According to QualityFirst Real Estate, a San Diego-based firm that specializes in REO, local market conditions are primed for a buying spree of bank owned and short sale properties.

QualityFirst says property values there are headed back up and foreclosure numbers are dropping, with many real estate professionals now operating under the premise that the economy is finally beginning to turn around – the firm says all this makes now the time for potential homebuyers to snag a good deal.

According to the National Association of Realtors, San Diego County resale house prices rose 14.7 percent in the first quarter of 2010 to a median $379,000.

On top of that, data from both the Mortgage Bankers Association and the credit-reporting agency TransUnion show a drop in foreclosure rates – for the first time in four years.

Bill De Ridder, president of QualityFirst Real Estate, notes that some experts say the recent increase in sales prices is because the worst fixer-upper properties have been sold off, mostly to speculators and flippers, and now the more expensive homes, the ones with little or no damage, are entering the market.

De Ridder is advising potential homebuyers to quickly get their financing in place to take advantage of the real estate turnaround and the current record-low interest rates.

He says now that the federal tax credit for buying a home has expired, he’s noticed that, on the one hand, banks are even more motivated to lower prices on some properties to move their inventory of foreclosed homes.

But De Ridder also says that on the other hand, some lenders are holding on to properties longer to allow time for prices to appreciate before marketing them.

While currently in San Diego, there are already thousands of homes that are classified as REO or are in the short sale process, De Ridder says that over the next five years or so, there will continue to be a steady supply of REO and short sale properties coming onto the market.

He notes that currently, nationwide, there are about six million borrowers in active default; about 12 million homeowners who have negative equity of 30 percent or more; and unfortunately, many of these will end as bank owned or short sale properties.