Downtown 92101 Properties…

…2010 in revew create some interesting conversation pieces.  First of all, despite the overall condition of the economy, we still see 35% of our sales in downtown San Diego real estate coming from all cash.  These numbers remain very similar to 2008 and 2009 so we have not seen less cash flow into our marketplace.

With the financial markets already getting shaky in early 2011 due to unexpected world events such as what just happened in Egypt , we expect to see a stable number of people parking their cash in real estate Downtown San Diego this year.

Mortgage Financing Landscape

In 2010, of the 65% of the condos downtown San Diego we saw purchased via financing, the numbers break down quite simply.  82% of the borrowers opted for standard conventional financing, with 17% extending into the conforming jumbo or extended conforming category.  This is the category where Fannie and Freddie still buy the loans from $417,001-$697,500 for properties in San Diego County.

For true Jumbo loans, meaning loans above $697,500, there were only 7 loans total out of 728 downtown San Diego condos purchased via financing which represents less than 1% of all mortgages in Downtown San Diego.  This is why we are seeing so many sales in the low priced category.  We don’t expect to see any dramatic changes in this trend for 2011, but we are already seeing some private funds loosen up for Jumbo loans.

Condo prices Condos Downtown San Diego 2010

• $000,000- $300,000        –    33% of all condos sold in 92101
• $300,000 – $500,000       –    38% of all condos sold in 92101
• $500,001 – $700,000        –    16% of condos sold downtown San Diego
• $700,001  –  $1,000,000  –     9% of all properties sold downtown San Diego
• $1,000,001 +                          –     represents only 4% of all properties sold in 92101

With 71% of the downtown San Diego properties being sold for $500k or below, you can see the sales occur where the financing is available.  Even cash investors don’t see the luxury market bouncing back any time soon .  Short sales, foreclosures and Developer New Condos represented a total of 75% of the condos sold for 2010.

For 2011, we expect to see a dramatic shift in the above sales chart.  With New Condos Downtown San Diego from developers almost being sold out completely. we will see the developer category fall from 36% of sales downtown San Diego to somewhere near 10-16%.  This means Downtown San Diego Realtors will be responsible for more of the overall market sales. 

We expect to see a larger number of those developer sales replaced by Short Sales Downtown San Diego.   With the government lightening up the consequences of short-sales, more consumers will chose this option for 2011.

As you can see in the above chart, short sales have been increasing by numbers almost two fold since 2008. How many short sales do you predict for 2011?