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It’s full-on spring frenzy in the housing market — bidding wars have erupted between flippers and newlyweds, and builders are taking the tarps down from shuttered projects.
The fervor is buttressed by the numbers. San Diego home prices have been rising now for 10 months, according to Tuesday’s latest batch of housing data in the Standard & Poor’s/Case-Shiller index. The county was the only market out of 20 places nationwide to show a gain between January and February.
The bottom end of the market especially showed strength. Homes priced under about $300,000 were the best-performing tier in February, rising 1 percent over the month previous, and gaining 9.4 percent over their levels a year ago.
But those signs of growth and energy in the local housing market haven’t yet banished the gloom. Other trouble still looms — on the jobs front, in commercial real estate, in impending foreclosures. And with bank strategy difficult to read and government stimulus changing shape or disappearing, the forecast is even trickier.
In a stark sign of pessimism about the future for the non-housing side of the real estate market, builders asked for zero permits for new commercial buildings in San Diego County in March, according to the Construction Industry Research Board.
Employment is also sending mixed signals. Local unemployment crept to 11 percent in March, adding 5,600 more jobless San Diegans to the rolls from sectors like manufacturing and construction. But a recent study by the National University Institute for Policy Research found that the local tech industry keeps adding jobs.
A significant portion of San Diego’s economy depends on a healthy housing market, and the government has been dangling some carrots to get people out and buying homes. A federal tax credit ends this weekend that rewarded first time buyers for purchasing a home. A state incentive begins May 1. The impact of the federal benefit disappearing is not yet known, though it’s not unimaginable that lawmakers will pass something else to further stimulate the housing recovery.
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But because local home prices are still dramatically lower than they were in 2005, foreclosures and short sales — selling for less than you owe — aren’t going anywhere anytime soon. More San Diegans are spending more time on hold with banks to fight for a break on their payments. Others are giving up.
Financial pros and regular Joes are gathering bits of insight where they can to get their bearings on this economic landscape.
Real estate broker Sharyn Crown’s been striking camaraderie while swapping stories with other agents about pitfalls, scams and elusive bank reps.
“You know the Realtors all get together and you tell your horror stories,” said Crown, a broker here since 1976. “It’s a new world now.”
Buy a refrigerator from a guy on Craigslist, come back with daunting questions about San Diego’s economy.
That’s what happened a few weeks ago to Dieter Haschke. The guy selling the fridge had been living in his Mission Valley home without making a mortgage payment since December 2008, Haschke discovered.
“How many more people are out there doing this?” Haschke wondered.
Haschke’s not the only one wondering if and when the much-ballyhooed shadow inventory — the stock of distressed homes that haven’t yet hit the market in force — will come. The fear is that such an event could undercut the stabilizing housing market.
That shadow inventory Haschke was wondering about is difficult to gauge, but there are thousands of foreclosure notices going out to San Diego County homeowners each month that have yet to make it all the way through foreclosure and show up as bank-owned houses for sale.
More homes are in that boat than are currently listed for sale across the whole county.
As of Tuesday, there are more than 9,602 properties actively scheduled for foreclosure sale — the second stage of foreclosure — that have not already been sold or had their auction canceled, according to ForeclosureRadar, a California-based foreclosure data firm. Lenders have filed another 7,577 default notice within the last four months against San Diego County homeowners that have not yet made it to auction.
But it’s hard to tell when those homes will show up in the market.
“While on the one hand we won’t bail homeowners out, we’re also totally anti-foreclosure,” said Sean O’Toole, ForeclosureRadar’s founder and CEO. “Politicians don’t want to kick people out on the street. And so we have a stalemate.”
For the local companies formed around the housing mess, business is booming. Jon Maddux, founder of Carlsbad-based You Walk Away, said he’s hearing from people who once disdained his services as irresponsible and immoral. You Walk Away, which launched in 2008, charges homeowners a flat $995 fee to guide them through the foreclosure process.
Since then, Maddux said nearly 5,000 clients have used the company across the country.
And more are coming around, he said. All that’s changed is the buzzword. People who couldn’t stomach walking away from their homes are now calling to ask about “strategic default.”
“It’s actually an easier, more palatable way of saying it,” he said.