Upside Down Home in San Diego

A very common scenario in San Diego and many areas of the country. Joe Homeowner purchased a home in 2006 for $500,000, today his home is now worth $300,000. My interactions with most of these homeowners 6-12 months ago was that as long as they could afford the payment they would continue to make their payments knowing the values would eventually come back. The recent attitude of many homeowners I am coming across has taken a much different attitude. More and more homeowners are looking for a short sale, modification or just walking away. Can you blame them? Would you continue to make your mortgage payment on a home that was worth $200,000 less than what you owed? A recent RealtyTrac statistic said that there are approximatively 60,000 homes in San Diego County that are at 150% loan to value or more. WOW, did you understand what I just said. That means homeowners owe their lender $150,000 for every $100,000 of home value.

I am not a fan of people walking away from their mortgage but in CERTAIN situations I really can’t blame them. Yes they may have made a mistake and purchased a home they could not afford but sometimes they can afford the payments but they are sick of the value and don’t want to continue paying their mortgage. Perhaps a short sale is their best option. Everyone’s situation is unique and you really need to make sure you know all of your options before you decide to do something. We don’t slam everyone into a short sale. Just last week I talked to someone who owned several investment properties and they were considering a short sale. I told them they really needed to consult a tax professional and sure enough. The tax consequences on the short sale was going to be horrendous. It didn’t make sense for that particular person. They were better off trying to complete a modification (Difficult on Investment Property) or let the property go to foreclosure.

Whatever your thinking. Consider your options, make sure you consult a trusted real estate agent, your tax preparer and avoid those horrible loan modification scams. We can help you with a short sale in San Diego. Don’t hesitate to call or email us.

15 thoughts on “Upside Down Home in San Diego”

  1. Hi,

    I’m just getting started with my new blog. Would you want to exchange links on our blog-rolls?

    BTW – I’m up to about 100 visitors per day.

  2. I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.

  3. You guys must be getting a lot of business from clients considering the short sale option. Honestly, the markets in a lot of California cities just amaze me in how far they have plummeted. I honestly don’t know what I would do if I was 200k underwater after buying a home I thought would be worth twice as much in 5-10 years. Great post and good luck with helping those folks.

  4. We are seeing these trends in Arizona as well.
    The problem is no one can estimate when the market is going to be back up, and who wants to pay that kind of money for something they can’t see through. We know there is a light at the end of the tunnel, we just don’t know how long the tunnel is.
    There is a lot of truth in your point that it comes down to individual situations.
    Thank for posting this.

  5. Round Rock Apartments, yes, this is much of our business right now. I would say 60% of it is either a short sale or REO but when you consider the other part are home buyers it really goes up much higher than that because most of our buyers despite being regular buyers are buying short sales or REO’s so it seems like damn near all of our business has something to do with a short sale or REO!

  6. Joy, excellent points. Investors and buyers are buying what they can but the most difficult thing we are dealing with now is the lack of financing for buyers. It’s so difficult to get a loan closed these days! 🙁

  7. Alex….I hear this all the time from clients being worried about their home values. My response is…Do they need to sell or refi? If there is no urgent reason to sell your home or refi at the moment, values will not matter for your right now. There is no point in pushing the panic button. The hope is that values will rebound in due time. Dropping or raising home prices is something that we cannot control so again, if there is no urgent need to use your value in your home, it’s better to just ride the wave (something you guys should be use to in San Diego).

    I understand when people cannot afford their mortgage and then they can’t refi. IMO….the best step would be to speak to your mortgage holder about modifying their mortgage instead of jumping to a short sale.

  8. real estate investment software

    Yes, this is a typical problem nowadays, fortunetely with the new principal reduction program some people might be able to get out of this situation

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