People Thought Housing Prices Would Go Up Indefinitely
The Fresno Bee reports from California. “Thousands of Fresno County homeowners are getting some good news in the mail: They owe less in property taxes this year. That may lessen the sting of the bad news that comes with it: The homes they purchased during the height of the housing boom are now officially worth less. The county reassessed 46,500 properties — most single-family homes — bought since 2004.”
“The properties have declined in value a total of $2.5 billion. Similar reassessments are happening in Tulare and Kings counties and elsewhere in the state.”
“Miranda Brown said her home near Fort Washington Country Club in north Fresno has an assessed value of $530,000. Just two years ago, it was valued at $695,000.”
“Brown doesn’t know how much she will save in property taxes, but said she wasn’t too discouraged by the drop in her home’s value. ‘It’s the market, it’s going to go back up,’ she said. ‘I just have to sit on it and wait.’”
The Contra Costa Times. “The housing market meltdown that is eroding homeowner equity is now hurting local governments as county assessors in hard-hit portions of the state, including the East Bay, report that property tax revenues will be far less than anticipated.”
“In Contra Costa, the extent of the softening of property assessments for the 2008-09 fiscal year caught city and county officials by surprise. ‘We were quite shocked,’ said County Administrator John Cullen.”
“In Contra Costa, the news is just circulating. Assessor Gus Kramer reduced the valuation on 30 percent of the 274,400 single-family homes in the county. ‘No way,’ said San Pablo Finance Director Bradley Ward when I told him about his city’s assessment.”
“What seems almost certain is that next year will be even worse. That’s because the latest assessments for the 2008-09 fiscal year, which began July 1, are based on the value of homes as of Jan. 1, 2008.Since the start of the year, property values have only declined further.”
The Mercury News. “For Silicon Valley homeowners, the collapse of housing prices has everyone worried. One-fifth of the houses for sale in Santa Clara County today are now priced at less than $450,000, a figure that was unthinkable even a year ago.”
“But for scores of local, longtime renters, the fragile economy may present a unique opportunity. ‘I’ve been wanting to buy a house for a long time,’ said Chanelle Brearley, 27. ‘We’re just getting our feet wet, but everyone says the market may be coming down. Maybe we do have a chance.’”
“Jackie Morales-Ferrand, assistant director of San Jose’s Department of Housing, said San Jose is eager to help city workers, from teachers to faculty at San Jose State University and postal employees, buy houses.”
“The two-hour class is required to qualify for down payment assistance. ‘It answered a lot of doubts we had in our minds,’ said Dr. Neelam Rattan, a psychology professor at San Jose State who currently rents an apartment in the Evergreen area. ‘We keep hearing prices are going down. Paying rent is just money going down the drain.’”
The Tribune. “Construction of new homes in San Luis Obispo County continues to slow this year, as residential building permit activity shapes up to be the lowest it’s been in more than a decade, according to a local industry trade group.”
“If the trend continues, this will be the fourth consecutive year that fewer residential building permits are issued countywide compared to the year before. This year’s numbers are on pace to be the lowest since 1992, Home Builders Association of the Central Coastspokesman Jerry Bunin said.”
“Bruce Gibson, 2nd District county supervisor, said the drop in residential permit activity is a reflection of unresolved national economic issues. ‘I think people thought housing prices would go up indefinitely,’ he said.”
“Home builders are experiencing significant losses as many of their completed projects continue to go unsold, said Jerry Rioux, executive director of the San Luis Obispo County Housing Trust Fund.”
“‘This is horrible for the builders,’ Rioux said. ‘We’ll see some go bankrupt and projects stopped midway.’”
The North County Times. “Data suggest that North County’s foreclosure beast evolving as it spreads beyond subprime to all sorts of loans. In two areas that have dominated foreclosures over the last year —- north Oceanside and east Escondido —- cases have flattened over the last three months. Meanwhile, foreclosures in neighborhoods with newer homes and higher median incomes, such as places in San Marcos and Carlsbad, are growing.”
“‘As prices continue to decline, we’ll see more foreclosures. And as we see more foreclosures, we see more price declines,’ said Sean O’Toole, founder of ForeclosureRadar. ‘It’s kind of a toilet bowl effect.’”
“‘The overall pace ‘hasn’t dissipated at all,’ said Ward Hanigan, founder of a San Diego foreclosure investment firm.”
“Hanigan said he does not expect to buy up foreclosed properties until 2010. He said his company is waiting until a recovery is in sight for housing. ‘When the banks get so desperate that they’ll sell us one or two properties at a wholesale price, then we’ll know we’re at a bottom,’ he said. ‘We’re not at that liquidation mind-set yet.’”
“JPMorgan Chase released its second-quarter earnings report Thursday. Its findings support the trend of price depreciation forcing foreclosures among less risky borrowers.”
“While subprime losses continued to dominate, foreclosures on prime mortgages are starting to hit the bank hard. Subprime losses have jumped sixfold from a year ago. Prime losses are up 25-fold.”
“‘We are seeing that the problem loans have spilled beyond subprime, beyond home equity (lines of credit) and into prime,’ said Thomas Kelly, spokesman for the bank. ‘Some people could afford it (the house), but chose not to, and the biggest impact is falling home prices.’”
The Orange County Register. “This year is shaping up as one of local real estate’s lousiest for home sellers or anyone who makes a living off selling houses. The median selling price for 2008 so far was $500,000 - down $125,000 from the year before, a 20 percent decline.”
“Shoppers weren’t impressed, though. Just 10,782 Orange County homes have been sold from January through June, according to DataQuick Information Systems. That’s the smallest number of sales for any six-month period in records dating back to 1988. At the same time, soaring foreclosures and loan defaults top peaks of the 1990s.”
“Banks took possession of 5,317 houses and condos in the first half of the year. That’s 28 percent more than the 4,160 foreclosures in all of 2007.”
“Here’s another measure: lenders took possession of 1,131 homes in May alone. That was the highest monthly total since at least 1988, when DataQuick began tracking foreclosures, and 68 percent higher than the record set in the 1990s.”
“Growing foreclosures spells even more price declines for the future, said Irvine housing consultant John Burns. ‘How can prices stabilize when there are more people going into default than buying homes?’ he asked.”
“Over-priced properties are drawing little attention, said agent Cary Hairabedian. ‘The houses that are sitting are overpriced for their condition and their location,’ he said. ‘Buyers aren’t stupid. They were stupid in 2005 and 2006, but they’ve sobered up real quick.’”
“Hunter Norred, 22, a new real estate agent…agreed last week to buy a repossessed two-bedroom condo in Placentia for $115,000. County records show that the unit’s pre-foreclosure sales price was $325,000. He estimated his monthly payment and dues at $1,000.”
“‘You couldn’t even get a two-bedroom apartment for that,’ Norred said.”
The LA Daily News. “Concerned about crime and a spike in abandoned homes, more than 100 residents poured into the Sportsmen’s Lodge on Sunday for a neighborhood empowerment meeting. The more than 80,000 foreclosures in California during the last quarter of 2007 have left their mark on the San Fernando Valley.”
“As a result, gangs and vandals are zeroing in and are converting some into hangouts. Residents fear the properties are creating blight, said Los Angeles Councilwoman Wendy Greuel, who hosted the meeting.”
“One developer in foreclosure did not finish tearing down three homes in the 11900 block of Riverside Drive. Transients began moving in. Graffiti sprang up. The eyesore prompted residents to call city officials for help, Greuel said.”
“‘It’s a double tragedy. It’s a tragedy that someone loses a home or a developer loses a property,’ she said. ‘At the same time, you want to ensure that the neighborhood is protected.’”
“Terry Holtzman has watched his income sour in recent months as the plummeting housing market pushed much of the Southland’s economy to the verge of recession. And now, when the Woodland Hills construction worker has less to spend, rising prices for everything from food to fuel have intensified the squeeze on money for even the most basic of needs: such as keeping the power on at home.”
“‘It’s tightening up my budget,’ Holtzman said as he waited to pay his $350 Department of Water and Power bill at a Winnetka customer service center last week. ‘I’m not being able to pay my bills in full for whatever bills I have.’”
“DWP officials said 358,374 customers - nearly one in four of the 1.4 million the utility serves - had overdue bills in May. That was 13 percent more customers with overdue bills than in May of last year, officials noted.”
“The vast majority of the 358,374 - about 293,000 of them - were homeowners, according to DWP records. But overdue accounts of apartment dwellers also surged - up 40 percent from a year ago to 22,251.”
“‘They’re in a vise and don’t know when it will ease,’ said Jack Kyser, chief economist with the nonprofit Los Angeles County Economic Development Corp. ‘In many cases they’re really stuck and don’t know what to do. It’s easier to let the utility bill slide and then catch up, especially if they’re facing a big jump in variable-rate mortgage payments.’”
The Pasadena Star News. “A $33 million housing project originally intended to provide affordable homeownership in Old Town Monrovia has been converted into leasable units as the developer attempts to weather a distressed housing market.”
“The Colorado Commons housing development on West Lemon Avenue was originally intended as purchasable condominiums when Barker Pacific Group, the developer, began construction in October 2006.”
“Since then, however, the ‘unprecedented condition of the mortgage lending market’ has led Barker to seek approval from the Monrovia City Council to instead rent the units, according to City Manager Scott Ochoa.”
“Barker intended to price the residential units between $375,000 and the high $700,000s when they began the project. Now, however, in today’s market, the value of any one unit ‘could be from 15 to 25 percent lower,’ said Reed Garwood, project manager for Barker.”
“Barker must pay Monrovia $2,500 per month to compensate the city for the loss of property tax revenue. Barker must also promote a lease-to-own program for renters. Also, the units must be converted back into purchasable condominiums within 12 months of when the median home value in the area returns to September 2006 levels.”
“That probably won’t happen anytime soon, Garwood predicted. ‘It will probably be a while - not in the immediate future. Somewhere around four to five years, depending how it goes,’ he said.”
“City spokesman Dick Singer said that the project would likely have been foreclosed upon had Barker not been allowed to convert the units into rentals. ‘They don’t have enough to pay the bank,’ he said. ‘What we’re facing is a takeover by the lending institutions of the whole project.’”
“The three council members who voted for the conversion said leasing was the best available option, under the circumstances. ‘No one foresaw the depth of where we are today,’ said Mayor Pro Tem Dan Kirby at the council meeting. ‘This was not our first choice.’”
“The property was previously a ‘large police problem’ before it was developed, according to Councilman Tom Adams.”
The Daily Pilot. “Getting more people on the Westside to buy homes instead of renting has been a top priority for city officials, but they have experienced a setback in achieving that goal. The Costa Mesa City Council voted unanimously Tuesday to allow a developer planning to build 151 condominiums to rent them instead of selling them.”
“Nexus Development Corporation, which already owns the parcel of Westside land on which the company plans to build the condos, pleaded with the council that it could not possibly finance the project if it were forced to sell the units because of the housing slump.”
“‘The problem with having some sort of restriction is that you can’t get financing,’ said Cory Alder, the president of Nexus. ‘There are different types of lenders. There are lenders for rental projects and lenders for condominium projects. Lenders for condominium projects are not in the market today.’”
“More than a dozen Westside business owners and residents came to speak in favor of giving the developer the freedom to put up a rental complex, but most echoed the council’s preference for owner-occupied condominiums.”
“‘The huge problem on the Westside is overcrowding. We’ve got too many rentals, and we’ve got too many people living in those rentals,’ said Roger MacGregor, the founder of MacGregor Yacht Corporation, which owns the 5 acres immediately east of the proposed project.”
The Desert Sun. “In May, the residents of the neighborhood north of Vista Chino and west of Landau Boulevard heard that the developer had stopped paying for upkeep of the community park, clubhouse and pool. Since then, they’ve kept up the area as much as possible just through volunteers.”
“That attitude seems more the exception than the rule. ‘I’ve got my own yard’ and ‘I’m having trouble keeping up with mine,’ is a common refrain.”
“Andrea Dooley, steering committee member of the Cove Neighborhood Association in La Quinta, said she isn’t surprised the helping neighbor of yesteryear is scarcely found.”
“‘The reality is - I don’t know, maybe I’m negative on this - I just don’t see that (helping spirit), not just in our neighborhood, but any neighborhood,’ she said. ‘Without (a homeowners association), I would say there aren’t many people that would step up to the plate.’”
“Michael Richerson, a Palm Springs Realtor, paid $25 for someone to haul away a rotting couch from a foreclosure down the street from his home. ‘It was worth it to get rid of it because I was tired of looking at it,’ he said.”
“Ernest Meeker and his partner Douglas Cron chipped in. Facing an impending foreclosure that they sidestepped by signing the home back over to the lender, the couple commuted between their rental and their Cathedral City home to water the grass and care for the pool - until the bank changed the locks.”
“‘We were trying to make it look like we were still there,’ Cron said. Cron and Meeker had hoped to work something out with the bank that would keep them in their home.”
