Years Of Appreciation Have Been Wiped Out In California
The San Francisco Chronicle reports from California. “Despite a brisk business in foreclosure sales, the Bay Area real estate market showed little sign of recovery as the summer selling season concluded, according to a real estate report. Although more existing single-family homes changed hands in the nine-county region in August compared with a year ago, 36.1 percent were foreclosures, according to MDA DataQuick.”
“All those bargain-priced bank-owned properties sent the median price plunging to $450,000 - the same level it was in May 2003.”
“‘For a healing housing market, you want to see sales (of resale homes) rise at the same time foreclosures are decreasing at the same time prices stay steady or go up,’ said Mark Hanson, a 20-year mortgage industry veteran based in Walnut Creek. ‘If you increase resales and foreclosures continue to go up, you’re not chewing through existing inventory.’”
“Data on defaults and the downward spiral in home prices seem to indicate that there’s no end in sight. ‘I’m hesitant to say we have any meaningful evidence the wave has passed,’ said Andrew LePage, a DataQuick analyst. In fact, he added, ‘Next year, we could see more prime and Alt-A (one step below prime) mortgages go bad.’”
The Marin Independent Journal. “The median price of a single-family home in Marin last month was $810,000, down from $1 million last year, and 181 single-family homes were sold - down from 201 in August 2007, MDA DataQuick reported. In July, the median single-family home price in Marin was $875,000, and 212 single-family homes were sold.”
“In Marin, foreclosure resales were 13.5 percent of total sales, up from 11 percent in July and 2.7 percent one year ago.”
“Realtor Katie Beacock, incoming president of Marin Association of Realtors, said last month’s figures show ‘we’ve hit a bump in the road’ of a long record of Marin home value appreciation. ‘We are on a roller coaster ride and we are not at the end,’ she said. ‘It’s too hard to tell whether we’ve reached the bottom or not.’”
The Mercury News. “The median house price in Santa Clara County plunged 26 percent last month compared with a year earlier, the county’s steepest decline on record. And for the first time since 2004, the median house price in the county slid under $600,000, according to MDA DataQuick. Houses sold in August went for a median price of $592,750, down from a hefty $805,000 in August 2007.”
“Last month, nearly 25 percent of resale transactions were homes that had previously been foreclosed upon, according to DataQuick. In August 2007, just under 2 percent of sales were past foreclosures.”
“The past week’s financial news may dampen some buyers’ enthusiasm — especially those in expensive neighborhoods, where home purchases are more frequently financed using proceeds from stock sales. ‘Up to now, I haven’t seen much change in high-end buyers and sellers, but now if their portfolios are in the toilet, how will that change things?’ said Dana Grover, a longtime San Jose appraiser of residential real estate.”
The Monterey County Herald. “Foreclosures dominated the real estate market in Monterey County last month, with foreclosed properties making up 63.1 percent of all homes sold. The median sales price for August was $299,000, according to DataQuick, down 48 percent from the same month last year.”
“‘Historically, we are always one of the least-affordable areas. We’re not on that list anymore,’ said Sandy Haney, CEO of the Monterey County Association of Realtors. ‘We’ve moved someplace that I didn’t think we’d ever go.’”
“‘I’m certain sellers aren’t thrilled to death,’ said Haney, ‘but we’ve got rid of the mindset of all that rapid appreciation.’”
“Chuck Cryder, a broker in Salinas, said his agents have seen lots of investors stepping up to take advantage of those prices. ‘Some of them are pretty savvy,’ Cryder said. ‘They realize this is their chance. They’re not going to get to buy property in Monterey County again.’”
“He debunked the myth that financial distress is behind all foreclosures. In some cases, he said, owners who owed more than their home was worth chose to walk away even if they could have made the payments.”
“Some cases he has seen firsthand, others he has heard about from other agents: An investor opting for foreclosure when his mortgage payment reached $3,500 on a property with rental income of $1,500; a guy who lost his house to foreclosure evicting his condo tenants so he could move in; families giving up on $500,000 mortgages and rebuying similar homes for $350,000 in their kid’s name.”
The Modesto Bee. “As usual, the housing meltdown was worst in the Northern San Joaquin Valley, according to MDA DataQuick. Stanislaus County median sales prices fell to $185,000 in August. That’s a one-year drop of 41.3 percent. It’s 53.3 percent below what homes were selling for at the building boom’s December 2005 peak.”
“Stanislaus prices haven’t been this low since the spring of 2002. Six years of appreciation have been wiped out.”
“The Northern San Joaquin Valley continues to be the fore- closure capital of the universe. During August alone, 867 Stanislaus homes were foreclosed on, costing lenders $284.4 million in unpaid debt, according to Foreclosure Radar.”
“Merced County homes sold for a median $150,000 in August. That’s down 47 percent in one year and 60.8 percent from the December 2005 peak. Merced prices haven’t been this low in seven years. Last month, 549 Merced homes were foreclosed on.”
“San Joaquin homes sold for a median $207,000 in August. That’s down 44.1 percent in one year and 54.8 percent from the November 2005 peak. San Joaquin prices also are back to summer of 2001 levels. Last month, 1,245 San Joaquin homes were lost to foreclosure, costing lenders $467.7 million.”
The Recordnet. “In a new ‘Labor Day Briefing for California,’ the Employment Development Department attributed the weakening of the state’s labor market to deepening problems in California’s troubled housing market and real estate banking sector, a weakening national economic, a spike in gas prices and rapidly rising food prices.”
“The loss of nearly 76,000 jobs over the year ending in July ended four years of near-continuous job growth in the state, the report said.”
“Since peak employment in housing-oriented industries in 2006, construction and financial activities sectors have lost a combined 204,700 jobs from February 2006 through July 2008, EDD said.”
“Most economists predict that California’s economy will continue to sputter and stall until the housing sector starts to turn around, the report said, and that’s not expected until the end of this year or early 2009 - ‘after the wave of home foreclosures abates and the stock of foreclosed homes on the market clears,’ it said.”
The Ventura County Star. “Carolyn Vang-Walker, assistant principal of Ventura Adult & Continuing Education, said adult students are seeking more computer training and healthcare skills, such as phlebotomy training. A lot of former Countrywide Financial Corp. employees have enrolled in the full-time vocational training program - many working on building new office skills.”
“‘They’re really having a difficult time,’ she said. ‘Many of them have mortgages on their homes that need to be paid. They went from having a nice income to having to start over again.’”
The LA Daily News. “The foreclosure rate in Los Angeles has surged by nearly 300 percent, with foreclosures on 1,700 apartment units and 9,100 houses and condos in the 18 months through June. Much of the foreclosure activity in the city is in South Los Angeles and the San Fernando Valley, according to the Los Angeles Housing Department. In addition, mortgages on more than 35,000 homes were in default - at risk for foreclosure.”
“In July, 844 Valley families lost their homes to foreclosure, while 1,509 got notices of default, according to the San Fernando Valley Economic Research Center at California State University, Northridge.”
“In early July, city officials chastised Calabasas-based Countrywide Financial Corp. for offering $1,000 to relocate tenants in a foreclosed duplex in South Los Angeles. Rent-control laws require a foreclosing lender to pay a minimum of $6,810.”
“The company apologized to the tenants and halted the eviction letters, saying they were a result of a mix-up by a real estate agent working for the company.”
Since then, the Fair Housing Council has investigated two other complaints about Countrywide cash-for-keys offers or move-out notices to foreclosed renters. In one case, a single father of three said a real estate agent and telephone clerk representing Countrywide told him he had two days to move or his locks would be changed.”
“‘I was shocked,’ said Ely Quijascq, of Santa Clarita, who has since received a formal 60-day notice to vacate his rented town house. ‘I told him, ‘I have three kids; I don’t know what to do.’ I told him, ‘There’s no way I can get out so soon.’”
The Voice of San Diego. “Buyers looking for a deal on a foreclosure using one of these loans are encountering a tougher situation than they expected: banks turning down offer after offer. If banks have another offer from a buyer holding cash or even a typical loan, they are reluctant to approve offers from buyers using FHA or VA financing because the programs require sometimes significant fixes be done to the property before the sale closes.”
“‘You couple that with a bank that doesn’t really want to fix anything and you’ve got a situation where banks don’t want to sell to those buyers,’ said Gary Kent, a real estate broker who specializes in selling bank-owned homes.”
“The decision to buy a house should still be made extremely cautiously, said Erlinda Avena, CEO of the San Diego Home Loan and Education Center.”
“‘On the one hand, this is a buyer’s market, but on the other hand, you’re plagued with the continuous influence of defaults and foreclosure impacting not just individuals but the entire neighborhoods,’ she said. ‘You also have to be very prepared but being able to buy under the economic conditions. Are you going to have an income to support yourself and your mortgage in this topsy-turvy economy?’”
The Orange County Register. “In July 2007, Vijay and Supriti Soni of Corona del Mar paid $440,000 for a home in Santa Ana. Five weeks later, they resold the house to Javier Hernandez - the family gardener and handyman - for $660,000. That’s a 50 percent gain in 38 days - at a time when real estate prices in Santa Ana were plunging.”
“Records show that Washington Mutual, America’s largest savings and loan and one of its most precariously perched lending institutions, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of the Soni family since early 2007.”
“Of the 22 homes sold in that period, at least six have become problems for Washington Mutual.”
“Last month, District Attorney investigators raided the family’s homes and business offices. Now, prosecutors are investigating the Sonis and other members of their family for criminal behavior.”
“‘Unfortunately, we are back looking at these characters again,’ said Doug Brannan, the deputy Orange County District attorney who prosecuted the Sonis in 2003.”
“In mid-2007, WaMu’s then CEO, Kerry Killinger, boasted that his company had tightened lending standards to protect itself from the darkening real estate market.”
“‘It’s been over two years since we first began talking to you about housing prices becoming inflated and of the high risk of a slowdown in housing with price declines in some parts of the country,’ Killinger said during his July 2007 quarterly earnings call. ‘As a result, we started to take actions to minimize our exposure, including tightening our underwriting.”
“This summer, the bank reported a $4.8 billion loss in the first half of 2008 due mostly to souring home loans. On Sept. 11, the company ousted Killinger and said it was setting aside $4.5 billion for losses in the third quarter of this year.”
“Credit-rating agencies downgraded the bank’s bond rating to junk status. The stock sank to $2 on Sept. 15, from a high of $39.25 a year ago. Last week, the bank put itself up for sale.”
“Elijio Servin Rojas told The Register that he never made a down payment on the home he bought in November for $640,000 from Sushama Lohia. Records show he paid at least $64,200 before closing.”
“Servin Rojas said he was renting when Lohia persuaded him to buy last year. He said he has fallen behind on payments on the $575,800 mortgage from Washington Mutual. He received a notice of default in July.”
“‘I’m up against a wall,’ Servin Rojas, a tile worker who has been working only part time, said in Spanish. ‘They’re just going to take away our house.’”
