Short sales and foreclosed homes in San Diego
People looking at homes for sale in San Diego could be interested to learn of the latest trends happening in the area involving short sales and foreclosed homes. A recent article in the San Diego Union-Tribune characterized 2012 as the "pivotal" year for San Diego's housing distress, as short sales began to make up a larger share of the residential housing market than home foreclosures and traditional resales.
The source cited DataQuick numbers from August, which indicate that one out of every five homes that were resold in the San Diego County were short sales. When the market took a turn in 2007, short sales made up a single-digit percentage of resales. The Union-Tribune explained that short sales allow homeowners to sell their homes for less than what they still owe on their mortgage in order to keep their heads above water and avoid the negative effects of entering into foreclosure.
An article in the North County Times on October 11 cited industry data indicating that the number of foreclosures occurring in the San Diego area has been declining for 17 of the last 18 months. The source revealed additional encouraging news for the local housing market, as the number of mortgage defaults decreased significantly. In September, there were 1.2 defaults for every 1,000 homes in North San Diego County alone, which is down a substantial 10.8 percent from August 2012 and down 40.4 percent from September of last year.
"Short sales are expected to become even more common and easier to close as Freddie Mac, which owns or guarantees a sizable chunk of mortgages in California, will make it easier for borrowers to complete them starting next month," wrote journalist Lily Leung in her recent article for the Union-Tribune. "Borrowers will see that the process is considerably shorter and that it will leave less of a financial black mark on their credit histories."
The increase in short sales is having tangible effects on the market and may well continue to do so. The source indicated that this trend means sellers and buyers can enjoy a more dynamic real estate market. Short sales essentially result in a decrease in losses for banks, and a higher chance that short sellers may be able to enter the housing market again after a shorter interval of time.