Life Is Never Dull In California
The UCLA Newsroom reports from California. “In its fourth quarterly report of 2007, the UCLA Anderson Forecast holds steadfast to the basic tenet of a forecast they have been making throughout the year, that the national economy is not technically in a recession, nor is there a national recession on the economic horizon. There will be job loss in the construction sector, as well as real estate-related financial services, but not nearly enough to trigger a recession.”
“As part of his no recession forecast, UCLA Anderson Forecast Director Edward Leamer also notes that if declines in housing were going to trigger a recession, they would have done so already. Recessions have traditionally trailed a housing peak by no more than a year; at this point, the business cycle is trailing the housing cycle by seven quarters without a recession.”
The Daily Breeze. “Southern California will likely avoid a recession this year and next despite a grinding slowdown in the housing market, according to the forecast by the Los Angeles County Economic Development Corp.”
“‘It’s a two-track economy. You’ve got housing, finance, the auto industry struggling, but you’ve got other industries growing very slowly,’ said Jack Kyser, chief economist for the LAEDC. ‘We don’t look for housing to recover this year. It’s going to be 2009, so that’s going to be a drag on not only the housing market, but also home furnishing sales, building material sales and government finance, which depends on property taxes.’”
“In 2008, the number of overnight visitors to the county should increase by 1.9 percent to 26.3 million, largely a result of the weak dollar, an expected rise in Chinese visitors and several local attractions such as the new ‘Simpsons’ ride at Universal Studios Hollywood theme park.”
“The housing slowdown hurts on various fronts. ‘It’s terrible, and it’s getting worse every day,’ said Warren Snyder, who co-owns Torrance-based Carriage Realty & American Broker Loans as well as American Credit Repair. ‘People say we’re teetering on a recession. Most of those people who are connected to that type of business are already in a recession. This is just the tip of the iceberg.’”
The Daily News. “‘We feel that overall, Southern California should escape falling into a recession, but you are going to have spot recessions in some areas,’ Kyser said, noting that communities hit hard by the subprime mortgage crisis were particularly vulnerable.”
“‘Life is never dull in Southern California,’ he said.”
“The weakest sector in Kyser’s forecast - and the one getting the most attention - is the struggling residential real estate market. ‘Basically, the housing industry … is in a depression,’ he said. ‘And anything allied to this industry will continue to suffer.’”
“Kristina Theard of Porter Ranch is all too familiar with the crisis. She lost her job early last year in the collapse of mortgage lender New Century Financial Corp. She quit a commercial banking position at the beginning of this month and was at Tuesday’s job fair, sponsored by HireQuest, as part of her aggressive job search.”
“‘By the end of the month I’ll probably know where I will land, but I definitely want to stay away from mortgage management,’ she said.”
The Ventura County Star. “It came out of the blue. Loretta Altman was driving to work at Countrywide Financial Corp. in Simi Valley when she got a phone call from a friend.”
“‘She said, You’ve got boxes at your desk.’ I said, Does that mean …?’ Altman recalled.”
“Her friend confirmed that it meant that she’d been laid off. She went into the office on Madera Road, packed up what she was allowed to take and said her good-byes, leaving with a two-week severance package.”
“Altman said she thinks that she was among about 20 people at her office who lost their jobs Friday.”
“‘It was a complete side-swipe,’ Altman said. When the company went through a round of layoffs in October, people were informed ahead of time that cuts were coming. ‘This one was completely out of the blue,’ she said.”
“A former Countrywide employee who lost his Simi Valley job in October said the process then was very organized. He said it was very different from what he heard happened Friday.”
“The October layoffs occurred shortly after the Calabasas-based mortgage lender announced that it was slashing up to 12,000 jobs companywide because of the housing meltdown. That, combined with a drop in employee morale, inspired Altman, a systems analyst, to start looking for another job.”
“‘I took that as fair warning — start looking now,’ she said. She had received an offer letter for a new job Thursday, so when she got the call Friday, she was thinking: ‘OK, you’re OK, you got the offer letter.’”
“But it hasn’t been that easy. Altman found out Monday that her background check for the new job had been halted because Countrywide provided an incorrect date of hire for her. She said she’s been going in circles with Countrywide to get the issue addressed. She plans to call her attorney.”
“‘I may miss out on a great job because Countrywide refuses to fix this problem,’ she said.”
The Union Tribune. “Would you pay $69,300 for a two-bedroom home in Vista? Or $116,300 for a three-unit apartment building in the Barrio Logan neighborhood of San Diego?”
“Those are the starting bids for a few of the tax-delinquent properties the county plans to auction Friday in its annual effort to recoup unpaid property taxes.”
“Not every deal is as good as it looks. Some properties have tax or bank liens that may exceed the auction sale price and lead to post-purchase headaches for buyers. Still, it’s hard not to be amazed at the rock-bottom opening bids.”
“The two-bedroom home in Vista with an opening bid of $69,300 has a market value of about $335,000, according to an Internet real estate site.”
“The three-unit apartment building in Barrio Logan starts at $116,300, but similar-sized buildings have sold in recent years for $400,000 to $575,000. Zillow estimates its value at $526,000.”
The North County Times. “With an estimated 5,000 properties going into foreclosure by the end of 2008, city officials took action Tuesday to curb blighted yards, unsafe neighborhoods and virtual welcome mats for squatters.”
“The City Council voted unanimously to approve an ordinance that would make banks responsible for the maintenance of properties of which they have taken possession.”
“During the presentation, Linda Mejia, a senior code enforcement officer, told the council that of the 26,283 single-family residences in the city, nearly one out of 23 homes is in foreclosure. By the end of the year, code enforcement officers expect about 5,000 homes will be bank-owned.”
“‘We’re having one of the worst foreclosure rates in the Riverside County,’ she said. ‘It doesn’t matter how beautiful or big your vacant home is, all neighborhoods are vulnerable.’”
“Gary Lupo, a Realtor in Riverside, said cities facing a large number of foreclosures have only themselves to blame. ‘The biggest problem and the whole reason why this occurred is because everybody was greedy,’ Lupo said.”
“He contended that mortgage lenders were greedy in seeking commissions, home buyers were greedy in signing for homes they couldn’t afford and cities such as Murrieta were greedy for the revenues they receive in allowing ‘McMansions’ to be built and sold, referring to vast tracts of large cookie-cutter-style homes.”
“‘You guys approved it,’ he told city officials.”
The Press Enterprise. “One in nine Murrieta homes is either in foreclosure or in the preliminary stages. Many neighborhoods have homes with dying lawns and broken windows. The law is meant to prevent ‘the broken window syndrome,’ where vandals and squatters choose homes to party or live in by finding signs of abandonment.”
“The city can assess as much as $100,000 per parcel or structure that will be tacked on as a tax lien and paid to the city when the property is sold. The program is expected to begin in April. The city’s proposed blight law is a variation of others used in Chula Vista, Orange County and Riverside.”
“Gene Wunderlich, president-elect of the Southwest Riverside County Association of Realtors and an agent in Murrieta, said the association supports the new law.”
“‘Anything the city can do to help keep home values up is beneficial to us,’ he said.”
The Desert Sun. “The First Time Buyer Housing Affordability Index analysis is considered the ‘fundamental measure of housing well-being for first-time buyers in the state,’ according to the California Association of Realtors.”
“New figures show 38 percent of households in the Coachella Valley can afford an entry-level home here…more than at the end of 2006 - when affordability registered at 33 percent.”
“The analysis, released Tuesday, also shows the desert area is more affordable than California overall, where the housing affordability index is up to 33 percent. In the Coachella Valley, a person would have to make a minimum of $57,300 to qualify for a $285,970 entry-level home.”
“Assuming the buyer puts 10 percent down and has an adjustable interest rate of 6.21 percent, officials say that translates into $1,910 monthly payments, including taxes and insurance. That’s mathematically speaking. Real life doesn’t always add up that way.”
“‘Everybody has their own story to tell and everybody who makes $57,300 a year doesn’t necessarily fit into that program,’ said Kurt Handshuh of California Home Loan in Palm Desert. ‘If they have a car payment, or child-support issues, or a credit card payment every month, that drives the price of a house (one can afford) down.’”
“At the height of the market, affordability in the desert was 11 percent to 13 percent.”
“The Coachella Valley relies on the tourism and hospitality industry, and resort jobs don’t always pay enough for employees to afford a house, says Greg Berkemer, executive VP of the California Desert Association of Realtors.”
“‘You’re finding the jobs in the desert won’t allow you to buy in the desert,’ Berkemer said.”
“Entry-level homes in the Coachella Valley are generally considered anything priced under $500,000. Average prices in that market dipped almost 4 percent in 2007 and sales of those homes were down 24 percent from 2006.”
“‘Not everyone at $57,300 can make that work,’ Handshuh said of affording an entry-level home. ‘Not everyone is going to qualify.’”
“Two years after Palm Springs City Council approval, the city’s first new mixed-use project is nearly ready for occupancy. ‘It makes it look like something’s really going on here, finally,’ said Tony Larcombe, owner of Dwight Polen Design in uptown Palm Springs.”
“803 N. Palm Canyon offers Palm Springs its first new retail and housing combination in the uptown/downtown area. ‘People say they can’t wait to come home from work and walk to dinner,’ owner/builder Wally Hrdlicka said Tuesday as he toured the project.”
“There are currently about 20 mixed-use projects approved and in various stages of construction and planning in Palm Springs, according to the city’s Development Projects Update. While these projects are still drawings on paper, 803 N. Palm Canyon will be ready to move into by April, said Hrdlicka. Prices hover around $700,000.”
“Hrdlicka said he sees a predominantly gay market interested in purchasing the townhouses as second homes, as well as yuppie hipsters from Los Angeles. Units facing Palm Canyon Drive, which may be noisier than the homes that face the mountains, will draw a younger clientele, he said.”
“‘They are the ones who stay out at night and are from L.A. and maybe live in a loft already,’ Hrdlicka said.”