San Diego Housing Bubble News and Analysis

I looked into Bridgewalk and Pasado (mid $500k SFH) in Del Sur not too long ago. I like the fact that the homes are new and modern, and close to shiny new schools. Selling price is *almost* reasonable, but the mello-roos and HOA kills me. I think they are at least $300/month, and some are even higher. Lots are small too.
How negotiable are new home prices? Can you make an offer lower than the listing price, like you can with existing home sales? Do the builders have a minimum price they will not go past, even if the market comp drops below that? Anyone thinks the price of these new houses at Del Sur will drop any more?
Bree3355...I'm curious too if there are other new constructions in the area below $600k.

Is Mandolin the motor court condo thing? If so, what are they asking for them now?

I looked at those when they first opened. They were asking around $500K for them then (January 08, I think). I can't justify that price point for that type of living. Especially combined with HOA and Mello-Roos. If I remember correctly, the combined tax rate was in the neighborhood of 1.7%.

I last drove by there a few months ago and there hadn't been much construction going on in the area around Mandolin. The think the houses across the grassy area is called Pasado, they hadn't done much with those either.

I wonder if they are having a hard time selling? I really want to like Del Sur but, the area seems so tightly packed and rediculously expensive even for North County.

While we are on the topic of Del Sur, does anyone know what is going on with the empty lots North side of Del Sur between Camino Del Sur and Paseo Del Sur? There has to be about 20 lots that have just been layed out with services but they are just sitting there.

I looked at Del Sur last year but didn't like the community, as it was too far from highway or the civilization, in general. SEH is also far from highway but at least it got its own shops, supermarket and gas station. Del Sur was also loosely scattered across the landscape, unlike the master planned community of SEH or 4S Ranch.

Anyway, I stopped looking at any new housing community with MR, after realizing that deducting MR as property tax is illegal. I hear that builders at Del Sur, SEH, Sky Ranch of Santee and other large master planned community not yet near build-out are all having trouble securing additional financing from banks to continue on. This is bad because many HOA fees are initially high with expected decrease after build-out. Now these fees will remain high indefinitely.

I'd imagine this also has an affect on Mello-Roos as well. Can Mello-Roos be increased?

Are there any new houses in San Diego county that doesn't have Mello-Roos? Or new houses in areas that don't have HOA? I don't understand the appeal of HOA...it seems to take away some of the freedom of home ownership.

Does anyone know why it's illegal? It's property tax. No property? No Mello-Roos tax. Seems pretty straightforward to me.

Have there been court cases where the IRS won, when preventing someone from deducting MR?

We pretty much ruled out any properties with MR during our home search over the last two years.

HOAs can be a good thing. They prevent your neighbor from painting his house purple, or parking a giant boat in his front yard.

It depends. Some HOAs do not allow parking on on the common street overnight, which is overkill. Some don't allow garage door to be opened for more then several hours unless you are moving stuffs in and out....I guess they are trying to discourage grease-monkey neighborhood from starting.

My HOA (Riverwalk of Santee) does not allow:

- Car washing, even for single detached residences with own driveway
- Parking on private streets inside the community
- Supposedly no parking on own-driveway as well but nobody is following this rule

There are probably more restrictions that I've yet to looked into. But the HOA fee is only $118/mo and no MR. So I think it's a good trade-off, at least so far.

It's not deductible because, unlike normal property tax (which goes to fund the state), the vast majority of Mello-Roos taxes goes to directly fund neighborhood improvements. Since the property owner directly benefits from the Mello-Roos payments to a much greater degree than someone located, say, 25 miles away would, it's not considered to be tax deductible as a general fund property tax.

The final word from CA franchise tax board on it:

You cannot deduct Mello-Roos taxes if they are assessed to fund local benefits and improvements that tend to increase the value of your property. Mello-Roos taxes may appear on your annual county property tax bill with other deductible property taxes. That does not mean you can deduct the Mello-Roos taxes. You may only be able to deduct a portion of the total property tax shown on your bill.

Most of the time, you cannot deduct real estate taxes assessed for local benefits and improvements. However, you can deduct them if they are for maintenance, repair, or interest charges related to those benefits. Some examples of local benefits are:

Sidewalks
Streets
Sewer lines
Water mains
Public parking facilities
Other similar improvements
To deduct local benefit taxes, you must be able to show the amount of the taxes that are for maintenance, repair, or interest. If you cannot show what part of the local benefit taxes are for these charges, you cannot deduct the taxes.

For more information, you can:

Contact your Mello-Roos District.
Get Internal Revenue Service Publication 17, Your Federal Income Taxes-Individuals, Chapter 24.

Or just follow this link...

http://www.ftb.ca.gov/individuals/faq/ne...

Why is car washing considered low-class?

As my HOA explains:

No car-washing is because the water, along with chemicals from the soap detergent would simply drip to the storm drain and eventually get to our ocean, untreated. This I somewhat understand and support.

No parking on driveway if the length of the driveway is less than that of the car. HOA does not want the car to extend out to the sidewalk. But then again, most driveways in the community are less than 15 feet, OK for small cars, barely adequate for mid-size and simply aren't sufficient for full-size and pickups. And yes, most families have garage full of stuffs and thus could only park one car in it, or none at all. This is one rule that most residences will not support and thus everybody's ignoring it so far.

In my healthier days. I wouldn't let anyone else wash my car. Dark paint plus poor washer that does the wax-on wax-off thing = lots of swirl marks.

Anyway,

You'd be interested in an HOA rule under the Torrey Hills Master Association.

Paraphrased:

"No owner shall convert his/her garage into a place of storage and vehicles shall not be parked on the drive unless there are more vehicles than can be accomodated inside the garage."

Basically, this means if you unless you have 3+ cars or drive a Hummer H1, technically you're suppose to garage all your cars before you start parking on the driveway...Fortunately, this rule is never enforced. But it does make a convenient excuse for getting a third or fourth car :)

There are no rules against car washing.

As one of those evil people who painted their house purple, I think HOA's are for jerks who need a better hobby than getting their undies in a wad over decor differences. I'm all for keeping people from letting their property turn into a trash pile, but there's a line that gets crossed when people start to nitpick over crap like basketball hoops in the front or house color. HOA's are all too often run by conservative Nazi's with nothing better to do than make sure their neighbors are following the "rules."

Well different parts of "Torrey Hills" are under different HOA's. Torrey Hills MA is actually the lesser of the HOA nazi's. They have a bunch of rules, but unless you have a pesky neighbor that complains, they really don't enforce that much. So plenty of neighbors are a pack rat and park both of their cars outside. Fortunately, there aren't a lot of retired old seniors here who just report people.... IF you started working on your car with the garage door open, you might get a few evil eyes but no one is going to say anything. Putting a clunker on the driveway on blocks would be a no-no though. (I think it's a san diego law anyway that you can't do that)

Parts that border the Carmel Country Highland (I know, I get a kick out of the name too...what's next Carmel Valley Plateau?) are under a different HOA...I heard those HOA's are HOA nazi's. I have friends that live in Derby Hills/Saratoga area and they routinely get letters from the HOA...Anything from leaving your trash cans out too long for 1 extra day...To your contractors hanging too large of an advertising sign outside while he's remodeling.

Just an FYI - It's illegal in California to block the sidewalk with your car. The issue is for disabled... not to mention moms with strollers, kids on bikes, etc.

http://dmv.ca.gov/pubs/vctop/d11/vc22500...

22500. No person shall stop, park, or leave standing any vehicle whether attended or unattended, except when necessary to avoid conflict with other traffic or in compliance with the directions of a peace officer or official traffic control device, in any of the following places:
< snip >
(e) In front of a public or private driveway, except that a bus engaged as a common carrier, schoolbus, or a taxicab may stop to load or unload passengers when authorized by local authorities pursuant to an ordinance.

(f) On any portion of a sidewalk, or with the body of the vehicle extending over any portion of a sidewalk, except electric carts when authorized by local ordinance, as specified in Section 21114.5. Lights, mirrors, or devices that are required to be mounted upon a vehicle under this code may extend from the body of the vehicle over the sidewalk to a distance of not more than 10 inches.

I never said anyone was evil. HOAs are useful for the jerks, like me, who DO appreciate a neighborhood that is kept aesthetically pleasing. Some neighborhoods are designed from the ground up with this in mind, and they look great the way they are. For those types of neighborhoods, one person painting their house purple would ruin the look that us jerks enjoy and even hurt resale values. For people who aren't that into appearances, there are plenty of HOA-free neighborhoods to choose from. I live in one now, thankfully temporarily, where a brown house with a waist-high brown lawn is right next to a sky-blue house with a white picket fence, which is next to a yellow house with what looks like a tugboat in the driveway, and let's not forget the house across the street, with the life-sized horse statue in the front yard. You might call it "character", but tastes are subjective, and I think it looks like crap. Luckily there is enough variety that everyone can find a neighborhood they like.

Of course, HOAs do sometimes cross the line into Nazism, which is why it's a good idea to know their rules before buying.

Those empty lots with the lamposts on the streets in Del Sur have been that way since 2004. I know because we moved to 4s in march 2005 and started looking there in 2004.

Del Sur's plan is to build all the way over to the Highschool, complete with commercial space and shopping. If you go into the current builders there, some have a site plan for the whole place (why this isnt up on the web is beyond me). The golf course was scrapped, as was the hotel to go with it. That was supposed to go in near the bridge at the low point on Camino del sur in the middle of the del sur and the east gate of Santaluz. That would have been a nice addition.

I think it will be a good 8-10 years before del sur is built out.

Black Mountain Ranch is in no rush to build out Del Sur any time soon. The ranch land was basically free. Thank you spanish/mexican/american wars.

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The final word from CA franchise tax board on it:

You cannot deduct Mello-Roos taxes if they are assessed to fund local benefits and improvements that tend to increase the value of your property.

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Right now and in future property values will not increase (may decrease) at least next 3 or 4 years (based on 2006 prices).
I heard Mello-roos money used for building schools, libraries and public parks too. These facilities are not for just those with communities Mello-roos.
I believe tax code is not clear enough to say "Mello-roos is not tax deductible"

I believe the tax code is clear enough.

Firstly, you can't say that "...my property value has not increased and may actually decrease in the near future...therefore my MR should be tax deductible...". It doesn't work that way.

Secondly, public facilities (library, park, school, etc.) built using the MR money is typically intended mostly for residences of that particular community, not all San Diegans. I, living in Santee, would not send my kids to school in SEH, would not have a casual pick nick at De Sur's park and would not be checking books from 4S Ranch's library. These facilities are enjoyed almost exclusively by the residences of these master planned communities.

Where I live (Riverwalk of Santee), YMCA and city-owned sports park are just across the street. Nearby schools & libraries are for all residences of Santee. The community is not so far away as to needing a lot of infrastructure improvement to be connected to the city. Thus it's one of the very few large new housing community in Santee that doesn't have MR.

Way back in the pre-MelloRoos days developers had to kick in for some of these things. I live in University City - developers had to kick in for the Regents Road bridge (that still isn't built due to NIMBYism.). That money is still sitting, escrowed, in the city coffers while various factions fight over it. Developers also had to kick in towards building Curie, Marcy (now gone), Standley M.S., and UCHS. It was part of getting the development approved - the developers had to kick in for infrastructure. It didn't mean this stuff got built in a timely fashion... Standley was 5 years behind the developers promises, UCHS about 10 years behind it.

Then they came up with a way to pass that on, more directly, to the homeowner...

Are there any data out there that compiles which areas have Mello-Roos and which don't? Ideally it would be a map with colored regions showing MR areas. My only way of getting this info right now is looking at MLS listings (some listings say whether or not there's MR) and getting a rough idea over time which regions are MR regions. There's gotta be an easier and more reliable way.

The MR is broken down on your bill, if you are so inclined you could break it out and deduct the stuff that doesn't increase value on the property. This is a moot point anyway, most people just use the amount on their 1098 which is reported to the IRS by the bank.

Exactly, UCGal.

Mello-Roos benefit the developers **and the landowners** who sell to the developers. Developers can pay more for the raw land because the infrastructure and improvements don't add to their cost basis when stupid buyers are willing to shoulder these costs.

If I were to buy a house with MR, I'd demand the builder/developer pay it off first. You can do that, or deduct the amount of total MR assessment from the price and pay it off yourself, IIRC.