Collectively, We Went A Little Nuts Out Here In California
Bloomberg reports on California. “In the sprawling new subdivisions of Southern California’s Riverside County, newspapers litter empty driveways and coffee-colored lawns are reminders of neighbors who had to abandon their dream homes. California leads the nation in home foreclosures, and economic worries are driving the voters who have the biggest say in tomorrow’s Super Tuesday contests.”
“‘The economy has trumped everything else,’ said John Husing, VP of a Redlands consulting firm.”
“In Riverside County, 160,000 homes were constructed since 2000, said Larry Ward, county assessor and property recorder. Today, one of every 43 homes in the so-called Inland Empire that stretches east of Los Angeles County to the Arizona border is in foreclosure, according to RealtyTrac.”
“Average home values in the county dropped from $450,000 last year to $350,000 this year, Ward said.”
“A few years ago, no money down and interest-only loans bought Clinton supporter Felipe Molina, who makes $43,200 a year, a $590,000 Riverside home that he intended to use as a small boarding-care facility for the elderly. Now, Molina and his wife can’t afford the $4,500 in monthly mortgage payments.”
“Veronica Blankenship, a 49-year-old African-American probation officer who Riverside Fair Housing Council officials say was the victim of a predatory lender, owes $3,400 in monthly payments, more than she earns, for her modest home.”
“Clinton’s proposal for an interest-rate freeze ‘is not going to help me,’ she said. She also dismissed the fund proposed by Obama, as another government program for which she wouldn’t qualify.”
“‘Politicians say anything to get a vote,’ she said.”
From Reuters. “Stockton, California, may be the foreclosure capital of the United States, but that is not influencing how residents like Michelle Encinias who are losing their homes will vote on ‘Super Tuesday.’”
“Encinias recently cast a mail ballot for Sen. Hillary Clinton, but has little faith that the New York Democrat or other presidential candidates can do much about foreclosures if they make it to the White House.”
“‘They’re just going to say what we want to hear,’ Encinias, who has two children, said during an interview in her four-bedroom home in a middle-class neighborhood in Stockton.”
“Encinias’ skepticism is shared by Tino Gonzalez, another Stockton Democrat leaning toward Clinton for Tuesday’s primary election.”
“‘I don’t think either party is going to do anything about it,’ Gonzalez said of the local foreclosure surge. ‘They’re promising a lot of stuff to get elected but once they get elected they’ll forget.’”
“Gonzalez’s mortgage is rock solid. He chose a fixed-rate loan because, he said, he felt adjustable rate loans were a trap waiting to be sprung on unknowing borrowers. His caution paid off, for foreclosures are soaring among borrowers with adjustable-rate mortgages, such as Encinias.”
“‘I go to the gym and hear a lot of horror stories,’ Gonzalez said. ‘A lot of people bought houses a year, year-and-a-half ago and paid top dollar and now can’t make the payments.’”
“Encinias conceded she could have avoided defaulting on her mortgage by selling her house when local home prices were peaking, but said better loan disclosure rules could have prevented her current predicament.”
“But many who bought during Stockton’s housing boom simply ignored loan terms, said Bill Herrin, an economist with the University of the Pacific: ‘Everybody wanted to do it now, today. Collectively, we went a little nuts out here.’”
The Recordnet. “The lunch rush used to fill Campesino Café. That hasn’t been the case for the past several months. A handful of south side businesses, such as Campesino Café, that cater mostly to Latino immigrant workers are not only seeing the effects of a sluggish economy, but they also say reverse migration has left their business nearly empty of customers, who are fleeing lackluster employment conditions.”
“The cafe has laid off two of its five staff members. Sales have diminished from $500 per day to $200 per day since the summer. ‘If there are no customers, we don’t have money to pay,’ said Margarita Jimenez, the cafe manager and daughter of the owner.”
“‘This is one of those annual times when families go back to their homelands. At times, they don’t feel there is enough work to come back, and you’re going to feel that pinch in the businesses that provide services to the Latino community,’ said Mark Martinez, CEO of San Joaquin Hispanic Chamber of Commerce.”
“‘Right now, there’s no sign that it’s going to get better. There are no jobs,’ said music retailer Marcos Flores, who is considering closing the shop.”
“The soft housing market has played a huge role in the economic slowdown in San Joaquin County. The housing market slowed job growth in the county from 1.3 percent in the fourth quarter of 2006 to 0.4 percent in the fourth quarter of 2007, according to University of the Pacific’s Business Forecasting Center.”
The Orange County Register. “It’s hard to feel sorry for well-heeled shoppers whose idea of tough economic times is passing on $1,000 Burberry raincoats or that $300 limo ride while the working poor skimp on vegetables and take the bus.”
“But economists say that recent signs of cutting back by the affluent could hurt the economy.”
“Nathan Warren, a limo driver, knows this first hand: He has seen his monthly wages drop by 40 percent to about $1,800 since late last year. His work week at Newport Beach-based Classy Ride Limousine Service was reduced to three days from five amid slow business.”
“‘I have to struggle to get by. I am pinching pennies,’ said Warren, a Costa Mesa resident. ‘I am eating more cereal and am not buying clothing.’”
“He used to go eat at restaurants a couple times a week. No longer. He also would like to visit friends in San Diego and Los Angeles. But less work and expensive gas are making him put off those trips.”
“Just look at the cutbacks by Dali Wiederhoft, a 52-year-old marketing executive from Reno, Nev., made skittish by a volatile stock market, a 20 percent decline in her home value and recession fears.”
“Over the past three months Wiederhoft pared her spending on clothes to $500 per month from about $3,000; that means no more Jimmy Choo shoes and David Yurman jewelry. Her cutbacks also included canceling the services of a cleaning woman and a lawn care company. She also plans to trade in her BMW for a Ford when her lease expires in about a month.”
“‘This is a time to have cash, not to spend. So, I’m cutting wherever I can,’ she said.”
“Soaring home values had made upper-middle class shoppers feel wealthy in recent years, causing them to trade up to $500 Coach handbags and $1,000 espresso makers, but a housing slump has wiped away their paper wealth. The woes are creeping into even the high-end luxury sector, as affluent shoppers are rattled by the turbulence in the financial markets.”
“Classy Ride Limousine Service, which caters to clients with an average household income of $200,000, has suffered a 10 percent sales dip this January vs. the same month last year, according to general manager Jason Lattier.”
“The 13-year-old business started seeing a slowdown last November when sales dropped 15 percent vs. the same month the year before. That 15 percent decrease was the worst monthly drop in about four years, he said.”
“‘We’ve been really slow,’ said Lattier, noting that 12 out of his 20 drivers are now working three days per week. With the average driver earnings $150 a day in tips and wages, that means a weekly shortfall of $300.”
“‘People are holding onto their money or maybe they don’t have the funds like they used to,’ Lattier said. ‘I’m not sure.’”
The Record Searchlight. “The chatter inside Cypress Square Barber Shop in Redding usually involves NASCAR, football or bowling. On the economy, conversation that quickly turned to the sagging housing market. Home sales in Shasta County are down from last year, according to DataQuick. At the same time, home foreclosures are up in the county.”
“‘How many people work in Redding at $40,000 a year can afford a house?’ said Tom Gerald, of Weaverville.”
“Eddie Grant, 78, of Redding, who paid cash for his home 22 years ago, said he’s worried about people losing their homes to foreclosure. ‘Somebody wanted to stimulate the economy 20 years ago and it’s out of control,’ Grant said. ‘It was buy and buy and now nobody can pay for it.’”
The Daily Pilot. “It’s been a tough few months for Orange County homeowners, and no area is feeling the brunt worse than the Westside of Costa Mesa.”
“The 92626 zip code, which comprises the western end of the city, had the biggest increase in foreclosures last quarter of any zip code in the county, according to DataQuick.”
“The area posted only a single foreclosure in the fourth quarter of 2006, but that number rose to a whopping 29 in the fourth quarter of 2007 — leading Orange County with a 2,800% increase.”
“Nearly every part of the county had an increase in foreclosure. Costa Mesa Realtors surmised the Westside’s high amount was the result of a large number of first-time buyers who, in some cases, may not have completely understood the loans they took out.”
“Elia Ceniceros of Weichman Associates Realtors recommended prospective home buyers check with the California Department of Real Estate or local realty boards to check an agent’s credentials. Part of the problem, she and Fajardo said, was many first-time home buyers were recent immigrants, and small-time lenders sometimes coaxed them into taking out loans they were unable to pay off.”
“‘There’s a lot of unscrupulous and unethical agents out there that may have done that to clients, but the problem is that when the client turns around and needs the agent to help them, the agent is no longer in the business,’ Ceniceros said.”
“Valerie Torelli, who owns Torelli Realty in Costa Mesa, said she had a number of homeowners come to her asking for help with short sales. The problem, she said, was not restricted to low-income buyers; many more affluent ones had pushed their luck in recent years because they expected the market to keep improving.”
“‘Even people who have really good income got sucked into this, too,’ Torelli said. ‘They kept buying houses they couldn’t afford.’”
The Press Enterprise. “Love may fade, but bills must be paid. That’s why some couples who are divorced or separated are continuing to live together, experts in the Inland area and throughout Southern California say.”
“Divorce lawyers, real estate agents and psychologists who work with ex-couples say they are seeing men and women staying together after the breakup because they just can’t afford to live separately, given the slumping housing market.”
“Former partners are not parting ‘because the equity in the house, which is their biggest asset, is rapidly going down,’ said Martin Bender, a Temecula lawyer specializing in family law. ‘A lot of parties are (afraid of) losing their major asset. They are trying to hold on in hopes that it will go up.’”
“The trend of cohabitating exes differs also from the so-called ‘nondivorce’ — in which couples do not legally separate but lead separate lives while still living together — for legal reasons. Unless spouses legally break their union, each party can continue to claim a share of their joint assets, including the home.”
“Riverside Realtor Collette Lee said she closed escrow last month on a home whose occupants had divorced six months earlier and were sleeping in separate bedrooms and leading separate lives.”
“‘It was an amicable divorce — well, as amicable as a divorce can be,’ Lee said. ‘It was just very strange.’”
“Lee said she has seen a few cases lately of cohabitating ex-couples, something she had not previously witnessed in 20 years selling real estate.”
“Michael Young, who practices family law in Redlands, said…he has several clients in that situation. ‘What I do see is them not wanting to sell the residence at this point. They’re doing everything they can not to sell in this terrible market,’ Young said.”
“Sometimes, if couples can afford it, one party will rent another place while the other remains to sell the house so they can split the proceeds, Young said. Couples who cannot afford that basically avoid each other.”
“‘I always think, ‘How awkward is that?’ Young said.”