The Heyday Was A Little Carried Away
The Ventura County Star reports from California. “Right now is actually an excellent time for first-time buyers to buy a home. The California Association of Realtors reported that housing affordability continued to improve throughout the state in the first quarter of 2011. According to a February article in the San Diego Union-Tribune, home affordability in San Diego County has reached a record high. The California Building Industry Association has determined that overall housing affordability in California has continued to increase in the first quarter of 2011.”
“Mike Winn, CBIA’s president and CEO, said this was good news for consumers looking to take advantage of low prices and encouraged buyers to get into the market before prices begin to rise. ‘Affordability levels continue to remain high by our state’s historical standards, so this is an opportune time for buyers to get into the marketplace,’ Winn said.”
The Orange County Register. “From the reporter’s notebook at the National Association of Realtors conference taking place this weekend in Anaheim: Once again, NAR Chief Economist Yun took a pot shot at UCLA forecasters, calling their outlook for California overly optimistic. Two years ago, Yun called a UCLA Anderson Forecast ‘bubblish’ for predicting a 16 percent home price gain in Orange County in 2010. Now, he’s questioning a recent forecast stating that California home prices will rise 52.5 percent by 2017.”
“‘Everything is moving in the right direction,’ said Yun, who projects an 8 percent to 10 percent gain in U.S. home prices over the next three years. ‘But to say that everything will appreciate in the high single digits every year for six years, I think that’s high.’”
The Modesto Bee. “It’s going to take until 2015 before home construction returns to normal in Stanislaus County, an economist told a room full of builders Thursday. But home construction in the county has been anything but normal for more than a decade. It certainly isn’t normal now, according to Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton.”
“The economist showed how the county built too few homes during the 1990s and too many homes during the past decade. ‘By 2000, Stanislaus had a genuine housing shortage,’ Michael said. Home builders jumped on the opportunity, and by 2003 housing growth had surpassed population growth. ‘You should have seen home prices level off after that, but they did quite the opposite.’”
“Not only did home prices continue to soar, but developers built an even greater number of homes in 2004 and 2005. It wasn’t until after the housing boom went bust in 2006 that construction slowed.”
The Record Searchlight. “When Thunderbird Forest Products in Cottonwood shut down last summer, George Phillippe lost his job as plant manager. Phillippe, 58, had been there nearly 30. Decades of mill work, with its seasonality and the economy’s ups and downs, mean occasionally you’re between jobs. But Phillippe says it’s different this time. ‘Back in the ’70s and ’80s a person could get laid off on Friday and be back to work somewhere else on Monday morning,’ said Phillippe, whose wife also lost her job at Shasta County. ‘But there is just nothing out there right now.’”
“Molding and other wood mill operations were once plentiful in Shasta County, but lower production costs from overseas competitors and automation have eliminated many jobs. Those companies still operating in California have been hammered by the housing downturn, which has virtually eliminated demand. ‘That (Thunderbird) product was totally based on housing in the area of residential construction, whether it was apartments, condos or houses,’ said Don D. Davis of ReMax Five Star in Redding, who is listing the Cottonwood property.”
“Retired Chico State University economist David Gallo has estimated one of every four jobs lost in Shasta County since 2006 has been in construction. ‘The heyday was a little carried away,’ Gallo said of the construction boom. ‘We are not going to see 2005 again in terms of construction jobs. That was crazy — unsustainable. But we are going to see a resurgence of housing. It’s just a question of when.’”
The City Journal. “Everybody knows that California’s economy has struggled mightily since the 2008 financial crisis and subsequent recession. But a study commissioned by City Journal using the National Establishment Time Series database, which has tracked job creation and migration from 1992 through 2008 (so far) in a way that government statistics can’t, reveals the disturbing truth. California’s economy during the second half of that period—2000 through 2008—was far less vibrant and diverse than it had been during the first. Well before the crisis struck, then, the Golden State was setting itself up for a big fall.”
“During the 1992–2000 period, the L.A. and San Francisco Bay areas added more than 1.1 million new jobs—about half the entire state total. But between 2000 and 2008, as Chart 3 indicates, California’s two big metro areas produced fewer than 70,000 new jobs—a nearly 95 percent drop and a mere 6 percent of job creation in the state. Not only did California in the 2000s suffer anemic job growth; the new jobs paid substantially less than before.”
“Steven Malanga’s ‘Cali to Business: Get Out!’ identifies the major villains: suffocating regulations, inflated business taxes and fees, a lawsuit-friendly legal environment, and a political class uninterested in business concerns, if not downright hostile to them. One could add to this list the state’s extraordinarily high cost of living, with housing prices particularly onerous.”
The Bay Citizen. “Sometime next month, Raul Peña will give up his East Oakland home. Peña, a 40-year-old dishwasher, used a subprime loan from Countrywide Financial to buy his two-bedroom house for $359,000 in 2005. He is in the process of selling it in a short sale for just $100,000. Raul Peña wonders why Bank of America could not cut him a break since it will be losing hundreds of thousands of dollars on his sale anyway. ‘They could have given it to me at $100,000, and I’d be able to afford it,’ Peña said.”
From NPR. “Unintentional, accidental, reluctant, never-in-the-world-thought-they-would-be-a-landlord landlords. That’s the fate of many a homebuyer trying to sell these days. Paul Williams Williams, along with his wife and young daughters, rent a home in Rogers Park on Chicago’s far north side. A job change brought them to the area. They also own a two-bedroom bungalow in Oakland, Calif., that they bought at the height of the housing boom.”
“‘We bought it at just over $500,000,’ Williams says, ‘and the last appraisal was at $260,000.’”
“Once they heard that appraisal, Williams says, he and his wife decided not to sell but instead to rent their home to a friend of a friend.”
The North County Times. “Defaults in North San Diego County in October, compared with 12 months earlier, jumped by the highest percentage than in any month since late 2009, according to data from ForeclosureRadar. The sudden jump corresponded with declining house prices and a national trend of homeowners falling further behind on their mortgages.”
“‘Maybe people were holding on, hoping to see some recovery in prices, and now maybe giving up and not making their payments,’ said Bob Casagrand, a San Diego real estate agent.”
The Long Beach Post. “Foreclosures rose slightly in October, according to RealtyTrac’s U.S. Foreclosure Market Report. Long Beach and other affordable communities have been more foreclosure prone, and until the backlog of foreclosed, or about to be foreclosed on, homes gets cleared, it will be difficult for the local markets to begin a recovery, area real estate agents say.”
“‘It’s a lot of what many of us have been saying all along,’ said Jeremy Colonna, a broker with Colonna & Co. Realty in Belmont Shore. ‘Having the state and federal governments change the rules over and over again does nothing more than prolong the inevitable. Homeowners who are not paying their mortgages eventually get foreclosed upon.’”
