The San Diego housing market is better than it was two years ago, but is not making significant progress, said Michael Lea, the director of The Corky McMillin Center for Real Estate at the San Diego State University School of Business Administration.
"We're bouncing along the bottom," he said.
He said estimates are that 30 to 40 percent of homeowners are still underwater, meaning their mortgages cost more than their houses are worth.
Matt Battiata, CEO of The Battiata Real Estate Group and author of "Upside Down Nation: The Handbook for Upside Down Homeowners," said underwater homeowners can try for a loan modification, short sale, staying in their home or "throw their keys on the counter and walk away."
Walking away is the worst option because of the negative impact that has on credit, he said.
Battiata said he's seeing many people doing short sales and then buying again.
Lea said attempts to modify loans "have had far smaller effects than we thought." But, he said, banks are more willing to negotiate.