However, not all San Diego homeowners are in this fortunate group. Some may have bought their homes at the height of the market, paying much more than their home would bring on today's market. Also, many people took out second mortgages or refinanced their homes and used the money to finance remodeling, buy a new car, purchase luxury items, etc.
Around December of 2005, everything came crashing down, bursting the real estate bubble. While over 500,000 homes had been bought and sold in the time from 2000 through November of 2009, there were approximately 41,000 foreclosures and over 120,000 defaults. Also, there are thousands of people who are behind in their payments and who are trying to get their lenders to do a loan modification or allow them to sell their home for less than the remaining amount of the mortgage (a short sale).
The ensuing recession and the troubles with the financial market that have come about in this past year or so have made people less apt to refinance their homes, largely due to lost equity, and have made obtaining credit much more difficult.
Despite all of these difficulties, there is some good news. The majority of home prices in San Diego have begun to come back from their lowest point in 2006, and three areas are within 20% of their highest prices.
While home prices may possibly go a bit lower in the coming year due to additional defaults and foreclosures, many economists predict appreciation of approximately 6% on an annual basis. (Appreciation in San Diego from November of 2008 through November of 2009 was just above 6.5 %.) Should that rate of appreciation continue, it is likely that the high median home prices seen a few years back will again appear sometime around the year 2018.
When this present recession began, there was a small inventory of unsold new homes, and building since then has pretty much come to a complete halt. The number of building permits issued in 2009 was the lowest since the 1940's, and it is expected that approximately 4,000 will be issued in the coming year.
In the near future, perhaps in a few years, there will be a greater demand for housing than the available supply. This combined with the sale of homes on the market and those that are about to be or are in foreclosure, will ultimately result in an upswing in overall home prices in San Diego. And, while there have been many people who have lost their homes during this recession, they may become home buyers in the future, once they manage to salvage their credit scores and build up some savings.
After all, San Diego will remain a most desired place in which to live.
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