Local Real Estate Market Confusing to Both Buyers and Sellers

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh. You're listening to These Days on KPBS. After talking with some real estate agents lately, you might start thinking that happy days are here again in the local housing market. After all, the pace of home sales has been going up each month for almost a year, the pace of price declines has slowed and the number of homes on the market is way down from last year. So, some agents say now is the time to buy, before housing prices start shooting up again. Well, maybe and maybe not. The San Diego real estate market is a very complicated place right now; it's got long-time analysts scratching their heads. Although indicators show the market could be slowly on its way back up, there are so many 'ifs, ands and buts' clouding the picture, you need a lot of information before making a move in this real estate market. Two people with some of that information are my guests. Matt Battiata is CEO of the Battiata Real Estate Group. Welcome, Matt.

MATT BATTIATA (CEO, Battiata Real Estate Group): Good morning. Thank you.

CAVANAUGH: And Kelly Bennett is staff writer and author of the "Survival In San Diego" blog on voiceofsandiego.org. Nice to see you, Kelly.

KELLY BENNETT (Staff writer, and author of the "Survival in San Diego" blog on voiceofsandiego.org): Great to be here.

CAVANAUGH: And we invite our audience to join the conversation. If you've got questions about this confusing real estate market or you've been trying to buy or sell property lately, give us a call, tell us about it, 1-888-895-5727, 1-888-895-KPBS. I want to start out with a general question to both of you, and I'll start with Matt. How would you describe the current state of San Diego's real estate market?

BATTIATA: The current state of the San Diego real estate – Boy, talk about a general question, right? You know, the best way – the best analogy that I've come up with to describe real estate markets is they're kind of like an oil tanker out on the ocean. They get momentum, okay. So if you go back to 2004, the spring of 2004 was when we kind of turned off the propellers and turned off the engines on the market. The first fed rate hike was in April of '04 and the first week of May of 2004, which is normally about the busiest time of the year, was dead. And that was the end of the market. Now, if you look at the stats, our median price still kept going up for another year and a half. It didn't peak until 2006. The reason is because markets, like that ship, they don't turn on a dime and they don't stop on a dime. So now if you fast forward to here we are in 2009, we are steaming full speed ahead, still, in the opposite direction. Okay, maybe we've slowed down a little bit. But this ship has -- You know, we're going south now and it's got a lot of momentum. Even if, let's just say, optimistically, in the next six to nine months, we turn – the economy starts to improve, unemployment starts to go the other direction, and we start to turn – we turn the engines off and turn the propellers off. The reality is, this ship has a lot of momentum so even though we are close to the bottom, we are, in my opinion, we're a couple of years away from a turnaround. It doesn't mean that it's not necessarily a good time to buy. Interest rates are low. The market is much, much more affordable than it was. It's very affordable for a lot of people, which makes it healthy. The issue is there's a lot of people who are upside down because our market, in general, has dropped about 50%, which is incredible, in a three-year span. And the reality is, there's still a lot more short sales and a lot more foreclosures, unfortunately, and I hope what we're going to talk about is that the banks are really not making any real effort to modify people's loans, which is why, unfortunately, hopefully people can do short sales but otherwise we've got a lot more foreclosures that are going to come down the pike.

CAVANAUGH: And we're going to get to that but, Kelly, I saw you shaking your head in agreement with a lot of what Matt was saying.

BENNETT: Absolutely. I mean, we talk about what are the characteristics of that momentum as the ship is headed south, as you're talking about, as the – as prices continue to follow values. We're talking about, like Matt said, a ton of people underwater just because, you know, the house in another part of the county gets 20 offers on it when it goes on the market doesn't necessarily mean that your $100,000.00 - $150,000.00 of equity that has disappeared in the last three years is magically going to come back anytime soon. And so that's a big question for people because even if the housing market in general, you know, even if the stories I write and the reports that Matt and other real estate pros are sharing with their clients start to be a little bit more positive, start to be about prices going up, about sales continuing to go up, that doesn't necessarily save all of the people who are sitting underwater, a couple of hundred thousand dollars, in some cases. And so that's a big, big question. And also, unemployment is a big question. The state of the general economy can't be divorced from what's happening in the housing market and so we are seeing some more activity, some more people saying this is the time that I want to get out there and I want to be looking, but it's not just kind of smooth sailing from there.

CAVANAUGH: You know, Kelly, in the introduction I kind of wanted people to understand that when you start talking about real estate now, it's all well… and if… and if we see this indicator… I want to know what you see, what you've been writing about now, that are, quote, unquote, the positive indicators for the market.

BENNETT: Sure. Well, you mentioned sales. Sales have been going up for about eleven months. That means more homes sold, say, in May than sold in the May of 2008. More homes sold in April compared to April last year. Year over year we've seen, for eleven months, an increase in sales rates. That's great and that's – again, that means that more people are out looking and more people are actually out buying and closing escrow, which is a good thing. But it's nowhere near the sales that we had, still, in 2004. And so that's one thing that is, like you said, a positive but, you know, there's always that caveat on a lot of this news. Another thing that's good is that there are – or a lot of people interpret this as good for the market, there are some programs out there that are getting more funding for helping people actually get in and buy a house. There's government grants, there's more subsidies, there are tax breaks that are being put in place to help kind of jump start this housing market. The trouble is that when first time buyers go out there and look, they find a house that they like, they've got the financing in place, they've got their three percent down payment with – if they're using an FHA loan, which is sort of the federal government's, essentially, first time buyer program. But those people are out there also competing with all the cash investors who don't want to have their money in the stock market anymore.

CAVANAUGH: Oh.

BENNETT: And so the cash investors come in and say I've got two hundred grand in cash, I can close in ten days, and the first time buyer with his hodgepodge of, you know, government grants and loans and all of these different things, isn't always able to compete on the same level. So there is some frustration even though there are all these great programs and subsidies and the kinds of things that would allow someone who has been waiting to buy to actually get into the market now that things are affordable in some of the neighborhoods in the county, there's still that competition. So, again, it's one of those things that there's some sort of glimmer and then it's important to take into account all of the other characteristics. But I, you know, I think that's a good thing. I think there is incredible value in taking a measured, sober look at whatever market we're in, whether it's a boom market or a bust market. If I can afford something and I want to stay in a house for, you know, a number of years—a lot of people are saying ten—and I want to be in the neighborhood that I'm looking at and I can find something and close escrow on it, go for it, you know?

CAVANAUGH: Right.

BENNETT: But it doesn't necessarily mean that it's a matter – or, it's important to settle or it's important to – or, you know, it's the kind of like frenzied kind of rush, get in and just get something before prices go up again. I don't think that's a very good idea.

CAVANAUGH: Well, Matt, as Kelly was saying, there are some neighborhoods in San Diego County that are doing a lot better when it comes to house sales than others?

BATTIATA: Well, for – you know, it comes to – The better areas always weather the storm better, for sure. But, you know, to what Kelly said, the reality is, we've had multiple offers on the – you know, the whole way through this cycle. There was not a single spot over the last three or four years where the best deals on the market, foreclosures, short sales that were priced the most competitively of – even when we had 30,000 homes on the market. You know, now we have about 15,000. When we peaked out at about 30,000 homes, the best deals were still getting multiple offers. The benefit now to a buyer and, you know, there are – yeah, there's investors out there but, you know, for buyers right now, you have to remember—and this is the good news—is, you know, interest rates are still unbelievably low. They're not going to stay this low. I mean, there's just no way. When the market starts to recover, interest rates, I believe, are going to start going up again. And, you know, that $300,000.00 property, a lot of those were $600,000.00 a few years ago. So they're a lot more affordable. But, you know, the reality is, it is a great time. This is still San Diego.

CAVANAUGH: Umm-hmm.

BATTIATA: It's always going to be a competitive market. And we've never had a spot where we didn't have multiple offers, so if you are a first time buyer or a trade-up buyer, it is – you know, it's a great time to be a buyer, really. I mean, there's always a silver lining somewhere, you know.

CAVANAUGH: I'm speaking with Matt Battiata. He's CEO of the Battiata Real Estate Group. And with Kelly Bennett. She is staff writer, author of the "Survival In San Diego" blog on voiceofsandiego.org. And we are taking your calls at 1-888-895-5727. If you have a question or a comment about the current real estate market in San Diego, let us know. That's 1-888-895-KPBS. Matt, we heard that the local housing inventory, in fact you just said, is cut in half from about a year ago.

BATTIATA: Umm-hmm.

CAVANAUGH: Could those numbers be skewed a bit by the way active listings are reported?

BATTIATA: Yeah, a lot of the numbers are skewed. There's a new designation on the Sandicor Multiple Listings Service called 'contingent.' And what 'contingent' means is that it's a short sale where the bank – an offer has been submitted to the bank but the bank has not yet approved it. Now the 15,000 number does include those contingent listings so, you know, the inventory has dropped. A big part of that is what we call the shadow inventory where lenders have foreclosed on homes but not put them back on the market. They're just sitting on them. The reason they're doing that is to cook their books and make themselves look more solvent. If you – I mean, to put it bluntly, if you have a hundred homes, just to give you an idea. If you have a hundred homes that you've foreclosed on and taken back that you were owed, say, a half a million dollars each on, okay, that's $50 million in assets that you can put to your bottom line. These banks know that if they turn around and sell those things, they're going to get maybe $250,000.00 apiece and now they only have $25 million. So they're sitting on them, in part to cook their books, in my opinion, and make themselves look more solvent. And the other reason is, theoretically, they don't want to flood the market. That's one theory. I think the first theory is more right on. The other issue is, there's a ton of people in San Diego County, and this is probably a bigger issue than the shadow inventory, there is a tremendous number of people who are facing foreclosure or trying to do loan mods with the banks and they're in this limbo. Their house is not on the market. They don't want to sell their homes. They're horribly upside down. They're trying to work something out with the banks, and the banks are really just going through the motions, burning up time. But they're not foreclosing on the homes, so that's a huge – you know, that's a huge, dark cloud that at some point is going to have to be dealt with. And I think the reality is, those are going to end up – hope, better – hopefully, they're going to end up being short sales. I hope they don't end up being foreclosures. The best bet would be that the banks actually modify their loans but the reality is—and I'm speaking from firsthand experience because we do loan modifications as a service for free—the reality is a fraction of the people that need loan mods are in a – will actually qualify and of those people that will qualify, once they realize what the banks will actually do for them in a loan mod, they're not even interested because it's a bandaid.

CAVANAUGH: Kelly, you wanted to comment on that shadow inventory?

BENNETT: Yeah, well, I wanted to say first, what, you know, what Matt's talking about with these loan modifications, can be anything from someone seeing the interest rate that they're paying every month drop from, you know, 5% to I think it's as low as 2% or they might take a loan that had previously been a 30-year lifespan and give it a 40-year lifespan.

CAVANAUGH: Right.

BENNETT: Or they're freezing an introductory period for a loan and making a low payment for a few more years and then what happens in a few more years, they get to that point that they're at right now, which is my payments are going to go up fifteen hundred bucks. Well, the question that I have and that a lot of people have is, what are we expecting will happen in those three years? What are we waiting for? I mean, is – are we expecting that – a crazy boom again that will get back up to 2004-2005 levels? There's a researcher at USD, Norm Miller, who has done a study to kind of try to model what home prices could possibly do and he's not forecasting prices getting back to 2004-2005 levels until mid-decade. And so it's important to be looking at, you know, when we're talking about a loan modification…

CAVANAUGH: When you'd say mid-decade, you're talking like 2015?

BENNETT: The next, yeah.

CAVANAUGH: Oh.

BENNETT: The next decade.

CAVANAUGH: Uh-huh.

BENNETT: And that's largely due to the fact that what got us to the point that we were at a few years ago was this incredible proliferation of loans that had never been tried before and people, you know, getting into mortgages and into properties that were on riskier loans than they would have previously. And that's – And one of those categories of loans, and what I was hoping to say on the shadow inventory thing is, technically, shadow inventory, the best definition I've heard of it is, the homes that the banks have already foreclosed on but they haven't put back on the market. But like Matt said, there's this other shadow, this other dark cloud, that is all of the people who aren't making their payments right now or all of the people who are – have received a notice of default, that first official notice of foreclosure, but haven't yet gone all the way through the process. Or what I've been looking at is what kinds of loans are out there right now, and we've got – you know, we knew about sub-prime. That was the category of loans that – often low-income, low credit score people were able to get into homes and we've seen kind of the damage that the fallout from the sub-prime boom has had in our market. Well, sub-prime only captured seven percent of all of the outstanding loans in San Diego County. You know, the ones that – including all the people back to the '80s who have mortgages on their houses. Alt-A, which is the next step up from that…

CAVANAUGH: Alt-A.

BENNETT: Alt-A, those are the higher risk loans for people with better credit so it's kind of like the sub-prime for better credit people and that's anything from a low down payment to one of the adjustable rate mortgages that allowed people to pay a very low introductory payment for a few years. Those – that's 14%. So twice as many of our outstanding loans in San Diego County are that second category, Alt-A. Well, is that a big deal? The default rate for the sub-prime is a lot higher than Alt-A, so we're kind of doing okay there. But it's growing at a faster rate. So last year, all of the Alt-A loans that we're talking about, that's that middle range, that higher risk loan for better credit people, were – only 12% of those were in default. This year, 25%. So it's an important thing to be looking at. There are people in different neighborhoods at different income levels with different credit scores who are experiencing, in a lot of ways, the market of 2006 for the sub-prime people.

CAVANAUGH: I see.

BENNETT: And so what are we trying to do with people being underwater? And how are we going to kind of account for the people who are, you know, coming into default who haven't been foreclosed yet?

CAVANAUGH: There are a lot of people who want to get in on this conversation. Let's take a phone call. Jim is in La Mesa. Good morning, Jim.

JIM (Caller, La Mesa): Good morning. I had a question for you guys.

CAVANAUGH: Umm-hmm.

JIM: We hear a lot about short sales and different modifications. Have you actually run into any buyers who have taken advantage of those things? And how does it affect their credit? How does it affect their ability to purchase a home after that financial cataclysm.

BATTIATA: After – Okay, after doing a short sale, for example?

JIM: Yeah.

BATTIATA: Yeah, okay. Yeah, we do – I mean, I've done hundreds and hundreds and hundreds of them over the last few years. Doing a short sale – a loan modification does not affect your credit. That's – Although you do have to be, you know, pretty significantly behind in your payments before the bank will consider a loan mod.

BENNETT: Which does affect your credit, right?

BATTIATA: Yeah.

BENNETT: Yeah.

BATTIATA: Being behind on your payments, yeah. So if -- You know, Jim, if you – if you're an individual that says I love my house, I want to live here forever, I don't care that I'm upside down and if the bank can just get my payment to a reasonable number, I'll stay here forever and, you know, in ten years maybe I'll be at a break even, then you're a great candidate for a loan mod if you qualify. The problem with loan modifications, just to address it real quick, is that most of the people that are having trouble making their payments right now did stated income loans when they bought their homes. The banks, for the most part, no longer do stated income loans. So it's a very narrow parameter of people who will qualify for a loan modification. In other words, if you make too much money, Jim, they say, Jim, you make too much money, you don't need a loan mod, we're not going to do it. But if you say, look, I'm not making as much money, I'm not working right now, they say, Jim, you can't – you're not going to qualify regardless so we're not going to do a loan mod. So that's loan modifications. Short sales – short sales – And if they do a loan mod, typically what they will do is slightly reduce your payment but your loan will still accrue and it will still accrue interest at the same rate it is now, that if they save you $500.00 a month, for example, for three years, that's $18,000.00. You'll either have a balloon payment after three years or it'll be tacked onto your balance. But to answer your question, with a short sale, a short sale impacts your credit because it's reported on your credit as debt settled for less than the amount owed. What that means is that the bank agrees to settle the debt on your property for less than what you owed for what ever market value is and the good thing is, you just walk away.

CAVANAUGH: Right.

BATTIATA: You don't owe the bank any money. You're not signing a promissory note, it's a done deal. The short sale itself, that debt settled for less than the amount owed, that is a, relatively speaking, minor impact on your credit. The big impact from a short sale on your credit is because most people, when they do a short sale, they stop making their payments either because they can't afford it or because they simply say what's the point? If you miss five months of mortgage payments it could drop your FICO Score a hundred points easy. So we have a lot of people who do short sales who have not missed their payments, it takes four or five months, they sell the house, they walk away, the bank settles the debt. It's not that big of an impact on your credit. Fannie Mae and Freddie Mac, however, revised their guidelines last year as far as how they view people who have done a bankruptcy, a foreclosure, or a short sale, and what they've done is they're severely penalizing people who go the route of bankruptcy or foreclosure. Those people have to wait basically five to seven years before they can buy again. By contrast, with a short sale, it's a 24 month waiting period because they view you doing a short sale as you doing the responsible thing…

CAVANAUGH: The responsible thing, yeah.

BATTIATA: …in light of the circumstances so…

CAVANAUGH: We have to take a short break. We will return and talk more about the state of San Diego real estate. The number to call is 1-888-895-5727 to join the conversation. These Days will return in just a few moments.

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CAVANAUGH: Welcome back. I'm Maureen Cavanaugh. You're listening to These Days on KPBS. And we're going to be continuing our talk about San Diego real estate. I want to take a moment, though, to correct a misstatement that was made in our previous segment this hour. My guest, David Peters, misspoke when he gave out the local resource line for people who want to try to find some mental health services when they've lost their jobs. That resource – excuse me, that resource line is 211 or 1-800-476-3337. Now, back to the subject at hand. My guests, Matt Battiata, CEO of the Battiata Real Estate Group, and Kelly Bennett, who is a writer and author of the "Survival In San Diego" blog on voiceofsandiego.org. Kelly, I know from Matt, he outlined his problems with the loan modifications being offered. A lot of people who are out of work, if they can't make a stated income kind of a submission, they're not going to get a loan modification, etcetera, etcetera. But I want to hear your take on the kind of loan modification deals that are being offered in San Diego. This new one that's out that offers people, if they're 125% of the – at, you know, of the worth of their property right now, they can go for a federal loan modification. Is that going to be more helpful for people in San Diego? And please explain it a little better than I just did.

BENNETT: Sure. Sure, no problem. It's actually the sort of the second side of Obama's Making Home Affordable program. It's the refinancing side.

CAVANAUGH: Yes.

BENNETT: So we're not talking about loan mods…

CAVANAUGH: Okay.

BENNETT: …specifically on that one. And what it basically accounts for is the people who have seen their homes fall underwater, who now look at their mortgage and say, okay, my mortgage is 125% of what my home could actually sell for right now.

CAVANAUGH: Right.

BENNETT: If you have a loan that is guaranteed or owned by Fannie Mae or Freddie Mac, which isn't – I don't know if it's the majority, it's certainly not all of the loans in San Diego County. But it's some. If you have a loan that's owned or guaranteed by one of those companies and you're 125% or less, you know, that's the value of your loan to your home, the ratio, then you can go to this program and get a refinance which is important because banks – if you don't have – you know, if your loan is worth more than your home is worth, you can't typically get a refinance on your loan. And a lot of people are looking at their payments changing or their homes becoming, you know, the next foreclosure just because they can't afford their payments. They got laid off or their incomes have otherwise changed or they have just – you know, they want some encouragement to stay in a home that is worth less than it was when they bought it.

CAVANAUGH: Right.

BENNETT: It is – So a lot of people were saying it's sort of, again, one of those things that's good news but… It's good news for more – because more people can then refinance their loans that weren't able to before. Because, previously, the rule was that you had to be less than 105%, which is barely anyone in San Diego…

CAVANAUGH: Yeah.

BENNETT: …who would be needing to qualify for this program. But it's not all the loans, it's only the ones guaranteed or owned by Fannie and Freddie, which, in a lot of cases, weren't the ones that are really our trouble loans anyway. They're not the Option ARMs, they're not, typically, the Alt-A. They're the ones that are kind of more conventional.

CAVANAUGH: Sure.

BENNETT: And, you know, it's just a – it's a refinance. It's putting somebody – it's essentially, again, asking someone, like Matt was saying, if you want to stay in your house and you think in ten years you might break even, and you love it and you want to stay there forever, then this may be kind of the road to go down. A lot of people on the blogs over the weekend—because this news was announced, I think, last Thursday—that it was going to be up to 125, a lot of people were saying this is finally something that I can do and feel kind of honorable about it. There's a big – there's a lot of big questions right now and I'm getting – my e-mail box is full of them with people saying what's the right thing to do right now? Is the right thing to do to get out of a house that is, you know, overvalued, is a depreciating asset and I'm, you know, putting all of my money into it and not knowing when it's going to get back to the price that I paid for it? Is the right thing to do to walk away and save that money for my kids in college? Is the right -- You know, it's all these big questions. And so there are these other plans that are – some people are looking at as maybe a way to, you know, to size up their home that they have, the loan that they have, and potentially take something that would allow them to stay in their home.

CAVANAUGH: And we're been using a term frequently in this conversation. I don't know that everybody is familiar with it. What does it mean to be underwater?

BATTIATA: Underwater or upside down just means you owe more on your – your loan amount is higher than the value of your home. And that's – You know, the problem with this 125% program is it doesn't really help that many people in San Diego.

CAVANAUGH: Right.

BATTIATA: If you bought your home a year ago or a year and a half ago, you might be in that ballpark but for most people, their loan to value is way higher than 125%.

CAVANAUGH: Right.

BATTIATA: You know, I was on – When Kelly was speaking, I was thinking back to when I was on this program after going to D.C., back in January, and lobbying all of our Representatives and also Barney Frank in D.C. And the thing that I took away from that was that every office I went to, they told me whatever we do with the banks, we're going to make it voluntary on the part of the banks to participate. And I remember telling them, you know, I tell you right now, it's going to fail because the banks are not going to voluntarily do this. And that's basically what's happened. The banks are not voluntarily doing it; they're only doing a fraction of the loan mods that are necessary. And, unfortunately, the regular course of the market – I mean, depending on how you want to look at it, if you want to have sort of a, you know, the free market reigns, then, yeah, the free market is taking its course, unfortunately. And we've seen basically a 50% decline over the last three years.

CAVANAUGH: I really want to get to some callers and we're – we've got a whole bank of calls here. Tanya is in Mira Mesa. Good morning, Tanya, and welcome to These Days.

TANYA (Caller, Mira Mesa): Good morning. Thank you for having me.

CAVANAUGH: Yes, how can we help you?

TANYA: My question is in refinancing. I heard them say that the interest rates are at the lowest they've ever been. I just recently purchased my home in December and we locked it in at 6.75 and I keep getting fliers every week of refinance now. And I'm in an FHA loan and they're constantly trying to get me to refinance, and I was just wondering if it would be worthwhile to do that.

BATTIATA: You know, I would – my recommendation would be to, you know, talk with the mortgage broker that you feel like you can trust and who's recommended to you and look at the numbers. I wouldn't spend any money. You got to really break it down. A good mortgage broker's like a financial planner and so they can tell you, look, if I can get your rate down to this much and the loan's going to cost you x-amount to do the loan, you're going to make that money back in a short period of time, then it's going to be worth it.

CAVANAUGH: Right.

BATTIATA: So that's the best answer.

BENNETT: I would want to add to that, too, that you got to make sure that you know when you refinance, you're taking your loan out of what is called a purchase money loan, which is what you – you know, the loan that you used to purchase your house, and you're changing that. And the biggest issue with that or the biggest thing to be aware of, I'd say with that, is that there are laws in California that a bank, after you short sell or foreclose, can't go after you if you used the loan to purchase your house. It's, you know, all they can take is your house, they can't take any money from you for the rest of your life, that kind of thing. But once you refinance or take a second loan on your property or take out a home equity line or something, that loan is then considered what's called a recourse loan, a loan that somebody can – the bank can come after you for and pursue basically what's called a deficiency. Basically, you're essentially assuming some liability for whatever loan you're taking out from the bank.

CAVANAUGH: I see.

BENNETT: So it's important to talk to somebody, like Matt said, somebody…

CAVANAUGH: Right.

BENNETT: …that you trust, about those options and ask them about that bit, too. It's not necessarily just because the interest rate is different or lower or more attractive, it's not necessarily the best idea.

CAVANAUGH: Let's take another call. Michael is in Clairemont. Good morning, Michael.

MICHAEL (Caller, Clairemont): Good morning. Thank you for taking my call.

CAVANAUGH: Yes.

MICHAEL: With all due respect to Mr. Battiata, you know, I'm given pause when listening to advice given by someone that has an economic interest in the advice that they give. So when looking at housing prices nationwide and, particularly, in San Diego for me, you know, I try to ask myself are prices going up or down? And I don't really look at the actual price of the home, I try to look at economic factors in the economy, things like unemployment, and also look at things like these exotic loans, some of these ARMs that were amortized over dirty – excuse me, amortized over 30, due in 3, due in 5, and due in 7. And I understand the due in 3s have already hit but if the due in 5s and the due in 7s are going to hit again and the economy is still going down, we're still – unemployment is increasing, I would expect that there would be more foreclosures. So I'll go ahead and take your comments off the air. Thank you.

CAVANAUGH: Thank you. And I kind of think that we've been addressing those particular…

BATTIATA: I think, yeah, I would agree with that.

BENNETT: We're talking about…

CAVANAUGH: Yeah.

BENNETT: We're talking about -- You know, we talked about the shadow inventory, we talked about the big dark cloud. Unfortunately, that's what the caller's referring to with a lot…

CAVANAUGH: Yeah.

BENNETT: …with a lot of sort of loan specific words. But, essentially, there are more people in the next couple of years who are going to be facing a period when their loan payments go up and we've got to be cognizant of that.

BATTIATA: Yeah.

CAVANAUGH: I'm wondering, you know, we do have to wrap up really pretty quickly. I wonder, it seems we're in a limbo stage right now or at least with a lot of things changing, a lot of fluctuations, and I'm wondering if you could both rather quickly say what risks you think there are in allowing this waiting game to continue for an extended period of time. Are there risks associated with so much complexity and confusion in the market?

BATTIATA: Well, you know, these moratoriums on foreclosures, unfortunately, they're kind of just prolonging the agony. And, really, to respond to the last caller, you know, the reality is, we're a couple of years away from the bottom so, you know, I would agree, a real estate agent who tells you it's always a great time buy or it's always a great time to sell, I hate – You know, I don't like that either. So I'm very careful to tell what I think is the truth. And the reality is we're a couple of years from the bottom. If you're an investor who wants to buy homes and flip them, I'd say you've got to be really careful. But if you're a buyer who wants a roof over their head and wants to live for the long term here in San Diego, I do think, you know, especially at that lower end of the market, it's a great time to buy. Are we at the bottom? Absolutely not, in my opinion. We're, in my opinion, two years from the bottom. I think once we hit the bottom, it'll take at least two or three years just to get back to the prices we're at now.

CAVANAUGH: Wow.

BATTIATA: So now you're talking 2014 or '15, and another three or four years probably to get up anywhere near where we were at at the last peak. But the reality is, there's a lot of opportunity in a market like that. The real estate market, I've always said, is extremely – I mean, you can set your watch by it; it's very predictable. And, you know, this is San Diego. We all live here for a reason and – but the bottom line is, we're not at the bottom but does that mean it's not a good time to buy? No, it doesn't.

CAVANAUGH: A real quick closing comment, Kelly.

BENNETT: Yeah, I would just say that what I was saying before about not feeling this frenzy and rushing and settling for something. If you're going to buy a house, you need to be there for a while so really do your research, really find people that you can trust and ask all of these important questions.

CAVANAUGH: I want to thank you, Kelly Bennett, a staff writer, author of the "Survival In San Diego" blog on voiceofsandiego.org. Thanks, Kelly.

BENNETT: Thanks for having me.

CAVANAUGH: And Matt, Matt Battiata, CEO, Battiata Real Estate Group, thank you.

BATTIATA: Thank you.

CAVANAUGH: And thank you to everyone who called. So sorry we couldn't get to everyone but please do call again on another topic. We'll be happy to take your call. And I want to let you know, in the coming weeks These Days will look at the debate over healthcare in America. We want to hear what you think before that series starts. Are you satisfied with the medical care you receive? Do you avoid going to the doctor because you can't afford it? What do you think about the current ideas in congress about changing the healthcare system? Write to us with your stories and ideas at TheseDays@kpbs.org. The "High Cost of Healthcare" is coming soon to These Days here on KPBS.

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Guests

Matt Battiata, CEO of the Battiata Real Estate Group.

Kelly Bennett, is a staff writer, and author of the "Survival in San Diego" blog on voiceofsandiego.org.