A continual decline in the San Diego housing market is one of the key things keeping the economy from fully recovering in that area. Up to 50% of all homeowners in San Diego may be underwater, meaning they owe more on their homes than what they are actually worth. While some of these homeowners are facing foreclosure, many of them are losing patience because of the poor housing market. People’s attempts to regain some equity on their homes are failing due to the dismal economy and real estate market.
Many homeowners in San Diego are wondering if it’s even possible for them to stay in their homes long term because they’ll never regain their equity. Even rental properties seem to be more affordable and appealing than paying on an underwater mortgage. Some homeowners have attempted to get loan modifications with lower interest rates, but even after going through the trouble of getting the bank to approve it, the chances of the loan modification being successful are not good. Realistically, it sometimes takes upwards of a year for a homeowner to get approved for a loan modification and when they do, their payments are not decreased enough to really help them out.
Some real estate agents and professionals in the San Diego area feel that the only solution to the housing market crisis and the number of underwater homes is for the banks to forgive principal amounts on loans; but others believe this is not a realistic expectation. If banks were to forgive principals, they would be the ones taking the hit and many feel they aren’t ready and willing to do this, despite the fact that they lose money on foreclosures and short sales all the time.
It’s estimated that almost 10% of properties sold in the last ten years have been foreclosed on in neighboring Chula Vista. Most homeowners in the area feel that it’s best for people to stay in their homes because foreclosures tend to negatively affect price indexes and credit ratings. Either way, the negative affect that distressed properties have had in the San Diego area will take some time to correct itself and most homeowners are left wondering if the issue will be reconciled through more foreclosures or if the banks will take one for the team.
