A Growing Black Cloud Sitting Behind The Mountain
The LA Daily News reports from California. “Desperate homeowners in the northeast San Fernando Valley got a potential reprieve on foreclosures Wednesday when the Los Angeles City Council unanimously approved a $1 million program it hopes will lead banks to lower mortgages to current market values. But the measure is not legally binding on lending institutions, and some homeowners in Pacoima acknowledged that it hinges on lenders who they said have been reluctant to help them out so far.’
“‘The bank hasn’t wanted to reduce the loan principal, which would make our mortgage affordable and sustainable, and our only hope is that this might now make (bank officials) change their minds,’ said Jose Hernandez, whose mother, Rosa, faces foreclosure on the $488,000 home she bought in Arleta five years ago.”
“Hernandez was approved for a $388,000 loan on her Arleta home when she likely should not have qualified, according to her son. ‘My mom was told she qualified even though she only made $10 an hour,’ said Jose Hernandez.”
“Hernandez said his mother’s original monthly mortgage payment was $2,100 which later increased to $2,300 a month before jumping to $4,000 in December, by which time she was retired and could no longer make the monthly payments. Jose Hernandez said that he, his sister and father - who have a combined monthly income of $6,000 - have tried to refinance the loan themselves under their names but have been unsuccessful. ‘We’re willing to negotiate taking over the loan,’ said Hernandez. ‘But the bank won’t budge.’”
The Press Democrat. “A spring surge in Sonoma County home sales picked up strength in April, as sellers in financial distress and banks unloaded houses at low prices. The median sales price fell to $315,000 — nearly 28 percent below a year ago. Prices are hovering near an eight-year low, meaning the housing downturn has wiped away much of the gains from the boom that pushed the median to a record $619,000 in 2005.”
“But looming large is another glut of properties expected to hit the market this summer and later this year. A temporary freeze on foreclosures by the federal government was lifted earlier this year, and a state law requiring lenders to wait 30 days before filing a default notice also slowed the process. ‘More foreclosures are coming down the pike. It’s like a growing black cloud sitting behind the mountain,’ said CJ Holmes, a real estate broker in Santa Rosa.”
“Already, lenders have seized 2,970 homes in Sonoma County during the 12-month period through March, more than double from a year ago, First American CoreLogic reported. A rising tide of foreclosed homes could wash over buyers if their numbers don’t grow to match the busiest years of the last home sales boom, Holmes said. ‘If we have this much inventory and we’re not even keeping up with our peak year — even though prices are so much lower — it indicates we don’t have enough buyers,’ she said.”
“Banks can take several months to review such short sales and may not agree to the price. Buyers may become frustrated or find a better deal and back out of the sale. ‘So no matter what we sell, we’re still getting a bunch of new listings,’ Holmes said.”
The Contra Costa Times. “More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the firm began its report in January 2005. April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.”
“Foreclosures also rose in the Bay Area. In Alameda County, 3,119 households received at least one foreclosure-related notice in April, up 72 percent from a year ago while in Contra Costa County 3,356 households received a notice, or a 30 percent increase. In San Mateo County, 824 households received a notice, or 42 percent higher. Some 1,874 households received a notice in Solano County, or a 33 percent increase.”
The Mercury News. “South Bay foreclosures surged anew in April after banks ended a moratorium on kicking late-paying mortgage holders out of their homes. There were 294 foreclosures in Santa Clara County last month, up 19 percent from March, according to a report Tuesday by ForeclosureRadar. That spike followed a 41 percent decline in foreclosures from February to March. The peak month for foreclosures in the county was August 2008, when 853 borrowers lost their homes.”
“Sean O’Toole, founder of ForeclosureRadar, said the recent increase is due to lenders ending moratoriums on home repossessions they put in place while awaiting announcement of the Obama administration’s foreclosure-prevention programs. O’Toole and others said it’s hard to say whether the newest decline in defaults means the worst of the foreclosure crisis has passed.”
“‘The numbers are so wild right now, we just can’t predict the future, even a month from now,’ said Dustin Hobbs, a spokesman for the California Mortgage Bankers Association.”
The Press Enterprise. “A near record number of homes entered the first stage of the foreclosure process last month in Riverside and San Bernardino counties after mortgage industry foreclosure moratoriums were lifted. Notices of default, the first step in the foreclosure process, were issued for 6,019 homes in Riverside County last month. That was fewer than the 6,642 record in March but more than the 4,706 default notices recorded in April, 2008. San Bernardino County recorded 4,661 notices of default last month, down from 5,336 a month earlier but sharply up from 3,759 a year earlier. Meanwhile real estate agents complain about a shortage of foreclosed houses for sale because banks have stopped taking over homes and seem to be slow putting the ones they have on the market.”
“New federally sponsored programs for refinancing and modifying troubled mortgages and the lending industry’s redoubled efforts to stave off foreclosures will be undermined by job losses, predicted Chapman University economist Esmael Adibi. ‘The weakening economy trumps all the goodwill coming form the banking system and the Obama Administration,’ Adibi said.”
“Pete Nyiri, owner of Corona-based Top Producers Realty, a high-volume broker of bank-owned Inland houses, said late last week he started getting more repossessed houses to sell. He said lenders and loan servicers ‘are telling us it is going to be back to where it was as far as numbers are concerned.’”
“Christopher Thornberg, an economist with Beacon Economics in Los Angeles, said the slowdown in foreclosures while mortgage delinquencies increased ‘was a mirage. It wasn’t real. At some point you have to foreclose.’”
“Martina Aloi, 62, said she and her 87-year-old husband submitted offers on four houses before they were able to buy their first house for $165,000 in San Jacinto. ‘I was very, very surprised. I didn’t think it was going to be as competitive as it was with prices coming down and the economy,’ Aloi said.”
The Sacramento Bee. “Surprisingly strong demand for a $10,000 state tax credit to help Californians buy new never-occupied homes prompted legislation Wednesday to triple the amount of funds for the buyer credit to $300 million. The state’s home building industry is sponsoring the legislation.”
“Assemblywoman Anna Caballero, D-Salinas and the bill’s co-author, Assemblyman Jose Solorio, D-Santa Ana… and builders cited those revenue impacts – and a larger benefit to a tottering state economy – in countering questions about providing more tax breaks while the state budget is in shambles. The group cited the same benefits when asked about complaints by some who rent and own existing homes about having to subsidize new-home buyers. Caballero said it’s also vital to build out stalled newer neighborhoods.”
“‘It’s a time of crisis, a time when we’re struggling with trying to figure out how to keep home prices stable,’ said Caballero. ‘They have a vested interest in seeing that their home values don’t decline and the market stabilizes.’”
The Desert Sun. “‘The more we can get people back to work, the sooner the state budget will recover,’ said Assemblywoman Anna Caballero, D-Montebello, said., noting that every home that’s built generates more than $300,000 in economic activity.”
“According to the Construction Industry Research Board, 3,317 permits were pulled through California during March, up 39 percent from February. Construction of the new homes dropped from 208,000 housing starts in 2005 to about 66,000 in 2008, representing a 68 percent decrease. At a time when unemployment is at a staggering 11.2 percent, Solorio said this legislation holds potential to get construction workers back into the home-building business.”
“‘For every new home we build, we create three new, direct jobs,’ he said.”
“California Building Industry Association chairman Horace Hogan, also president of Brehm Communities in San Diego, said the state credit has done more than get prospective buyers off the fence. ‘This has had the effect of allowing us to start construction,’ he said, of the company that builds on average 118 houses a year. ‘We started construction on another 23 houses in the last month and a half because of rates and stabilization of prices. We’re hiring people again. I think it’s absolutely critical that we fund this at least to get through this sunset date next year.’”
“Layne Marceau, president of Shea Homes in Northern California, said the cancellation rates on sales have fallen to 13 percent. That’s far from the 50 percent averages some builders had been seeing months ago. ‘I had not started a home since December 2008,’ he said. ‘This week, we’re starting over 60 homes.’”
The Ventura County Star. “When taken together with the federal tax credit for first-time homebuyers, low interest rates and low housing prices, the state tax credit is part of the mix that makes it beneficial to buy a home now, said Mark Schniepp, executive director of the California Economic Forecast. But he doesn’t see it as a big stimulus to the housing sector, stating it would have a bigger effect if extended to existing homes.”
“‘Once they get the existing home market going, it would automatically get the new home market going,’ he said. To do otherwise — to bypass stimulating existing home sales — goes against the grain of how the housing cycle works, he said.”
“Schniepp challenges the argument that new home sales create more bang for the buck economically, since buyers of existing homes spend on renovations, new furniture, appliances and other things. ‘It’s short-sighted to limit it to the new home market,’ he said.”
The Burbank Leader. “Home sales are beginning to put the laws of supply and demand at odds with the economic slide, possibly bringing a rebound in prices, Realtors and experts say. The inventory of homes for sale in Burbank and Glendale is growing lean, and competition for the shrinking listings is starting to get fierce, Realtors say.”
“The development should lead to a rebound in prices for some homes, although it is uncertain whether the full market has begun to turn around, said Robert Bridges, associate professor of real estate finance at USC’s Marshall School of Business.”
“‘All of these things are kind of conspiring to create what at some point is going to be a bottom in the market, and that might well be upon us,’ said Bridges, who added that renewed consumer confidence was a major driver behind the competitive home market.”
“Markets are most tight with moderate- to low-priced homes, or about $500,000, with some agents luring multiple shoppers with artificially low postings and forcing bidding wars that can drive up totals by tens of thousands of dollars, Realtors said. The good deals are not disappearing, said Kendyl Young, an independent Realtor who markets homes in Glendale, but with competition on the rise, some buyers might be forced to battle for their purchases.”
“The price for one recent Glendale sale jumped from $299,000 to $480,000 during a bidding war, she said. ‘I believe that some of these agents are being very intentional they are setting the listing price low so that the buyers are encouraged to think about whether the property is truly worth it to them,’ she said.”
“Whether that same interest will continue as the recession plays out, however, is unsure, she said.”
“The market for more expensive homes is not nearly as tight, as banks have adopted more stringent qualifications for home buyers, and sellers have opted to hold their properties instead of selling during the recession, said Keith Sorem, a Realtor for Keller Williams Real Estate Services. ‘The only people who are selling their homes right now are people that have to,’ Sorem said.”
The Voice of San Diego. “In recent months, some regular old houses in the county’s third-largest city have been attracting more attention than the cinematic landmark. In some parts of Oceanside, bidding wars are erupting over foreclosures and short sales. Many are listed at prices about 50 percent lower than what they went for at the market’s peak three years ago.”
“There are still some houses that languish on the market, usually higher-priced coastal homes with sellers who refuse to compete with distressed sales. A luxury condo project may go to auction in the next two months. But in swaths of the city, watchers of Oceanside real estate have begun to tentatively utter the word ‘bottom.’ The city can be held as an example of how a market might start to stabilize once the price becomes right, said broker Jim Klinge, who has listed several foreclosures in Oceanside.”
“‘Half-off is the equation,’ Klinge said. ‘If you’re half-off in Oceanside, you’ve got a lot of buyers.’”
“‘I don’t know if I could say ’stability,’ but what we are seeing in Oceanside is that things that are in good condition, really well-priced, are getting multiple offers on the first day,’ said Deborah Danko with Willis Allen’s Fallbrook office. ‘It’s been a while since we’ve been writing offers on the hood of our car.’”
“The word on the street is ‘bottom?’ — uttered with some uncertainty — for the neighborhoods that have been thrashed by foreclosures, especially in northeast Oceanside. ‘How long it’ll take to come out, nobody knows,’ Danko said. ‘And it’s not to say that there’s not going to be a bank-owned on somebody’s street that is ridiculously low-priced. But it’s a good sign.’”
