It's 2010 already, over two years since the housing crisis began, and housing prices are not climbing as optimistically as one would have hoped. In fact, December reported the largest monthly drop of previously occupied home sales in more than 40 years. San Diego, however, appears to be in better shape than the rest of the nation.

December sales fell 16.7 percent across the nation. This was in part due to the fact that President Obama's first-time homebuyer's credit was set to expire on November 30, 2009. The tax credit has been extended to homes purchased by April 30, 2010, and has been expanded beyond first-time home buyers to include long-term homeowners as well . Despite the extension and expansion of the credit, the drop in sales after the sunset of the previous credit raises the question of the sustainability of the housing market after April 30.

After all, if housing sales declined at the sunset of the previous tax credit initiative, whose to say that the same won't happen after the new sunset date?

Interestingly, however, Southern California housing prices and home sales are on the up from the January 2009 bottom. San Diego research firm MDA DataQuick reported that the San Diego area has had a step-by-step climb in home sales and in housing prices.

One of the major factors in San Diego's incrementally rising housing market, says MDA Dataquick, has to do with the availability of distressed properties in the current market. Buyers are jumping on the chance to get good deals on properties that have foreclosed or are in the short sale process.

Unfortunately for San Diego, where there exist willing buyers, there also exist distressed homeowners. Many homeowners are left with no recourse but to foreclose. Furthermore, with the rise of loan-modification scams, many of these distressed homeowners find themselves in perilous situations where they have no recourse but to foreclose, having been scammed out of money by paying alleged "loan modification" companies to negotiate their debt.

Although many loan modification companies might be scams, attorneys must abide by the strict ethical rules of the State Bar. As such, a San Diego bankruptcy attorney or a real estate attorney may have a higher ethical threshold and stronger incentive to be honest with his or her loan modification and debt negotiation practice.

Of course, the distressed home sales and foreclosures are fueling the rebound in the housing market. It has yet to be seen what will happen when the inventory of distressed homes begins to dwindle and when the homebuyers tax credit expires. But for now, San Diego can rest assured that its economy is showing signs of rebound.