A Year Of Bitter Medicine In California
The Daily Democrat reports from California. “Widespread foreclosures have created a buyer’s market, but many who have snapped up reduced cost homes in the region are finding unexpectedly high property tax bills in their mailboxes. In Yolo County, the Assessor and Tax Collector offices have been inundated with phone calls from bewildered new property owners ever since annual bills were sent out last Wednesday. Even the most careful homebuyers can easily overlook and fail to budget for the initial property tax amount, said Linda Styczynski, a senior accountant at the county’s Tax Collector Office.”
“‘We feel really bad for them,’ Styczynski said. ‘They might have bought a $700,000 home for $300,000.’”
The Sacramento Business Journal. “The median price of a home selling in Greater Sacramento last month was $195,900, down 11.3 percent from August and 39.8 percent lower than a year ago. Sales, meanwhile, were up 8 percent over August and 186 percent higher than a year ago.”
“California home sales soared 96.7 percent in a year-to-year comparison while the median price of an existing home fell 40.9 percent, the California Association of Realtors reported.”
“‘Statewide sales in September edged past the 500,000 threshold for the first time in more than two years, rising 2.3 percent compared with August and 96.7 percent compared with a year ago,’ said CAR president William E. Brown. “This dramatic increase in sales owes as much to market weakness a year ago in the early stages of the credit crunch, as it does to the growth of sales in September this year.’”
The Union. “The land owned by developers North Star/ Grass Valley LLC has gone into default and is set to be auctioned off to the highest bidder on the county courthouse steps Nov. 14, The Union has learned.”
“A handful of local developers have run into financial trouble as a result of the real estate slump, though on a much smaller scale than in urban areas such as Sacramento and the Bay Area, Citizens Bank Executive Vice President Tim Peterson said. Citizens Bank does not place blame on the developers of North Star for their inability to keep their loan current.”
“‘The loan was good when it was made. The people were wanting to do all the right things. Sometimes things don’t work out,’ Peterson said.”
The Contra Costa Times. “Residents of Lamorinda have seen their homes hold their values, propped up by excellent schools and proximity to San Francisco. But now even in the three cities, where most families earn well upward of $100,000 per year, the housing market is stressed.”
“And some are sitting for months on end, said Bill Finnegan, a broker for Alain Pinel Realtors. That isn’t good news for sellers. A broker since 1972, Finnegan said he has been through four downturns. But with the combination of the credit crunch, price declines and job losses, he is now in uncharted territory. ‘This one is different,’ Finnegan said.”
The Los Gatos Weekly Times. “California Association of Realtors president William Brown was in the area recently and addressed officials of the Silicon Valley Association of Realtors. Brown acknowledged the shakiness of the housing market, and discussed the impact of market conditions on the state trade association and the industry. ‘The reality is half our members have never seen a down market,’ he said.”
“Brown urged agents to continue being active and involved in the political arena. ‘The bottom line is things still need to be addressed. Indications are this problem is going to be with us for a while. We need to maintain as strong political presence in the political process as we can, because it is during times like these that we are weakest.’”
The Mercury News. “The strain of the nation’s economic crisis is trickling down to college-bound teenagers who are already stressing about their applications. The bursting housing bubble and tighter lending requirements makes it harder for parents to rely on home equity to foot tuition bills.”
“‘A lot of upper-income families, particularly in the Bay Area, used to rely on vehicles like home-equity loans or lines of credit,’ said Karen Cooper, director of financial aid at Stanford University. ‘We’re seeing a lot more families apply for financial aid, and more parents are taking out private loans.”’
“Noah Johnson, a senior at Gunn High School in Palo Alto, is applying to several private schools. But money is a huge issue, in part because Noah’s father is retiring in May. ‘I hear them talking about how they might have to move or sell the house. I’d rather put myself in debt then have them sell our house,’ said Noah.”
“The Johnsons’ Palo Alto condominium has lost equity. Noah does have a college fund set up by his grandfather, but those banking stocks, which were worth over $20,000 a few years ago, are now valued under $9,000. ‘We’re going to try to send Noah where he wants to go, even if we have to beg, borrow and steal,’ said Sheri Johnson, Noah’s mom. ‘But we may have to move out of the Bay Area, and we’re prepared to sell our house.”’
From KCBS. “Crown Chevrolet has long been a landmark in Dublin, but now the dealership is going out of business after being taken over by a competitor. The California New Car Dealers Association says that 96 dealerships have gone out of business across the state this year. That includes a Dodge outlet in Brentwood, and a Hyundai dealership in Pittsburg. Association President Peter Welch says that the housing market is hurting dealerships everywhere.”
“‘In prior years, probably about 30 percent of people who bought cars did it on home equity lines, but most of those have been wiped out with the falling prices of houses,’ said Welch.”
The New York Times. “An eternity ago, people in this city in northern San Joaquin County braved four-hour round-trip commutes to the San Francisco Bay Area for a toehold on the dream. Today, Manteca’s lawns and driveways are storefronts of the new garage-sale economy — the telltale yellow signs plastered in the rear windows of parked cars Friday through Sunday directing traffic to yet another sale, yet another family.”
“‘This is the perfect storm for garage sales,’ said Gregg Kettles, a visiting professor at Loyola Law School in Los Angeles who studies outdoor commerce. ‘We’re coming off a 20-year boom in which consumers filled ever-bigger houses. Now people need cash because of the bust.’”
“Since losing his construction job, Constantino Gonzalez has been economizing. The inflatable bounce house is the children’s favorite toy, but the family’s $1,800 mortgage payment is coming. So it sits propped up in its bright blue case, awaiting customers. ‘We need to eat,’ Mr. Gonzalez tells his children about selling off their toys. ‘I can’t cover the sun with my finger. So why lie?’”
The Fresno Bee. “In Fresno County, the scene was the same. There were 2,202 foreclosures in the third quarter compared with 2,821 in the second quarter, according to MDA DataQuick. However, year over year, the July-August-September numbers were up 21.9%. Tulare County saw default notices surge 48.4% year over year to 883. The greatest percentage increase was 119.3% in Imperial County. Only Santa Barbara showed a decline — a 0.8% dip from 598 default notices to 593.”
“Jeff Schrager, president of the No Homeowner Left Behind Foundation in Fresno, said he is optimistic the situation will get better. ‘2008 was a year of bitter medicine,’ he said. ‘2009 is going to be a transition year to more opportunity and prosperity.’”
The Ventura County Star. “Above the piles of crisp beige résumé paper and matching envelopes that sit on the shelf at the Job & Career Center in Ventura, there’s a small celebratory bell that’s rung every time a job seeker finds employment. These days, the bell is gathering dust. ‘The bell isn’t ringing as much as it was,’ said Susan Hartwick-Sauer, an employment specialist at the center.”
“Eleanor Shook of Simi Valley, had a (hard) time keeping her spirits up when she was laid off a year ago from the foreclosure department at Countrywide. ‘I had a lot of anger,’ she said. ‘I became very frustrated.’”
“Every few weeks, she’d get together with some of her fellow laid-off friends and talk about what happened. Some went back to school. Some took unemployment. After a year of looking, Shook recently got a job working in customer service, and she’s smiling again.”
“It was the same old song for the housing market Friday when the California Association of Realtors released its September sales data: sales are up and prices are down from a year ago. In Ventura County, the median sales price last month was $431,770, down 9.7 percent from August and 36.7 percent from a year earlier. In dollar value, the median has plunged $250,050 from $681,820 in September 2007.”
“More sales make sense as more low-priced, ‘fire sale’ home inventory comes on the market, said David M. Smith, professor of economics at Pepperdine University. ‘Until we see prices stabilize, I don’t think we can say it’s a positive sign that sales are up,’ he said.”
The Daily Breeze. “The South Bay’s median price for all homes sold in September was $500,000, compared with $693,500 in September 2007, according to the report by Los Angeles-based California Association of Realtors. The local price drop was less than the countywide decrease of 32.1 percent to a median of $360,000.”
“Of the South Bay communities cited in the report, San Pedro saw the most severe drop in median price, by 33.5 percent, to $412,000. ‘I think what’s really happening is with the waves of foreclosures and bank-owned properties, the ripples are finally hitting this area,’ said Kim Howard, a Realtor who works mostly in San Pedro. ‘It started in Riverside and Diamond Bar, and then it hit Carson and it finally hit us.’”
The San Gabriel Valley Tribune. “Marty Rodriguez, owner of Century 21 Marty Rodriguez in Glendora, said 30 percent of the transactions her office handles are either home foreclosures or short sales. ‘That’s the highest it’s been for us, but I don’t think we’re through,’ she said. ‘I think that could probably get up to 40 percent … and maybe even 50 percent.’”
“Rodriguez said foreclosures and short sales account for nearly all of her office’s transactions in La Puente.”
LA Downtown News. “L.A. Live’s second phase, to include restaurants and clubs, will begin to open next month, culminating with the opening of the Grammy Museum the first week of December. By 2010, the completed project is expected to include a 14-screen movie theater and a 1,001-room, 54-story high rise housing 1,001 JW Marriott and Ritz-Carlton hotel rooms, topped with 224 condominiums dubbed the Ritz-Carlton Residences.”
“Much of Thursday’s discussion focused on the current economic climate. ‘Everyone is impacted by this economy,’ said Tim Leiweke, president of L.A. Live developer Anschutz Entertainment Group. (He) admitted that his firm recently lost about 20 prospective buyers who had reserved Ritz-Carlton Residences, which mostly range from $1 million to $3 million.”
“‘If not for the downturn, quite frankly, we would’ve been sold out of condos already, I’m fairly certain,’ he said. ‘I believe we will sell the condos out before we open, but it’s going to take a little bit more time.’”
The Union Tribune. “So far, commercial real estate has avoided the massive mortgage defaults that have hit homeowners, even though San Diego County offices, shopping centers and hotels saw similar surges in prices over the past few years. But experts are beginning to talk about possible tough times ahead for commercial landlords, particularly as building owners try to refinance maturing debt.”
“One example of this early stress in San Diego is Cosmopolitan Square, a 39-story hotel-condo project proposed near Petco Park. Despite having a trendy Mondrian hotel in its plans, Cosmopolitan Square developers lost the full-block site downtown to foreclosure last week when they failed to find a lender willing to provide a bridge loan to get the project off the ground.”
“‘California has been relatively quiet,’ said David Iannarone, managing director of CW Capital in Washington, D.C.. ‘I’m not sure that’s going to last.’”
“‘We’re just seeing the beginning of it,’ said Thomas Deane, head of structured transactions and special assets for Wachovia Securities. ‘I think retail is the next to go. Then office is not too far behind.’”
The North County Times. “Economists are nearly unanimous that California is in a recession and concerned that the nation as a whole could soon go the same way, if it hasn’t already. But the economic picture varies sharply from one sector to the next. Mortgage companies and others in the financial sector account for about 60 percent of the 7,500 jobs that private employers in San Diego County have cut in the last year. Meanwhile, lodging and other tourism-related industries continue to hire.”
“The recession has even boosted some local businesses, including several that help client companies to cut costs.”
“Economist Stephen Levy said California’s recession, while serious, isn’t likely to lead to long-term changes in the structure of its economy, as opposed to the slowdown that followed cutbacks in the defense industry in the early 1990s. The current recession has been concentrated in retail and housing-related industries, both of which are notoriously cyclical, said Levy.”
‘Lower prices have cut deep into consumer spending but they also are a relief to homebuyers and to employers struggling to lure new workers to a relatively high-cost state, he said.”
“‘In some perverse sense, the collapse of housing prices is going to be a benefit for the economy of San Diego County’ in the long run, Levy said.”
