By Roger Showley and Emmet Pierce
UNION-TRIBUNE STAFF WRITERS

12:50 p.m. July 15, 2008

San Diego County housing prices dropped a record 25.3 percent on a year-over-year basis last month to stand at $370,000, DataQuick Information Systems reported Tuesday.   It was the lowest overall median since May 2003 and contrasted sharply with the all-time peak of $517,500 set in November 2005. 
 
Single-family resale homes dropped to $405,000 from $420,000 in May and $565,000 in June 2007. Resale condos posted a median $259,000, down from $287,750 in May and $397,500 in June 2007.

Newly built homes rose from $435,000 in May to $490,000 last month, continuing a trend analysts attribute to the near-absence of newly converted condo projects on the market. Those former apartments typically sell for much less than newly constructed condos and houses and dominated the new-housing market until the recent downturn.

Sales topped the 3,000 level for the first time since August in a usual seasonal upswing of activity during spring and summer months. The total stood at 3,077, up from 2,979 from May but down 12.3 percent from year-ago levels. It was the 48th straight month of year-over-year declines in sales activity, a trend that began in July 2004.

Meanwhile, evidence is growing that bargain hunters are bidding more than the asking price for some properties, mostly foreclosures that banks are trying to resell quickly.   HouseRebate.com said 17 percent of all sales countywide in the 30-day period ending June 26 were sold at price higher than the original listing price. A year ago, the overbidding percentage was only 6.5 percent.

HouseRebate CEO Brian Yui said interest is concentrated in houses priced at $500,000 or less. “Things are moving quicker and buyers are dealing with realistic sellers,” Yui said.

This week, the State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. It also requires owners acquiring property through foreclosure to maintain the exterior of vacant San Diego homes. The new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. These requirements will remain in effect until January 1, 2013.

The full text of Senate Bill 1137 (Perata) is available at www.leginfo.ca.gov.

The time is now to get a great deal on a San Diego short sale property. The sub-prime loan troubles have negatively impacted the financial market causing the numbers of San Diego homes approaching foreclosure to increase to record numbers. One technique for a homeowner, who is attempting to avoid foreclosure or bankruptcy, is to try to sell the property prior to foreclosure (San Diego Short Sale) even though the home is worth less than the loan amount. Hence, the term “short” in short sale.

More lenders are agreeing to short sales in San Diego with the hope of quickly recouping their losses and minimizing their costs associated with carrying a home without mortgage payments from the owner.

Because the lender is receiving less than the value of the home when the loan was issued, short sales do require the approval of the mortgage holder. For buyers, the bottom line is that they generally get a good deal on the property. The price is usually below current market’s asking prices because the lenders are motivated to sell the San Diego home quickly to avoid foreclosure and carrying costs. In addition, lenders tend to be more realistic about market values than homeowners who may have emotional ties to the property.

The downside of San Diego Short Sales are that banks can be very slow in responding to a buyer’s San Diego Short Sale offer or never respond at all. If you have patience.

There are some benefits to short sales for San Diego Foreclosures.  In many cases, banks are willing to accept a short sale to avoid taking on the burden of the San Diego Foreclosure auction or another REO property.

Although a short sale does have debt relief benefits, it also has some tax relief provisions that must be considered.

Under the Mortgage Debt Cancelation Tax Relief law (H.R. 3648), the follow provisions apply to San Diego Short Sale Homes:
• Mortgage Debt Relief is not based on income.  All short sales qualify for consideration.
• Only two million dollars of the short sale qualifies for the exclusion for San Diego home sales. (one million if a couple is married filing separately)
• The Mortgage Debt Cancelation Tax Relief law only covers a primary home residence.
• The mortgage in consideration for debt cancelation must have been secured by the current San Diego home buyer.
• Cash outs of any kind, including refinancing a first or second mortgage, home equity line of credit, are not included in debt cancelation tax forgiveness relief. 
There are some exceptions to the Mortgage Debt Cancelation Tax Relief law (H.R. 364 termed as “acquisition indebtness” that qualify such as:
• Refinanced debt that does not exceed the original mortgage amount of the San Diego home
• Second mortgages or home equity lines of credit used for home improvement purposes
Cash outs for short sales of San Diego homes never qualify

Some additional provisos for short sales seeking tax relief for their mortgage debt forgiveness to consider about Mortgage Debt Cancelation Tax Relief law (H.R. 3648):
• Refinanced Mortgages on San Diego real estate:  Tax relief for short sales does cover refinanced debt in cases where the debt is directly related to the improvement of this San Diego home or acquisition of this as a primary residence.  Any moveable property associated with the San Diego home (such as furniture or dishes) do not qualify for mortgage debt tax relief.
• San Diego home as a Principal Residence:  The principle residence for a San Diego home is the primary place of occupancy.  At given time, if a San Diego house is not legally reported as a primary residence for a short sale, then the San Diego home mortgage debt is not eligible for tax relief.
• San Diego homes qualifying as a Second Home:  In the case where the San Diego home is used as a rental or lease property, provisions might apply to incur forgiveness for some of the tax debt.

For many San Diego Real Estate home owners facing tax consequences of short sale forgiveness off debt income foreclosure, the new Mortgage Debit Cancelation Tax Relief law may provide much needed relief to San Diego home owner’s tax burden.  San Diego home owners may receive a tax break on debt forgiveness during the short sale.  When a seller gets approval from a bank or lending institution to accept less than what is owned on the actual mortgage, then sellers could be relieved of the taxes on the amount forgiven by the bank for federal tax purposes.  In many cases, a bank will agree to a short sale to keep from losing all opportunity recoup the value of the San Diego home in a foreclosure auction.  Or, if there is already a surplus of San Diego foreclosures for a bank or the San Diego real estate market is slow, rather than take possession of the San Diego real estate, the bank will agree to a short sale to avoid adding more REO properties to their inventory.  The new Mortgage Debt Cancelation Tax Relief law will give extra incentive for mortgage debt relief for San Diego foreclosures by deleting the taxation of the portion of the forgiven amount.

Under the Mortgage Debt Cancelation Tax Relief law (H.R. 3648), a short sale with authorization from the bank holding a mortgage helps relieve the tax debt load on the forgiven amount.

Note:  There is no similar provision for forgiveness in California tax law.

The information is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice.  Although the information has been compiled from sources deemed reliable, please note that individual situations can vary and therefore, please consult your attorney for specific advice and legal counsel.

There is going to be another San Diego Foreclosure auction on June 30, 2008.

There are over 50 properties being auctioned.  50+ Foreclosed homes must be sold!
 
When:  Monday Jun. 30, 2008

Where: San Diego Marriott Hotel & Marina–Marriot Hall  333 W Harbor Dr, San Diego CA 92101
 
Time: Registration begins at 5:30 p.m. Auction starts promptly at 7:00 p.m.
 
ALL HOMES OPEN FOR INSPECTION not available for this auction.

The public have been getting some great deals on San Diego homes and properties.  I heard of an investor picking up 5 detached homes for under $200K each in the San Diego North County primarily in Escondido.

One of the HouseRebate.com agents can assist you with sales comps and even a rebate on these homes.  Please call for details 888-836-5675.

Here are some sample homes scheduled for San Diego foreclosure auction:
Address: 3903 Country Trails Bonita , CA 91902.
San Dieigo County.
Square Footage: 2717  Property Type: Single Family
Starting Bid: $259,000   Previously Valued To:* $721,621
Financing: Yes
 

Address: 1294 Fools Gold Way #1 Chula Vista , CA 91913.
San Diego County.
Square Footage: 1071  Property Type: Condo
Starting Bid: $99,000   Previously Valued To:* $380,000
Financing: Yes
 

Address: 1446 Trouville Lane #4 Chula Vista , CA 91913.
San Diego County.
Square Footage: 1362  Property Type: Townhouse
Starting Bid: $129,000   Previously Valued To:* $379,900
Financing: Yes
 

Again…50+ Foreclosed homes must be sold!
 
When:  Monday Jun. 30, 2008
Where: San Diego Marriott Hotel & Marina–Marriot Hall  333 W Harbor Dr, San Diego CA 92101
Time: Registration begins at 5:30 p.m. Auction starts promptly at 7:00 p.m.
ALL HOMES OPEN FOR INSPECTION not available for this auction.

We have been observing a trend in San Diego Foreclosure listings.

Many of the San Diego REO homes are being sold above the original asking price.

There were 10 homes sold in Escondido 92027 that were sold above asking price in the last 90 days and many more across the county.

In addition, there were 47 overbid situations in the last 30 days in the South Bay section of San Diego real estate out of 141 San Diego South Bay Closing which comprise of Chula Vista, Otay Ranch, National City and Bonita.

In the last 30 days, 374 San Diego homes have sold over the asking price out the 2,265 listings that sold in San Diego.  That is a staggering 16.5%

During the same period last year, only 6.5% of the homes were overbid situations. 

The banks are pricing their San Diego Foreclosure homes to sell. 

The information to the public is so efficient that we are seeing multiple offers on well priced properties. 

The banks appear to be getting fair market value for their homes because there are multiple bidders.

For buyers thinking about low balling REO listings, they must think again as there are other buyers out there willing to pay FMV.

Today’s Tip:

If you really like the home, offer  a fair price otherwise you may end up without the home even though you might have paid what the winning buyer paid.

Often times, the seller just takes the highest offer without counter offering any of the bids.

Are you facing a San Diego Foreclosure?  There is help for you.

Governor Arnold Schwarzenegger’s Task Force on Non-Traditional mortgages has teamed up with The Homeownership Preservation Foundation to provide assistance to those facing foreclosure.  The service is free.

If you are facing foreclosure, don’t delay.  Call 888-995-Hope today or visit www.yourhome.ca.gov.

They even have a site in Spanish for you  www.sucasa.ca.gov.

These people want to help you stay in your home.

San Diego Vacation homes should benefit from the recent Same-Sex marriage laws that permits marriages of people of the same sex.  California does not require those married to be residents of California.

Those domestic partners seeking to be married legally are now considering purchasing second homes in San Diego.

The San Diego real estate market could use the help for increased demand for San Diego homes as prices are now off 26% of there peak in 2006.

San Diego has been one of the hardest hit cities in the country according to Standard &Poor’s / Case-Shiller Index of home prices report as reported in the Union Tribune today.  Nationwide the home prices have fallen 17%.

The number of sold San Diego homes and condominiums reached 2,469 for May 2008 according to our search on Sandicor, the regional MLS.

Approximately 26% of these listing were San Diego Bank owned listings or San Diego REO property.

We project additional San Diego foreclosure properties being listed on the San Diego MLS in the months to come.

As of today there are:

-12,326 San Diego Pre-foreclosure properties

-3612 in San Diego properties scheduled for auction.

-6,155 San Diego bank owned property i.e. the bank has foreclosed on the property and now owns it.

As these San Diego foreclosure properties hit the market,  be prepared to see downward price movement.

Currently there about 1,700 active San Diego foreclosure home listings listings at www.sandiego.houserebate.com/foreclosures out of total of 18747 active listings for San Diego Homes and Condominiums.