You Can’t Get Blood From A Turnip In California
Palo Alto Online reports from California. “Finding a house is hard in Palo Alto. The competition gets tougher for houses under $1 million dollars. Homebuyers might be wondering how much of a bubble could have popped in Palo Alto. ‘Two years ago, or even a year and a half ago, the question buyers would ask me was: ‘Are prices going to go down more?’,’ Tim Foy, a broker and Realtor in Palo Alto, said. ‘Now the question is: ‘How do I get a house before they go up more?’”
“The inventory for townhomes and condominiums is a lot larger than homes, even in Palo Alto. There are currently 80 on the market with two or more bedrooms in Palo Alto, Mountain View and Menlo Park available under $850,000, Foy said. ‘Traditionally they have appreciated and people have made money on them,’ he said. ‘It is a great way to get into the market because you own something.’”
“If you want to know what’s on the market, you need to get out there and look. That’s what I did in March, spending a couple of weekend afternoons cruising through open houses in Mountain View, Palo Alto and Menlo Park. 1097 Karen Way, Mountain View, with an asking price of $998,000. At 2:15 p.m. would-be buyers were swarming the house, which was a short sale with no date set for offers yet. The outstanding loans on this home were $1.1 million, but because both loans were held by the same lender, there was only one negotiator for the short sale.”
“My final stop that Sunday was a home in a planned-unit community in Sharon Heights, in Menlo Park. The large home had one common wall with a neighbor. Priced at $1.09 million, the home would be perfect for a downsizing couple, said Marilynne Pryor, an agent with Coldwell Banker, Menlo Park. But despite the fact that sales have been picking up since after the holidays, she’s not seeing the multiple offers of her colleague who sells in the $400,000 to $800,000 range in Mountain View and Sunnyvale.”
“Pryor’s tips: Despite $1.09 million being a good price point, people living in larger homes nearby are still hesitating to sell. ‘They have their heads on a price point for their house that they heard about five or six years ago. Guess what? Equity in that home has gone down. There’s no nest egg to fall back on,’ she said.”
The Oakland Tribune. “Two new bank failures, involving one bank in Oakland and anther in San Rafael, won’t be the last in the Bay Area and are a reminder that the region’s economy remains wobbly, analysts said. Oakland-based Innovative Bank and San Rafael-based Tamalpais Bank were seized by bank regulators last Friday and turned over to new owners.”
“Bank failures have mounted in recent months in the Bay Area amid a sour economy. Last fall, the FDIC closed two San Francisco-based bank, Pacific National Bank and United Commercial Bank, and turned them over to new owners. ‘We are not out of the woods yet,’ said Hans Schroeder, a principal executive with San Francisco-based Green Street Capital Management. ‘The banking problems are definitely not over. There will be more failures.’”
“About 99.5 percent of Tamalpais Bank’s failed loans were in real estate. About 49 percent of the nonperforming loans were in commercial real estate. Some experts believe the FDIC could close banks with more frequency if it so chose. Christopher Thornberg, an economist and co-owner with Beacon Economics, said the FDIC is simply biding its time before it charges in to close more banks.’Most of the regional banks that are heavily oriented toward commercial real estate are under water,’ Thornberg said. ‘They are a mess, a disaster.’”
The San Francisco Chronicle. “In California during the boom real estate years - 2005 to 2007 - homeowners took out 2.88 million home equity lines of credit and 1.18 million nonpurchase second loans, according to First American CoreLogic, which tracks loan data. The total was 4 million such recourse loans totaling $485.3 billion. In California, a foreclosure generally wipes out the borrowers’ obligation on the main mortgage but not necessarily on other home loans.”
“‘We’ve seen a lot of folks coming to us, saying, ‘I was foreclosed on, now these people say I owe $150,000 for my second loan; I thought everything was going to go away, what do I do now?’ said Noah Zinner, an attorney with Housing & Economic Rights Advocates in Oakland.”
“Shannon Jones, a real estate attorney in Danville who gets several calls a day from people concerned about their liabilities post-foreclosure, said she’s turned down some second-loan clients. For instance, one Bay Area man had borrowed $52,000 on a home equity line of credit for a home that ended up in foreclosure. ‘The lender filed suit against him and he asked me to defend him,’ she said. ‘I said, ‘You don’t have a defense. You borrowed the money, you spent the money. You signed a promissory note and said you would pay it back.’”
“Often, such borrowers end up settling with the lender for pennies on the dollar, Jones said. ‘You can’t get blood from a turnip,’ she said.”
The San Gabriel Valley Tribune. “A record number of U.S. homes were lost to foreclosure during the first quarter of 2010 as banks stepped up their efforts to work through troubled loans.Will this flood the market with low-priced homes, effectively depressing overall housing prices? One local Realtor doesn’t think so. ‘I think lenders are smarter than that,’ said Tom Adams, owner of Century 21 Adams & Barnes. ‘I think they’ve been gauging the absorption rate for some time so they could determine how many to release at a time.’”
“Adams said many markets including the San Gabriel Valley have a shortage of inventory, so bolstering the supply is actually a good thing - even if it’s bank-owned properties. ‘Banks know there’s a shortage and they’re taking advantage of this window to go out into the market as much as they can without hurting things,’ he said.”
“Ahmed Ispahani, a professor of business and economics at the University of La Verne, said banks don’t want to flood the market with too many REOs. ‘If they release a large number of homes, prices will go down and their income will go down,’ he said. ‘They are acting very smart. They want to release as few as possible so demand exceeds supply.’”
“In some cases, buyers are fueling an increase in home prices, Ispahani said. ‘I have some friends who are eager to buy, but they say other buyers are offering more than what the homes are priced for,’ he said. ‘It’s a very controlled market.’”
The Daily Pilot. “The number of homes nearing foreclosure in Orange County spiked during the first quarter, indicating that banks may be finally working through their backlog of homes. RealtyTra’s figures show there were 93% more notices of trustee sale than in the first quarter of 2009. This is one of the last stages in the foreclosure process before a bank repossesses a home.”
“It’s possible that as banks are getting stronger and the economy is looking more solid, they’re more willing to take the potential hit to their balance sheets,’ said Patrick S. Duffy from MetroIntelligence Real Estate Advisors.”
“Also, a variety of moratoriums in California expired at the end of September, and many of these foreclosures may have been delayed a few months. In total, RealtyTrac says there were 12,841 homes in the foreclosure process during the first quarter, including 1,722 that were taken back by the bank. The spike raises concerns of a pending double-dip in the housing market, as some economists have predicted. The news comes days after a positive report on the housing market here — March saw a 12.2% jump in the median-priced home from 2009.”
“‘Would a higher percentage of foreclosures impact housing prices in the county?’ asked Duffy, ‘especially at a time when interest rates are rising? Certainly.’”
“A city councilman has been caught up in a new wave of foreclosures sweeping the country this year, but said a deal has been worked out with the lender to keep him in his home. A Monday notice in this newspaper said the home belonging to Pico Rivera City Councilman Bob Archuleta and his wife will be sold in a public auction April 26 at Pomona Superior Court because they are in default on a $508,238.61 loan from Washington Mutual Bank.”
“Archuleta said Thursday he will not lose his home. ‘It’s been worked out through a loan modification and the payments will be brought current,’ he said.”
“The couple bought the four-bedroom, three-bath home on Orange Terrace in 2005 for $389,000, according to public records, and later took out loans against it. Archuleta, a Realtor, isn’t alone. The country is in for another round of foreclosures, said Tom Adams, owner of Century 21 Adams and Barnes.”
“‘There were a lot of political promises that were made or suggestions that millions of people were going to be helped, but the overwhelming majority of those programs have not panned out as the politicians would have had everyone believe,’ Adams said. ‘Now it’s time for the banks to get on with their business.’”
The Record Searchlight. “Foreclosure activity was back up in Shasta County in March. March capped a first quarter in Shasta County that saw a total of 1,145 foreclosure filings — default notices, scheduled foreclosure auctions and bank repossessions — reported on 1,023 properties, a 14.4 percent increase in filings and an 18.4 percent jump in properties compared with a year ago.”
“With roughly 50 percent of all transactions in Shasta County either bank-owned properties or short sales, these distressed deals continue to put downward pressure on values.”
“Enter Dan Bennett: an extreme example of somebody who’s cashed in on the foreclosure market. In January, the Shasta College nursing student bought his first house off Hilmonte Drive in Redding for $63,000 — an 1,800-square-foot, four-bedroom foreclosure that sold for $250,000 in October 2005. The home listed for $359,900 in September 2006 before it fell into foreclosure.”
“Bennett, 22, said the house had been gutted and was basically a shell when he purchased it. So Bennett basically paid for the property on which the house sits. ‘All the appliances and toilets were missing,’ said Bennett, who’s working to rehabilitate the home and hopes to move in this summer.”