There Is Still A Problem In California
The Santo Cruz Sentinel reports from California. “Wary house-hunters see opportunities now that home prices have dropped dramatically. Buyers will find lots of choices in Watsonville and the San Lorenzo Valley at close to the February’s median selling price of $380,000, but not many in Santa Cruz. Dianne Pereira helped a buyer acquire a bank-owned house in the Seabright area for $380,000. Pereira tracks the foreclosure numbers in the Santa Cruz Record, which reported 52 default notices — more than usual — issued to borrowers in the past week. ‘There are a lot of properties in default,’ she said. ‘Previously it was more in Watsonville, now it’s more mainstream.’”
“Gloria Behman sees a silver lining in falling prices. Her client, a single mother with two children, bought a bank-owned house in Live Oak for $380,000. ‘She was able to buy a house with a fabulous yard for her kids,’ Behman said.”
“On the other hand, it needed fresh paint and new carpet. The house was on the market last June for $449,000; the bank’s asking price was $395,900.Behman’s advice: ‘Don’t pay more than you need to pay — if this property doesn’t work, there will be another.’
“Analyst Schahrzad Berkland of the California Housing Forecast is…cautious, calling the price drop in Watsonville ‘probably a plateau’ instead of hitting bottom. ‘I still see a big bubble,’ she said. ‘A house that a policeman could buy in 1998 is now affordable only to an engineer. So there is still a problem.’”
The Manteca Bulletin. “Dana Fernandez is going from renting a room to owning her own place. The 25-year-old had to watch every dime for awhile and made macaroni and cheese plus Top Ramen a staple but she was able to do something that was completely impossible in the hot Northern San Joaquin Valley housing market of just a few years ago – she was able to buy her own home without help from anyone while working part-time for just under $10 an hour.”
“Her home is a one-bedroom, one-bathroom condo with 700 square feet in Modesto. Fernandez said she had always made owning her own home and property a goal. Fernandez said she realized that the current market was a “chance of a lifetime.”
It helped, of course, that she was able to see the day-to-day real estate activity in Manteca where she works part-time for her real estate agent Linda Aksland and is in the process of becoming a full-time agent. ‘I realized I could afford it if I watched my money,’ she added.”
“Fernandez said she didn’t let what seems to be non-stop 24-hour cable news cycle of economic gloom-and doom scare her. ‘Life is a risk.’ Fernandez said, noting that even in good economic times things could go wrong. ‘If something does happen the worst that I could end up doing is going back to renting.’”
The Washington Post. “The sun is shining less brightly these days in sunny Southern California. The recession hit here earlier and harder than the rest of the country — the statewide unemployment rate topped 10 percent last month — and chances are it will linger here longer. The severe downturn reflects the region’s central role in the Bubble Economy.”
“‘People here used to feel that because of the weather and the lifestyle, we were immune,’ said Robbin Itkin, a lawyer with a suddenly booming corporate workout and bankruptcy practice at the Los Angeles office of Steptoe & Johnson. ‘They don’t think that now. There is a somberness I’ve not seen before.’”
“The shakeout in commercial real estate, which is now in full swing in suburban Orange and Riverside counties, has made its way to the tonier areas of the city. There are numerous ‘For Rent’ signs on Melrose Avenue in West Hollywood and along Montana Avenue in Santa Monica. Lack of financing has stalled the $3 billion, Frank Gehry-designed hotel and residential project on Grand Avenue downtown and a $400 million luxury condo tower in Century City.”
“‘It’s clear to me that we will have a lot of reinventing to do here over the next few years,’ Jim Thomas, a prominent local developer, told me.”
The Mercury News. “California is in for a lengthy downturn, with the jobless rate hitting nearly 12 percent this year and next. The state’s recession will be ‘deeper and longer than we previously thought,’ economists with UCLA’s Anderson Forecast predicted.”
“One key to revival is the sector that started the economic tailspin: housing. Though housing markets ‘have yet to bottom out,’ by this fall, California’s housing industry will be building fewer houses than its growing population requires and ‘will be eating into its housing stock.’ ‘All of the excess that was the housing bubble is now burned off,’ said Jerry Nickelsburg, a UCLA economist, ’so when the rest of the economy is ready to turn around, the housing market will be ready to turn around.’”
The Recordnet. “‘As the recession deepens, the diverse engines of California’s economy find themselves running on fumes,’ he wrote. Growth won’t start in California until the beginning of next year, he said, but the economy will be growing at a more normal pace by the end of 2010. ‘If there is any good news in the picture, it is that the correction in the housing market is almost complete, and the downturn in the retail sector is nearing the end of its run,’ Nickelsburg said.”
The Desert Sun. “Home sales jumped about 70 percent in the Coachella Valley in February over the same period a year ago. to fall drastically — indicates the market is repairing itself, said Greg Berkemer, executive director of the California Desert Association of Realtors.”
“The median price of homes sold was $156,000, down 53.4 percent from $334,900 in February 2008, according to the California Association of Realtors. The median price of an existing, single-family detached home in California in February was $247,590, compared to $253,330 the previous month and $418,260 in February of last year, according to CAR. ‘The California median price has declined by a larger margin than the nationwide price,’ Leslie Appleton-Young, CAR’s chief economist, said in a statement.”
The Bakersfield Californian. “From February 2008 to February 2009, 8,552 properties, mainly single-family homes in the metro Bakersfield area, foreclosed, county records show. Marilou Ward, a Realtor with Remax Golden Empire, has dealt with occupants who have accused her of trying to rip them off. Some renters are surprised to see her because they don’t know the home is in foreclosure. ‘If someone comes to their home, a Realtor trying to negotiate cash for keys, it’s in their best interest to do that immediately. Not to ignore us, blow us off,’ Ward said. ‘The clock’s ticking with the banks and, as the amount of time increases, the dollar amount of the offer will decrease.’”
“To receive money from the bank, occupants must hand over keys and garage door openers. They must leave the place in ‘broom-swept condition,’ Ward said. Personal property and debris have to be removed from the interior and yard. All fixtures — toilets, countertops, ceiling fans — must remain. Landscaping, too. ‘I’ve had people dig up all the trees and plants. They figure they paid for it,’ she said.”
From Bloomberg. “David Rapaport, a professor at the University of California San Diego Medical School, is paying an upfront fee of $3,500 to refinance his mortgage at 5.13 percent. A year ago, his rate was 6.25 percent and there were no fees. ”
“‘I’m happy just to be able to get a refi and reduce my monthly payment,’ said Rapaport, who owns a two-bedroom townhouse in San Diego, where home prices have dropped 32 percent since June 2006. He is saving $264 a month with the new loan meaning it will take about a year to recoup the fees he paid.”
The Los Altos Town Crier. “A handful of new condominiums came on the market for $121,000 and less this month in Los Altos – a rare, and coveted, opportunity offered by the city’s affordable housing program. The condos include five one-bedroom, 790-square-foot units, priced at $106,000, and three two-bedroom, 1,200-square-foot units for $121,000.”
“The BMR units in the $54 million, 2.2-acre development have the same floor plans and finishes as the market-rate units, which are priced at approximately $650,000 for a two-bedroom condo and more than $800,000 for a townhouse. Silverstone President John McMorrow said that buyer incentives and price reductions have helped move properties – 20 of Peninsula Real’s 78 units have sold since they went on the market in September, and owners can move in beginning April 15.”
“Sue Russell, the affordable-housing co-chairwoman for the Los Altos chapter of the League of Women Voters, described the units’ availability as an exciting affordable housing opportunity. ‘This is the largest since Chester Circle, and that was back in the late ’90s. This is a big influx,’ she said.”
The Bay Area Newsgroup. “The Vallejo home from which “D.C. Madam” Deborah Jeane Palfrey ran her infamous escort service likely will sell for nearly a half-million dollars less than its original 2007 asking price. A federal judge recently approved the sale of Palfrey’s two-bedroom Capitol Street historic home, with the money to be put into escrow, since Palfrey’s assets remain frozen as they move through probate. Palfrey hanged herself at age 52.”
“Records show Palfrey’s two-story, 1865 Greco-Italinate-style home was listed in May 2007 for $748,500. Its last listing was $290,940. ‘She originally wanted $1 million for it in 2006, but that was way, way too much,’ local Realtor Corrine Oakes said.”
“Though the home was beautifully restored, even winning a city award for best restored house in 2006, other, larger historic homes were selling for significantly less than what Palfrey wanted, Oakes said. She said she told Palfrey at the time that a price of about $550,000 was more reasonable. ‘She wasn’t very pleased with that,’ Oakes said.”
The Orange County Register. “In July 2005, while predicting a 15% gain in Orange County home prices, real estate prognosticator Gary Watts put about $77,000 down and bought a $765,000 rental home in Rancho Santa Margarita. At first, he was pleased with the deal. A year later, the home’s value had jumped at least 8% to around $825,000 or more.”
“Today, however, Watts has defaulted on the home’s loan. ‘I can make the payments. That’s not the issue. It’s a business decision,’ Watts said. ‘I tried to work with the lender. The lender didn’t help. They said, go ahead, do a short sale. It’s strictly business.’”
