The Foreclosure Situation Is Affecting Prices In California
Bloomberg reports from California. “A muddy gravel road winds uphill through a redwood forest to Jake Terhune’s $985,000 home just outside of Geyserville, in the heart of California’s Sonoma County wine region. Terhune, a self-employed cabinetmaker put down $100,000 and agreed to pay about $6,900 a month for 30 years to buy the three-bedroom house in 2006. Things started going wrong almost immediately after he moved in. Demand for Terhune’s custom cabinetry dried up. His business’s income, which had been about $20,000 a month, plunged 50 percent.”
“After making his first payment, he fell behind. Unable to persuade Ameriquest Mortgage Co. to modify his loan, he stopped paying and ignored calls threatening to take his home. By the summer of 2007, Ameriquest, once the biggest home lender to people with credit problems, put the loan up for sale.”
“‘I was working on two houses, but they got foreclosed,’ Terhune says. ‘If my customers can’t pay what they owe me, the mortgage company can’t get what I owe them.’”
“Terhune was in trouble almost right from the start. When his second $6,910.89 mortgage payment came due, he didn’t have the money.”
“‘I called AMC and told them I only had $5,000,’ Terhune says, referring to Ameriquest Mortgage Co., which is no longer doing business. ‘I asked them if we could work something out, but they were not interested,’ he says.”
“The following month, Terhune owed $14,000; he says he had $10,000. ‘I had worked on a house but that house got foreclosed, so I’m not going to get paid,’ he says.”
“A mortgage collector told him not to send any money unless he could pay the entire amount, he says. By the time National Asset Direct bought the loan and offered a plan to reduce his payments, Terhune was $70,000 in arrears. Even with the easier terms, he missed the December payment.”
“‘I’m keeping good faith and trying to catch up,’ he says. ‘I’m flying by the seat of my pants.’”
The Record Searchlight. “When it comes to the sagging real estate market, Siskiyou County is not immune. Local real estate agents and sellers are taking a hit. Realtor Shelley Sarason (who) specializes in sales in Mount Shasta and Lake Shastina, knows the pain.”
“‘We didn’t have enough homes for sale in ‘05,’ she said. ‘Lots in Lake Shastina were selling like crazy, and we had a few bidding wars on houses that were priced to sell.’”
“Season Johnson, a loan officer in Mount Shasta, thinks the change began as early as 2002. ‘In ‘02 real estate began to really appreciate. More people began investing, and Wall Street did, too. More money led to more loan programs and some people began upgrading to bigger homes while others were getting into the market and often into homes they couldn’t afford in the real world,’ she said.”
“The county has seen fewer foreclosures, however, than other areas of the state. Augusta Meyers, owner of Augusta Meyers Realty in Mount Shasta, had some advice for first-time buyers: ‘Remember, you are not buying a dream home. It’s your dream to own a home.’”
“The last time the median sales price in Shasta County was lower was in January 2005. January home sales in Shasta County dipped to their lowest level in the 14 years DataQuick has tracked the area.”
“‘It’s almost like a bunch of people are standing on the side of a pool and waiting for somebody to jump in,’ lender Ken Lawrence said of the state of the market.”
“Joe Rodola, a Redding credit counselor who leads monthly first-time home buyer classes, believes prices are still falling because consumers are still scared.”
“‘I think it’s generally created by the national media, they report another 100 homes foreclosed today, and it’s oh my gosh,’ Rodola said. ‘The other side of it is people still don’t want to get one of these bad (subprime) loans. I tell people they’re not making them anymore.’”
“Redding Realtor Ron Largent said home prices rose so sharply during the boom years that the fall has been long and hard. ‘Is it going to drop more? That will be a question of supply and demand. If buyers surface, then prices will hold,’ said Largent.”
The Telegraph. “Quick, where’s the foreclosure rate higher – upper-middle class Folsom or low-upper class El Dorado Hills? It’s higher in suave El Dorado Hills, significantly higher – by 50 percent.”
“‘We’re still going to see foreclosures increase, as long as people can’t get out of adjustable-rate mortgages,’ said mortgage lender Barbara Ott, in Placerville. ‘Banks are eating hundreds of mortgages.’”
“‘A lot of ’stated-income’ programs are gone,’ she said. ‘Lending limits on stated-income are dropping — instead of 80 percent of (home) value, it’s now 65 percent.’”
“Also disappearing is a lending habit of loaning to borrowers who had proven they were bad risks. ‘The sub-prime market is gone,’ said Greg Clines of Century Oak Mortgage of Folsom. ‘There will be more ’short’ sales and foreclosures in the next one and a half years. They won’t be a majority of houses offered, but they will be a majority of houses actually selling.’”
The Daily Pilot. “After watching the foreclosed home down the street slowly devolve into a state of dilapidation, Mary Dinius said she was forced to take matters into her own hands. The Mesa North resident paid her gardener an extra $40 to mow her former neighbor’s lawn on Cheyenne Street.”
“Dinius didn’t know the home’s former residents, but it is only one of many foreclosed homes in the Mesa North/Del Mar neighborhood that have slid into a state of disrepair.”
“Costa Mesa real estate agent Larry Weichman said the neighborhood reflects a growing pattern: the rise of neglected, foreclosed residences throughout the city that will most likely get worse before it gets better.”
“‘People will no longer take care of the properties because they don’t have any vested interest in them,’ he said. ‘Sometimes you’ll even find them stripped of appliances, or with holes left in the wall.’”
“‘[These homes] will affect the values of surrounding properties — there’s no doubt about it,’ he added.”
“Costa Mesa Chief Code Enforcer Jim Golfos said that the city has fielded such complaints about a number of such homes. Technically, whoever owns a property, in this case, a bank or other loaner, is legally responsible for its maintenance. But, given the vast size and influence of national banks, a number of properties tend to slip through bureaucratic cracks, Golfos said.”
“‘Recently, it took us about three weeks to get through [a lending institution’s] lawyers — that can be a lot harder than dealing with an individual resident,’ he said. ‘This is a phenomenon that just came to light [in] the city three to four weeks ago.’”
The Desert Sun. “Palm Desert housing sales in January were up 10.4 percent from a traditionally slow December, according to DataQuick. The median price for 92211 was $377,500, down 17.8 percent from January 2007. The median for 92260 is $340,000, down 21.8 percent.”
“In the Coachella Valley, 526 homes were sold in January. It’s been nearly 12 years since monthly sales in the Coachella Valley dipped that low. In September 1996, 493 homes were sold, according to DataQuick.”
“Relatively steady sales in the desert’s condo market are helping make up for plunges in sales of new home construction, January’s numbers show. ‘If condos were down as much as other categories, then the overall decline would be sharper,’ DataQuick analyst Andrew LePage said.”
“The median price for the valley stands at $330,000, down 13.2 percent from January 2007.”
“In January, new home sales took the biggest year-over-year sales hit. Only 80 new homes were sold last month - a drop of 64 percent from January 2007. The local Building Industry Association is projecting fewer than 1,500 permits will be issued this year, down from the more than 8,000 issued in 2006.”
“‘A lot of contractors are having to lay people off,’ said Aimee Schrumpf, executive director for the Desert Contractors’ Association. ‘Because of the layoffs, we’re hearing more and more of people just trying to feed their families.’”
The LA Daily News. “The median price of a San Fernando Valley home plunged a record $113,000 in January from a year ago and sales sank to an all-time low as credit and foreclosure problems further pounded the market, a trade association said Wednesday.”
“The 18 percent price drop, to $500,000 from $613,000, is the first double-digit percentage decline since the early 1990s, said the Van Nuys-based Southland Regional Association of Realtors.”
“The latest median is nearly 25 percent below the record $655,000 set last June and is at the same level as in December 2004.”
“Similar conditions are now also in play in the Santa Clarita Valley. The report showed that last month the median price there plunged an annual 21.8 percent, or $127,900, to $460,000 and sales fell 42.4 percent, to 99 transactions.”
“The condominium median price fell 20.9 percent, or $75,100, to $284,900 and sales tumbled 57.5 percent, to 31 transactions.”
“Prices would have to fall further to make them affordable and turn around the sluggish sales market, said Daniel Blake, director of the San Fernando Valley Economic Research Center at California State University, Northridge.”
“‘I’m still not seeing a light at the end of the tunnel,’ Blake said. ‘If there is one, we’re looking at it about this time next year. And I hate to say that to a Realtor.’”
“Nevertheless, the Realtors group still believes that fire-sale prices won’t result from the market upheaval. ‘Buyers need to realize that prices are not nose-diving, especially in a mature market like the … Valley where there is a finite supply of homes for sale,’ said Jim Link, the association’s executive VP.”
“While January’s big price decline is surprising, it came down from a high level, Link said. Nevertheless, January brought the fourth consecutive month of price declines.”
“‘If you are a seller, you’ve got to be realistic and realize you will not be getting what you would have 18 months ago,’ Link said.”
“Randolph Rogers knows that all too well. ‘The third time was the charm,’ said Rogers, as movers loaded the last of his family’s belongings into a big van Wednesday.”
“He put his 1,500-square-foot home on the market last May for $539,000 after retiring from the Los Angeles Unified School District. He dropped the price three times, finally striking a deal for $425,000.”
“Why that price point? ‘So they could get a conforming loan,’ he said of the buyers. So on Wednesday they locked up the house they bought new in 1987 and moved to Leisure World in Camarillo.”
“Last month, home sales plunged an annual 43.2 percent, to 323 transactions, 246 fewer than a year ago. That’s the lowest monthly total since record-keeping began in May 1984.”
“Association President Mary Funk said short sales are becoming more common now. She said some offers are coming in ‘way under’ the list price but that lenders are submitting counterproposals. And some are willing to pay the buyer’s closing costs.”
“That’s good for buyers, she said. But severe problems persist. ‘The foreclosure situation is affecting prices. The problem is the buyers feel that homes that are owner-occupied should be going for the same price as a foreclosure or a short sale,’ Funk said.”