More Condos in San Diego Bank Foreclosure List Inventories

by on cities

The overbuilding of high-rise condo buildings in San Diego has substantially increased the number of San Diego condo units entering bank foreclosure list inventories, according to local real estate data.

During the period from 2001 to 2008, over 8,000 condo units were built in San Diego, two times the number of condo units constructed during the same number of years in Los Angeles, which has a population three times that of San Diego.

During the boom, developers went into a frenzy of building condo complexes as banks easily gave out construction loans and as San Diego was becoming the mecca of many people because of its bayside location and its good climate.

In May 2004, the median sale price for existing condos reached the record level of $647,500, a 56-percent increase in a three-year period.

Flippers during the boom were making nearly $100,000 in just two months of buying and reselling condos. In 2005, many excited buyers bought one-bedroom condo units in the price range of $340,000 to $370,000.

When the housing market collapsed, flippers and other condo buyers could no longer sell. A studio-type unit bought for $340,000 in 2005 entered a bank foreclosure list this year and was later sold for only $162,000, a staggering drop of more than 50 percent from its 2005 price.

Currently, downtown San Diego is now overflowing with condos for sale. Approximately 400 newly-built units and existing units are being offered for sale.

More than 450 condo units are in the foreclosure process and most of these are expected to enter bank foreclosure list inventories in the coming months. About 1,000 units were being built when the market collapsed, and they are now set to get added to the market this year.

Housing analysts contend that it would take years before all the condo units are sold, as more units are expected to enter bank foreclosure list inventories.

While some condo developers are able to hold off their condo units from the market, some developers have left San Diego. Los Angeles developer KB Home has canceled its 184-unit condo project.

In 2004, Bradford Willis signed a contract to buy a one-bedroom condo unit in a luxury condo project called Vantage Pointe for $341,000.

Now, he is thankful the project did not push through, as he was able to cancel his purchase contract and get back his deposit. More importantly, he was able to avoid the likely situation of seeing his condo unit getting added to a bank foreclosure list.