It’s Going To Be A Bumpy Ride In California
The Orange County Register reports from California. “Homes in Capistrano Beach and Irvine’s Northwood areas may have been hit hardest this year by speculators buying properties, only to bail out when the housing slump hit. Median prices there fell about 15 percent, DataQuick reported. Overall, median home prices fell in almost 70 percent of Orange County’s ZIP codes during the first half of the year, DataQuick reported.”
“And while median prices increased in 23 ZIP codes, they accounted for about 28 percent of Orange County’s 83 postal zones. But some agents questioned whether other neighborhoods with the highest price gains really saw home values go up. Irvine sales agent Mac Mackenzie, who sells homes throughout Orange County, said many are areas where more expensive houses are selling for less, pulling medians artificially up.”
“‘Those 23 ZIP codes where prices are up doesn’t take into account price reductions (made to get) a sale,’ Mackenzie said. ‘Higher cost houses are selling for less. I think that’s skewing the numbers.’”
“The biggest price drops occurred in areas with high numbers of new-home sales, such as Newport Coast and an area near The Block in Orange (92868), said Hahn. In addition, areas such as Capistrano Beach (Dana Point’s 92624) and Northwood (Irvine’s 92620) are pricy neighborhoods where a lot of speculators invested, then bailed out when the slump hit, putting homes back on the market for whatever they could get.”
“‘Capo Beach is really hit hard,’ Mackenzie said. ‘There were so many speculators who tried to flip houses (there).’”
“Bob Chapman, who oversees a Prudential California chain in south Orange County, said that more higher-priced homes are selling now, making the median price look better than it is. ‘I don’t think it indicates an increase in value in very many places at all,’ Chapman said.”
The Sacramento Bee. “The housing sector weighed down the job market with increasing force in Sacramento and California last month, leaving payroll growth nearly at a standstill. ‘The housing slowdown is taking a bigger bite than previous months,’ said Dennis Meyers, an economist with the state Department of Finance.”
“‘It seems like housing is at the root of it all,’ he said, adding that the housing sector is hurting other segments of the economy.”
“Consumers ‘are living on fumes — there’s going to be a slowdown,’ said economist Chris Thornberg. ‘We have a real mess on our hands.’”
The San Mateo County Times. “Lately, the real estate propellant for the East Bay has fizzled. During the last year, four key industries that are tied directly to housing construction, sales, or financing, have lost 5,000 jobs in the East Bay alone.”
“‘The East Bay will not completely avoid the fallout from the housing market problems,’ said Scott Anderson, senior economist with Wells Fargo Bank.”
“Anderson has just returned from San Diego, which went through a job boom in recent years because of robust home-building activity. The reverse is now the case in San Diego, he said.”
“‘The housing market in San Diego has single-handedly brought that area’s economy to its knees,’ Anderson said. ‘All of it is related to the housing fallout. They are also seeing effects in retail employment, which is due to a slowdown in consumer spending.’”
The Union Tribune. “San Diego County reported the slowest year-over-year job growth since January 1994, when the county was crawling out of a recession.”
“‘Things are looking pretty bad,’ said Alan Gin, an economist at the University of San Diego. ‘It’s conceivable in the next couple months that we might see negative job growth – a fall in jobs.’”
“Economists pinned the blame for slow job growth on the local housing market. ‘It really is the real estate market that’s causing this,’ said Kelly Cunningham, an economist at the San Diego Institute for Policy Research. ‘Even though job growth in the visitors industry and the professional business sector is still positive, we’re losing as many jobs as we are adding.’”
“For the past year, Cunningham and Gin have been predicting that San Diego would be able to survive the real estate slowdown without falling into a recession. Now they say they are not sure.”
“‘If this trend keeps going on for the next couple months, it would suggest that we might have a recession before the end of the year,’ Cunningham said. ‘Not a big recession, but a slight one.’”
From KGO TV. “Homeowners in some Bay Area communities are defaulting on mortgages at a record pace. In the first three months of this year, defaults in Contra Costa County are up two hundred twenty-five percent.”
“Statewide, there are nearly 500,000 homeowners currently facing foreclosure. Eleven percent of all subprime adjustable rate mortgages are past due, and analysts keeping track of it all say it will get worse.”
“For Richmond homeowner Robert Harrell, it all happened at once. The security guard supervisor lost his job, at the same time his mortgage company hiked his mortgage rate. ‘Which just about doubled my house payments, which put me behind so,’ said Harrell.”
“When Harrell started missing some of his payments, the mortgage company began foreclosure procedures. ‘They just wanted their money,’ said Harrell.”
From CBS 5. “It’s a sign of the record number of foreclosures: 80 Bay Area homes will go on the auction block Saturday at the Concord Hilton. More than 5,000 foreclosure notices went out in June. That’s three times more than last year.”
“Local newspapers are filled with hundreds of default notices. Many homes were purchased by people with bad credit who took adjustable rate subprime loans. Congressman George Miller said the government may do more to force lenders to educate buyers of the risks.”
“Miller…believes the worst is yet to come. ‘We are just entering the unwinding of the subprime loan scandal,’ he predicted.”
The Signal. “With subprime lending worries continuing to send shockwaves through financial markets, the foreclosure market in the Santa Clarita Valley may have only just begun to grow.”
“‘The foreclosure crisis is going to continue for a couple more years,’ said Rodney Fernandez, executive director of the Cabrillo Economic Development Corporation.”
“It is a trend that many in the real estate market are aware of in the Santa Clarita Valley. ‘There is going to be a foreclosure market,’ Pam Ingram, a local real estate agent said. ‘We just don’t know to what extent it’s going to be.’”
“For those who are looking to buy a foreclosed home, however, the time is ripe, and a person can receive a home for below market value. Ingram said it was important to have someone knowledgeable there to help with picking the market.”
“‘You need to be very careful when you’re shopping,’ she said.”
From Eyewitness News 29. “More trouble for the once, high-profile Bakersfield realtor, David Crisp. Eyewitness News has learned, for the first time, a home belonging to either Crisp or his wife Jennifer, is poised to go on the auction block.”
“Documents show an outstanding loan for $400,000. The Crisps can’t sell the home themselves because of an outstanding I.R.S. lien amounting to over $111,000. There are eight properties showing ‘notice of default’ owned by the couple.”
The ChicoER. “While the worst is over, the north valley isn’t out of the woods yet when it comes to the housing market. ‘It’s going to be a bumpy ride over the next 18 to 20 months,’ said Greg Paquin, president of The Gregory Group.”
“Blackening the view, both past and future, are the number of shaky mortgage loans that have been made to individuals ‘who shouldn’t be buying a home,’ Paquin said.”
“Not only has that put some mortgage lenders in trouble, it’s hurt builders who have had to foreclose. ‘We heard stories about people living in Sacramento and buying properties in places they’ve never seen’ for speculated return in California hot housing markets.”
“Paquin also blamed lenders for backing away from their strict guidelines in lending and allowing that to happen. However, he said traditional standards were falling back into place.”
“‘Other than people in housing, people are feeling pretty good,’ Paquin said about the north valley economy.”
The Modesto Bee. “It’s a good time to be a renter in Modesto. Apartment rents remain flat in Modesto, according to statistics released today by RealFacts.”
“Many people appear to be leasing apartments instead of trying to buy homes with housing sales sagging badly in most parts of the West, according to RealFacts.”
“Sales have been bogging down during the past two years as home prices have declined, causing more prospective buyers to stay on the sidelines in hopes of getting a better deal.”
“The slowdown also reflects greater difficulty in getting mortgages as interest rates rise and lenders tighten their qualifying standards.”
“When the Northern San Joaquin Valley housing market was booming, investors jumped in to buy homes they planned to resell, or flip, at higher prices or to use as rentals. As the market cooled, it became inundated with rental units, and that has helped hold down rents.”