Unchartered Waters In California
The Daily Bulletin reports from California. “Home prices in Southern California are racing downhill, but does that mean it’s a buyer’s market? Each month real-estate agents watch prices plunge and foreclosures soar, and several buyers are still in no rush to make deals. ‘Prices aren’t just falling - they’re falling faster than they were,’ said Michael Carney, executive director of the Real Estate Research Council at Cal Poly Pomona.”
“Carney’s localized bi-annual report shows home prices dropping 18.4 percent in San Bernardino County and 21 percent in Riverside County from April 2007 to April 2008. And prices were already falling before that.”
“San Bernardino-based real-estate agent Hamid Aghili sells new homes but hasn’t negotiated a sale in months. ‘Prices are lower, but people don’t have money,’” said Aghili.”
“The 15-year real-estate veteran’s phone range off the hook during the housing boom, but not these days. More often than not, Aghili finds himself working on ’short sales.’”
“Josee Maclaughlin, real-estate agent in Upland, thinks 2010 might be the long-awaited bottom-out year. About 60 percent of her business is short sales right now.”
“‘It’s a long process,’ Maclaughlin said about short sales. ‘The banks don’t have enough employees to get it all going. It’s bank back-up.’”
“Bank-owned properties have flooded her territory, which stretches along the 210 Freeway from San Dimas to Rancho Cucamonga. ‘It kills sellers who aren’t in that situation,’ Maclaughlin said. ‘They can’t get their values up.’”
“Caroline Urso said ‘nobody really knows’ when home prices will flatten. The loan officer with Countrywide Financial in Redlands has sold one new-construction home loan in the past nine months. She was used to selling up to 10 per month.”
“And instead of packaging $400,000 mortgages, now she’s arranging loans for $100,000.”
“‘We’re in unchartered waters,’ Urso said about the current real-estate market. ‘The more and more people walk away (from their foreclosures), the more prices will keep falling. It’s really disheartening. It’s killing everybody’s value.’”
The Voice of San Diego. “San Diego County home prices dropped 20.5 percent in the most recent Standard & Poor’s/Case-Shiller home price index, the March 2008 index compared to March 2007’s. It was the 20th consecutive month of such declines.”
“North County mortgage broker Yamila Ayad said she’s seen signs of life in recent months that have pulled her out of the two hardest years in her career. ‘It’s not a market where anybody would want to voluntarily sell a home today,’ she said. ‘I have definitely seen houses that have fallen to 50 percent of what they were selling before.’”
“‘Prices are falling today because they’re too high,’ said Christopher Thornberg, Los Angeles-based principal of Beacon Economics. And the hope espoused in the literature of some perky agents — that the market will soon turn around dramatically — doesn’t fit the nature of a slow-moving regional housing market.”
“‘Home markets do not bounce, they splat,’ Thornberg said. ‘We’re not dropping a rubber ball here, we’re dropping a watermelon.’”
“Individual sellers still have to compete with banks for lowest prices on listings as banks seek to unload repossessed properties quickly. And 35.1 percent of the homes sold in April and 36.6 percent of the homes sold in March in San Diego County had been foreclosed on at some point in the prior 12 months, according to DataQuick.”
The Union Tribune. “The San Diego Case-Shiller index, set at 100 in January 2000, now stands at 185.44, down from the peak 250.34 in November 2005. That means that at the peak homes were worth 2½ times their 2000 value but have since fallen back 25.9 percent to today’s level.”
“James Hamilton, an economist at the University of California San Diego, called the Case-Shiller findings ‘pretty serious’ but ‘not mysterious.’ ‘There is still a very big overhang of unsold homes on the market,’ Hamilton said. ‘That’s going to bring the house price down.’”
“The San Diego Association of Realtors most recently said that more than 18,300 homes were listed for sale earlier this month, an eight-month supply at current sales rates.”
From Bloomberg. “About 30,000 foreclosed homes have been auctioned in California so far this year, the most of any U.S. state, according to RealtyTrac. Banks holding repossessed properties are so eager to unload them they’ll give buyers discounts of as much as 40 percent, said Celia Chen, an economist at Moody’s Economy.com.”
“‘Lower prices will certainly entice buyers back into the market, especially in a state like California where the median home price is so high it’s made it very difficult for people to afford a home,’ Chen said.”
“Foreclosure auctions are removing inventory and may lead to a faster housing market recovery as prices drop, Karl Case, co- founder of the S&P/Case-Shiller home-price index, said today.”
“‘Banks don’t wait around,’ Case said. ‘They put it on the market and get rid of it. That means prices adjust more rapidly.’”
“Sales jumped 20 percent or more in April in Las Vegas, Fort Myers, Florida, and Riverside and Sacramento, California, areas that had ’strong and sudden price drops,’ said Walt Molony, spokesman for the National Association of Realtors. Those cities also ranked among the top 10 U.S. metro areas with the highest foreclosure rates, RealtyTrac said.”
“The most expensive U.S. metropolitan market for single-family homes in the first quarter was San Jose, with a median price of $780,000, the National Association of Realtors said in a May 13 report. The national median home price was $196,300 in the same period.”
“San Francisco had the second-most expensive home sales, with a median of $701,700, followed by Honolulu, at $620,000, and the Anaheim and Santa Ana, California, areas at $597,900, according to the Realtors’ report. The metropolitan area surrounding New York was fifth, with a median single-family home price of $491,900.
The biggest U.S. state also led the nation in home-price drops. Sacramento saw the biggest price decrease in the nation during the first quarter with a loss of 29 percent, followed by the Riverside and San Bernardino areas, down 28 percent, the Realtors said.”
“San Diego’s median home price dropped 23 percent in the first quarter, the fourth-biggest U.S. price decline, according to the Realtors’ report. Los Angeles was No. 6, down 21 percent, the Realtors’ study said.”
The Contra Costa Times. “Elias Escobedo lost his house earlier this month when it was foreclosed on, but not because he didn’t pay his mortgage.”
“Instead, he’s the victim of a real estate agent who is accused of forging the deed to his home and embezzling $40,000 in a scheme to raise his credit score and pay his monthly mortgage payments, according to the Contra Costa County District Attorney’s office.”
“In the Bay Area, counties are ranked by mortgage fraud with Santa Clara being the highest and then followed by Alameda and Contra Costa counties. California is the fourth-ranked state with significant mortgage fraud, after Florida, Nevada and Michigan.”
“His agent was the same real estate agent that sold the home to Escobedo in 2004. Escobedo said that Bullard told him his credit was bad and he could come up with a way to clean it up and invest the money, he said. Using a straw buyer to hold the property, or someone paid to park the deed, they would refinance the home, take money out and pay the mortgage.”
“The agent, Rodney Alonzo Bullard, has been charged with grand theft and two felony counts of forgery by the Contra Costa County district attorney’s office.”
“Escobedo now lives with his mother in downtown Pittsburg. ‘I feel stupid because I put my trust in him,’ he said. ‘I invested all my life savings with him.’”
“This familiar scam is one of the most well-known and widely-used in California, yet homeowners still fall victim to an agent or broker who suggests the arrangement.”
“‘There was a time when we had maybe 40 notices of default a month and now we’re having 600 to 700 a month,’ said Ridge Lazard, deputy district attorney for Solano County, who said foreclosure scams have ballooned in the last year. ‘We have more and more desperate people who become easy targets. They want to hear there’s a simple solution.’”
“‘They do offer the simplest situation,’ said Chris Sadlowski, an agent with the Concord resident agency of the FBI. ‘They tell them, ‘Don’t worry about it anymore.’”
“And that is a welcome relief to worried and stressed-out homeowners, he said.”
“Sadlowski said that the East Bay has a huge amount of mortgage fraud and fraudsters target low-income and ethnic communities, specifically new immigrants or non-English-speaking populations that may not be aware of laws or regulations.”
“‘In my personal opinion, they’re already in a bad situation, so they kind of cross their fingers and hope it turns out for the best,’ he said. ‘People are working from an emotional deficit.’”
The San Francisco Chronicle. “In the San Francisco area, which Case-Shiller defines as the counties of San Francisco, Alameda, Contra Costa, Marin, San Francisco and San Mateo, the one-year price decline from March 2007 stood at 20.2 percent. The decline from February to March was 3.5 percent.”
“The Bay Area’s year-over-year price slump was the sixth steepest of 20 major metropolitan areas tracked by the index.”
“‘Prices are falling because they were too high - ridiculously high,’ said Christopher Thornberg, principal of Beacon Economics in San Francisco. ‘They’re now in the process of going back to a more normal level. Frankly, that’s a good thing.’”
“The index uses January 2000 as a benchmark of 100. The current number for the San Francisco area is 168.38, meaning prices are still up 68 percent from eight years ago. The last time the local number was at that level was in May 2004. Thornberg said he thinks prices could return to year 2000 levels.”
“‘We’re at a pace now to bottom out in early 2009,’ Thornberg said.”
The Eurerka Reporter. “Property tax cuts that are benefiting thousands of homeowners throughout the state are not expected to have the same impact in Humboldt County. ‘We don’t go up as fast and we don’t go down as fast,’ said Humboldt County Tax Assessor Linda Hill.”
“Even so, the market slowdown that began in 2005 could lead to property tax cuts for those who purchased at the high point of the market and have watched as their homes have lost value. A homeowner could save $30 a month in property tax for a $36,000 drop in assessed value.”
“The Sacramento Bee reported last week that assessors in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties are reviewing residential taxes for the second straight year and could cut property taxes $104 million in the eight-county region.”
“According to The Sacramento Bee, Sacramento County reassessed 50,000 properties last year and will review 85,000 this year, with potential tax cuts of $60 million.”
“Statistics from the Humboldt Association of Realtors reveal the county’s median home values peaked in second-quarter sales in 2005 at $320,000 and have fallen 6.5 percent to $299,000 in the first quarter of 2008.”
“The drop is 13 percent in the North Bay area, where the median price of a single-family home was $355,000 through the fourth quarter of 2007 before falling to $309,500 in the first three months of this year.”
“‘The prices are off only a little bit. It’s the sales that are off dramatically,’ said Realtor Richard Dorn.”