San Diego Real Estate Insider

Oceanside real estate housing market

The Oceanside real estate housing market, one of the largest residential real estate markets in San Diego County, which has consistently improved over the last year. A June 29, 2010 article from the Voice of San Diego stated that, “All three of the Case-Shiller home price tiers for San Diego rose moderately in the month of April.  The low tier was back on top with a 1.0 percent rise, compared to .5 percent increase for the middle tier and a .3 percent rise for the high tier. These numbers followed a very unusual March in which the previously stagnant high tier registered a huge increase and the formerly robust low tier actually declined.  April's price movements were a lot more in line with what we've seen during the price bounce that's prevailed since last spring. Just a reminder: the price tier cutoffs are determined by separating all home sales during the measurement period into thirds.  The low tier consists of the cheapest one-third of homes sold, the middle tier the middle one-third, and the high tier the most expensive one-third of homes sold.  This is a fairly rough method of separating out different types of homes, especially in San Diego where homes priced substantially over the $468,000 high tier cutoff are quite common.  So while the high tier can give an idea of what's happening in that over-$468,000 chunk, there could potentially be considerable variation within that chunk.”

In fact, Oceanside and San Diego County homes for sale are the only city in the entire United States to post a full twelve months of positive price increases. According to a June 29, 2010 article from the San Diego Union Tribune, “San Diego is the only metro area in the nation with 12 months of consecutive home price increases, according to the latest Standard & Poor’s/Case-Shiller Home Price Index released Tuesday. San Diego housing prices rose 11.7 percent in April compared to a year ago. That’s the second fastest rate of annual increase behind only San Francisco, which saw home ...

La Costa real estate housing market

The La Costa real estate market, part of the larger San Diego County housing market, showed a full year’s worth of rising median prices. This is indicative of a strong improvement in the area, although at least a portion of the economic recovery might have been driven by the expiring federal tax credit. According to a June 29, 2010 article from the Voice of San Diego, “San Diego County home prices rose 11.7 percent in April compared to same time last year. And prices were up 0.7 percent between this March and April, the 12th in a string of consecutive monthly price increases since prices hit a low last spring. The numbers out this morning from the Standard & Poor's/Case-Shiller home price index show the one of the last months of the scramble for the federal homebuyer's tax credit. The analysts behind the index noted that though many metropolitan areas around the country showed these kinds of increases in April, this morning's report concluded that nationally, "home prices do not yet show signs of sustained recovery." San Diego was the only market out of the 20 the index measures that did not dip negative in the winter months. From the peak in November 2005, prices fell 42 percent to reach the market low in April 2009. Now they've roared back to a slighter 30.62 percent off the peak. San Diego County prices are still 61 percent higher than they were in January 2000.”

This positive trend for La Costa and San Diego County houses for sale has extended to the larger Southern California region. According to a June 15, 2010 report from the San Diego Union-Tribune, “Home prices throughout Southern California rose by 22.5 percent in May, the highest year-over-year jump in five years, MDA DataQuick reported Tuesday. But some housing economists say that pace will not hold up much longer. In fact, they think it could actually reverse course and result in lower prices by year’s end. The reason? Prices have risen only because the housing market is returning ...

Carlsbad housing real estate market

The Carlsbad housing market, part of the larger San Diego County real estate market, saw consistent signs of improvement along with the rest of the Golden State. According to a July 7, 2010 report from Sight on San Diego, “San Diego County’s home prices rose 7 percent in May from the previous year, the second highest year-over-year increase in the country, according to the real estate website zillow.com. Nationwide, home prices dropped 3.8 percent in the same time period. The Seattle-based company comes up with its home-value index by looking not only at homes that have sold but also pending sales as well as homes that are not on the market. In San Diego County, the median home price was $375,400, a 1 percent increase from the previous month. Of course, that’s down 30.1 percent from the peak median price of $538,200 in October 2005. Here is the breakdown of Zillow’s numbers, which it releases every month, and how they compare with other home-price statistics: How do we rank? In terms of price increases, San Diego County is second only to the Virginia Beach, Va., metro area. When compared with major metro areas, San Diego is No. 1. Next are San Francisco with a 5.9 percent increase, Los Angeles with a 5.3 increase, San Jose and Santa Barbara each with a 4.7 increase. If the list seems a little California-centric, it is. Of the top 10 markets, six of them are in the Golden State. How about in terms of home price? San Diego has the ninth highest median home price.”

Carlsbad houses for sale were caught up in the larger trends of the San Diego housing market throughout recent months. San Diego County saw some of the most consistent and largest gains in the entirety of the country. The Carlsbad real estate market saw several straight months of increasing median prices, as well as decreases in foreclosures and increased sales volumes. The entirety of the Golden State has been rallying strongly in the most recent tracking periods, although ...

La Mesa Real Estate Market Update June

The number of La Mesa homes for sale that were actually purchased increased substantially in the month of May, hitting a level not seen for several years. According to a June 15, 2010 article from the Southwest Riverside News Network, “Home sales in San Diego County rose 19.6 percent in May, compared to the same month a year ago, while prices increased 15.3 percent during the same period, a real estate information service reported today. A total of 3,879 homes changed hands locally last month, compared to 3,242 in May 2009, according to La Jolla-based MDA DataQuick. The median price of a home in San Diego County in May was $340,000, compared to $295,000 in the same month a year ago.”

The article went on to note that “A total of 22,270 new and resale houses and condos sold in the six-county Southern California region — Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties — in May, according to DataQuick. That was up 9.7 percent from 20,299 in April, and up 7.2 percent from 20,775 in May 2009. May sales throughout Southern California were the highest for that month since 2006.” The report went on to quote the president of MDA DataQuick, who said that “The important thing to remember, though, is that what we saw in May was partly driven by government stimulus. In the second half of the year the market will have to stand on its own again, barring new forms of government involvement.” In other words, the La Mesa real estate market will soon discover if it can continue to rally without help from the federal government.

Foreclosures were less of a negative drag on the La Mesa housing market recently, as the number of foreclosures in the county declined substantially in the month of May. According to the San Diego Union Tribune, one of the reasons that foreclosures have declined might be that lenders are becoming more flexible with their collection methods. Basically, banks are increasingly looking towards short sales and other alternatives ...

San Diego real estate market Update June

The San Diego real estate market is one of the strongest in the state and the country, especially in the aftermath of the economic recession. San Diego foreclosures in particular have sharply declined in the most recent tracking period, pointing towards an increasingly flexible and stable housing market. According to a June 17, 2010 article from the San Diego Union Tribune, “Foreclosure activity might have dropped off last month as lenders modify some mortgages or authorize more San Diego short sales. Foreclosure filings and notices of default fell dramatically last month in San Diego County, but analysts did not see this as evidence of less distress in the housing market. Default notices totaled 1,623, down 22.9 percent from April and 46.9 percent from a year ago, MDA DataQuick reported Thursday. Foreclosures numbered 1,021, down 15.8 percent from April, but up 3.7 percent year-over-year, because of a moratorium on foreclosures in place at the time. Analysts said the declines might represent further signs that lenders are shifting from taking legal action against homeowners who can’t pay their mortgages.”

The article, written by Roger Showley, went on to note that “The good news is that various reports show delinquencies rising at a slower pace — an indication that distress is easing and various housing submarkets are stabilizing. The Mortgage Bankers Association put California’s first-quarter delinquencies at 10.9 percent of all homes with mortgages last month, down from 11.3 percent in the fourth quarter. But that still leaves some 1 million homeowners in California who are not making their payments, O’Toole said. ‘If you were to foreclose on those folks en masse, it would certainly create panic and fear,’ he said. There are no delinquency estimates at the local or city level.” In other words, for one reason or another, San Diego is facing a lower number of distressed sales than in months past.

There was, however, one large foreclosure recently – and it wasn’t a San Diego home for sale. According to a June 22, 2010 article from the North County Times ...

Why Buy Today?

On a previous post about buyers just caring about the price, someone from Mesa, AZ left the following comment and questions:

My husband and I just made an offer on a bank owned home in Mesa, AZ. We are first time home buyers. The house needs no work at all and has only been on the market about three weeks - my realtor suggests that we pay the bank what it wants $229K and then try to get 6% closing costs and 3% toward downpayment. We also qualify for the Ameridream program for FHA. Is that good advice if it is all about the price? It is in a great community, etc., and the house was appraised at 255K last year. Even with this market, the bank got a previous offer. In this market, how does one go about making an offer and knowing it is fair? We just don’t want to get ripped off. Thanks for any advice you can give us.

Not being in Mesa, I can't intelligently comment on the price of the property, but I can tell you how I approach it with my clients here. It starts with questions:

Question: How long do you expect to keep the house?
The reason is that the value of the property when you sell is just as important as when you buy. If the value of the property drops another 10% before the market bottoms out, and it costs you 5-6% to sell, you need more than 16% in appreciation to break even.  

Question: Does it pencil out?
Can you cover the monthly nut if you have to rent it out? If for some reason you have to move and you are upside down - and that isn't hard with 97% loan, can you rent it out while you wait it out?

Question: Why buy now?
This one usually surprises people because the mantra of Realtors is always "Now is a good time to buy". They take away our lapel pins if we don't chant this into the mirror every morning.

Seriously though, every economic expert ...

HR 5830: The FHA Housing Stabilization & Homeownership Retention Act

On April 17, 2008, Rep. Barney Frank introduced in the House a bill that would enable the FHA to refinance home loans at 90% of current market value with the goal of keeping more home owners in their homes. I will track this bill through the House and Senate as I did with the Mortgage Forgiveness Debt Relief Act of 2007. 

In essence, this would provide for a government guaranteed short refinance, where, like a short sale, the lender on the distressed loan takes less than is owed. I will post my analysis of the bill in a future post.

Here is the full text of the bill:

110th CONGRESS

2d Session H. R. 5830

To create a voluntary FHA program that provides mortgage refinancing assistance to allow families to stay in their homes, protect neighborhoods, and help stabilize the housing market.

IN THE HOUSE OF REPRESENTATIVES

April 17, 2008

Mr. FRANK of Massachusetts (for himself, Ms. WATERS, Mrs. MALONEY of New York, Mr. WATT, Mr. ACKERMAN, Mr. MEEKS of New York, Mr. CLAY, Mr. LYNCH, Mr. AL GREEN of Texas, Ms. MOORE of Wisconsin, Mr. LINCOLN DAVIS of Tennessee, Mr. HODES, Mr. WILSON of Ohio, Mr. PERLMUTTER, Mr. MURPHY of Connecticut, Mr. DONNELLY, Mr. WEXLER, Mr. SHAYS, Ms. GINNY BROWN-WAITE of Florida, Mr. DINGELL, Ms. SCHAKOWSKY, Mr. LEVIN, Mr. HINCHEY, Mr. FATTAH, Mr. JACKSON of Illinois, Mrs. CHRISTENSEN, Ms. LEE, Mr. WU, Ms. MCCOLLUM of Minnesota, Mr. VAN HOLLEN, Mr. BUTTERFIELD, Mr. COURTNEY, Mr. SESTAK, Mr. SIRES, and Ms. TSONGAS) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To create a voluntary FHA program that provides mortgage refinancing assistance to allow families to stay in their homes, protect neighborhoods, and help stabilize the housing market.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `FHA Housing Stabilization and Homeownership Retention Act of 2008'.

SEC. 2. PURPOSES.

•  

  (1) to create an FHA program, which is voluntary on the part of borrowers and ...

Short Sale and Phantom Tax Debt Relief Overview

Lots of questions have arisen from people since President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007, whereby in certain circumstances, a homeowner does not have to pay federal income tax on debt forgiven on a loan secured by a qualified principal residence via a short sale, foreclosure, deed in lieu, loan workout or short refinance where the loan amount was reduced and forgiven in order for the homeowner to keep the property.

It is somewhat confusing just reading a bill with only references to other sections of the law. Below is the text of Section 2 of H.R. 3648 that specifically pertains to mortgage forgiveness. To save you the hassle of cross-referencing all this, I have included the sections of the IRS Tax Code that were added to or modified as a result of Section 2 of H.R. 3648.

SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Mortgage Forgiveness Debt Relief Act of 2007’’.

SECTION 2. DISCHARGES OF INDEBTEDNESS ON PRINCIPAL RESIDENCE EXCLUDED FROM GROSS INCOME.
(a) IN GENERAL. Paragraph (1) of section 108(a) of the Internal Revenue Code of 1986 is amended by striking ‘‘or’’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘‘, or’’, and by inserting after subparagraph (D) the following new subparagraph: ‘‘(E) the indebtedness discharged is qualified principal residence indebtedness which is discharged before January 1, 2010.’’.
(b) SPECIAL RULES RELATING TO QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.  Section 108 of such Code is amended by adding at the end the following new subsection:
‘‘(h) SPECIAL RULES RELATING TO QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.—
‘‘(1) BASIS REDUCTION.—The amount excluded from gross income by reason of subsection (a)(1)(E) shall be applied to reduce (but not below zero) the basis of the principal residence of the taxpayer.
‘‘(2) QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.—For purposes of this section, the term ‘qualified principal residence indebtedness’ means acquisition indebtedness (within the meaning of section 163(h)(3)(B), applied by substituting ‘$2,000,000 ($1,000,000’ for ‘$1,000 ...

Bush Signs Mortgage Debt Forgiveness Act

With a stroke of the pen, President Bush signed into law H.R. 3648, The Mortgage Debt Relief Act of 2007, and dramatically changed the lives of homeowners across the country who are facing foreclosure, considering a short sale, negotiating a loan workout, or have done any of these since January 1, 2007.

While this bill has been long awaited by homeowners who would be penalized by the potential phantom tax, and real estate agents praying that it will open the flood gates to more business via short sale listings, the goal of the Administration and legislators is to reduce the number of foreclosures and the need for short sales by allowing homeowners to renegotiate their loans without tax consequences.

The President welcomed those in attendance, saying,

"Thank you all for coming. Welcome to the White House. I'm pleased to sign a bill that will help homeowners who are struggling with rising mortgage payments. The Mortgage Forgiveness Debt Relief Act of 2007 will protect families from higher taxes when they refinance their homes. It will help hardworking Americans take steps to avoid foreclosure during a period of uncertainty in the housing market."

After thanking House and Senate members, staff, HUD and the Treasury Department, Bush continued.

"In recent months, our nation's housing market has faced serious strains. Home values have fallen in many parts of our country. At the same time, many homeowners with adjustable rate mortgages have seen their monthly payments increase faster than their ability to pay. And now some homeowners face the prospect of foreclosure.

"My administration has taken strong steps to help homeowners avoid foreclosure by making it easier to refinance loans. We gave the Federal Housing Administration greater flexibility to refinance loans for struggling homeowners. We helped assemble a private sector group of lenders, loan servicers, investors, and mortgage counselors called the HOPE NOW Alliance. This group has agreed on a set of industry-wide standards to help those with subprime loans refinance or modify their mortgages, so more families can stay in their homes.

"The bill I sign today will help this effort ...

Mortgage Debt Forgiveness Passed by Senate

UPDATE: President Bush signs HR 3648, The Mortgage Forgiveness Debt Relief Act of 2007.

It took them close to two and half months, but the U.S. Senate finally got around to passing H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007. Initially sent to the Senate on October 4th, the Senate passed this legislation on Friday, December 14th, allowing Senate Finance Committee Chairman Max Baucus to crow a bit about helping the U.S. homeowner dealing with foreclosure or a short sale.

Sen. Baucus released the following press release on Friday:

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) won passage today of legislation offering tax relief to American families caught in the subprime mortgage crisis. When debt is forgiven on a home loan, the homeowner must normally count that debt forgiveness as income and pay taxes on it. The bill approved today as an amendment to H.R. 3648 creates a three-year exception for debt forgiveness on home loans – helping families already unable to meet their mortgages to avoid incurring large tax bills as well. The bill also extends a provision allowing homeowners to deduct mortgage insurance payments from their taxable income. 

“Homeowners who are already in trouble on the mortgage certainly can’t afford a big hit from the tax man too,” said Baucus. “Upheaval in the housing market has turned the world upside down for far too many families, and Congress needs to help these folks climb out of a financial hole. This mortgage tax bill will help to ease the burdens of homeowners who are hurting today.”

In addition to tax relief for debt forgiveness and mortgage insurance payments, the bill includes:

- Tax relief for volunteer firefighters and emergency medical technicians
- Help to expand housing options for college students with children
- Protection of tax relief for homeowners after the death of a spouse
- Flexibility to help co-op tenant/owners deduct real estate taxes and mortgage insurance

The bill is fully offset by increased penalties for failure to file S corporation returns or partnership returns, and new requirements for the payment of corporate ...