quality, such as upgraded kitchens.
Condo prices have taken a hit, the price per square footage falling 14.5 percent from July 2007.
“In any kind of uncertain market, condos get hurt more than single-family homes,” Bransfield said.
One of the areas that would get hurt if the current foreclosure trend worsens is City Hall’s general fund, which received $34.9 million, or roughly 14 percent of the total budget, from property tax revenue for the current fiscal year.
The foreclosures would specifically hit the secured tax portion — tax on real property — which makes up about $26 million.
“In forecasting the property tax revenues for 2008-09, we did project a lower rate of growth in values than we’ve been experiencing the last few years and part of that was to account for any impact the foreclosures might have,” David Carr, the principal budget analyst for City Hall, said.
The impact would most likely be seen when the property changes hands, foreclosed homes typically sold for less than market value.
The properties are typically discounted at about 20 percent, the reason being the associated risks with purchasing such a home.
“It’s not like an open house where you get to see the property,” Scully said. “When a house is being foreclosed on through a trustee sale, the owner is not going to let (buyers) in and be cordial.
“They’re trying to hold on to the home.” Lloyd Segal, a principal of the California Foreclosure Institute, said the longer homes stay in their current state, the more likely the purchase price will go down.
The institute holds free workshops on purchasing foreclosed homes throughout Southern California, covering why lenders don’t want to keep these properties. A workshop is scheduled at the institute’s Santa Monica headquarters on Aug. 20.
“People say lenders want to foreclose and sell the property to make money,” Segal said. “The reality is the lender doesn’t want the property.
“They’re in the business of giving loans, not in managing real estate.”
Originally published in the Santa Monica Daily Press print edition on August 8, 2008. Read the original PDF.