A Blanket Decline In California
The North County Times reports from California. “North County’s housing market reversed course last month. A monthly housing report showed the sales boom of September and October had softened and prices plummeted at an alarming rate. The median price of a house in North County took an absolute beating, dropping 12 percent in just one month. That brought the median price in November to 40 percent below the same month a year ago, dropping to $358,000. Sales were up just 32 percent from a year ago after two straight months of sales that were double the weak 2007 numbers.”
“Strong sales numbers in September and October had provided a glimmer of evidence that price declines might be nearing an end. Thursday’s report, released by the North San Diego County Association of Realtors, debunked that idea.”
“‘Unemployment is skyrocketing, expectations about the economy are falling and I would suggest people are becoming somewhat more cautious about purchasing,’ said Mark Goldman, a real estate lecturer at San Diego State University.”
“Only houses priced under $400,000 increased in sales from a year ago. Still, price declines appeared to be very real. The median price per square foot, which adjusts for the size of the house, also tumbled —- falling by 8 percent in just one month and down 30 percent from last year.”
“Such a dive in prices set records in the four-year-old survey for biggest drops in median price and median price per square foot. It was also the first time in the history of the report, known as HomeDex, that the median price per square foot dipped below $200, declining to $196.”
“Another trend persisted in the November report: Sales boomed in foreclosure clusters but stagnated in high-end, coastal communities. One cause of slouching high-end house sales could be the cost of financing large loans, as lenders have applied one of the steepest premiums in history to loans above a certain size, which are not backed by the government.”
“In addition to more expensive borrowing, Carlsbad mortgage broker Sheldon Ruckens said he thinks plenty of high-end homes carry negative-amortization loans, risky products that can see payments increase by as much as 100 percent. ‘My feeling is it’s going to take time to hit the high end, but looking at what the economy is doing, it’s coming,’ he said.”
The Union Tribune. “The plunging U.S. economy and subsequent cuts in the construction, service and manufacturing industries are prompting many immigrant workers, particularly those in the United States illegally, to contemplate a life-changing decision: Do they stay and earn far less, or head home to meager opportunities?”
“Outside the Home Depot store in Point Loma last week, the economy was chiefly on workers’ minds as they waited for contractors, rushing toward every vehicle that arrived. There was not enough work for everyone. ‘My last job was two months ago,’ said Juan Gonzales, a concrete layer who took the bus from Lemon Grove to wait for work. ‘My savings are gone. We can hardly pay our rent. In another month, we won’t have any money.’”
The Desert Sun. “The worst recession in decades continues its stranglehold on the Coachella Valley, The Desert Sun’s latest quarterly Economic Index shows. Lee Morcus, who co-chairs the Coachella Valley Economic Partnership, used one simple sentence to describe the situation. ‘It is bleak,’ Morcus said, even as the entrepreneur saw well over 1,000 people — many from the unemployment lines — file applications for 200 jobs at the new Jackalope Ranch restaurant the Kaiser Restaurant Group plans to open in Indio.”
“‘I expect 2009 will be worse than 2008,’ Morcus said. ‘I’m still skeptical about 2010.’”
“The Construction Industry Board has reported that 748 permits have been pulled through October, Bell said. The number pales when stacked against the 7,000 permits that used to be issued when valleywide construction was at its peak. ‘We have probably lost 15,000 to 19,000 jobs in the construction sector in Riverside County,’ said Fred Bell, executive officer of the Building Industry Association, Desert Chapter. ‘That doesn’t count the service sector jobs, so we’ve seen quite a bit of impact on the job base.’”
“Richard Oliphant, a longtime Coachella Valley developer who postponed construction on the billion-dollar Avanterra mixed-use project…said he remains optimistic. ‘The Coachella Valley population is only at 425,000,’ he said. ‘At build-out, it will hold over 1.25 million, so we’re only one-third built-out.’”
“Oliphant voiced confidence the nation’s top economists will get it right. ‘Otherwise we’re making a horrible mistake throwing $1 trillion at the problem,’ he said. ‘If it doesn’t make it right, I don’t know how we can.’”
The Recordnet. “The number of existing houses sold in San Joaquin County dipped sharply last month, as did the number of houses on the market. Sales fell after September and October saw the highest sales numbers ever - predominantly foreclosure properties, according to the monthly sales report, based on Multiple Listing Service data. A total of 981 existing single-family homes sold last month countywide, down from 1,258 in October, the report said.”
“Foreclosures make up about 45 percent of monthly listings countywide but account for almost nine out of 10 sales. At the current sales rate, today’s foreclosures would be picked out of the market within two months. This isn’t a drying up of the foreclosure properties pool but a temporary lag, said Jerry Abbott, president and co-owner of Grupe Real Estate, Stockton.”
“State and federal policy changes aimed at helping homeowners wrestling with potential foreclosure have simply slowed down for many the march through the foreclosure process, he said. Abbott said that means new foreclosures have been lagging for a couple of months, but he expects foreclosure numbers to jump again in January and February. ‘It’s kind of thin pickings right now in terms of good foreclosure properties,’ he said.”
“TrendGraphix said the median sales price fell from $190,000 in October to $175,000 last month in San Joaquin County. That compares with a $200,000 sales mark in January 2002, when TrendGraphix began tracking sales as the market was well into the start of a six-year boom.”
The Monterey County Herald. “All Monterey County residential properties — about 95,000 houses — will be reassessed in January to make adjustments to their tax value. County Assessor Steve Vagnini said Friday that the value of a property, which determines the tax amount owners pay, is normally only reviewed when there is a change of ownership, new construction or a request. But the recent housing market dive has caused a sharp decline in values and it is only fair to do a reassessment, he said.”
“‘We never saw a blanket decline in the market value’ before, Vagnini said.”
“Love Motors in Seaside has closed its doors for good after 25 years. On Friday, the lot holding fleets of Chevrolet cars and pickups, and a showroom housing high-end sports and luxury sedans, was empty of customers. The dealership’s closure is a major fiscal blow to Seaside, said City Manager Ray Corpuz. ‘Our largest industry here is the car industry,’ he said, adding that it provides 60 percent of sales tax revenues.”
“City officials have met with dealers in the Seaside Auto Mall and ‘a lot of them are saying, ‘We can sell the cars, but people can’t get the credit,’ Corpuz said.”
The Contra Costa Times. “A recent report by advocacy group First Focus estimated that the mortgage crisis will directly affect 311,000 children in California and 2 million nationwide, with many forced to move away from the stability of their homes and schools. Thousands more will be indirectly affected in other ways.”
“Dave Behling, a teacher at Freedom High School in Oakley, said the downturn is apparent on his campus. Several students have moved away, victims of foreclosure. More are prioritizing their part-time jobs over school work to contribute to the family’s bills. The hallways — usually abuzz this time of year with girl talk about who’s going with whom and where to buy new winter formal dresses — instead are filled with solemn conversations about sewing a gown or borrowing one from someone else.”
“No one is talking about the economy outright, he said, but it’s clearly taking its toll on students. ‘A lot of the people have got a facade up,’ Behling said. ‘And I don’t know how long the facade is going to stay up before it crumbles.’”
“Behling, facing possible foreclosure himself, knows firsthand. His wife, a data technician for the school district, has taken a second job, and his 17-year-old daughter is desperately seeking work. Her plans for college — initially focused on the University of Utah but now turned toward state schools and community colleges to save money — are up in the air.”
“‘Obviously, there are students out there that have been affected by this,’ said Luis Peres, outreach coordinator for West Contra Costa. ‘You look in the neighborhoods and there’s foreclosure signs everywhere.’”
The Marin Independent Journal. “The fiscal news is getting worse at Marin County Civic Center, where officials expect the county to face a $4.8 million budget gap next year, about $1 million more than predicted little more than a month ago. County Administrator Matthew Hymel attributed Marin’s widening budget chasm to the county’s slumping housing market.”
“‘It’s a reflection of the housing market downturn being longer than most have expected,’ Hymel said. ‘It hasn’t bounced back. We’re counting on more property declines over the next year.’”
“While Marin is faring better than other regions, Assessor Joan C. Thayer said the county, cities and special districts ‘are going to have problems’ as sagging property values and slowing sales crimp the property tax tap agencies depend on for funding.”
“‘I think the situation is more serious than it was last year, and that the recession has deepened,’ the county assessor said. ‘Everybody’s property has declined in value.’”
“The median price for all homes sold in Marin in October was $599,750, a 31.5 percent drop from $857,000 a year ago, largely because of 74 condo sales, many of them foreclosures, at a median $315,000. The median price of a single-family home in Marin in October was $850,000, down 13 percent from $978,000 last year, and 141 single-family homes were sold - down from 169 in October 2007.”
The San Francisco Chronicle. “San Francisco’s real estate industry might be happier to bid farewell to this year if next year offered the hope of anything better. It doesn’t. Instead, executives at the helms of the city’s biggest brokerages say they’re preparing for an unpleasant and unprofitable 2009, although it may turn out to be the best year that buyers have seen in more than a decade.”
“‘San Francisco had managed to fool itself through most of 2008 into thinking that it wasn’t going to suffer the same sort of issues that have hurt other places in the state,’ said Christopher Thornberg, an economist with the consulting firm Beacon Economics. ‘The last four or five months of the year, San Francisco has seen price declines that have been quite prominent. You can’t have prices fall as much as they have across the bay without some impact on San Francisco itself.’”
“The median price of a single-family home in San Francisco fell 16.6 percent to $702,000 in October, the most recent month for which data are available, according to MDA DataQuick. The October drop compares with $842,000 in October 2007. The median price is now 22 percent below its peak of $900,000 in May 2007.”
“Top executives at Zephyr, McGuire Real Estate and Pacific Union GMAC Real Estate, three of the city’s biggest brokerages, say sales are slower this December than last. Sales volume is down 28 percent at McGuire, according to Charles Moore, the company’s CEO.”
“One of his top agents approached him recently after listing a home that she was convinced would sell quickly. ‘She thought it was a run-don’t-walk situation that would go over asking (price) with multiple offers,’ Moore said. ‘Two weeks later, she showed it to a buyer who offered less than the asking price and got it. There’s a new, lower benchmark.’”
“Even as the real estate executives say they’ve encouraged their agents to lower expectations, they are finding increasingly that the prices still aren’t low enough.
When Zephyr agents presented their new listings at last week’s sales meeting, said owner Bill Drypolche, the inventory was relatively light, not abnormal for this time of year. But the number of homes with price cuts and deals that collapsed in escrow was way above average. ‘It was disheartening,’ he said. ‘It’s very unusual in San Francisco to have to go through rounds and rounds of price cuts. It means that either we missed the market, or we were too high in the first place.’”
“After a 14-year rise in home prices, a period in which it seemed that values moved only in one direction, Moore said it’s difficult to persuade sellers to price low. Whereas in the past, a below-market price might have been a ploy to attract multiple offers, Moore said, he’s now encouraging his agents to tell their clients to price low and be willing to accept an even lower offer.”
“‘It is good counsel today to tell your seller to list the property under the competition,’ he said. ‘A high-water mark is no longer appropriate when the tide is ebbing. Prices are still coming down, and good sellers have to chase the prices down.’”
“As a group, Moore said, sellers are going to have to acknowledge that is no longer their turn. ‘For the past 14 years, all of our buyers have acted under a sense of urgency,’ he said. ‘Sellers need to embrace that it is what it is. They have to start acting differently with more of a sense of urgency.’”
