It’s A Market-Driven Issue In California
The San Francisco Chronicle reports from California. “The coordinators of Sunday’s auction of 41 units at the new Eight Orchids condominium midrise in Oakland billed the event as a means of finding the actual market value for such homes. Among the dozen transactions recorded by The Chronicle, sales prices ranged between 25.3 and 34 percent off the original asking price.”
“‘The market has definitely humbled us,’ said Stuart Gruendl, CEO of project developer BayRock Residential of Oakland. ‘But at the same time, our heads are above water and the property is succeeding.’”
“BayRock has been taking reservations for Eight Orchids, a 157-unit complex at Seventh Street and Broadway on the edge of Chinatown, since February 2007. As of early last month, it had sold 20 units - fewer than two per month.”
“One of the early single-bedroom condos sold for $316,000, up from a starting bid of $245,000 but well below the original $435,888 asking price. The auction for a three-bedroom, three-bathroom town home started at $475,000, stalled around $528,000 and then quickly ran up to $534,000.”
“That was nearly 34 percent off the list price of $805,888. Nevertheless, a member of the bidding family, when asked how he felt, replied: ‘I’m kind of nauseous.’”
“On the other hand, one winning woman walked out of the auction room crying tears of obvious joy, with her family members smiling and offering congratulatory hugs. ‘Nobody offered me a consoling hug,’ Gruendl later joked.”
“All 41 of the homes put up for auction received bids above the minimum. Ken Stevens, CEO of the West Coast division of Accelerated Marketing, said the auction would be used to establish the price for remaining homes at Eight Orchids.”
“More difficult to evaluate is what the auction will mean for the broader Oakland or East Bay market, experts say. P’All those auctions will end up in some appraiser’s book,’ said Christopher Thornberg, an economist with Beacon Economics of Los Angeles.”
“‘That kind of discount could be attributed to their location, as much as to the overall market and credit situation,’ said Patrick Duffy, principal with MetroIntelligence Real Estate Advisors in Los Angeles.”
“The particular challenge for Oakland developers is that several large condo developments have opened or begun selling the past year. These builders are selling only a few units per month on average, according to San Francisco research firm Mark Co.”
“The Eight Orchids discounts could be unwanted news for those who have bought downtown Oakland condos during the past few months - especially if they settled on a unit in the Chinatown building itself. Gruendl acknowledged there is a gap between what early buyers paid and the amounts agreed to at the auction.”
“‘But not enough that existing homeowners should lose sleep,’ he said.”
The Press Democrat. “Lenders increasingly are unloading foreclosed homes as supplies continue to mount in Sonoma County — good news for buyers and bad news for homeowners trying to sell.”
“One in four homes sold in Sonoma County in February were foreclosed upon in the past 14 months. Every week in February, buyers purchased 16 houses or condos that had recently been in foreclosure, according to DataQuick.”
“Two days was all Richard and Liz Fedrick needed to find a newer house in Cloverdale they liked and could afford, something they didn’t think possible after leaving Sonoma County four years ago in search of cheaper housing in Southern California’s high desert.”
“Last month, the couple, with their toddler, moved into the three-bedroom home they bought for $295,000 after the lender cut the list price 18 percent.”
“‘We were expecting to have to settle for something older, something small. But there were tons of choices,’ Richard Fedrick said. ‘It’s a great market.’”
“Still, the rest of the housing sector has a way to go before hitting bottom, agents said.”
“‘In order for a market to level out, you have to get through the bank-owned homes. There’s going to be more and more inventory this year and next year,’ said Rendino, an agent in Rohnert Park.”
“Every week in Sonoma County, lenders seize almost 50 homes and condos from borrowers who have stopped paying their mortgages, according to the county recorder’s office.”
The Charlotte Observer. “Starting today, Wachovia Corp. has stopped making so-called Pick-A-Payment mortgage loans in 17 California counties that have been hard hit by falling home prices and rising foreclosures, according to a memo obtained by the Observer.”"In these counties, the Charlotte bank is no longer originating mortgages that it keeps in its own portfolio, a class of loans that includes the Pick-A-Payment product, bank spokesman Don Vecchiarello confirmed. The bank continues to make mortgages that it can sell off to investors, he said.”
“‘It’s a market-driven issue,’ Vecchiarello said. ‘It’s not a product-driven issue.’”
“The 17 counties are in regions known as the ‘Central Valley’ and the ‘Inland Empire,’ areas the bank has identified in earnings conference calls as particular trouble spots. The territory stretches from San Diego in the southern part of the state to Sacramento in the northern part of the state.”
“Wachovia acquired the product when it bought California-based Golden West Financial Corp. in 2006 to expand on the West Coast and in the mortgage business.”
“Investors have worried about the $24 billion deal because Wachovia bought Golden West at the peak of the housing boom. About 60 percent of the bank’s Pick-A-Payment portfolio is in California.”
From FOX 6 San Diego. “When Eddie Zepeda’s mortgage payments went up, he went through the roof. ‘I was desperate,’ explains Zepeda.”
“He had to decide whether to pay his skyrocketing mortgage, or to take care of his family. Even working two jobs, Zepeda says there wasn’t enough money for both. Zepeda says the money problems started to take its toll on his family.”
“‘I was getting divorced at a certain point cause the stress was just too big,’ he says. Zepeda says he tried everything. He set up meetings with five different lenders.”
“‘Two brokers and three banks and they all told me to ride it out, that there was nothing I could do at this point,’ Zepeda explains.”
“Zepeda says he didn’t have much of a choice so he decided to stop paying his mortgage and simply walk away from his home.”
The Daily Bulletin. “If neighborhood streets could talk, El Rancho Verde’s roads would tell the story of change. Nonetheless, the same huge front yards, towering palms trees and ivy-laden landscape flourish on this stretch of county land located adjacent to Rialto’s borderline.”
“Things have changed for the worse, some residents say, but others say the best is yet to come.”
“John Brown moved here because the houses were cheap. That was in 2000. He paid $140,000 for his five-bedroom, three-bathroom home. ‘I have three kids and didn’t want to bring them up in the L.A. area,’ Brown said.”
“He’s optimistic about a proposed housing development by Lytle Development in the neighborhood’s northeast end that hasn’t materialized because of the busted housing market.”
“‘I’d like to see it happen,’ Brown said. ‘We’d like to see our property values go up.’”
The Modesto Bee. “Assessed home values — and property taxes — will be lowered this year on about 38,000 houses and condos, 4,000 mobile homes and 1,000 multifamily housing units in Stanislaus County.”
“County Assessor Doug Harms said that’s because property values have dropped dramatically in the past two years. He said some homes are worth less than half of what buyers paid for them during the 2005-06 housing boom.”
“The biggest drop will be for 2,500- to 3,500-square-foot Patterson homes purchased during December 2005, which Harms calculated are worth about 52 percent less than their original prices.”
“To break it down, homes purchased from October 2005 to July 2006 will see the biggest declines, which will average 40 percent to 44 percent countywide. The lowered assessments will reduce property tax collections.”
“‘It’s in the billions,’ Harms said of the loss. Last month he had estimated that property tax revenues would fall $1.4 billion, but now he estimates the loss will be significantly larger.”
“Five vacant Modesto homes that police say are havens for illegal camping, drug use and dangerous fires are set to come under the wrecking ball tomorrow. Police say officers and city building inspectors have since October worked with owners of the homes.”
“The owners agreed to allow city workers to demolish the buildings Wednesday morning, according to a Modesto Police Department press release.”
“‘There are a number of these properties throughout the city that we are monitoring,’ said city Building Inspector Bert Lippert in a press release. ‘If a property is being used as a haven for drug use or is becoming a safety hazard for the surrounding neighborhood, then we begin looking to the property owners to take reasonable steps to clean it up. If that doesn’t happen, then we have to look at other means to protect our community. And demolishing the dwellings is something that is very effective.’”