Abundance of Distressed Properties in San Diego Real Estate Market

Despite continued talk of declining housing inventory and foreclosure activity, real estate acquisition strategies abound in Southern California’s San Diego County. So where are the opportunities, what types of distressed properties might real estate investors and home buyers be interested in acquiring, and what other attractive investments are available for out of area buyers looking to capitalize on San Diego’s property market?

Underwater Homes and San Diego County Short Sales

While Inman News reports another 3.5M U.S. homeowners having been pulled from being underwater, thanks to almost $1 trillion in new home equity being added, San Diego still has its own fair share of underwater homes. According to Zillow, as of the end of the first quarter of 2014, over 55,000 San Diego County homeowners were still underwater, or 12.6% of county homeowners that had mortgages. Zillow also predicted that 11% of San Diego County home owners would still be underwater by 2015.

According to UT San Diego, the following neighborhoods may represent the best opportunity for investors to acquire a foreclosure:

  1. Encanto
  2. Otay Mesa
  3. Oceanside
  4. Chula Vista
  5. Spring Valley

Many of these homes could offer short sale opportunities, or may become foreclosures.

The Danger of Delinquent Property Taxes, and Tax Lien Sales

The county tax collector reports that approximately $100M in delinquent San Diego property taxes are still owed. Almost 37,900 San Diego County property owners have been identified as being delinquent on their property taxes. If not settled, many of these homes could wind up being auctioned off as foreclosures. Regardless of whether mortgage payments are up to date or if there is no mortgage, homeowners across the country have been losing homes to this process for as little as $6 in property tax related fees. Homes are then usually auctioned off for a fraction of their values.

Clearly there is significant motivation for homeowners in this position to sell their homes and strike win-win deals. This is where San Diego real estate investors can help.

San Diego Foreclosures

DataQuick reports that 3,162 San Diego homeowners are still 90 days or more past due on home mortgage payments. According to data compiler RealtyTrac, savings from buying foreclosure homes are actually up signicifantly as of April 2014, with an average discount of 22.3%. The largest leaps in savings, year-over-year to April, are being seen in:

  • San Diego up 27.2%
  • Carlsbad up 24.3%
  • Fallbrook up 23.5%
  • La Mesa up 20.8%

Still, median home sales prices have been rising in all of these areas. UT San Diego proclaims many San Diego County homes are still selling for 50% below their previous peak prices.

Other Types of Distressed Property in San Diego in 2014

Mortgage and property tax delinquency aren’t the only causes of foreclosure or distress. There are many other reasons for San Diego County property owners to be highly motivated to sell today. RealtyTrac says 8.06% of county homes are currently vacant, which could suggest they have been abandoned. Some homeowners have needed to move for family or job reasons, and others need to downsize or relocate quickly due to financial reasons.

Of course, distressed and foreclosure properties aren’t the only option for home buyers and real estate investors. Many are trending towards buying newly renovated homes from investors which offer highly attractive, ready to move in or rent options in great neighborhoods.