Diego Downtown has been a hot topic for couple years in a row now.
Here you’ll see hundreds of unsold luxury condominiums stacked in vacant high-rises. Some units downtown are now selling for less than half what earlier buyers had paid during the market peak.
According to Peter Y. Hong from Union Tribune, These see-through buildings, with names evoking European sophistication like Aria and Vantage Pointe, are the opulent spatter from the bursting of one of California’s flashiest housing bubbles.
From 2001 through 2008, more than 8,000 condominium units were built in downtown San Diego. That’s double the number of downtown units constructed over the same period in Los Angeles, a city three times its size. So while sales of urban high-rise units are convulsing elsewhere, nowhere is the collapse more dramatic than in downtown San Diego.
Flush with easy credit, developers and home buyers were eager to invest in “America’s finest city,” the nickname used by officials to tout San Diego’s bay-side location and perfect climate.
At the height of the frenzy, hopeful purchasers queued up outside sales offices to plunk down deposits. There were occasional arguments over who was first in line. No one wanted to miss out with condo values riding an elevator to the sky.
Near the peak, in May 2004, median resale prices of downtown condos hit $647,500, a 56% increase in just three years, according to San Diego research firm MDA DataQuick.
“It was like the Gold Rush down there, and this is the fallout,” said Peter Navarro, a UC Irvine professor of economics and public policy who in 1992 ran unsuccessfully for mayor of San Diego.
“Tough new lending rules aren’t helping matters. Fannie Mae and Freddie Mac, the government-sponsored entities that buy or guarantee the majority of new mortgages, require a new housing project to be 70% pre-sold for a home buyer to get a loan. That makes it virtually impossible for buyers to get mortgages in largely vacant buildings, even if they have great credit. Rather than dump units at fire-sale prices, some developers are converting their projects to rentals, at least until the market improves. ” – Union Tribune
It might sounds gloomy, but there is a bright side here for buyers..
There were 442 condos sold in the last 6 months comparing with 319 6 months before. It is definetely a sign of a increased activity and the fact that buyers are driven like bee to the honey to low prices on condos downtown.
Interests rates are at all times low still and the sellers are flexible. In some particular buildings the prices have come down so much that it creates multiple offers situations for buyers and in some cases even brings up the price.
Having a rich choice, availability, interest rates and even FHA, VA, approved building downtown, there are no doubts that it is one of the most amazing times to purchase property.
