We’ll Never See That Again In California
The LA Times reports from California. “The Southern California real estate crash has finally reached the high-end areas of the Westside. Home prices in Beverly Hills, Santa Monica and Malibu — which continued to soar well into 2008 — finally tanked at the end of the year, losing between 26% and 30% of their value in just a few months, the latest data show. The sudden drop came as a surprise to Shelley Conn, who remained a believer in the myth that the wealthier parts of the Westside were immune until she put her Santa Monica house on the market last spring.”
“She and her husband, Bill, had been offered $2.4 million for the three-bedroom just months before, so she listed the house for $2.3 million. But it didn’t sell until November, after the couple dropped the price to $1.9 million. In Conn’s wealthy neighborhood, few residents thought anything would drop below $2 million. ‘I didn’t believe it until the end,’ Conn said.”
The Contra Costa Times. “The effects of the mortgage meltdown and recession have rippled through Contra Costa County, but one region is taking the hit particularly hard. Residents of East Contra Costa County — which includes Pittsburg, Antioch, Oakley and Brentwood — are bearing the brunt of the financial impact, according to the Employment and Human Services Department. And they’re reaching out for help.”
“Julian Rocha never thought he would turn to public assistance. A 20-year carpenter who helped build houses, the Antioch resident owned a home and had always been able to provide for his wife and four children. Then the bottom dropped out of the housing market, and Rocha was laid off and found himself unable to pay his mortgage or register his car.”
“‘It’s difficult because I never take benefits of that kind because I am working all the time very hard,’ said Rocha, whose first language is Spanish. ‘The economic situation is very bad.’”
From Bloomberg. “The cost of a Golden Gate Bridge view from the top of San Francisco’s tallest residential building just got 15 percent cheaper. Prices of all condominiums in the downtown Millennium Tower will be cut amid the city’s biggest housing glut since the dot-com crash in 2001, according to city planning data. The offer includes apartments already sold in the 60-story, 419- unit high-rise being built in the South of Market area.”
“More than 2,300 condos, including buildings by Tishman Speyer Properties LP and Lennar Corp., came on the market last year and construction of at least 2,200 units has been halted, city data show. ‘When the market was humming along, demand kept up with the supply coming on line,’ Vince Malta, former president of the California Association of Realtors, said in an interview. ‘Now you simply have supply exceeding demand.’”
“Millennium’s discount…may not be enough to attract potential buyers such as Joe Mahimainathan, 31, who abandoned his six-month search for a condo because of the faltering market. ‘I wonder if a condo is even a good thing to buy,’ said Mahimainathan.”
“‘Three years ago, people would stand in line to sign a condo contract sight-unseen, in an office five blocks away,’ said Ilse Cordoni, president of the San Francisco Association of Realtors. Now, prospective buyers want to physically tour a ‘finished product,’ instead of viewing staged models or videos in off-site sales centers, she said.”
The Santa Cruz Sentinel. “New housing starts in the Santa Cruz area dropped like a hammer last year. Various building departments in Santa Cruz County issued 42.1 percent fewer permits for new homes in the month of December, and 58.3 percent fewer permits for the year compared to 2007, according to the Construction Industry Research Board. Total housing production in California in 2008 was at the lowest level on record, according to the California Building Industry Association. ”
“‘It has a big impact with regards to the community,’ said Rafael Adame, building official for the Watsonville Community Development Department. ‘A lot of homes are empty because of foreclosures and that’s creating lot of other issues.’”
“Because of the economy, people are living in garages and doubling up in homes. There is blight in some neighborhoods and vagrancy so city officials who would normally be fielding permit applications and handling inspections are busy with new tasks. ‘It’s kind of a reversal,’ Adame said. ‘It’s mainly enforcement and foreclosures whereas before we were doing inspections. It’s going to be a budget issue.’”
The Times Herald. “Home prices in Solano County dropped more than 44 percent in December compared to the same month the previous year, though sales skyrocketed here as they did statewide, the latest industry figures show. Countywide, the median price for homes sold fell to $206,000 last month from $369,750 in December 2007, according to the California Association of Realtors. Fairfield’s median price fell furthest — 54 percent — to $191,000 from $415,000. Vallejo’s was next, sliding just over 49 percent, to $162,000 from $319,750.”
“Realtor Jeff Dennis said sales in December were up about 230 percent over a year ago, with a mix of investors and residents snatching up bargain-basement deals. ‘The affordability index a few years ago was in the low teens — meaning only a very few people earning the area’s median income could afford the area’s median-priced home,’ he said. ‘Now it’s like 48 percent.’”
The Daily Bulletin. “Over the past year, the Inland Empire has shed more than 38,500 jobs, bringing the unemployment rate to 10.1 percent in December. Most of these job losses were in construction and related industries. The old engine of growth in the Inland Empire, development, has been stymied.”
“To see this, one would need to examine the movement of land prices, which is an indirect measure of the opportunity and optimism in a real estate market. ‘Land prices have taken a nose dive in the past year, moving from $15 per square foot for development ready land a year ago to around $8 per square foot today,’ says Rick Nunez, Senior Associate in Colliers International’s Ontario office.”
The Press Enterprise. “It was only a few years ago that economists were talking about how the housing bubble was costing Inland Southern California its advantage as the affordable place for buyers. The area was at close to full employment, but home prices were going up too fast.”
“Now more than 186,000 Inland workers are unemployed, many more are underemployed, and almost everyone is nervous about the state of the economy. It means that, despite a huge decline in home prices, there won’t be enough buyers in 2009, Chapman University economists said in their annual forecast.”
“In early 2005, when the median home price in Inland Southern California was about $340,000, only one in five people made enough to qualify for a typical 30-year fixed mortgage with 20 percent down. The median single-family home price has dropped to about $209,000 in Riverside County, and $180,000 in San Bernardino County, according to by DataQuick.”
“‘Recessions come to an end,’ said Esmael Adibi, Chapman’s chief economist. ‘Eventually we would come out of this. The question is, how long would it take.’”
The Recordnet. “The producers of the ‘Deals on the Bus’ series by Discovery’s TLC channel, the documentary-style series…will show a new real estate trend: People riding in tour buses in the quest to buy nice yet affordable homes in communities hard hit by the housing downturn. ‘It’s kind of like speed dating for homes,’ said executive producer Carlos Ortiz of Actual Reality Pictures, an independent Los Angeles-based film company that has filmed such reality-genre programming as ‘Flip That House’ for TLC.”
“Ortiz said the show aims to capture without manipulation the real action of those looking to buy their first homes, and the focus goes on the chase for a home and the positive opportunities in a down residential real estate market. Contrast that with Australia’s ‘60 Minutes’ take last year on the same Dias foreclosure bus tour in Stockton, where the reporter described the tour-bus riders as ‘vultures - here to pick the bones of the subprime crisis.’”
“One of the local stars will be Albert Jimenez, a Stockton meter changer for PG&E, who is staging a family party tonight during the show premiere because he not only bought a nice 2,400-square-foot foreclosure home in Stockton for $125,000 - ‘The home looks so good you’d think it was new’ - but he’s also doing it on national TV.”
“In this market, that means a 5 percent 30-year, fixed-rate mortgage of $903 a month, including property taxes and insurance, for Jimenez, who makes about $60,000 annually. ‘That’s only about $150 more than my apartment was, and it’s three times the size,’ he said.”
The Modesto Bee. “The average Stanislaus apartment rented for $819 per month during October, November and December. That was $1 more than the year before, according to Realfacts. Vacancy rates climbed to nearly 7 percent. In 2000, before the region’s home building boom began, less than 2 percent of apartments were empty.”
“Merced rental rates are even further behind and remain among the lowest in California. They now average $735 per month, only 6.1 percent more than four years ago. Rental home rents also have become a bargain throughout in the region. ‘The economy is driving the rental prices down,’ said Kris Marin, who manages about 250 rental properties in the Northern San Joaquin Valley. ‘There are a lot of vacancies. It’s hard to find good, qualified tenants if the rent is too high.’”
“And once tenants get in — whether it’s an apartment or a home — most don’t have to worry about rent increases. ‘You don’t want to scare them away by raising the rent,’ explained Marin. She said landlords sometimes even will lower rents to keep good tenants.”
The Merced Sun Star. “The year 2008 saw sales in Merced County increase 61 percent over the previous year. Although continued strong sales activity is expected, bank foreclosures will certainly outpace them the first two quarters of the new year. The flood of bank-owned properties has had devastating effects on property values. Last year saw prices fall 38 percent over the previous year. In a normal market with this type of sales activity, prices would be going up, but this isn’t a normal market.”
“My first day as a Realtor, I sold a house. The home was on Vine Circle in Atwater, a new one. It was a 3-bedroom, 1.5- bath with 1,072 square feet that I sold for $66,500. That was in August of 1989, 20 years ago. I have that same house listed today for $70,500.”
“If that doesn’t demonstrate how far values have plummeted, then nothing will. Properties are now selling below what it would cost to rebuild them. Vacant lots are selling for less than it took to develop them. In fact, the cost of building fees in Merced is now nearly three times the market value of the residential building lot.”
“Brace yourself for another wave of bank-owned properties soon to hit Merced County as government tinkering has backfired. As this wave approaches, prices will continue to trend downward. Bad news for banks, good news for the consumer.”
The Daily Press. “If 2008 was the year of the default, 2009 may be the year of the redefault. More than half of loans modified in the first quarter of 2008 fell delinquent within six months, according to recent data from a top bank regulator. The trend has left officials investigating: Are the modified mortgages badly written? Or have cash-strapped, unemployed homeowners accumulated too much increased credit card debt to afford even reduced payments?”
“One of the problems is that when people come to lenders for help in securing a more affordable mortgage, the lender will set modifications that leave them with a minimal amount of disposable income, according to real estate attorney Steve Vondran, who serves clients in the Victor Valley.”
“‘That only allows them to afford the house and have a little bit of breathing room,’ Vondran said. ‘They set them up for disaster, really, because if another hardship comes along … they’ll be right back where they started. It’s kind of a vicious cycle.’”
“Another issue, Vondran said, is that some modifications are being done by brokers and third-party groups who may not have the expertise or motive to really help the client. ‘I’m getting a lot of people calling for an attorney because they’ve been duped by brokers who are not in compliance,’ he said.”
The Appeal Democrat. “Plummeting revenues due to the construction slowdown will lead to layoff notices for eight Yuba County employees and the deletion of 12 vacant positions. Supervisor Mary Jane Griego noted the development boom that preceded current conditions and that she said was spurred in part by dramatic increases in housing prices in Placer and Sacramento counties. Those increases helped push development into Yuba County, she said.”
“‘We’ll never see that again,’ Griego said of the extraordinary rise in home values in this region and the rest of California.”
