The Glendale News Press reports from California. “Local home foreclosure rates have continued to rise, led by a baffling eight-fold jump in La Crescenta filings during the month of September, compared with a year ago, according to experts and a report prepared for the Glendale News-Press by RealtyTrac. With La Crescenta’s unemployment rate of 5.9% well below Glendale’s 11.1% and Burbank’s 10.4%, the figures were surprising, said Paul Habibi, professor of real estate at the UCLA Anderson School of Management.”
“‘I would expect that in a Palmdale-Lancaster kind of community,’ Habibi said. ‘That’s puzzling.’”
“The rise in La Crescenta foreclosure rates was likely a result of residents struggling to pay increasingly unmanageable mortgage payments during the recession, said Marcella Theisman, an agent in La Crescenta. ‘When they bought, they bought at the top of the market, and when the property values fall, either one can’t afford it, or they can’t see the sense in trying to pay more than the property is now worth,’ she said.”
“Buyers are eagerly seeking out low-priced properties that may have been in foreclosure, but they are frequently disappointed by the low number of homes on the market, said Dan Soderstrom, a real estate agent in Burbank. Much of that problem is because banks have not followed through on foreclosures and listed properties for sale, Soderstrom said.”
“The short supply of homes and the growing demand that has been fueled by a federal $8,000 tax credit for first-time home buyers has compounded the problem, he said. ‘I’ve got nothing to show buyers,’ he said.”
The Wall Street Journal. “When do borrowers walk away from their homes? More often, it’s when the bank can’t go after them. The research, by Andra Ghent of Baruch College and Marianna Kudlyak of the Richmond Fed, raises the possibility that strategic defaults may be more of a problem than believed by some analysts and economists. The authors conclude that ‘a non-negligible portion of U.S. mortgage default is in fact strategic.’ It’s not that borrowers can’t pay—they just decide it’s no long worth it.”
“A commonly cited 2008 paper by the Boston Fed downplayed the effect of negative equity on foreclosures and concluded that borrowers don’t usually walk away from properties just because they’re upside-down. But the Richmond paper notes that the study may not be applicable nationally because it looked only at early 1990s defaults in Massachusetts, a recourse state.”
“The researchers note that just 11 states, accounting for one-quarter of the nation’s housing stock, could be considered non-recourse. Still, two of those are states that have some of the biggest negative equity and foreclosure problems: California and Arizona.”
The Christian Science Monitor. “California, the state which has led the nation in home foreclosures, has finally seen a significant drop in the number of mortgage defaults and house repossessions. But many economists say the trend is less about improved economic conditions than about banks holding off on foreclosure or renegotiating loan agreements.”
“‘It’s not out of the goodness of their hearts,’ says Andrew LePage, DataQuick senior analyst. ‘Foreclosures are expensive and the more homes you dump on the market, the more you drive down prices and it becomes a vicious cycle.’”
“A state moratorium on foreclosures was in effect through most of the last quarter, and has just been lifted. ‘Now that the moratorium has been lifted, there should be a tsunami of them [foreclosures] coming shortly,’ says Chuck Cochran, a real estate assessor based in the San Fernando Valley. ‘A lot of properties are due to hit the market, which could push prices down another notch.’”
“‘There are lots of unknowns at the moment, especially in California,’ says Jed Kolko, real estate specialist for the California Public Policy Institute. ‘Among them is that there is no way to know if what the government is doing to help people renegotiate more comfortable mortgages will have a permanent effect or only a delaying one.’”
“The DataQuick study released this week showed that while most foreclosure activity was still concentrated in affordable inland communities, the foreclosure problem has continued to slowly migrate into more expensive areas. Default notices are rising fastest in the affluent counties of the Bay Area – San Francisco (up 72 percent over a year ago), San Mateo (up 58.5 percent), and Marin (up 65.9 percent).”
The San Francisco Chronicle. “The Bay Area locales where homes sell the most above asking price tend to be relatively affordable, according to a report from ZipRealty released Friday. The highest offers (measured by sales price-to-list price ratio) were clocked in the East Bay’s 94608 ZIP code, which includes Emeryville and part of Oakland. Homes there on average sold for 105.65 percent of the asking price in the third quarter, said ZipRealty. “The homes are in the $200,000 to $300,000 price range. I’ve been writing offers there like nobody’s business and getting beat out, often by cash offers.”
All-cash offers are the telltale mark of investors. David Kerr, a Zip Realtor who specializes in the East Bay…said…’I've seen the same house picked up at a (foreclosure) auction go back on the market and sell higher than the highest comparable sale in that area because it’s been rehabbed.’”
“The third ‘hottest’ Bay Area ZIP code, 94606 in central Oakland, is similarly affordable with a median price of $279,000, he said. Of both ZIP codes, Kerr said: ‘Homes here were selling in the $400,000s and $500,000s at the height of the market and now you’re picking them up in the $200,000s and $300,000s.’”
The Monterey County Herald. “By the time real estate agent Becky Jones drove up to a foreclosed home in Seaside on Tuesday, there wasn’t much left except the walls. ‘It was absolutely stripped,’ said Jones. Most of the wood floor was removed. There were no light fixtures, no appliances. Even the kitchen sink was gone.’ Jones didn’t have any problem getting in — the doors to the home were gone, too. A retaining wall in back of the five-year-old home was gone as well.”
“‘I’ve never seen anything like it,’ said Jones, adding that she has ‘handled foreclosures for years.’”
“Seaside acting Deputy Chief Judy Stradan said…reports of former tenants or owners taking property from foreclosed homes are not uncommon. ‘It’s happening all over, city after city,’ she said.”
The North County Times. “Dan and Colleen Spence…waited nine months for Bank of America to approve their bid on a Temecula home. When the letter came, the bank wanted to close on the property in 10 days. No problem for the Spences, who sent $2,000 in ‘earnest money,’ had the home inspected, and then —- nothing. ‘We’ve had silence for a month,’ Dan Spence said. ‘We don’t know what’s going on.’”
“Frustration can be heard in Spence’s voice, and he’s far from alone: Buyers and real estate agents say short-sale purchases have become a crapshoot of delays, reversals and occasionally, the jackpot of homeownership. Real estate agent Jeannine LaChance had a recent deal fall through. The bank had approved her buyer, but then a new buyer offered a higher bid. When the new, high bidder walked away, the bank returned to LaChance’s client, but demanded more money.”
“‘They think the market’s going up,’ she said. ‘I think they’re crazy.’”
The Press Enterprise. “Sales of existing U.S. homes surged a record 9.4 percent in September as Americans rushed to take advantage of a tax credit for first-time buyers before it expires next month. Marty Rodriguez, owner of a real estate brokerage east of Los Angeles, said half of her transactions last month were low-priced foreclosures and short sales. ‘You have so many buyers in that lower price range,’ she said. ‘Sometimes my agents are writing five offers for one buyer on different properties just trying to get one property — and not getting accepted. It’s a little crazy.’”
“Aldo Martin, 28, of Covina had to put offers on 16 houses before having one accepted this week. ‘We’d go look at eight houses and if we liked five of them, make offers,’ said Martin, a sales supervisor. ‘Your odds are better. We got aggressive.’”
“The Realtors’ association and the National Association of Home Builders are lobbying to extend the first-time homebuyers credit on concerns that demand will wane after it lapses. ‘The work of stabilizing the housing market won’t be done’ when the credit expires next month, Senate Banking Committee Chairman Christopher Dodd said during a panel hearing. ‘We still need to use every tool at our disposal to fix this problem.’”
“However, some analysts say the tax credit may not be as critical to the housing market as real estate agents suggest. The Realtors association has ‘an incentive to talk up the effects of the credit as it is urging Congress to extend it, and it therefore may be exaggerating the credit’s effects,’ wrote Nomura Securities economist Zach Pandl.”
“One potential roadblock to an extension also emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent. The Treasury Department’s inspector general for taxes questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18.”
The Desert Sun. “When will there be true economic recovery in the Coachella Valley? Try 2012. And that’s only if everything’s done right. That’s the prediction from John Husing, an economist who has studied the Riverside and San Bernardino counties region for more than 40 years, and recently that of the Coachella Valley.”
“During his 2009 Coachella Valley economic report in Indian Wells on Friday, Husing used one word to express what the valley’s been through: ‘Arrggh!’”
“Fueling that frustration, Husing said, is the fact that the valley has suffered unprecedented job losses in the recession. ‘We’ve lost 130,000 jobs’ in this area and in two surrounding counties, he said. The unemployment rate has topped 14 percent, and is rising to levels close to those recorded in Detroit. ‘That’s not pretty,’ Husing said. ‘It’s a rate that is somewhat comparable to what was going on in the middle years of the Great Depression.’”
“The good news is the valley’s median home prices likely hit the bottom in the third quarter, he said. Looking ahead, Husing said a return to economic prosperity will require diversification of the economy and a housing market recovery.”
“‘The last major shift in the California economy in this last cycle was housing,’ Husing said, citing some $10.6 billion in lost building permit activity, $8.3billion of it being residential. To Husing, that’s lopped $21.2 billion out of the region’s $110 billion economy. ‘That means one of the targets you have to worry about is how to get that (construction) sector back to work,’ he said.”
“Husing’s 2009 report on the economy said he’s seen pent-up demand for homes, mostly because of high affordability. The valley’s affordability level, once at 10 percent, is up to 63 percent. Sales volume is up, and the median prices are back to 2002 levels.”
“Still, Husing said one yet-to-be-resolved piece of the valley’s economic puzzle is that a portion of the 35,498 homes that were sold in the valley are in danger of being worth less now than what is owed. ‘How many homes are upside down’ and in danger of default that have not yet shown up? Husing said. ‘That’s a huge piece of the challenge.’”
From Bloomberg. “The California Public Employees’ Retirement System, the biggest U.S. pension fund, and real estate adviser MacFarlane Partners severed ties as the fund reviews the performance of its investment managers. Calpers put more than $1 billion in the urban program. MacFarlane also helped the pension fund pay $970 million in cash and property to Lennar Corp. for a stake in LandSource Communities Development LLC in January 2007. The 15,000-acre (6,000-hectare) tract north of Los Angeles, known as Newhall Ranch, filed for Chapter 11 bankruptcy protection in June 2008 after failing to restructure debt.”
“‘Large institutions increased allocations during a period when real estate prices were frothy and along the way got involved in riskier investments, whether it was land or opportunistic funds,’ Craig Leupold, president of real estate consultants Green Street Advisors in Newport Beach, California, said in an interview.”
The Manteca Bulletin. “Is the era of the McMansion in Manteca giving way to a small is beautiful period? The Manteca City Council put its official blessing Tuesday on Winters Colonial Estates – a new neighborhood dubbed as workforce housing a stone’s throw or two from where the city’s first McMansions went up along the perimeter of Woodward Park.”
“The project on five acres is a radical departure for residential density south of the Highway120 Bypass. Instead of four homes per ace that is typical of subdivisions south of the Bypass, there are eight homes per acre – the maximum allowed under the city’s zoning rules. The typical pre-McMansion Era Manteca neighborhood has 6,000-square-foot lots or five homes per arce.”
“Those five acres will yield 40 homes with five different house plans ranging from 1,151 to 1,466 square feet with a mixture of single and two-story layouts. Mayor Willie Weatherford, in approving the project, noted ‘we need smaller homes in Manteca especially in this economy.’”
The Recordnet. “Higgins Ranch, a 505-acre property near Camache Reservoir and once slated for development, is going on the auction block for the second time at less than ranchland prices. The bank-owned property was offered this past spring but failed to receive any bids at the $1,175,000 minimum price. The reserve price is $750,000, said John Rosenthal, president of the Portland, Ore., brokerage conducting the auction.”
“‘The banks have gotten realistic. They’ve dropped their prices,’ Rosenthal said.”
“The cut in price reflects today’s weak real estate market. ‘I don’t care what you do today; people expect a discount,’ he said.”
“It’s hard to make a comparison because of relatively few sales in the region in a volatile real estate market, but the most recent ranchland sales going back to last year range from $1,650 to more than $3,000 an acre. At the auction reserve price, the Higgins property is $1,500 an acre. It is leased for grazing at $841 a month. The property with frontage on Highway 12 near unincorporated Wallace is affordable for pasture land, its current use, said Randal Edwards, an agricultural appraiser in Hilmar. ‘That’s a below-market price,’ he said.”"
