Home Buying in 92078>Question Details

Sara, Home Buyer in 92009

So let's have an honest discussion about San Elijo Hills Mello Roos....

Asked by Sara, 92009 Wed Sep 3, 2008

I just asked a question about investing in a property, and someone brought up a really good point about San Elijo Hills and the Mello roos. On average, I think they run approx. $200/month -- some more, some less. What do you experts out there think about them? Are they high enough to scare off potential buyers? Anyone care to dust off their crystal ball and make any SEH market predictions for the next year or so?

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We've looked in and around SEH for the past year, and the average Mello Roos are closer to $250, with most of the nicer ($600K+) houses pushing $300 (plus HOA) per month.

We have friends who are on Tara Way that are $350/mo in MR, plus HOA. Ouch. Same for the surrounding streets (Venice, Genoa, etc), same with the Schoolhouse Way area. The older SEH sommunities like Calistoga are in the $160-200 range, but those houses are a little smaller, in the 1500-2100 sq ft range, too small for us after living in a 3000+ sq ft house.

We're selling in Santa Fe Hills, and I even touted our low Mello Roos (*only* $166/mo) in our listing description :-) No HOA for us, so hopefully someone who wants to move to San Marcos will see the value in saving $250-350 a month, not to mention that our prices in North San Marcos are about 20% less per sq ft. than South San Marcos.

We do like the SEH community, don't get me wrong. As I mentioned we may end up there (we have an offer on a short sale house in Discovery Hills which has MR of ~$230/mo + $120 HOA). That to me is a lot, but it's still $150 less than an equivalent neighborhood in SEH would be. It would be tough to pony up $500 a month over and above your property taxes. For what? A nice town square with a raging fountain? Movie nights in the park? The schools in SEH are good, but so are other parts of San Marcos with much lower MR.

When doing the math for our move, I figured an extra $300/mo in Mello Roos was the equivalent monthly payment on an extra $50,000 financed over 30 years. With that in mind, you can buy a similar house in Carlsbad and pay the same per month.
0 votes Thank Flag Link Fri Sep 12, 2008
Contact the San Diego Tax District and ask. The Mello Roos is assessed by size of property and/or land.
0 votes Thank Flag Link Wed Aug 5, 2015
yes they are high enough to matter. they work against qualifying and when stacked on the various HOA fees they definitely are a consideration for buyers who are ALL being underwritten these days. when the loans were being handed to anyone who raised their hand they were immaterial...now they are a big deal. while they might not be scaring off buyers they are an element of their qualifying that will keep a lid on appreciation, qualifying (as clearly explained by mike92069 below) and will also be part of the calculation of owners who default...some strategically. the bottom line is that when you are looking at the better part of $500...even if the buyer is okay with it, their lender has the last word.

i have to ask lorraine if she has good recon on the mello roos fees ramping up. she may be confusing the general ad valorum tax that is levied on all parcels and which can rise by 2% annually if the values rise. i am pretty sure that the mello roos taxes do not adjust except downward if there are additional units wedged into the pool of payees or if the service base reduces as it did in encinitas ranch when they eliminated the elementary school in that service area.
0 votes Thank Flag Link Sun Mar 20, 2011
Hello Sara;
Living in San Elijo Hills has its perks, but it also has it draw backs. Something to keep in mind is that Mello Roos will not go away, it has a run of 20+ years. This commitment is passed on to the next buyer, and the next ---usually goes up every year by @ least 2% increase. In the community of Mahogany the tax base is approximately 2.5% -- that is about 1.5% higher than other communities- the monthly Mello-Roos is approximately $700 a month. The mello-roos is incorporated into your yearly property taxes.
San Elijo Hills, is still not completely build out. I know that they think that when the community is build out that the mello roos will go down, but I would not bet on it.
Will prices be going down its hard to say, the better question to ask is how long will interest rates be this low?
Crescent Moon Realty, Inc. & Land N Sea Auctions.
0 votes Thank Flag Link Thu Dec 9, 2010
Hi Sara,
Since I don't know what your investment goal is I would have to assume that its for both cashflow and long term appreciation. I'm also assuming that you are looking at Pre-Tax Cahsflow and not After Tax. I always look at Pre-Tax cashflow since the goal of the investment is for it to pay itself. If you can't achieve this right off the bat then my advice is to NOT BUY YET. Be patient and wait for prices to come down, and they will since current indicators points that direction.
SEH is GREAT rental market however current price points relative to the current rents are still way out of sync. Mello Roos and HOAs certainly also differ by neighborhood. The older neighborhoods have the lower fees and Mello Roos, so you may need to focus your search in these neighbhoods.
SEH will not be immune to further price declines, in fact looking at current listed home prices show declines. Appraisals are also comming in short of values indicating a still unstable real estate market. Future evidence of market stress is evidenced by Shadow Inventory. These are troubled homes that banks are delaying the foreclosure on since they do not want the debt showing on their books for fear of being shut down by the FDIC. There's also the more recent accusations of Bank Fraud with regards to Fraudulent loans, broken chains of title, who really owns the note since they were sold to investors. So hang on for some surprises. Feel free to contact me for proper consultation
0 votes Thank Flag Link Thu Nov 25, 2010
I am very seriously considering buying in this area. Mello roos vs other areas are a big consideration. Also, issues regarding getting 'good' insurance due to proximity to major brush are deterring me.

0 votes Thank Flag Link Thu Sep 4, 2008
Sara - I know a good agent in Carlsbad, if you'd like a referral - vchrisner@kw.com
0 votes Thank Flag Link Wed Sep 3, 2008
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