The Housing Bubble

The Ventura County Star reports from California. “Last month’s Southern California homes sales, while the highest in 10 months, continued at their slowest pace in more than two decades, DataQuick reported today. It was the slowest June in the agency’s records, which date back to 1988. In Ventura County, there were 767 transactions in June, a 13.4 percent drop from 886 sales a year ago. The median was $420,000, down 27.8 percent from $582,000 a year ago.”

“About 41 percent of the Southern California homes that sold last month involved foreclosed properties, according to the report.”

The Union Tribune. “Prices in San Diego County slipped by yet another year-over-year record of 25.3 percent to a median $370,000. Sales in June were the second-lowest on record for the month.”

“Southern and inland neighborhoods recorded prices as much as 43.1 percent down in Logan Heights, compared with the first half of 2007.”

“‘We have multiple offers consistently,’” said Marc Carpenter, a San Diego real estate agent who sells bank-owned houses and condominiums. ‘Buyers are seeing properties that they watched sell two years ago for $650,000 and now they are priced at $400,000. To them, it’s a great value.’”

The North County Times. “The number of notices of default surpassed 1,100 for the third straight month while foreclosure sales, the final step, hovered around 600 for the fourth straight month, according to ForeclosureRadar. The numbers were close to foreclosure activity peaks set over the last couple of months for North County foreclosure activity.”

“Because notices of default typically precede bank-owned foreclosures by three to six months, the plateau of high numbers suggest that North County will continue to see more foreclosures throughout the year.”

“‘I would certainly sign on with the conclusion that this is not about to go away,’ said James Hamilton, an economics professor with UC San Diego. ‘I think every indication we have suggests that home prices will continue to fall, that as they do, that will increase the foreclosure rate, and I don’t see something on the horizon making this problem more manageable.’”

“Banks own about 3,100 of the 5,000 houses and condominiums now listed for sale in southwest Riverside County, according to the Multi-Regional MLS and Foreclosureradar. And roughly half of the houses selling recently have been foreclosures.”

“Builders are starting what they say is one of the most energy-efficient housing developments in Southern California, though its prospects are uncertain in what has become the worst real estate slump in a decade.”

“‘People think they can get a good deal on a foreclosure, but it doesn’t have solar power,’ said Tim McGinnis, president of Woodside Homes’ California subsidiary.”

The Orange County Register. “Four out of the five foreclosurer buyers interviewed by the Register paid less than their home’s previous owner - between 24 percent to 31 percent less. In those four cases, the previous buyers bought at the peak of the market, then lost their home to foreclosure. Savings for the new buyers ranged from $133,000 to $251,000.”

“If she hadn’t found a foreclosure to buy, single mom Lou Kane might still be a renter. She wanted to be in her own home before her 11-year-old son started middle school, so she began house hunting this past winter.”

“After getting outbid on six of the first 12 homes she wanted to buy, she decided to up the ante on the 13th, a two-level townhome in Fountain Valley with new floors, carpeting, windows, copper plumbing and fresh paint.”

“The bank listed it for $417,000, so she offered $425,000. She took possession in March. ‘I wanted to build equity (in a home),’ she said. ‘I knew it was a down market. No one really knows if it will go down further. No one has a crystal ball.’”

“Joe and Michelle Lawwill got a 3 bedroom 2 1/2 bathroom home with a pool in Anaheim Hills for $610,000 - nearly $200,000 less than the previous buyer had paid. But their new home also came with a lot of unexpected repairs after having a neglectful owner and then sitting vacant following foreclosure.”

“The lawn and plants died. Outdoor drains were plugged with dirt. Sprinkler heads lay broken. Lights and wiring had to be replaced. Bad patch jobs covered holes where speakers had been attached to walls. Electric sockets were plugged with paint.”

“After spending all his nights and weekends making repairs, Lawwill’s not sure he would buy another foreclosure. ‘I probably would spend a little bit more and get it from someone who cared about it,’ he said.”

The Press Enterprise. “Sales activity in Riverside and San Bernardino County continues to increase from 12 months ago, mostly from buyers seeking bargain-priced homes in some phase of foreclosure. That accounts for 41 percent of all resale transactions in Southern California, almost six times as much as last year.”

“The median price of a hold sold in Riverside County in June was $275,000 down 31.3 percent from where it was in June 2007.”

“In San Bernardino County the median price has fallen 34.2 percent in the last year to $240,000. In both Inland counties, the median price of an existing home is off about $150,000 since the peak of the housing market in late 2006.”

“The Los Angeles County Economic Development Corp….released its mid-year economic forecast for the rest of 2008 and first half of 2009. A little more than a year ago, Jack Kyser’s agency had anticipated a 10.7 percent year-over-year increase in taxable retail sales for 2007. Instead, the year saw a 3.1 percent drop, and now he foresees a 3.7 percent decline for 2008.”

“‘The overall environment changed dramatically in a lot of sectors,’ Kyser said. ‘It will be pretty thin gruel,’ according to the report.”

“Murrieta officials will place nearly a half-million dollars worth of liens on properties to cover delinquent payments for trash service. The dollar amount is double the prior year’s and coincides with a rise in foreclosed properties.”

“Residents said it is silly that empty homes still have trash cans in their driveways.”

“‘No backyard, no front lawn but they have two trash cans just sitting there,’ said David Johnson, as he looked over his fence into his neighbor’s yard. ‘They left two months ago so I don’t see why they have to pay for trash pick-up. Ain’t no trash there. Just weeds.’”

The San Bernardino Sun. “People driving past new houses often see large signs offering incentives to get them to come in and take a look. The most recent one - ‘Trade-ins welcome.’ Nick Ondatje, a Realtor with Park Place GMAC Real Estate, talked about why new home builders want to work with this incentive.”

“‘As soon as the prices went sky high in 2002-04, we saw these phenomenally historical rises in home value,’ Ondatje said. ‘People had the perception that they had all this equity, so they started touching that money and using it to buy toys. Now the position they find themselves in is they owe $400,000 on their house and they can only sell it for $200,000. The only way that will come into play with the new homes and making a move into that is a lot of the new homes are offering a variety of different incentives to sell their property.’”

The Monterey County Herald. “This time it’s not just a housing tract that’s been waylaid by free-falling home values and credit woes. It’s an entire planned community.”

“Recently, developers for the much-ballyhooed East Garrison project notified Monterey County officials that they planned to hold off on building the first phase of homes and other buildings until the housing market starts to rebound.”

“Keith McCoy of Urban Community Partners said the developers have submitted a formal report to the county, which he said reflects a drop of more than 25 percent in the local housing market, including a ‘drastic’ reduction in the number of homes being sold on the Central Coast, he said.”

“‘We slowed things down a little in the spring and we were hoping things would come back a bit, but they didn’t,’ McCoy said.”

“Supervisor Dave Potter called the delay a disappointment, but not necessarily a surprise. ‘I had hoped the project, because of its unique nature, would survive (the downturn),’ Potter said while acknowledging the difficulty in competing with the ‘glut’ of housing on the market.”

Bay Area Newsgroup. “The housing crisis. A bank failure. Oil shocks. The credit crunch. A job slump. The mortgage meltdown. Feeble auto sales. The stock market slide. A sour economic outlook was delivered to Congress on Tuesday.”

“‘Everything seems to be going haywire and nobody knows what to make of it,’ said Jon Haveman, a partner with Beacon Economics, which tracks regional economies in California.”

“‘We’re in a terrible state of uncertainty,’ said Eugene Miller, chairman of a real estate law firm with offices in Walnut Creek. ‘People have little confidence in the future. Right now, we are in the deer-in-the-headlights phase of the economic cycle.’”

“Marsha Cabral, a Fremont-based residential agent, blames bad publicity for some of the problems. ‘The news media is not doing the housing industry a lot of good,’ Cabral said. ‘Houses are selling. But buyers are more cautious than they should be.’”

The Pasadena Star News. “IndyMac customers have voiced concerns about the safety of their money in the wake of Friday’s takeover of the Pasadena-based mortgage lender by federal regulators. People want to be clear on which funds are insured by the Federal Deposit Insurance Corp. - and which are not.”

“‘I’m scared,’ said Maxine DeBruce, 73, of Duarte. ‘That’s my life savings. I just put all of my eggs into one basket, which I’ve been told never to do. I had to do a lot of repairs on my house. I put in a new roof and a new ceiling.’”

“DeBruce said she purchased three certificates of deposit through IndyMac - one for her and her daughter, another for her and her son and a third that lists all three as holders Debruce may be in luck.”

“‘My first thought was that my life is over,’ she said. ‘What in the world would I do at my age?’”