Nearly 30 Percent of San Diego Mortgages Underwater

[MindPilot]

Source: Voice of San Diego

Monday, Dec. 22, 2008 | Nearly 30 percent of homes in San Diego County with a mortgage are worth less than their owners owe on their mortgage, according to new data.

The 29.4 percent share of county homes "underwater" or "upside-down" compares to 27.4 percent for the state and 18.3 percent for the nation. The San Diego County data was prepared for voiceofsandiego.org by First American CoreLogic, and was the only county-level data of its kind released for the quarter ending Sept. 30.

(snip)

"The people who did the right thing, bought within their means, 30-year-fixed, saved up a down payment -- good for them," Goldman said. "They're still underwater."

(snip)

"If you sell right now you're by definition either distressed or stupid," London said. Fred Eckert, title rep at Chicago Title, tried to find the silver lining for the underwater statistic: "On the plus side -- 70 percent are still OK," he said.


Read more: http://www.voiceofsandiego.org/articles/2008/12/22/housing/847underwater122208.txt

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Thank the FSM I'm not there yet, but my house is worth less than half of what it was two years ago.

[hobbit709]

1. Luckily we only owe another 12K on ours.

[xchrom]

2. frightening

"The people who did the right thing, bought within their means, 30-year-fixed, saved up a down payment -- good for them," Goldman said. "They're still underwater."

[Phred42]

3. Can't come back from that.

[SpiralHawk]

4. The putrid fruit of republiconomics

ptooooey - on so-called 'conservative' republicon economic schemes

[notesdev]

5. Fleeting "plus side"

"On the plus side -- 70 percent are still OK," he said.


Get back to me on that in 6 months and let's see where we stand.

[Juneboarder]

17. Yea... exactly!! nt

[Warren Stupidity]

6. People really should inspect the property before they buy.

A simple visit to the site would establish if the property is on dry land or under water.

[XemaSab]

9. This is California

Stuff like that can change minute-to-minute here. :shrug:

[MindPilot]

31. "Is it on fire?"

Is usually a California's homebuyer's first question.

[4dsc]

7. What were they thinking...

I know of properties, about 1200-1500 sqft that were going to $500,000 a couple of years ago(in 1995 the same properties went for about %150,000). What made people think these homes were worth that much is beyond me.. Of course I have heard that these same homes are still worth over $350,000?? WFT is wrong with that..

[MindPilot]

32. That's exactly the situation in my neighborhood

The first three properties on my block including my house are all about 2000 sq ft, street-to-alley lots, built in the 1920s, around 200k in '96 when I bought. They all flirted with a million two years ago, but have dipped to slightly less than $500k right now.

[tomm2thumbs]

8. a third is overwhelming number

given that it's a basic home thing and not just a car or credit card

[slackmaster]

11. It's a "gee whiz" number and probably far from accurate

It's a worst-case analysis, not a real figure. See reply $10.

[slackmaster]

10. As someone who works with real estate data, I have to point out a likely flaw in that figure

The figure used as "the amount that homeowners owe on a mortgage" includes all loans, including equity lines.

Figures for actual balances on (revolving) equity lines are not available. Credit limits for those instruments are in the public record. However, the type of loan (e.g. fully funded equity loan vs. revolving credit line) is not. It is possible through computer modeling to make a good guess whether a loan is a traditional equity or a HELOC, but that process is inexact and again, the actual balance is not available. You would have to survey lenders to get an estimate for that figure.

I offer my own situation as an example.

Price paid for home: $140,000 in 1994
Balance on first loan: $98,000
Credit limit on HELOC: $210,000
Balance on HELOC: $15,000
Present value of home: Roughly $400,000

Anyone researching loan-to-value ratios would say that my debt load is $308,000, when in fact I owe just $113,000.

[PSPS]

12. I'm sorry, but you're kidding yourself

Since you bought before the worst of the bubble, you're probably OK. But if you were to try and sell your home today for $400K, you might be unpleasantly surprised.

[slackmaster]

23. My situation is not the point at all

The estimate of 30% of mortgage holders being "under water" is too high. It's yellow journalism. The actual number is unknown.

[happylib]

30. sorry but I don't trust a damn thing a realtor says

Never have and never will.

Back in 2005 I told my 2 friends that are realtors/refinance that prices are way to high and a massive bubble was upon us. That all these idiots flipping homes are driving up the prices so high that soon nobody will be able to afford them at this rate. When this bubble crashes both of them will lose there jobs and end up working in grocery stores.

Of course they laughed as houses back then sold themself. So in 2006, and 2007 we revisited the topic, same response they were totally brainwashed and clueless morons. In 2007 when it was clear to anyone with 6 braincells or more than the economy was starting to crash. They were still in denial and said everything will bounce back soon. Atleast thats what they paid to hear at seminars.

I guess its because they have rose colored glasses on and must stay positive to sell homes.

Well today 1 guy the realtor works for TerminX 6 days a week and he is/was a Bushie. The other guy who did refinancing and tried to talk me into an ARM to jack up his commission, he works for Saveway. Despise both of them now looking back on how they tried to profit from me at my own demise. Turns out I knew more about the biz then they did.

A lot of stupid people bought homes and a lot of stupid people didn't have to work hard to pre-approve losers into homes they never could afford.

[slackmaster]

36. What was said by what realtor to prompt your response?

You are right to be skeptical of things that sales people of all stripes say, but that doesn't seem to be responsive to my post.

[Ozma]

48. Great points: Your last line should include that a lot of stupid people

became realtors, too and should NEVER have been given a state license to sell real estate with so few brains and such little education in economics and simple history of booms and busts.

[Waiting For Everyman]

50. The smart ethical ones are driven out, it's cocktail-partying that counts.

[wolfgangmo]

13. Thanks for the analysis.

It is good to know, but given your data and experience, do you think the estimate quoted is too high or too low?

Speaking as someone who has been squashed by Republinomics due to some unforeseen problems and a lack of even basic services in America, I am not happy with any numbers.

My home, which was purchased modestly, on a 30 year fixed, well within our means, but needing some fixing up to it's 100 year old frame, is underwater. I am not in a good place and may lose my home.

If that happens I am throwing the keys in the door, posting on craigslist that a house is available for squatting, and walking away to Canada where at least I can get treatment for my spinal injury and attend graduate school without selling a kidney and my future for student loans.

[slackmaster]

21. The quoted estimate is definitely high, but I can't begin to guess by how much

The estimate assumes that every revolving equity line is maxed out. That is certainly not the case.

Sorry to hear about your situation. I hope you can keep up with the payments.

[4dsc]

18. Well good for those that bought in 1994

Says nothing of the folks that bought overpriced homes in the past 8 year or so..

[slackmaster]

25. Being under water is not important if you can keep up with the payments

If the market value of your house is less than you paid for it, you can get your property tax lowered. It's a small consolation but it's something.

[Ozma]

49. Your "debt load" isn't the point.

The point is: that you are NOT one of the 30% and never even come close, even if you took out a full $100,000 HELOC tomorrow.

[slackmaster]

52. You are missing the point - I guess using my situation as an example was a mistake

My point is that the "30%" figure is deceiving and inaccurate.

If I had bought my house in 2004 instead of 1994, gotten the same HELOC, and not borrowed a dime on it, I'd be considered "underwater" even though I would not actually owe more than my home is worth.

Or put it another way: I could have qualified for a $350 K HELOC. If all the other numbers were the same except for that, it would look like I was underwater even though I would not really be.

There is a real downside to my situation compared to many people who are underwater on homes they bought during the bubble: I'm almost 51 years old.

[happygoluckytoyou]

14. SANDY EGGO... home of California GOP Base---> Bwahahaha! Duke Cunningham...SWIM U CROOKS!!!

[Juneboarder]

19. We aren't all crooks down here!!

:hi:

[Ozma]

51. Right! I lived there in the 90's and I found SD City and County to be wonderful

Not full of Repubs, yes some, but we also had a Mayor who was independent and marched in the Gay Pride parade, in the 90's!!!!

So don't judge all people by a few bad Republican apples that live among us multi-cultural Californians, most of us are transplants anyway.

I don't live there anymore, but I still love that city and the area is some of the best in the world.

[MindPilot]

33. Actually San Diego county went blue just before the election

More registered Democrats than Republicans.

And our mayor--conservative republican that he is--is a strong supporter of gay rights.

[YvonneCa]

44. Excuse me...

...San Diego is my home.

[hadrons]

15. San Diego is a conservative area, so a lot of Bush true believers ....

are getting hit pretty hard.

[Juneboarder]

20. SD is a conservative county

and I just LOVE to drive around with my "W stands for Wrong" and "gObama" magnets! LOL... it's crazy how many times I can get flipped off on my 10 mile commute home from work.

[slackmaster]

24. San Diego County voted No on Proposition 8

The city of San Diego now has two openly gay men out of eight city council members.

Calling the area conservative is an oversimplification.

[hadrons]

40. Its mostly politically conservative, not so much socially

[slackmaster]

41. One of our new gay council members is a Republican

He wouldn't have stood a chance in his district had he not been one.

[MindPilot]

42. Which one?

Gay or Republican?

[slackmaster]

43. Carl DeMaio is a gay GOPer, District 5

Being a Democrat is a non-starter in that district. Being gay probably used to be, but not any more.

[YvonneCa]

45. So are a lot of Democrats. n/t

[Juneboarder]

16. Ouch!

Yea, my wife and I bought 2 1/2 years ago and the home is now $140,000 less than what we bought it for. Needless to say, we are in it for the long haul.

[truthisfreedom]

22. "If you sell right now you're by definition either distressed or stupid" is a crock of shit.

If you sell now and break even, you're a smart cookie, because you can't sell in the future unless you want to sell at 1997 prices. That's where it's all headed, folks. Look back to 1997.. that's what the bankers are predicting. I know, because I asked my Realtor and my banker, and they both said it.

[Juneboarder]

53. HaHaHaHa!!!

Yea... you can really trust that banker and Realtor that both say to look back to 1997. If people in the industry are saying that then add ten years to the equation. Those Realtors and brokers were saying that there is no bubble 1-2 years ago.

[NashVegas]

26. Remember the $500k SLUM House? What a Shock

I wish I could find the story, but when the average starter is $500k, what do you expect?

[MindPilot]

35. Please, the word "slum" is so, well, like, not cool.

We prefer to describe that property as a "pre-leveraged spenddown asset"

[tomhayes]

27. I bought in 2002, no 2nd, and I'm underwater

Bought in 2002 for $212,000 (2 bedroom condo, low end of the market at the time, only 20 condos priced lower in all of San Diego) and it went as low as $148,000 in June, and is now hovering around $175,000.

The condo is now worth $202,000 (10k less) AND if I sold it I'd incur at least a 3% cost (6k) in real estate fees, plus I'd likely have to put 2-4 thousand into reparis. So it'd cost me about 20k more than its worth to sell.

I'm underwater - now tell me how I did something wrong.

[slackmaster]

28. You did nothing wrong

BTW Freddie Mac estimates the value of your place at $189,262. You aren't under by much.

You got a pretty good deal.

[tomhayes]

37. $189,262 > $204,000

Plus the 3% selling fees and misc. expenses and I'm $25k away from breaking even, that's NOT pretty good in my book actually.

And I was laid off in Novemeber.

[slackmaster]

38. Ouch

Good luck finding another job soon.

[SoCalDem]

34. We have been "underwater" several times in our house

and always due to outside forces..
1) a base closing plummeted property values
2) most of the original buyers in our development moved to bigger & better, making our neighborhood a rental area
3) local elementary school closed

BUT.. we could always afford our payments and we never moved, so we are still here, and even with the devaluation, we are ok..

It's only a problem is you have to SELL in a down time (which we have twice)..

Even if you have to sell in a down time, other places you would move TO, are also undervalued..

We have been "lucky" in that , every time we have bought a house, there has only been one income (my husband's) so we never bought more house than we could afford on one income.

[Ozma]

58. If you can afford a house on one income, you are not ever

"underwater". Talk to the people who have both parents work hard at $12 an hour jobs just to feed a family and see if THEY can buy a house for 3 or 4 people today!

One income homeowners, either you own a small condo, or you are damn well off in today's world to afford a family size home on one income.

[slackmaster]

60. I ended up with mine as the outcome of a divorce

My ex ended up with a house too.

However, I had a net worth of approximately zero ten years ago, at age 40. The best financial move I ever made so far was refinancing the house in May 2004. I have less than 10 years left on a 4.75% fixed-rate loan, plus the $15 K I owe on the HELOC.

I had wanted to buy for a long time, but was never able to until I was 36 years old. That's a lot of years of struggling with mediocre jobs and putting up with asshole landlords.

[SoCalDem]

65. "underwater" from the standpoint of the house being "worth" less than one owes

..The "affordability" of the house, no matter the cost, always varies from person to person.. and a one-income family is actually MORE vulnerable, since the lost of that job, more or less means disaster..

That did not happen to us, but it could have..and a few times my husband did change jobs, and there were plenty of nervewracking times... During 15 years of the mortgage, I DID work, but the qualifying for the mortgage came at a time when I did not.. and all along, we preserved the equity by not using the house as an ATM... Looking back, we may have been "chumps" for NOT extracting "wealth" from the house, but had we done so, we would have been burned big time..as it stands, we just "losT' imaginary money we never held in our hands..

It's a sorrow to us, that we could not have sold 3 years ago when our house was "worth" a lot, and the normal house in our neighborhood sold within a day or two of being listed, but we were not ready to retire, so now we wear this albatross, and pray that sometime within the next 5 years, we can unload it and still have enough to buy a small place outright, so we can retire without a housing payment.. we could have done that 3 years ago...now...not so much :(

[Abq_Sarah]

39. You didn't do anything wrong

My sister lives in Tracy and she's in the same boat. She'd like to take a job offer out of state but she can't afford to eat the loss on her condo.

[cascadiance]

29. Thanks, for helping me to explain to other why I moved to frigid Portland last month....

I'd probably never would have wanted to invest in the housing market in San Diego the way it was. It was obvious even a year ago or so that it was one of the worst housing markets affected by speculation in the country.

Now if I can just find some way of digging through a hip high snow drift to get out of my house without a snow shovel! :(

I guess in context I prefer being under this kind of water/snow here... :)

[PurityOfEssence]

46. This is probably not as horrible as the fearmongers would like it to sound

Headlines like this are to terrify people into keeping glued to their TVs waiting for public suicides and sobbing homeowners.

To be underwater means that you owe more than the current market agrees upon for your house. Southern California is now and always has been a wildly fluctuating economy with boom and bust cycles. Homes were wildly overvalued over the past few years and are relatively undervalued now, so many of those in this horrible situation aren't really in that horrible a situation: if they're planning on living there for years or even decades and they're able to service their note, there's really no problem. Yes, it's irritating to see the inferiors move in across the street with a cost of 2/3rds what they got suckered into, but such is life.

For those who are doubly hit with layoffs and business downturns, it's a disaster, but the hard truth is this: most people would have gotten just as extended in good times, and this is what happens. Those who can stick it out may grumble about having no equity, but if they can stick with it and pay their note, the value will come back in the next few years.

There's a nauseating element of the American Character at play here: when we get a good deal and get away with something, it's not lucky good fortune or a wonderful accident, it's our due from the universe that owes us. Yet when the gamble (based upon expectations of worth) goes the other way, we're CHEATED and ABUSED by an unfair universe.

The fact that 30% are "underwater" just means that they're not as well off as they thought they'd be, and if they were counting on flipping the house of trading up, they will have to reorder their dreams of conquest.

[tomhayes]

47. Hey, I gots an idea, why don't you STFU about things you don't know

>The fact that 30% are "underwater" just means that they're not as well off as they thought they'd be, and if they were counting on flipping the house of trading up, they will have to reorder their dreams of conquest.

Hey, that's exactly what's not happening to me.

Underwater means YOU OWE MORE THAN YOUR HOUSE IS WORTH. Period.

It's not about what people were "feeling" or "planning" or "dreaming of conquests."

I bought six years ago, and I bought at the low end of the market and I'm underwater. Not at the high end. No second mortage. No laons secured by the house of any kind. Not to flip the house (condo.) I bought a place to live.

Now I've been laid off and if I had to sell I'd have to pay the bank $25k out of pocket.

Tell me again how its my fault, please tell me.

Or shut the f up about things you don't know about.

Thanks in advance.

[WriteDown]

54. Tell you another story....

I bought a new car in 2006 and was underwater that day when I drove it off the lot. :eyes:

[tomhayes]

57. Hey dummy, I want to read more

Do you have a blog where you compare apples to oranges that I could check out???

[WriteDown]

59. No....

But I'm curious how much equity you SHOULD have. Is it 10%, 20%, 30%? I have a house which is underwater also, but I'll wait 20 years or so before I complain.

[tomhayes]

61. How about, um, greater than or equal to 0%

Or do you think that house (like cars) start out with value and then immediately start to decrease in value until they hit a zero worth??

If you buy a house and immediately sell it you'll lose at least 3% in fee (up to 6% depending) but when a house BOUGHT NOT DURING THE HIGHEST LEVELS OF VALUE, and AT THE LOW END OF THE MARKET is worth 10% less SIX YEARS LATER- NOT DUE TO DETERIORATION, WHITE FLIGHT, OR NATURAL DISASTER then it's not some MORAL FAULT INHERENT IN MY CHARACTER THAT IS RESPONSIBLE FOR IT.

Could be that the WILD mismanagement of loans (commission based) HAD SOMETHING TO DO WITH IT???!!????!!!???!??!??!

[WriteDown]

62. You're off on a lot of points?

Why higher than 0%? Houses used to be meant as homes, not investment vehicles unless you plan to rent. Also, what car ever hits a zero value?

Obviously the market was not at the low end when you purchased the home because if it was, it would not be underwater.

Best advice is for you to be patient. Obviously you planned to be in the black right away. I was hoping for that too, but I like my house and I can stay here for as long as it takes.

edited for grammar

[tomhayes]

63. Says you

>Why higher than 0%? Houses used to be meant as homes, not investment >vehicles unless you plan to rent. Also, what car ever hits a zero >value?

Why higher than 0%? Because a house is a place to live AND a place to keep your money invested with minimal risk (depending on the house of course.)

I remember the advise "Buy if your going to be there for five years or more." Well it's six years and I'm down 10%, so it's not working very well is it??

As for being in the black right away, 0% is not the black, it's 0%.

Houses are SUPPOSED to retain their value (if properly maintained) at the low end of the market. The condo got up to $330k in value in 2005 but I didn't sell because I wanted a place to live. Now its worth half that amount and 10% less than it was 6 years ago.

Tell me how I'm inpatient more-- please. Tell me how I'm too anxious to get back to ZERO (is that greedy of me too?) Tell me how my character is the worst thing about Americans.

Or STFU please.

Thanks in advance for whichever route you choose.

Heyzeues H. Crist!!!

[WriteDown]

64. What condo is worth 330K?

In 99% of the country, that is outrageous so there is your first clue. A tip, only buy a place if you can see yourself being there for 30 years because you never know.

I am curious who told you all these anecdotes.

"Buy if your going to be there for five years or more."
"Houses are SUPPOSED to retain their value (if properly maintained) at the low end of the market."

[Waiting For Everyman]

66. Um, tomhayes is right.

Seems to me, you have some problem about admitting there's a problem. (I wonder why? Maybe you're part of the problem?) I'm fed up with the "blame the homebuyer" syndrome too. Because ya know what? It's fulla shit!

This is no "normal downturn". This is an entire market disappearing/collapsing and NOT from natural causes. People who need to sell can't sell. Do you get that?

And lobbing these asinine and antagonistic opinions on someone who has personally LOST a LOT is LAME. I get the same thing here, and I'm putting up with it no more.

[WriteDown]

67. Who needs to sell?

There is a reason most mortgages are 30 years. They don't assume you are going to sell in 1 or 2 or 5. I am amazed at the house flipper defenders. I've really got to call capital one and ask for some of my car loan back. I really took a bath on that one :sarcasm:.

[Waiting For Everyman]

68. Anybody who sells in less than 30 years is a flipper, huh?

[WriteDown]

69. No....

But I'd say if you sell in less than 10 you are. Houses used to be homes. They were bought by families and actually lived in. I have a house myself and am in the same boat. Possibly worse since I saved my whole life and put 20% down. I just don't plan on going anywhere though. Also, when I purchased my home I made sure that if I ever had to leave suddenly, I could support its mortgage payments as well as rent. Not comfortably mind you, but its doable.

[Ozma]

55. Great post! Yes, there's always a few here who don't know

anything and just like to make stuff up.
Your example helps raise the consciousness of people who just don't have a clue about the real world.

You are a victim, not an enemy. You bought in the belief in the soundness of the America economy, and you were cheated by a nation of leaders and cheaters who were drunk on power, money, the love of money, and rampant speculation. I would be willing to bet that MOST people who are "underwater" on their mortgages are just like you.

Thanks again!

[Waiting For Everyman]

56. I see something nauseating in somebody's character too.

The "inferiors"? Pray tell, who would that be? And getting laid off means that a person would've overspent anyway? Says who?