Another set of foreclosures to hit San Diego’s Carmel Valley area.

We came across an interesting article from Business Wire about the second wave of foreclosures coming to San Diego County area.  Check out this article from Business Wire:

Second Wave of Home Foreclosures Coming to San Diego County

Blue Sky Capital expects Carmel Valley to be hit hard

SAN DIEGO, Jun 26, 2012 (BUSINESS WIRE) — Blue Sky Capital, a San Diego-based real estate investment firm, says San Diego County is in store for a second wave of foreclosures, much bigger than the foreclosure wave that hit the county several years ago.

Blue Sky Capital has been tracking area properties and found that mortgages secured with Option Arm and Alt-A funding are about to reset at much higher rates. That will mean larger mortgage payments for homeowners who can’t afford it, pushing many into foreclosures.

“While these Option Arm and Alt-A loans exist throughout the county, areas like Carmel Valley are filled with them. During our tracking of distressed properties in the county we found many homes in areas like Carmel Valley were purchased with zero, or a small amount down, so there is very little equity in theses properties,” said Chris Williams, CEO of Blue Sky Capital. “Carmel Valley, just north of the city of San Diego, has a median income of $90,000 and while higher end families have been able to withstand the initial housing meltdown, things are about to change. We will see more housing distress in Carmel Valley, and as a result, more foreclosures and short sales.”

With more than 36 percent of all mortgages in San Diego underwater, or simply put, having negative equity, Blue Sky Capital expects things to get worse before they get better.

Blue Sky Capital also tracks housing supply and home prices and found because of the negative equity that exists, it’s affecting the inventory of available homes on the market and that’s slightly pushing up the price of homes.

Foreclosures“You could say the positive of this negative equity is that it helps drive home prices up, as underwater homeowners delay as long as possible putting their home on the market which creates a supply constriction. But it’s only temporary and not a real sign that things are improving, ” said Williams. “These situations are unsustainable and certainly short lived. Strategic defaults, foreclosures and property value declines have to happen for the market to reset and clear itself of the toxicity from the greatest mortgage mess of this century.”

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