Marin Real Estate Pulse

The August 2, 2008 edition of the Wall Street Journal has a front-page article about ghost towns throughout America. The ghost towns are largely a result of unfinished subdivisions. Many of these subdivisions remain a half filled with for sale signs outnumbering occupied properties. Many of the projects have been abandoned by their developers with little hope of being completed in the near future.

The story features a couple who won a rent-free, for five years, with an option to purchase a home at the end of the term for $452,000. I suppose this could turn out to be a great deal for the lucky renters if they don’t mind what can a weed filled yards for the next couple of years. Most of these ghost towns are in areas that had extraordinarily high development of new homes. Conversely, Marin County had very little development in the preceding five years. Most of the development that did occur was in Novato and not surprisingly Novato has experienced the largest reduction in prices in Marin County during the current housing market.

Most of Marin County is designated open-space which prohibits the development of new housing tracts and this remains one reason that Marin County pricing has weathered the current market downturn better than other counties and states. While Marin counties foreclosure rate has increased dramatically it is still significantly below the statewide average. There are very few abandoned properties in Marin County and those that have been abandoned are usually quickly resold by the banks.

If you are looking for one of those funky Western ghost towns I suggest you drive outside of Marin County.

 If you are up-side-down on your home (owe more than it is worth) and are considering foreclosure or a short sale you need to know the ramification each option has.

If you purchased your California home in the past couple of years with 100% financing and the home is worth less than your purchase price foreclosure may be your best option.  This may also only be true if you have NOT refinanced your home.  You see, in California, in a foreclosure the bank has no recourse on your assets beyond your home (original purchase money only- does not apply to refinanced property).  So if you want to walk from the house -give it back to the bank, the hit you take is on your credit rating for seven years.

Option 2 might be to sell your property and ask the bank to forgive the difference between your loan and sells price.  Even if the bank will not forgive you the difference this is called a short sale.  In a short sale your credit is not hit as bad as a foreclosure.  However, the bank will likely come after your other assets AND (this is a big one) the IRS will tax you on any amount forgiven by your lender.  Don’t forget when the IRS wants your money they get it.

If you want to refinance your property to keep the payments low that will be hard to do at 100% financing and it may take away the best foreclosure on original purchase money has to offer.