Coming Up For Air
Thursday, October 7, 2010
SAN DIEGO Real estate geeks say people who owe more for their home than it's worth have “negative equity.” But the rest of us just say they’re underwater. The degree of submersion in San Diego will determine how long it will take for the housing market to return to normal and stop being a drag on the local economy.
The latest numbers from the real estate data bank Zillow.com show a modest percentage of San Diego homeowners are underwater: Just over 20 percent. If one-in-five actually sounds like a lot to you, click the “Zillow” link above and see what’s up in some other metro areas.
In Las Vegas nearly three quarters of homeowners are underwater. In Riverside, CA about half of homeowners are submerged.
Some local real estate professionals think Zillow’s numbers underestimate San Diego’s problem. Matt Battiata, CEO of Battiata Real Estate Group, works with lots of owners of distressed properties who are trying to convince their lenders to take a loss and allow a short sale. He thinks the percentage of local folks underwater is more like 40 percent.
“If you look at a chart of the market over the last 50 years, it’s a roller coaster,” he said. “We had a peak in 1990, a bottom in ’96. We had a peak in 2005 and now we’re on the way down. There are a huge number of people in San Diego County who owe at the top of that last peak.”
And if they are forced to get out of their homes today – maybe they have to move or they decide they can’t make the mortgage payments – they’ll have to do a short sale, at best, or suffer a foreclosure, at worst.
The median price of homes has gone up in San Diego over the past year. Battiata calls that a “dead cat bounce.” Lots of people in real estate say it will take at least another year for San Diego sell off its distressed properties and that will drag down the market yet some more.
Please leave a comment below if you’re got a story to tell about being underwater on a home. Or call me at 619-594-3154.