It Keeps Getting Better And Better In California
The Daily Press reports from California. “First-time home buyers jumped into the local real estate market in December, pushing sales of existing homes up by 17 percent for the month and 207 percent compared to a year ago, according to new from the Victor Valley MLS compiled by Larry Trombley, an agent in Hesperia. The typical Victor Valley home sold in December was 1,905 square feet, 15 years old, selling for $140,596. In the past year, area home prices have fallen 39.6 percent and are now comparable to 2002 prices.”
“In December 3,639 homes were for sale in the Victor Valley, with 513 closing escrow. Eighty-seven percent of homes sold in December were foreclosure properties. Because there are so many foreclosures, the rising pace of sales hasn’t slowed declining prices. ‘Bargains and bargain hunters have kept this (Southern California) market alive through some of the bleakest financial news in memory,’ John Walsh, president of DataQuick, said in a recent press release. ‘There’s this renewed sense that you can score a ‘deal’ — something that had been missing for many years.’”
The Press Enterprise. “In a year of plummeting home values, Riverside County Assessor Larry Ward gave residents less time to challenge their property taxes and scant notice of the change. Ward changed the deadline midstream for taxpayers to request a decline-in-value reassessment on their homes. Some homeowners say they only learned of the new due date when their applications were rejected for arriving late.”
“Keven Lee, of Murrieta, said he filed an appeal after Ward’s office rejected his decline-in-value application. He believes his Murrieta home, purchased in 2003, was assessed at almost $90,000 more than its market value. If that’s the case, he overpaid about $1,000 in taxes in the past year, he said.”
“‘I thought that they had made a mistake,’ said Lee, of Murrieta, whose form was rejected in September for arriving late. ‘I went back and looked at the form I had sent them, and thought, ‘How could that be?’”
“Analysts say Inland housing prices have fallen more than 40 percent since their high point in 2006.”
The Recordnet. “Sales of existing homes in San Joaquin County jumped in December - typically a slow month - after a November slowdown as the prices of homes in foreclosure continued to slide. The median sales price fell to $133,000 in Stockton and $165,000 countywide.”
“‘I’m telling the guys at work it’s time to buy,’ said Tom Poust, a Stockton trucker who bought a foreclosure house at auction last year and will soon start looking for another to buy. ‘It’s cheaper to buy than to rent. It’s a terrific time to buy, and it keeps getting better and better.’”
“Foreclosures continue to dominate the existing home market, accounting for 84 percent of all December sales. That has meant steady declines in median sales prices as foreclosure asset managers continue to cut prices to try to get properties off their books. In Stockton, that has meant a 47 percent drop in prices in 12 months alone, from $250,000 in December 2007 to $133,000 last month, according to figures from the Grupe Real Estate-TrendGraphix monthly sales report, based on MLS data.”
“TrendGraphix figures date from January 2002, at the start of the last housing boom. The median sales price for Stockton that month stood at $155,000.”
“‘Median sales prices may go lower, but they can’t go much lower,’ said Mike Collins of Collins Realty in Stockton. ‘Some people pay that much for a high-end luxury car.’”
The Automotive News. “It’s a grim business being a car dealer in California these days. Metro Honda, in suburban Los Angeles, was going along fine until autumn, says General Manager John Jomehri. Sales were up 17 percent through August. Then the bottom fell out.”
“As real estate values in the state shot up this decade, owners used home equity loans to buy vehicles. ‘They were using the appreciation from home equity and walking into dealerships and saying, ‘I’m paying cash for this car,’ says Pete DeLongchamps, VP of Group 1 Automotive Inc.”
The Sacramento Business Journal. “It was a lousy Christmas for homebuilders. They sold 705 homes, about one home a month per project in the six-county region during the past three months, a record-low since The Gregory Group began tracking new-home sales in 1999.”
“The Gregory Group founder Greg Paquin noted that personal savings rates are up and that consumers aren’t buying cars or dining out as much. ‘If people aren’t buying cars, they’re not going out to eat … they’re probably not thinking about buying a new home,’ he said.”
“Paquin admitted he hasn’t been able to accurately call the bottom of the housing market, as housing sales appeared to bottom out at various points during the past two years. ‘I was joking with some people this morning that it was probably the lowest since there’s been a capital in Sacramento,’ he said of the fourth-quarter figures. ‘That’s probably not true, but the reality is no one’s buying.’”
The Record Searchlight. “A developer is going after Asset Real Estate and Investment Co. (AREI) in court for more than $3 million in unpaid rent, utilities and other costs at the firm’s former Hemsted Drive headquarters. The now-shuttered Redding-based real estate holding company sits at the heart of an alleged $250 million Ponzi scheme that allegedly has bilked thousands of senior investors out of their life savings.”
“Santa Rosa-based financial adviser Gary T. Armitage and his partner Jeff Guidi had persuaded many investors to sink their life savings into properties and corporate notes offered by AREI, promising annual returns of 8 percent or more. The firm reportedly had been losing $18 million a year while still taking on new investors.”
The Statesman Journal. “An investment vehicle that grew wildly popular in the mid-2000s helped fuel the rapid growth of Salem-based Sunwest Management Inc. But that same investment structure is now causing grief for the hundreds of people who bought interests in Sunwest’s senior living properties.”
“Payments to investors, including many in the Salem area, have been suspended because a number of Sunwest-managed properties can’t pay their bills. Foreclosures on some Sunwest properties by lenders have put the investments at risk.”
“Real estate attorneys also warn that the foreclosures will unwind the tax benefits of the so-called ‘tenant-in-common’ investments, also known as TICs. Tony Elshout, who has three Sunwest tenant-in-common investments, isn’t optimistic about a good outcome for investors. ‘I see this whole thing just blowing up,’ said Elshout, 69, a California resident and a self-employed businessman who also manages his own real estate holdings.”
“Elshout is angry and lashed out at Sunwest’s principals. ‘What they are trying to do is save their own butt. They could care less about the TIC owners,’ he said.”
From Reuters. “No. 2 U.S. homebuilder Lennar Corp again denied on Monday treating its joint ventures like a ‘Ponzi scheme’ and tried to counter the allegation by providing fresh data on those ventures. The statement came in response to accusations made last week by Barry Minkow, who had served time in prison for stock fraud but now investigates fraud. Minkow also had accused Lennar of improperly giving its chief operating officer, Jon Jaffe, a mortgage and of profiting from the now bankrupt ‘LandSource’ venture while the California Public Retirement Fund (CalPERS) lost about $1 billion.”
“In its statement, Lennar denied that it gave Jaffe a mortgage and acknowledged that Jaffe did use a line of credit secured by a mortgage to buy Lennar stock.”
“Morningstar analyst Eric Landry…deemed Minkow’s report ‘flimsy,’ and said it did not cause him to worry that he had missed signs of outright fraud on Lennar’s part; but he does think Lennar has used the joint venture structure too much for its own good.”
“‘Investors will tolerate the opaque nature of the joint venture structure when land prices are going up,’ Landry said. ‘But when land prices are going down, the company loses the benefit of the doubt.’”
The San Francisco Chronicle. “For five years, San Francisco attorney Tilden Moschetti practiced family law, but in November, he shifted his legal attention to reflect the demand in the market: personal bankruptcy filings. ‘It’s a good market to get into,’ said Moschetti. ‘Considering where things are right now.’”
“Bankruptcy attorneys, nearly put out of business by a 2005 law that made it more difficult for consumers to file, are dedicating more hours to hand holding devastated clients, compared with previous recessions.”
“‘It used to be that we’d get someone into bankruptcy so they could save their house,’ said Patrick McMahon, a San Francisco attorney for 25 years, who added that the foreclosure crisis has dashed most clients’ hopes of salvaging their home. ‘But now, I spend a lot of my time trying to convince people to let their houses go - that it’s not worth what they owe on it. They say, ‘But we’ve got a bond with our house,’ and I have to say, ‘So what. Just let … the house … go.’”
