Highball Harry Is Surrounded By Negative Equity
KPSP Local 2 reports from California. “There are new concerns about the housing market because of the economic turmoil. Officials at Standard & Poor’s are downgrading the credit ratings of Fannie Mae and Freddie Mac. One street in the Indio housing development Talavera provides a good snapshot of California’s struggling housing market. Taking a drive down Tinsley Avenue, KPSP Local 2 spotted several ‘for sale’ signs, along with at least two foreclosures– including one right next door to Maria Castro’s house. ‘I think it is sad that they’re losing their houses,’ said Castro when talking about the empty houses.”
NBC Los Angeles. “The Southern California housing market has been in a slump for years, and while it may be too soon to know the full impact of the crisis in the financial market, it’s certainly not helping. ‘You still kind of hold your breath no matter how good an opportunity it is for your family,’ said Braden Barty, a home seller.”
“Barty and his wife Michelle put their Studio City home up for sale about two months ago. After negotiating with the one offer they received, their house is now in escrow, but they’re not in a rush to buy another house, choosing instead to rent and take a wait and see approach. ‘We don’t feel like the market is going to get any better,’ said Barty, ’so the advice was from a couple of our friends was, when we had an offer, they just said take it.’”
The Contra Costa Times. “The percentage of Bay Area homeowners who are underwater edged up from a year ago. Some 22.8 percent of single-family houses with mortgages were in negative-equity territory during the second quarter, up from 21.1 percent a year ago, according to Zillow. In Alameda County, 20.2 percent of homes were underwater, up from 17.7 percent, and in Solano County, 55.4 percent of homes were underwater, up from 51.5 percent.”
“In Santa Clara County, 12 percent of homes were underwater, down from 12.8 percent a year ago. San Mateo County had 13.7 percent of homes with negative equity, up from 10.7 percent. And in Contra Costa County, 33.3 percent of homes were underwater, down from 36.6 percent a year ago. In San Joaquin County, 54.4 percent of homes were underwater, down from 55.9 percent.”
“‘Negative equity is still among us. We are still surrounded by it,’ said Jeff Pereyda, a broker-realtor with Tri-City Real Estate Brokers in Fremont. ‘Some are in negative equity and don’t need to sell. Some are in negative equity and need to sell. We’re seeing only the ones that need to sell.’”
“Before the number of underwater homes can decline, homeowners need to increase their income so they can pay down their mortgage and equity line of credit, he said. Home values also have to rise.”
“The final phase of demolition is expected to begin next week on an oceanfront condominium building condemned by the city last year.
Joe Quigg, president of the homeowners association board for Monterey Towers, said he expects crews will begin tearing down the shell of the 18-unit building on Aug. 15. Quigg’s one-bedroom unit was scheduled to be auctioned off at the county building by his mortgage company Aug. 18 because he was in default. Quigg, who said he has worked out an arrangement to keep the property, said costs associated with demolition had caused him to fall behind.”
“Mary Ann Sorensen who bought a Monterey Towers condo for $285,000 in 2000, voted against rebuilding in the hopes that further repairs would make the building viable. Unable to afford the mortgage without a renter, Sorensen said she is now in foreclosure and paid $7,500 in relocation expenses for a tenant. ‘I don’t know if we exhausted every avenue for it to be saved,’ she said.”
The Bakersfield Californian. “Although the supply of homes for sale in the Bakersfield area fell slightly from June to July, demand dropped even more. Gary Crabtree of Affiliated Appraisers called supply outpacing demand a ‘disturbing trend.’ ‘Overall, it just looks like the market is starting to lose steam,’ Crabtree said in an interview Monday. ‘But at least prices aren’t going down — yet.’”
“Belinda Capilla, an agent with Prudential-Tobias Realty in Bakersfield, said consumers are simply worried about the economy. ‘In a typical market when (interest) rates remain low a long time, people sit on the fence hoping they’ll go even lower, and then when they go up they all rush in,’ she said. ‘But buyers aren’t behaving as they would in a normal market.’”
The Martinez News Gazette. “The rich are getting richer and the poor are having kids and losing their homes,’ said Contra Costa County Assessor Gus Kramer when asked about the $700 million decrease in the local tax base he reported to the Board of Supervisors in July. And, in his opinion, the banks are to blame. ‘The banks are not helping anybody, the banks are our worst enemy now. They are not doing refinancing like they are supposed to, it’s a joke, a huge joke,’ said Kramer.”
“Kramer recalled the recent experience of his friend who owned a house in Martinez. ‘He owed $700,000 to the bank and he went through the [refinancing and foreclosure prevention] training classes, he did everything they asked him to do, he was a poster child for [a loan] modification,’ explained Kramer. ‘They denied him and they tell him they will foreclose – they were running the foreclosure procedures parallel with him working to prevent it.’”
“The thousands of foreclosures occurring monthly in Contra Costa is ‘really setting new benchmarks for each neighborhood, and it’s feeding on itself,’ said Kramer. ‘I see it getting worse before it starts getting better. I told everyone [in 2008] that it would be five to seven years [before property values raise again]. The naysayer said ‘that’s stupid.’ I own more real estate in this county than anybody, and I said, fine you’re on your own. Then they come back and blame me for [the massive drops in assessed value]. We’re not market makers in the Assessor’s office.’”
The Pasadena Star News. “Despite promises by lenders to improve their short-sale processes, clearly, they are not doing enough,” CAR President Beth L. Peerce said in a statement. ‘Instead of helping struggling homeowners who need to sell and willing home buyers who want to buy, lenders have created man-made roadblocks that have caused real estate gridlock and hindered a desperately needed housing recovery.’”
“”BofA only owns abut 9 percent of their portfolio, said Marty Rodriguez, owner of Century 21 Marty Rodriguez in Glendora, and the rest is owned by about 500 investors. ‘When you negotiate a short sale you don’t know what investor you’re dealing with,’ Rodriguez said.”
“The situation gets murkier when a second mortgage is involved. In many cases, that takes the form of a home equity loan. ‘If it hasn’t been charged off you’re in good shape,’ Rodriguez said. ‘But if it has been charged off the collection agency is going to want more, and that makes it more difficult to close because most buyers don’t have the extra money.’”
“The Daily Pilot. “Home prices have continued to sink, but not low enough to dampen seller expectations. That has created yet another market fundamental that’s dragging on sales, one in which buyers and sellers cannot get on the same page, some experts say. Steven Thomas, an account manager for Irvine-based Advantage Title Inc., regularly compiles a report on the sales-to-price listing ratios for Orange County.”
‘As of late, the ratios have become excessively high, reaching 93% and above on almost all types of property — foreclosures, short sales, low-priced homes, the mid-to-high range. ‘Meaning that there is not a whole lot of flexibility in the price, with the exception of homes priced over $1 million,’ he said. ‘This illustrates how buyers looking for a deal have their work cut out for them. Lowball Larry is not going to be successful in today’s market.’”
“And Highball Harry, let’s call him, is the overly optimistic seller who ignores the advice of his agent and sees his unsold home sit, and sit and sit. ‘The sales-price to original-list-price ratio illustrates how sellers are overpricing their homes and need to reduce their asking prices in order to be successful,’ Thomas said. ‘This, of course, does not account for all of the unsuccessful homeowners who remain on the market, as there are 11,300 homes on the active listing inventory [in Orange County]. It is not a specific area, or price range, or foreclosure, or short sale. Overpricing has made its way into every neighborhood, every type of property.’”
Inland New Today. “Riverside County had the highest foreclosure rate in the state the first-half of the year. Nearly 26,000 notices for mortgage default and auction sales plus bank repossessions were recorded in the county. Senior economist John Husing offered an even more sobering figure.’ ‘Forty-eight point nine percent of all the mortgages in the Inland Empire were on houses where falling prices put them underwater.’”
The Press Enterprise. “Homeowners struggling to avert foreclosure in Inland California, one of the metropolitan areas hardest hit by the mortgage crisis, have received 132,000 offers of help from mortgage modification programs run by the federal government and private industry, said a report released Friday by the Obama administration.”
“The report released Friday is only the second time the Obama administration has focused on a particular region during its monthly review of the nation’s foreclosure picture. ‘The current fragility in Riverside’s housing market — with low property values and many severely underwater mortgages — is the result of several prior years of rapidly rising home prices supported by widely available, but unsustainable, adjustable-rate mortgages,’ the report said.”
“Several economists said loan modification efforts have not been sizeable enough to cause the recent signs of improvement in the Inland housing market, such as a leveling off of home prices that had tumbled 54 percent from their peak. ‘It appears the modifications in the Inland Empire have succeeded in helping a limited number of people keep their homes, although it is difficult to argue that the modifications overall have had a meaningful effect on the housing recovery,’ said Stuart Gabriel, director of the UCLA Ziman Center for Real Estate.”
“Chris Thornberg, an economist and founder of Beacon Economics, went further. ‘There is no evidence that government policies have done anything to stem the tide of foreclosures,’ he said. Troubled mortgages are becoming fewer, Thornberg contended, because ‘every time there is a foreclosure, that mountain of debt becomes smaller.’ Ultimately time is what will reduce foreclosures to a more normal level, he said.’
