Enough Is Enough In California
The Lake County News reports from California. “The loss of homes to foreclosure across the United States, California and Lake County is showing no signs of slowing, and local Realtors are warning of another wave of foreclosed homes that is about to come onto the market. Anita McKee, president of the Lake County Association of Realtors, said Realtors are continuing to see a lot of activity. ‘The foreclosure market is really bad at the moment,’ she said. ‘Some of the agents are getting four a day, every day.’”
“Some areas of the county are being hit especially hard, including the Clear Lake Riviera, where McKee said some homes are selling for 40 and 50 percent less than they would ave in 2006. With those drops in value, it’s very hard for homeowners who are not in foreclosure to get their money out of the homes, said McKee.”
“McKee said they’re hearing that the banks are holding back on another group of foreclosures set to come onto the market until the current foreclosure are sold and cleared. ‘We’re expecting a lot more to come,’ said McKee.”
“Clearlake Realtor Dave Hughes, who is focusing on foreclosures in the south county, said he’s seen a small spike in the number of foreclosure listings, and is expecting to see more foreclosures coming onto the market in the next 30 to 60 days. Hughes said he believes Hidden Valley Lake is the most active area in Lake County for foreclosures. ‘It saw the best surge in values when things were good.’”
“‘It’s a good time to buy,’ said Hughes. ‘Even if things go down a lite more, you’re not going to get hurt that bad.’”
The LA Daily News. “The mortgage meltdown that spread into a global economic crisis started in the Valley’s own backyard, according to a new analysis from the Center for Public Integrity. Countrywide Financial Corp., formerly headquartered at 4500 Park Granada in Calabasas, topped the center’s list of 25 lenders responsible for extending subprime mortgages to homeowners who might not otherwise have qualified for a mortgage.”
“Those lenders accounted for nearly $998 billion of the $1.4 trillion in subprime mortgages made from 2005 to 2007, according to the report. ‘It was just a real lust for high yields and profits. Call it greed if you want,’ said John Dunbar, director of the center’s mortgage analysis project.”
“An investigation by the nonprofit journalism organization found that nine of the top 10 subprime lenders were based in Los Angeles or Orange counties, including all of the top five — Countrywide, Ameriquest Mortgage Co., New Century Financial Corp., First Franklin Corp. and Long Beach Mortgage Co.”
“‘The mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves,’ center executive director Bill Buzenberg said in a statement. ‘These banks were deliberate enablers that bankrolled the type of lending that’s now threatening the financial system.’”
“Bob Davis, executive VP of the American Bankers Association, said it was easy to find a market for these kind of investments in those boom days. ‘There was an investor market that was willing to take a benign view toward potential risk,’ he said. ‘It was the detonation that led to other financial problems.’”
The Recordnet. “The House of Representatives voted Thursday to outlaw ‘liar loans,’ ballooning mortgage payments and other bank practices that lawmakers say preyed on consumers who couldn’t afford their homes. The proposal is one of several that Democrats are pushing to tighten controls on an industry that critics say undermined the economy by underwriting risky loans, then passing them off to investors.”
“Under the bill, banks offering other than traditional fixed-rate mortgages would have to verify a person’s credit history and income and make a ‘reasonable and good faith determination’ that a loan can be repaid. Democrats said it would ban only the most egregious lending practices and wouldn’t keep most people from getting a mortgage they can afford.”
“‘The simple fact is that our laws and enforcement efforts did not keep pace with the complexities of a global economy and a financial industry where the greed of some trumped common sense,’ said Speaker Nancy Pelosi, D-San Francisco.”
The Lincoln Messenger. “Now is the best time to buy a house since the 1950s, according to some area Realtors. With home sales reaching their highest point since 2005, the housing market has turned the corner, said Bob Lagussi, a Realtor consultant and broker for Keller Williams Realty. Although Lagussi said some potential buyers are still waiting for the market to bottom out, he said the market bottomed out at the end of 2008 and the first part of 2009.”
“‘I’m seeing an improvement,’ Lagussi said. ‘I’m seeing rising prices in Placer County and I think that’s a good thing.’”
“Statewide, the median price of homes dropped 40.1 percent from last year to $256,850. ‘I don’t think it’s doom and gloom,’ said Gene Thorpe, president-elect of the Placer County Association of Realtors and a director for the California Association of Realtors. ‘It’s unfortunate for the people who bought in 2005 at the peak of artificially inflated prices but the net result of the lower prices are that hundreds of thousands of people who have not been able to buy a home before can.’”
“Home inventories are so high because so many homeowners have been forced out by the market and more than 1-million homes nationwide are going into foreclosure, according to Thorpe. ‘It’s not that they weren’t faithful,’ Thorpe said. ‘The sub-prime mortgages broke their backs.’”
The Sacramento Bee. “California’s 400-mile Central Valley and its largest metro area, Sacramento, are almost perfect poster children for housing boom excesses that doubled home values, then quickly shredded them in a torrent of foreclosures. How will we view this crisis in 10 years? The topic filled the room Thursday when Modesto-based Great Valley Center took a look ahead at its annual conference in the capital.”
“It was said we’ll wonder in 2019 what builders were thinking in the century’s opening decade. What was with all the 3,000-square-foot houses – and larger – in Manteca, Modesto and Merced, to name just a few area cities not famous for great-paying jobs? Gone will be the risky loans – with few questions asked – that made such homes affordable in 2004.”
“‘There are too many 3,000-square-foot homes for the low median incomes in the Valley,’ said Chelsey Norton, a planning consultant with Sacramento-based Mintier Harnish.”
“She said it’s not just that most people can’t afford them. Many won’t want them.”
The Modesto Bee. “Housing experts said a glut of foreclosed homes now offered at a fraction of their 2007 value is not making much of a dent in California’s need for affordable housing. A study predicts that the state will come up 3.7 million homes short of the need for low-income families by 2020, said Chelsey Norton of Mintier Harnish. Meanwhile, demand for large, upper-end suburban homes — which branded the Northern San Joaquin Valley the epicenter of the bank-owned home crisis — should be satisfied through 2030, Norton said.”
“‘Enough is enough, and we have enough,’ she said. ‘We need to build affordable housing that matches the income of the Central Valley.’”
The Record Searchlight. “Talks continue in Sacramento about extending the tax credit for the purchase of new homes. To date, the state has received nearly 4,900 applications for a total credit claimed of $47.3 million, an average credit of about $9,600.’The current tax credit is working quite well beyond our expectations,” said Tim Coyle, senior VP of the California Building Industry Association in Sacramento. ‘Here is the real problem: If you go and buy a home, you may not get the home delivered in five or six months, and the tax credit may be gone by then.’”
“Not extending the credit could be devastating, Coyle said. ‘We are concerned about derailing what clearly is a recovery prematurely,’ Coyle said.”
“Eight single-family home permits - two more than in March - were issued in Redding in April. All but three were pulled by Ochoa & Shehan, the most the Redding builder has taken out for one month this year. Four of the five housing starts Ochoa & Shehan took out in April were in its Crown Meadows Estates II subdivision, where prices start at just under $240,000. Four of the homes Ochoa & Shehan started last month were presold.”
“Ashley Wagar of Ochoa & Shehan said some customers are taking advantage of the state’s $10,000 tax credit to buyers who purchase new homes. In fact, many choose to buy an existing new home, rather than wait, so they’re assured of getting the credit. The credit expires March 1, 2010, or until the $100 million in funding set aside runs out.”
“‘A lot of them (existing homes) have been swooped up and that is why we have started some new specs (speculative homes),’ Wagar said.”
“Jeb Allen of Palomar Builders and S&J Development said the new-home purchase credit hasn’t had the impact he’d hoped, but that hasn’t slowed his company down. Allen said he put five homes in escrow in April. What’s more, he’s not afraid to start construction on a house he hasn’t sold.”
“‘I think if you are building something, you show that you are strong, you are here to stay, and people will come along and buy them,’ Allen said.”
The Daily News Group. “Menlo Park officials will spend $2 million in developers’ fees to help restore neighborhoods ravaged by house foreclosures. The City Council earlier this week approved spending the money to buy and renovate 10 to 15 foreclosed homes in the city, most of them in the low-income Belle Haven neighborhood east of Highway 101. The city will then sell the homes to residents on its affordable housing wait list.”
“The foreclosure acquisition program did, however, draw the ire of the Silicon Valley Realtors Association, which contends that by snatching up homes for sale the city will cut into realtors’ markets and drive up prices for homebuyers. ‘According to our numbers, homes priced accordingly in (Belle Haven) are selling quickly because of the lower prices in the soft market,’ said Adam Montgomery, the association’s government affairs director.”
“He added that many lower-to-middle income families are already taking advantage of those deals without city assistance.”
The North County Times. “In April the median price for a detached house was $390,000, an increase from $364,000 in March but still down 24 percent from $510,000 a year earlier, according to the North San Diego County Association of Realtors. At the same time, the report showed two distinctly different markets: the high-end, with few foreclosures and no sales; and the low-end, with lots of foreclosures and booming sales.”
“For example, the market in Del Mar has 30 months of inventory. On the other hand, western Vista showed two months of inventory. The median price increase could be the result of more ‘normal’ sellers getting into the market —- homeowners who have taken care of their properties commanding a premium over a glut of beat-up foreclosures, said Kurt Kinsey, a real estate agent in Oceanside.”
“And buyers are looking to stay in the home for longer, meaning they might be willing to pay more, Kinsey said. ‘A home is becoming a home again,’ he said, speculating that the average homeowner during the last few years moved after two years and that time in a home is going to increase to five years.”
“Analysts say banks have slowed the foreclosure process, meaning thousands of homes in foreclosure have not hit the market. For even more skepticism, Jim Klinge, a real estate agent in Carlsbad, said the buying frenzy on low-end properties could be purely seasonal —- sales traditionally pick up during the summer.’
“‘My guess is it will settle down again,’ Klinge said regarding the emerging bidding wars and 10 to 15 offers per listing. ‘You’ve got a bunch more foreclosures coming on, so when you get to the last three to four months of this year, you’ll get one to two offers —- if you’re lucky.’”
The Santa Cruz Sentinel. “Even though the median home price dropped 37 percent last year, Santa Cruz County remains unaffordable for many first-time buyers. Santa Cruz County is the fourth most expensive place in the nation to buy a home after San Francisco, New York and San Jose, according to a study.”
“Locally, the median price of a single-family home plummeted from $630,000 in 2007 to $400,000 in 2008, but homeownership is still out of reach for households with income under $130,000, according to the center’s calculations. Meanwhile, a two-bedroom rental cost $1,590 a month on average.”
“Local renters say the analysis is on target. Aptos accountant Trish Beckwith crunched the numbers for a $400,000 home. Putting 10 percent down would mean a $360,000 mortgage. Assuming 5.5 percent interest, with property taxes and insurance, the monthly payment would be about $2,600, she figured. ‘That’s a ridiculous payment for a first-time homebuyer,’ she said.”
“While homes in Watsonville are selling for $200,000 to $400,000, those closer to Santa Cruz are priced higher but need repairs, putting first-time buyers in a bind. Case in point: A home at 509 Clubhouse Drive in Aptos went on the market in January. The bank that foreclosed asked $399,000, and Beckwith found herself vying with eight other bidders.”
“Firefighter Danny Saracino bid $435,000. At 29, he’s been watching the market for more than a year, living in a 225-square-foot studio in Santa Cruz. He recently moved to Live Oak, where he pays $1,000 a month. ‘The other guys I work with are in the same boat — we’re outbid by investors going for their second or third home,’ he said. ‘Guys my age, the only ones who can buy have family in the area and can save up for a down payment.’”
“The home in Aptos, like others he’s seen, needed work. Saracino was willing to do it himself, but putting 10 percent down and paying the required private mortgage insurance, he worried about not having money for the repairs. ‘I’m a single guy, I can’t go up to $500,000,’ he said.”
“After rejecting Saracino’s bid, the bank called him back but he felt with salary concessions at work he would be stretching himself too far. He walked away. The home remains vacant.”
“‘For people in Santa Cruz, seeing how much value your home has lost, or hoping to get into homeownership, it’s discouraging from either side,’ said Maya Brennan, researcher with the Center for Housing Policy.”
