The Housing Bubble

The San Francisco Chronicle reports from California. “Home sales volume in California and the Bay Area increased between March and April as lower prices brought bargain hunters out of the woodwork, according to numbers released Friday by the California Association of Realtors. Statewide, the median for single-family homes was $403,870, down 32 percent from a year ago and down 2.6 percent from a month ago.”

“In the Bay Area, the median stood at $691,930, a 17.9 percent slide from last year and a 1.8 percent dip from March. In the Bay Area, sales down 12.1 percent compared to a year ago.”

“Leslie Appleton-Young, chief economist for the Realtors trade group, said that new homes, which are not included in the CAR data, are also a source of bargains. ‘In areas where you have a lot of unoccupied new homes where the builders just want to move them and move on, those price cuts have been much steeper,’ she said.”

“That was the case for Bob Bargenquast and fiancee Ines Donnelly. In April they moved into a brand-new home in Napa. The builder was eager to close it out and move on to another project, Bargenquast said.”

“The three-bedroom house was listed for $765,000 in the summer. Over the subsequent months they watched the price steadily drop until it got to $650,000 in January.”

“They initially made a lowball offer and got the home for $645,000 after the builder threw in $52,000 worth of ‘top of the line’ upgrades for flooring, countertops, shutters and so forth.”

“‘We say, you know what, now’s the time,’ Bargenquast said. ‘Interest rates are down; it’s a buyer’s market.’”

The Tribune. “Sales of all homes in San Luis Obispo County continued to dip year-over-year, continuing in which transactions have gone down in 30 of 31 months since October 2005, DataQuick reported Wednesday. It’s also the lowest April for home sales since 1995.”

“‘A driving factor for people is the amount of inventory they have to choose from,’ said Barry Brown, an agent at Prudential California Arroyo Grande and state director for the California Association of Realtors.”

“Before … it was ‘buy this or someone else will,’ and they would just choose a property close to what their needs were. In this market, they can be very selective,’ he said.”

The Ventura County Star. “On Friday, the California Association of Realtors reported that sales of existing homes increased from a year ago, while the median price was down 28.2 percent.”

“The median price decline from $691,710 a year ago to $496,530 in April was the sharpest drop on record, said Robert Kleinhenz, deputy chief economist for CAR.”

“As a testament to the weak housing market, there are a lot of homes with ‘For Rent’ signs in the window these days.”

“Ronald Ormsby, whose property management office is in Camarillo, said there are about 55 houses for rent in the city right now. The housing market has put some people into the rental market who weren’t planning to ever become landlords.”

“‘People that might have to move and are having difficulty selling and can still manage to make the payments without going into foreclosure, I think they’ll rent by necessity rather than as an option,’ Ormsby said.”

“He estimates it could take another year before the market hits bottom. Ormsby has been through housing cycles before, including the one in California in the early 1990s. ‘I don’t think the recession we had then is anywhere near as severe as the one we’re having now,’ he said.”

The LA Daily News. “Home sales in the San Fernando Valley increased slightly in April from a year earlier, the first annual uptick in 30 months. But prices continued to tumble with the median falling 26 percent from a year ago, to $465,000, said the Southland Regional Association of Realtors.”

“The median price has fallen $160,000 in the past 12 months, an amount equal to the median price in March 1997.”

“‘There is a general feeling that the market may have hit bottom and started to rebound - definitely on the transaction side but not on the price side,’ said Jim Link, the group’s executive VP.”

“A similar picture emerged in the Santa Clarita Valley, with foreclosures also playing a big role. In that market, sales increased an annual 2 percent. The median price fell 19 percent from a year ago, to $480,000.”

“Condo sales there declined 12 percent from a year ago. The median condo price fell 26.5 percent from a year ago, to $279,000.”

The Daily Breeze. ” Home prices across the South Bay continued to slide in April, with every community cited in a report released Friday posting double-digit declines.”

“Carson was the area’s biggest year-over-year loser, with a 25.9 percent drop in median home price to $389,000, according to CAR.”

“Manhattan Beach experienced the second worst drop, of 25.8 percent, to $1,372,500. The South Bay, excluding the Palos Verdes Peninsula, saw a 12.8 percent drop last month, compared to a year earlier. That was still better than Los Angeles County, which suffered a home price decline of 19.6 percent to $435,000.”

“‘Part of the problem is that the lenders are sitting on some really tight approval criteria,’ said Realtor John Parsons, a Redondo Beach planning commissioner and former councilman. ‘Now they’ve gone too far the other way. It’s hurting everyone, including lenders.’”

The Press Enterprise. “A shifting of sales to foreclosure bargains in the under-$500,000 category especially energized the housing market in Riverside and San Bernardino counties, where existing home sales in April surged almost 33 percent above a year earlier.”

“Yet, as sales rose, prices kept falling. The median price of an existing detached single-family home in California last month was $403,870, down 32 percent in a year. In the Inland region, the median price was $278,800, down nearly 30 percent from April 2007.”

“More first-time buyers are deciding to act now rather than wait for further price declines, Appleton-Young said, adding that the trend could be cut short if mortgage interest rates increase.”

“‘For people who are doing the buy-or-rent calculation, buying could clearly trump renting in many places at this point,’ she said.”

The North County Times. “In this frail real estate market, taking a more innovative approach to selling property has become so popular, it’s even acquired a nickname: extreme open houses.”

“When Escondido real estate agent Harry Martin really wants to sell a home, his secret weapon is sausage-and-egg breakfast casserole. ‘Let me tell you, two things draw agents to come see your property —- food and money…I find that good food ensures the best turnout,’ said Martin, who has sold homes in Escondido and Scripps for the past 13 years.”

“‘The agents come by, tour the property, and then have breakfast,’ he said. ‘The most important thing is that it keeps them in the property longer, giving them time to appreciate it more and for me to tout what it offers. It works every time.’”

The Modesto Bee. “Rodney Lowe admits his timing isn’t the best. The housing industry was red hot 6 1/2 years ago when the prominent Modesto builder quit the business. Lowe publicly predicted the real estate market had soared too high and was about to crash.”

“Here’s the weird part: Lowe has decided to start building houses again. ‘When many builders are exiting the industry, I’m making a return. I guess I’m a glutton for punishment,’ Lowe said. ‘I think people would say that my timing is pretty crazy.’”

“Lowe competed with Wall Street-financed big builders during his tract home days. He recalled how publicly trading development companies helped push up land prices in Modesto’s Village I from $35,000 per acre to $350,000 per acre, which was far beyond what small local builders could afford.”

“But now that the region’s real estate market is in recession, most of the national builders have scaled down or canceled their construction projects. Land prices have plummeted, and many ready-to-build-on lots have been deeply discounted.”

“That’s good for local builders, according to Lowe: ‘I think you’re going to see a lot of local contractors come back into the game.’”

The Tracy Press. “The house at 28 E. Third St. in Tracy embodies in many ways today’s housing crisis. It’s an average-sized, middle-aged suburban abode that time, vandals and subprime lending left in disrepair.”

“Though pending home sales are on the rise in and around Tracy, banks are still taking on more homes than they’re selling. Wachovia sold 825 during the first three months this year, but added about 1,100 homes from foreclosure to its inventory during that same time, according to company spokesman Don Vecchiarello.”

“It’s telling when easily a third of homes on the market, according to the California Department of Real Estate, are in some way vandalized, said local real estate and mortgage company owner Brian Cable. Oftentimes, embittered former homeowners swipe anything not bolted down, punch holes in drywall or tag a home’s interior, like an angry calling card.”

“‘You wouldn’t believe some of these homes,’ Cable said. ‘I don’t think people realize what the former tenants do to them.’”

“Rep. Laura Richardson, who lost her Sacramento home in a recent foreclosure auction, has also defaulted on properties in Long Beach and San Pedro, records show.”

“Richardson was able to bring her payments up to date on the Long Beach home relatively quickly, but the San Pedro property lingered in the foreclosure process for almost eight months, and still has a pending auction date.”

“‘I am not financially wealthy,’ she said. ‘I am not a millionaire. - Based upon what I was going through, changing four jobs in less than one year, I think any American would understand what that does in terms of a person’s financial stability.’”

“As a member of Congress, Richardson makes $169,300 a year. As a member of the Assembly, she made about $116,000, plus a per diem for living expenses in Sacramento.”

‘When it was pointed out that the average American makes far less than that, Richardson responded, ‘The average American is not responsible for maintaining several households.’”

“She said she ultimately hopes to testify about her situation in front of the Senate, and will write to the president to urge him to sign a package of foreclosure legislation.”

“‘We need to put a better process in place, so a person’s home is not being sold up underneath them,’ she said. ‘We have to improve the way we respond to this crisis.’”

The Capitol Weekly. “The Curtis Park house is not Richardson’s primary residence. She also owns a four-bedroom house in Long Beach, in her congressional district. Real estate records show she purchased that house in 1999 for $135,000. An estimate from Zillow.com puts the current value of that house at $474,000.”

“Like many homes that have gone through foreclosure, Richardson’s new residence quickly became an eyesore. With Richardson gone, upkeep on the home lapsed, and neighbors began to get angry.”

“Sharon Helmar, and her husband, Mark, sold the Curtis Park home to Richardson because Sharon’s arthritis required the couple to move into a one-story house. With the area’s real estate market slowing down, the house remained on the market for months, and the Helmars, who lived in the house for more than 30 years, were getting desperate to sell.”

“Helmar said that she has never met Richardson personally, but dealt with Richardson through her realtor. The Helmars wound up giving Richardson $15,000 toward closing costs, she said.”

“And she is still angry over what happened to a home that clearly she never really wanted to leave.”

“‘It’s kind of silly. You would think people who are making decisions for others would be able to make good decisions for themselves,’ she said. ‘She should have known what she could afford and not afford. In this neighborhood, you just don’t do that.’”

“While Richardson walked away from her bank loan, she has begun to pay herself back for the money she personally invested in her initial race.”