Bitter Former Owners In California
The Ventura County Star reports from California. “Rose Vicente is tired of waiting. Sixteen months after she and her husband, Manny, put their Simi Valley home up for sale for $650,000, they decided they couldn’t put their life on hold any longer. Although they still are waiting for a buyer, the Vicentes purchased a home in Wildomar, Riverside County, and plan to move in February. Last year, the Vicentes told The Star they wouldn’t budge when they lowered their asking price on their five-bedroom house to $495,000. Their outlook has since changed.”
“The Vicentes just slashed their asking price to $379,000, a 42 percent reduction from their original asking price. Their experience mirrors what is happening in the weak housing market. For the Vicentes, the substantial price drops gave them the ability to buy a second house in California, without being forced to wait until they sold their Simi Valley home. They decided on Riverside County because they were able to buy a 3,500-square-foot house — twice the size of their current home — for $300,000.”
“The space was important, Vicente said, since her son and daughter-in-law and their two children have moved in with them. ”Getting more house for your dollar is more important because grandchildren and kids are moving back home they can no longer afford to live on their own,’ she said.”
“It’s been a tough road, and not just for sellers, Vicente said. As buyers, she and her husband were surprised to see severely damaged homes with kitchens and tubs torn out by bitter former owners.She said she is hoping that the market will stabilize within the next five years so her family can move to Texas.”
The Sacramento Bee. “In 2008, long to be remembered for fear and opportunity, capital-area investor Scott Arbuckles and partners also saw the sudden opening. Last year, he bought eight Sacramento County repos priced below $120,000 to fix up and rent. By December, investors like him accounted for one in four home sales in the county – the most since mid-2004 – according to statistics released Tuesday by MDA DataQuick.”
“‘In a period of a couple months, the banks started selling properties at prices that would allow an investor to come in and make in excess of 10 percent per year,’ he said.”
“Free-falling median prices throughout 2008 testified mainly to lenders’ efforts to dump repo properties after 19,000 foreclosures in the region from January through September. The median price in Sacramento County, hardest hit by the region’s foreclosure crisis, fell almost $100,000 the past year.”
“Even as repos pushed the region’s 2008 sales within a shout of 2006 totals, overall sales were still among the lowest since 1998, said DataQuick analyst Andrew LePage. ‘It’s fair to say we’ve seen the beginning of a recovery in sales,’ said LePage. ‘But it’s a strange recovery that’s not as broad-based as you’d usually see. A lot of starter homes sold and nothing happened. A lender gets the money back, but no one is moving up.’”
“The outlook for 2009: more of the same, said LePage. ‘I think so much is riding on the health of the job market this year in Sacramento. For the market to really stabilize, you have to end that vicious cycle of foreclosures in hard-hit areas, and it’s going to be hard to do that if more people are thrown out of work,’ he said.”
The LA Times. “California’s system for providing jobless benefits is quickly running out of money even as state government is scrambling to keep up with the highest level of unemployment in almost 15 years. Chad Boyer, a laid-off newspaper advertising salesman from San Diego, had an even harder time. In November, he called the state’s toll-free number 802 times over a three-week period to check on his claim. He did not get through even once.”
“‘I think it’s easier to call a radio station and get free tickets to a Pink Floyd show than to get a live person at EDD,’ he said. ‘It’s a nightmare.’”
The Santa Cruz Sentinel. “The outdoor mall city leaders have been banking on for the past decade to bolster the city’s economy and draw shoppers from around the region has been put on ice by the Ohio-based developer. Stanbery Development says the troubled economy has dried up bank loans needed to launch such a project and that many retailers aren’t in the mood to expand.”
“‘The financial markets have basically stopped all cash flow for funding projects,’ Gregory Hall, VP of development for Stanbery, wrote in a letter to city officials.”
“‘Name a retailer, they’re all suffering,’ Mayor Randy Johnson said. “If you build it, you have to have people come rent it. Otherwise, you have a ghost town.’”
The Marin Independent Journal. “Several real estate firms have scaled back operations in Marin, particularly in Novato, where home sales dropped sharply last year. Valerie Castellana, a former president of the Marin Association of Realtors, said she recently closed two sales in San Rafael. But, she said, ‘the buyers are driving very hard bargains these days. They expect to get deals. Sellers are having to determine if they’re in a place where they can go along with that or do they need to hold on and wait for the market to return.’”
The Union Tribune. “Setting a grim record for monthly gains, notices of home-loan default in San Diego County surged by 121 percent in December over November. The notices, which mark the start of the foreclosure process, totaled 31,099 for all of last year, a 54 percent jump over 2007, the MDA DataQuick research firm reported yesterday.”
“The annual totals were the highest since DataQuick began keeping track of county foreclosures in 1988 and defaults in 1992, outpacing the tallies of the mid-1990s, during Southern California’s last big housing slump.”
“Many analysts say they are not certain when the pace of foreclosures will slow or when home prices will stop falling. ‘That is the big question for all real estate economists,’ said Mark Goldman, a real estate finance instructor at San Diego State University. ‘There is a consensus that we will hit a bottom halfway through 2009, but I am not anticipating a rapid recovery.’”
The North County Times. “Reeling from a historic glut of foreclosures —- there have been 15,000 in Southwest Riverside County since January 2007 —- banks have been slow to kick out defaulted homeowners and resell the properties. Mark McKinzie is fed up with the foreclosures on his block. Last week, he took aim at the banks that own the properties, and said he hopes his neighbors will help.”
“McKinzie hopes to shame banks into taking care of the foreclosed properties through a Web site he launched last week. McKinzie’s frustrations began when the house next door became vacant in April 2007. Since then, the lawn died and the yard was overrun by weeds so high that McKinzie said he took it upon himself to mow it. The story behind the house has been a mystery; McKinzie has been unable to track down the lender and the house is not listed as a foreclosure.”
“‘I work hard to keep my property looking nice,’ he said. ‘But now, when people come over, instead of saying, ‘You have a nice home,’ the first thing they say is, ‘What’s going on next door?’”
“And it’s not just the house next door. McKinzie said that each time he drives down a block, he sees at least one foreclosure with the typical markings of blight —- brown lawn, trash, toppled signs from real estate agents. “One out of every nine homes in Murrieta has been foreclosed on by banks over the last two years, according to data from ForeclosureRadar and the U.S. Census.”
“in a market where average prices have already fallen by more than 35 percent, McKinzie said he is hoping to prod banks into taking care of the properties and preventing any further damage to his own property’s value. ‘When the market does turn around, this is going to sell for $20,000 less than it would have,’ he said. ‘And that becomes a comparable sale for my house. That’s going to take me another year to recoup that equity.’”
The Pasadena Star News. “An Altadena woman charged by federal authorities with operating an $18 million real estate investment scheme that targeted African Americans was sentenced Tuesday to 12 1/2 years in prison and ordered to pay more than $8.6 million in restitution. Jeanetta M. Standefor operated Accelerated Funding Group (AFG) in Pasadena, was sentenced in federal court in Los Angeles by U.S. District Judge Percy Anderson.”
“Through AFG, Standefor operated a bogus ‘foreclosure reinstatement’ program that attracted more than 600 investors between 2005 and 2007, federal prosecutors said in a news release. The scheme used the investors’ funds to cure defaults on distressed properties about to be put into foreclosure. While soliciting investor money and promising returns of up to 50 percent in time periods as short as one month, Standefor and AFG were instead operating a Ponzi scheme that used money from new investors to pay previous investors.”
“Standefor pleaded guilty in September to two counts of mail fraud. Written materials put out by AFG touted its foreclosure reinstatement program as ‘virtually risk-free’ and promised investors that their principal would be safely returned within 72 hours at their request. However, Standefor and AFG did not use investor funds to cure defaults on any residential properties, and investors’ requests for return of their investments were ignored.”
“Standefor used more than $1.9 million of investor funds for personal expenses, including a lavish wedding for herself and a honeymoon, cars, jewelry, tickets to entertainment events and home renovations.”
The Associated Press. “‘Ms. Standefor exploited the housing crisis for her own benefit with false promises of help for troubled homeowners and fictitious profits for those willing to help,’ said U.S. Attorney Thomas P. O’Brien.”
“Investors were promised their money would be multiplied by as much as 50 percent within in a month. Deputy Federal Public Defender Charles Brown said he hoped the judge would sentence his client to five or six years in prison. ‘It seems like a harsh sentence for one person,’ Brown said of the sentence, adding Standefor had no criminal record. ‘It’s a tough time to be accused of a financial crime right now.’”
The San Francisco Chronicle. “Bay Area apartment rents will soften and vacancies will edge up in 2009, giving tenants more leverage, according to a forecast from an influential real estate firm. ‘It’s clear that with job losses in 2008 and continuing in 2009, and a fair amount of competition from excess single-family homes and condos entering the market, 2009 will be a very challenging year for apartment owners,’ said Hessam Nadji, managing director of research for Marcus & Millichap Real Estate Investment Services, in its Walnut Creek office.”
“Those excess homes and condos, which M&M terms ’shadow market rentals,’ largely are bank-owned foreclosures purchased by investors who then rent them out. ‘It will be more of a tenants’ market because of the higher vacancies and less pricing power’ for landlords, Nadji said.”
“The East Bay region, which comprises Alameda and Contra Costa counties, is the hardest hit by the foreclosure crisis and thus most likely to have ’shadow rentals,’ Nadji said. The forecast said that effective rents will finish 2009 at $1,370 a month, up 2.5 percent. But Nadji thinks that prediction may need to be revised downward to a projected rent growth of zero or even rent declines in 2009.”
“‘Job losses for Oakland have worsened,’ he said. ‘Our expectation is that rent growth for 2009 may not materialize there.’”
The Press Enterprise. “A wave of bargain shoppers caused Riverside County to post the best December on record for sales of existing homes. San Bernardino County saw the most closed escrows on existing homes for any December since 2005, which was during the housing boom, according to MDA DataQuick.”
“That doesn’t mean the Inland housing market has recovered its health, because about 70 percent of the sales were houses that lenders had repossessed from owners who could not afford their mortgages.”
“Last month the median price of homes that sold in Riverside County was $209,000, down more than 41 percent from December 2007. The median home price in San Bernardino County was $180,000, almost 43 percent lower than a year earlier.”
“‘The faltering economy has not significantly dampened first-time-buyer enthusiasm,’ said James Monks, branch manager for Prudential California Realty in Riverside. ‘We have had a handful of folks drop out of their search because they have been laid off, but it is nowhere near as bad as it could be.’”
“‘So many people who thought they would be lifelong renters want to jump in now when rates are good and inventory plentiful’ to buy entry-level priced homes, said Monks.”
The LA Daily News. “The wave of home foreclosures that swept over the Southern California real-estate market in 2008 pushed prices to five-year lows and sales to their lowest level in at least 20 years. MDA DataQuick reported that 201,894 new and previously owned houses and condominiums were sold last year, 2,248 fewer than the previous 20-year low of 204,142 sold in 2007. DataQuick’s records date back to 1988.”
“Even a 50.5 percent year-over-year sales surge in December could not salvage the dismal showing for 2008. Last month, 19,926 new and previously owned houses and condos changed owners, up from 13,240 sales a year earlier, according to the San Diego- based company. But just 1,813 of those sales were for new homes - the lowest for a December in the company’s databases.”
“‘The builders are in a holding pattern, staying alive until the market recovers,’ DataQuick President John Walsh said in a statement.”
“The region’s median home price tumbled 35 percent, to $260,000, a loss of $147,000 in 12 months, the company said. In most areas, the median price is now back to levels last seen in early to mid-2003, the company said. The December report showed that in Los Angeles County, the region’s biggest market, sales increased an annual 32 percent, to 5,848 properties, and the median price fell 32 percent, to $320,000. This is the lowest price since a $320,000 median in July 2003.”
“The typical monthly mortgage payment was $1,239 last month, compared with $1,380 in November and $2,060 in December 2007. Adjusted for inflation, current payments were 44 percent below those made in the spring of 1989, the peak of the prior real estate crisis. They were 54 percent below the current cycle’s peak in July 2007.”
