremely low, at only about 3-4% and that foreclosures have significantly decreased.

No one can ever be 100% sure, but it seems like there are a lot of people out there buying San Diego real estate.  I know that I’ve been getting a lot of inquires lately and there’s a lot more demand than 12-18 months ago.  Hopefully we start to see more inventory come into the market, but they will predominantly be resales, as there’s very little new construction going on(zero condos are being built downtown right now).  Take advantage of current rates and find yourself a home!

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The work will begin in December of this year and the first phase may be completed in 2 years.  Hopefully this does happen and the rest of the re-development comes soon.

Sales at Vantage Pointe officially stopped earlier this month and now Equity Residential will rent out the “condos” until further notice.  Equity Residential, one of the country’s largest apartment owners and managers, paid $200M for Vantage Pointe(which I think is too much to turn a profit if they were to sell the building).  If they plan on eventually selling these condos, I think they’ll have to do some fairly major rehabbing, changing the floor plans and making many of the units larger, decreasing the overall number of units.

Rents at Vantage Pointe have already gone up, but it will be interesting to see if the new owner holds firm on their new, higher prices.  My guess is that residents will bail out as well, finding nicer, less expensive rentals.  Good luck…

Q: Why is there a cap?

A: The downtown redevelopment project area east of the Gaslamp Quarter was adopted in 1992 with a $2.9 billion the cap in place. At the time, it was the amount of development planners expected would occur over the life of the project. But in the wake of Petco Parks opening in 2004, so much development has occurred in East Village that the cap is nearly at its limit. State law eliminated the cap for projects adopted after 1994 and this special legislation brings the San Diego project into line with the treatment of such projects in other cities.

Q: What does lifting the redevelopment cap mean?

A: Downtown development ” hotels, office buildings, retail, condo and apartment towers ” will now generate new redevelopment property taxes, referred to as tax increment, that can be collected without limit until 2043. The money is used to repay bonds sold to build various development projects.

Q: What would happen if the cap were not lifted?

A: The Centre City Development Corp., which oversees downtown redevelopment, would have had $386 million to spend over the next decade or so, leaving about two-thirds of downtowns community plan projects unbuilt. All future revenues would have would flowed to the city, county, schools and other taxing agencies and downtown would have had to compete with other city priorities for capital improvement dollars.

Q: Then do the other agencies get no share of redevelopment money?

A: This year a sharing agreement is sending the county, school districts and other special districts more than $25 million, and the share is scheduled to double starting in about two years.

Q: How does removal of the cap affect the Chargers?

A: It means that tax increment ” downtown property taxes ” could be available to subsidize a new stadium and any other public improvements downtown, which have been estimated at $6 billion over the next 30 years.

Q: How much is needed for the stadium?

A: No financial plan has been presented, but the Chargers have projected a 62,000-seat stadium would cost up to $800 million. The team has indicated that as much as $500 million in public funds might be needed.

Q: How would that money be spent?

A: The bus yard at the proposed site ” bounded by 14th, 16th and K Streets and Imperial Avenue ” would be relocated to a site not yet selected. The buildings, utilities and asphalt would be removed and any contamination cleaned up. New utilities and off-site improvements would then be built. How much of the actual stadium construction costs would be covered by the city has yet to be determined.

Q: How would the improvements be financed?

A: Most likely, the citys redevelopment agency will issue bonds to cover the costs and repay them from future redevelopment property tax receipts. If the city is responsible for $500 million in costs, the annual debt payment could total $50 million. Such bonds are not subject to voter approval, but an election still is planned on the stadium proposal.A: The downtown redevelopment project area east of the Gaslamp Quarter was adopted in 1992 with a $2.9 billion the cap in place. At the time, it was the amount of development planners expected would occur over the life of the project. But in the wake of Petco Parks opening in 2004, so much development has occurred in East Village that the cap is nearly at its limit. State law eliminated the cap for projects adopted after 1994 and this special legislation brings the San Diego project into line with the treatment of such projects in other cities.

Prior to this new bill, CCDC had a $2.9 billion spending cap for

downtown redevelopment.  The city spent about $100,000 on a study to determine whether or not downtown needed(rather, could justify) more redevelopment dollars.  The study showed that downtown San Diego still needs about $6 billion dollars worth of improvements – not including the estimated $800,000 or so, for the proposed new Charger stadium.

If Governor Schwarzenegger signs off on this bill, the seemingly extinct building cranes will soon be back in full swing.  Hopefully the city will take advantage of this and begin to make downtown San Diego a richer, more interesting city than it already is.  We’re a young downtown, but hopefully this will help us grow and mature gracefully.

As more development takes place, more and more people are going to learn about the “new” downtown San Diego and it won’t be long before businesses move their offices to 92101.  And once that happens, condo prices are going to start rising again.  I don’t think it will happen overnight, but it will happen. 

Yesterday, Vantage Pointe announced that it “halted sales on the 679–unit condo project and is returning deposits to dozens of buyers who had been waiting to close escrow.”  The San Diego Union Tribune also noted that this was the second time in the last year that Vantage Pointe has had to give deposits back – Vantage Pointe previously had refunded deposits to about 300 buyers due to new lending guidelines that required a higher pre-sale percentage.  It’s hard to say that I’m shocked of the news, rather I’m shocked it took this long.

Currently there are approximately 200 tenants, with plenty of room for hundreds more.  The UT reported that the $280 million project has defaulted on its $210 million construction loan earlier this year and that it has not been successfully sold to any investors. 

The developer, Point of View, is a Canadian company that has never built anything outside of its native country(aside from Vantage Pointe obviously), but appears to be working on a project in Maui.  And while I feel bad for them, I honestly have no idea what they were thinking when they built this development.  The building is in a less than ideal location, it’s far larger than anything else downtown, they didn’t phase the building or sales and the timing was terrible.  As Peter Dennehy, the VP of John Burns Real Estate Consulting, stated, “urban projects are tough with this number of units, they’re tough to pull off unless you have smoking market conditions”….I’d say that’s putting it lightly.

However, I do have to commend Pointe of View for returning the deposits and for paying buyers an additional $8000 since some can no longer qualify for the federal first-time buyer tax credit.  I’m not sure if they’re doing this for everyone who would have qualified, but the UT reported that Pointe of View was doing this for at least one buyer.  Hopefully, someone can come in and turn this project around, but it’s going to be tough.  In my opinion, in order to sell it, an investor/developer would have to come in and restructure the development with fewer, larger condos and lower prices.  I guess only time will tell.

Clearly I’m not an attorney, nor am I a tax consultant, but from my interpretation of SB 401, it appears to relieve California State income tax consequences to people who successfully complete a short sale and meet specific criteria.  Compounded

with the Federal Mortgage and Debt Relief Act of 2007, my understanding is that if the home/loan was purchased as a primary residence and the indebtedness is less than $800K and the forgiven debt is less than $500K, you do no have to pay any income taxes on the forgiven amounts.  This includes first and second trust deeds, refinances that were applied to the previous criteria and for loans used to build, or improve a primary residence. 

Again, you should consult your accountant or real estate attorney, but this certainly sounds like good news!  If you have any questions about short sales, foreclosures, or anything real estate related, please contact me, Denny Oh, at 858–243–2092 or denny@sandiegoh.com. 

The real estate market is a crazy one right now and you need someone who knows what they’re doing on your side. 

With one and two bedroom condos, Vantage Pointe seems to be targeting the first time home buyer, the investor who has a few hundred thousand sitting around and probably some second home investors.  What I dont get, is how they ever intended to sell off so many condos.  At this point, Vantage Pointe is renting out some of its condos and try and sell the rest.  Im not sure how they plan on doing this, but I dont think I could ever advise a client of mine to purchase here.  In fact, Ive talked people out of buying at Vantage Pointe!

Heres what I dont like

1. Competition “ with almost 700 condos in one building, how can you expect to sell anything when youre neighbor and 100 others are trying to sell the same condo?  Okso its not the same exact condo, but theyre not going to be very different.

2. Amenities “ again we are faced with a ton of people(assuming people buy/rent) who are all sharing the same common area amenities.  The pool area, lounge, gym and media room are all great, but what if more than 20 people want to use it?  Considering the fact that, from what I saw, nothing at Vantage Pointe was much different in size compared to buildings with 200 or so condos, how do they expect 3.5 times as many people to use the same amount of space?  I will say, however, that the lobby at Vantage Pointe is very impressivebut thats about it.

3. Litigation “ with so many condos that were built(which were not phased), I cant help but imagine there were some cut corners during the construction of Vantage Pointe.  Im not saying anything illegal was done, nor do I think that, but as all developers have been hit, I doubt Pointe of View was any different. When I toured the property, I saw things like un even rails, less than perfect 90 degree corners, etc.  I would be surprised if Vantage Pointe did not go into litigation at some point for building defects.  Like I told my friend, I dont think its going to fall down on you, but you might have problems with your plumbing and everything else.

4. Desperation “ as a realtor, I see how developers try and market towards us.  Some developers only come to us when times are tough and nothing is selling and others value our services and always want our help.  With Vantage Pointe and Pointe of View, realtors are being offered a 5% commission and I cant tell you how many emails I get about new events with food and drinks.  Typically Id say this is great, but in this case, I think it smells of fear and desperation.

Just take a look at the ad below.

All of their marketing is talking about bottom line pricing and negotiating an UNBELIEVABLE price.without even trying.  Last time I checked, that wasnt the best way to sell something and make money on it.  All thats missing are the dotted lines where you cut out the coupon!  Granted, theyre probably just trying to sell off some inventory so they can increase their occupancy rates and get financing on the remaining condos, but even with this aggressive approach, I doubt theyll sell much.

One of their ads shows a price reduction on a 1br from $249K to $216K “ a 13% decrease.  Another unit went from $381K to $341K “ also a 13% price reduction.  Typically, youll see this when a developer is closing out their inventory, or when theres something wrong with a particular condo(i.e., it has no view at all, or its next to the rail road track, etc.), but not when its a brand new building.

I know people will say Im wrong and that this is a great building, but I dont think that theres anything one could say or show me to convince me otherwise.  I would never buy here, nor would I want to represent someone who does.  If you want a downtown San Diego realtor who will advise you and not just look for a paycheck, give me a call.

Denny Oh 858“243“2092 denny@sandiegoh.com

I wonder why someone was using a heater?  It’s not even cold in San Diego!  Well, I’m glad no one got hurt and it’s good to know Diamond Terrace’s fire sprinklers work.