San Diego Housing Market News and Analysis

I'd recommend them to check out Mira Mesa. It's closer to Del Mar, similar priced as Clairemont and the housing stocks are newer. School are better too if that matters.

I agree with AN.

Mira Mesa is a good choice... affordable, good commute to Del Mar. Decent schools.

Thanks, already liked condos on black mountain drive that are 90k. 1 br 700 sf. but with baby need 2br and they get 150 k for 2nd bedroom. any condo sites away from freeway come to mind that would be worth me popping a down stroke for them? Or rent and wait?

Move to Temecula.

temecula, if she's thinking she needs to stay home with her baby. which odds are she will

61%

The proportion of mothers with a recent birth who were in the labor force increased from 57 percent in 2006 to 61 percent in 2008.

Other interesting stats:

Compared with other moms, stay-at-home moms in 2007 were more likely to be:
•Younger (44 percent were under 35 compared with 38 percent of mothers in the labor force).
•Hispanic (27 percent compared with 16 percent of mothers in the labor force).
•Foreign-born (34 percent compared with 19 percent of mothers in the labor force).
•Living with a preschool-age child (57 percent compared with 43 percent of mothers in the labor force).
•Without a high school diploma (19 percent versus 8 percent of mothers in the labor force).

http://www.census.gov/newsroom/releases/...

But the condo market is white hot right in Mira Mesa. Most are in contingent state and the one that comes on are usually distressed sale, which mean they'll price it very well. But that also mean it'll be swamped with investor very quickly.

That is a very fluid stage in life to be buying. Considering that it takes a few years just to recover transaction costs the only real reason to buy would be the fear of appreciation. I think we are a couple of years away from that. A lot can happen in the next 2 to 4 years for a couple in a new part of the country, with new jobs and new babies. Apprentices can be offered work in other areas once they complete their program or near completion, they are the first to lose their jobs, babies sometimes come in bunches, that 2 br condo will be outgrown when they have a 2 year old and kid #2 on the way. It's very difficult to downsize from $1300 mo in SD for a 2br without it getting sketchy or adding a commute that will wipe out the savings in gas.

My advice, stay put and rent until some of the variables in life for them are settled and after those raises come, don't bake advancement into the financial cake unless it's an education prohibitive field (ie. MD, PHD) where there aren't hundreds in line to take their place.

I bought a house when I was 22 or so, newly married, newish jobs, babies on the near term agenda. We had outgrown the place fairly soon and looking back, we would have been much better off if we had rented and bought 4 or 5 years later but kept an eye on the market conditions. That was 1991, market didnt take off again till 1998, we had plenty of time and now with the internet, it's easier to see things happening than it was back then. It's better to hold properties for a long time than change them every year or two. When kids are getting ready for school, careers are stable and the family size and income is more predictable, it's so much easier to be able to predict what your housing needs for the next decade or so will be, very hard to do when you are starting out.

Final answer, stay in place, live cheap, give her the option of staying home if another kids comes along and as his raises kick in. Once the tubes are tied, do the math, then go house shopping.

wow, i will request they follow this sound heartfelt advice, God Bless each of you

I am in a little bit disagreement with TG. I think it all depends on math. Life is fluid? That's not a big problem. Waiting for variables in life to settle is kind of an illusion as if we can predict the future. One always needs a back-up plan nevertheless.
Currently, mortgage is less than half of rent in most places. So it makes sense to buy if you can afford not to sell in a few years. If one needs to move: fine, the contingency plan should be having a cash-neutral rental property in your name. If math doesn't work (income too low or price too expensive), then rent.

As an exercise, can we grind through the math for a 2/2 in Mira Mesa, assuming the couple will need an FHA type loan?

A 2/2 in Mira Mesa rental probably is around $1400-1500/month.

A comparable 2/2 for sale would be probably around $200k
Hoa is about $300/month (maybe slightly less)
Property tax is about $250/month

If the property qualifies for FHA loan and the person(s) has good credit, he/she/they can probably put down only 3.5% or $7000. Though I think they would need to pay 1% closing cost for something similar to PMI. Out of pocket would be closer to $9k.. Plus there's a monthly fee for an FHA loan (I forget how much)...

Assume $193k financed for 30yr FHA loan @ 4% that's $922/month (rate might actually be lower now)

Total monthly is about $1472/month, xcluding the FHA monthly fees. It also doesn't include the tax benefit from deducting the mortgage interest on a Schedule A.
So I guess if I were planning stay 4-5 years in a 2/2, I'd probably be looking to buy.

As a rental, it would probably lose about $100/200 month, before tax deductions and that would assume 100% occupancy.
So I think it would make a bad rental. So if I wasn't planning to stay 4-5 years, I'd rent instead of buying the condo..Special consideration also because the couple doesn't appear to have sufficient cash reserves to bridge between months that the rental property would be vacant due to tenant turnover. In fact, I don't think the couple is in a position to have a rental until sufficient cash reserve has been built.

Cost of walking away (if need be later) would be roughly $10000 + having a bad credit report for a few years.

Comments?

BTW: no way going to get a good 2/2 condo in MM for $150k in this current environment.

HOA and taxes should be less and iunterest rate is lower. I'd dropp the monthly carrying cost about $100.

Also FHA buyer could ask for 3% closing cost credit and get in for only the 3.5% down.

Only issue is actually findig one to buy.

How is a buyer going to successfully ask for and receive a $3K closing-costs credit (for up-front MIP?) if condos in MM typically have cash offers from investors to consider?

And how many of the complexes there will actually qualify for FHA financing ... that is, have enough owner-occupants in them?

birmingplumb, the *new* MIP for FHA loans is costly.

Breaking Down The April 2012 FHA Mortgage Insurance Premium Changes

NOTE : FHA mortgage guidelines change frequently. Relevant updates are posted to http://themortgagereports.com/fha-most-r.... Information below may be outdated.

The "other shoe" dropped Monday when HUD announced that mortgage insurance for FHA loans will increase April 1, 2012 and again June 1, 2012. Mortgage insurance, similar to Fannie Mae and Freddie Mac guaranty fees, protect one party from the risks of the borrower becoming delinquent of going into foreclosure.

FHA loans have two tiers of mortgage insurance.

As FHA mortgage insurance exists today, there is an up-front mortgage insurance premium equal to of 1 percent of the loan’s amount. Upfront MIP can be added to closing costs, or borrowers can finance it by adding it to the loan amount.

There is also an annual MI premium that varies by loan type. For 30-year fixed rate mortgage, annual MIP is equal to 1.1% of your loan size for LTVs of 95% or lower. For everyone else, annual MIP is 1.15% of the loan size.

Annual MIP is paid monthly. The formula is (Loan Size) * (MIP Rate) / (12 Months) = Monthly MIP payment.

So what the does the FHA's new mortgage insurance rates mean to FHA mortgage applicants?

Starting April 1, 2012, Upfront MIP for loans raises from 1.000% to 1.750% of the loan size. Annual MIP fees change, too, climbing by 10 basis across the board, and by an additional 25 basis points for loans between $625,500 and $729,750.

$729,750 is the largest FHA loan limit. It's reserved for high-cost areas like the Washington, D.C. Metro area, New York City, and many parts of California.

If you think you'll want an FHA loan for your next mortgage, the best way to avoid the new FHA fees is to have your FHA Case Number assigned before the new FHA MI premiums go into effect April 1, 2012. All existing FHA mortgages will use the "old" MI rates.

http://themortgagereports.com/7964/the-n...

BG, sometimes I think you really have a bone to pick..
But to answer two questions

Yes, there are some. If you think most condo complex cannot qualify because most of them are do not fit an owner occupancy ratio, you're mistaken..

Not sure what cash offers from others has to do with FHA financing specifically. If you're arguing that the condo is multiple offers, with some being cash offers, how would your offer (with a loan) stack up versus a cash offer. Well, then that's a good point probably...But that's consistent with what sdr is saying when he says
"Only issue is actually finding one to buy."
But I suspect once you start talking about $200k+ property, the number of "cash" buyers probably starts to dwindle a bit...

Most FHA loans I believe have a pretty generous closing credit.... At least that's what Absolute Mortgage was advertising a few weeks back when I was generally look at rates.

Well, of course it costs more than a traditional loan. Because the purpose of it is to extend financing to people who don't have sufficient down and/or don't have good enough credit. But whether it costs more than a conventional loan is irrelevant. What is relevant is after grinding through the math is if it pencils out to be lower or comparable to rent.

But all this is really a moot point, because at the way Mira Mesa inventory is looking, that's the main problem.

If it were me, and if I could manage to stay put for 5 years at least. I would be looking to buy. That's just me.

FLU,
Thanks for clarifying a post I wouldnt bother to read. For the benefit of the mentally stable readers out there, there are 3 tiers of pricing for most MM condos. This is a generalization and there will always be exceptions but its a solid generalization.

The lowest is the trashed REO condos that the investors flock to. No chance for an FHA buyer and 2/2 would sell between 150 and 180K ALL CASH. Then there are the short sales which sell more than the REO's and in the 180 to 200 range. Slight chance for FHA but probably not as some investors are chasing these also. Lastly you have the nice, upgraded traditional sales between 200 and 240k. This is where an owner occupant could get in at full retail with a 3% closing cost credit on an FHA loan (many complexes are FHA approved in MM)which should take care of just about everything.

Release the lunatic again

flu, in my post, I was thinking that the suggestion was to ask the sellers for a closing credit in the neighborhood of $3-$5K to help with up-front MIP and that this provision in their offer would likely be trumped by strong cash offers.

I was unaware that there were lenders out there who would extend a closing credit to new FHA mortgagees.

Exactly, flu, the subject of MM condos here is moot. Thus, my post above. I find it idiotic that MM condos were brought up as an option for birmingplumb's daughter and SIL in the first place because any current listings there that are in their price range are likely swarming with investor-buyers with strong cash positions (acc to Piggs "presumably `in the know'") and the OP's prospective buyers will likely be coming in with a low downpayment.

And as a young "blue-collar" family, they likely do not fit the profile of the "single professional" whom several Piggs have claimed here are typically attracted to and occupy MM condo units.

birmingplumb's daughter and SIL would be much better off trying to locate a small SFR in the low-mid $200's with a YARD and avoiding the issue of HOA dues and degree of owner-occupancy entirely, IMO. Over time, they could make an SFR far more resaleable than an older condo, IMO. Believe it or not, there are plenty of these listings out there!

birmingplumb, here are some currently listed examples not far from where your daughter and SIL currently reside:

http://www.sdlookup.com/MLS-120013220-48...

http://www.sdlookup.com/MLS-110053834-45...

http://www.sdlookup.com/MLS-120025663-66...

The first two are "short sales." The comments indicate the first one is a "real fixer." In perusing the limited photos, it does NOT appear to be a "fixer" except for the landscaping, IMHO. The third one is in a better location (YES, it IS better, Piggs :=]) and is a "traditional sale" with a very ample lot which needs landscaping work. The first and third one are small but could be added onto, due to lot size.

There ARE options for SFR's in SD in the low-mid $200's but the buyer needs to be aware than many SFR listings in this price range are situated on busy streets and have deafening fwy noise which can be heard day and night standing on the lot. I did not include those listings here.

birmingplumb, South County would work out well for your SIL's job as the shipyards are 6 miles from West Chula Vista 91910, 3 miles from National City 91950, 5 miles from Paradise Hills 92139, 4 miles from Valencia Park 92114 and 4-5 miles from North Bay Terraces 92114. A buyer can get more for their money in a well-built SFR and even larger lot in these areas than upper Clairemont 92117 and Linda Vista 92111.

In my experience, I have found it cheaper to do a little "fix-up" work on an SFR than to waste money on monthly HOA dues, which can go up periodically as well as have costly "special assessments" required of each owner, both strictly at the whim of the HOA Board.

BG, none of those are around $150k. The cheapest one you linked to is $199k.

When you go above $200k, you can get SFR in MM too:
http://www.sdlookup.com/MLS-120021299-86...
http://www.sdlookup.com/MLS-120017345-10...
http://www.sdlookup.com/MLS-120015495-87...

I didn't mention SFR because there's no SFR in MM for around $150k and there are none in Clairemont as well.

I understand, AN. The OP wasn't entirely clear on their price range for a purchase (the best thing to do is to tell them to get prequalified). He all but stated they have no problem paying $1300 mo rent and like their current location (92117). The current 30 yr fixed FHA rate is currently about 3.5% with a one-point origination fee and a 1.75% up-front MIP payment (under the new guidelines). Under the 203b program, the monthly payments will be as follows:

For a $150K purchase (likely condo):
DP $5250, Orig fee $1447.50, up-front MIP $2533.13

97.5% P&I for $144,750 mtg: $660.06
Est mo taxes for City of SD (urban): $146.25
Contents ins premium: $33.20
1.25% MIP: 150.78
HOA dues: $250-$300
Total mo pymt: $1240.29 to $1290.49

***********************************
For a $200K purchase (likely small house):
DP $7000, Orig fee $1930.00, up-front MIP $3377.50

97.5% P&I for $193,000 mtg: $880.08
Est monthly taxes for City of SD (urban): $195.00
Homeowner's ins premium: $62.76
1.25% MIP: 201.04
Total mo pymt: $1338.88

***********************************
For a $250K purchase (larger 2-3 bdrm house)
DP $8750, Orig fee $2412.50, up-front MIP $4221.88

97.5% P&I for $241.250 mtg: $1100.10
Est monthly taxes for City of SD (urban): $210.77
Homeowner's ins premium: $78.45
1.25% MIP: 251.30
Total mo pymt: $1640.62

***********************************
If they were able to go conventional (had a 20% down payment), they could save themselves thousands per year on monthly MIP premiums and avoid the hefty up-front MIP payment as well as the 1% origination fee and thus get far more house for the money (due to borrowing a lower amount and having a lower interest rate).

As it currently stands (with FHA financing), the smallish house that could be purchased for $195K to $205K (they're out there, folks, and some are on larger lots) seems like the best bet for them to have mo mortgage payments in line with their current rent, IMHO. This would be better to live in with a baby than to share walls with partying singles and/or transient tenants and they wouldn't grow out of it as quickly. If they did, they could consider a room addition in lieu of trying to again qualify for a new, larger mortgage on another house in the coming years.

Just ONE rent increase in the coming months could make their case for homeownership!

I cannot thank you enough for all of your sound advice both now and last year as I searched for my sons apartment. He followed advice and lives in San Diego in a zip code you recommended. He is so happy.He never wants to leave San Diego, enrolled in a Art Class almost next door, got a bus card and feels better than anytime I can remember. I thank you for taking time to post a generous reply.God bless you.

I just reviewed your posts to refresh my memory, birmingplumb. I'm gratified to hear your (disabled) son found a suitable unit for himself in North Park (SD). This area is well-known for catering to the disabled, both within the community and in its public transportation. Of course your son "feels better" now because the climate we have here is very conducive to the health of those persons who come here from a harsh climate (such as MI). In addition, SD residents, for the most part are friendly and accepting. So glad to hear your son is doing well, birmingplumb!