The Housing Bubble

A report from the Bakersfield Californian. “The price of an existing single-family home in the Bakersfield area rose 5.6 percent to $133,000 from April to May, which could be a sign that Bakersfield will escape the double dip housing recession that has befallen much of the nation. ‘I don’t want to put another nail in the Bakersfield housing market coffin just yet,’ said Gary Crabtree, author of Affiliated Appraisers’ monthly Preliminary Crabtree Report. ‘We’re not dead yet.’”

“May’s $133,000 median sales price in Bakersfield was 16 percent above the area’s April 2009 two-year low of $115,000. Despite the monthly gain, local home prices were still down 8.6 percent from a year earlier. ‘As long as we don’t get a flood of REOs (bank-owned properties) and foreclosures, I think we’ll be OK.’ said Scott Tobias, VP of the Bakersfield Association of Realtors.”

“But therein lies the rub, said Matt Perry , president of the Central Valley chapter of the California Association of Mortgage Professionals, who said a wave of new foreclosures is likely. ‘As much as I would love to believe that the valley will avoid a double dip, I’m skeptical,’ he said. ‘I hope I’m wrong.’”

The County Sun. “Bank of America has announced plans to open a specialized counseling center this month in Colton to assist homeowners on the brink of losing their homes. At the close of 2010, roughly 32 percent of California home mortgages were ‘underwater,’ meaning that borrowers owed more than the current value of their homes, according to CoreLogic.”

“But a loan modification can be a near-maddening process, as told by those who delivered testimony during an Inland Congregations United for Change event held Tuesday night at Our Lady of the Rosary Cathedral in San Bernardino. ‘Every time I called somebody, somebody new would call me,’ said Maria Varela, a member of an ICUC-affiliated church in Riverside. ‘It was really scary, that we were going to have to live in the street or under the freeway, because we didn’t have money to pay for rent,’ she said, speaking in Spanish through an interpreter.”

“Bank of America’s Inland Empire market president, Al Arguello, attended the Tuesday night forum and said his employer prefers to resolve mortgage problems without foreclosures but cannot simply agree to the ICUC’s proposal. ‘Principal reduction is not allowed for all of the loans,’ Arguello said. ‘Fannie (Mae) and Freddie (Mac) will not allow that.’”

San Diego City Beat. “If not for her careful record keeping and a friend who’s a financial consultant, Rosa Sanchez might have lost her house by now. Though she qualifies for a federal program that requires banks to help borrowers modify their home loans, she’s had to stave off foreclosure twice this year. Sanchez is caught in what’s recently been dubbed a ‘dual track’: While she’s trying to get the loan modification that would allow her to keep her Vista home, Bank of America is moving ahead with foreclosure proceedings. The result is a frustrating mess.”

“‘The right hand doesn’t know what the left hand is doing,’ Sanchez said of her interactions with the bank. ‘They’re giving me different deadlines, they’re making me jump through hoops and they keep wanting more and more paperwork.’”

The Bay Citizen. “On Jan. 19, 63-year-old Tanya Dennis hired a locksmith and broke into her South Berkeley home. A former vice principal of Oakland’s Castlemont High School, Dennis said she wanted to resume living in her home of 27 years after foreclosure nine months earlier and eviction by Alameda County sheriff’s deputies in December. Dennis said she wants her lender, Wells Fargo, to reduce the principal she owes, creating affordable monthly payments.”

“‘These banks got billions of dollars of our money. We can’t afford to be complacent,’ Dennis said.”

“Tom Goyda, a spokesman for the bank, said Wells Fargo has ‘worked with Dennis for more than two years,’ but that ‘there is no option for which Dennis qualifies.’”

“Dennis, who broke into her house, lives in a home that is virtually empty. By the time she reoccupied the property, a real estate agent had already pulled up the carpets and sold her furniture. So far, she has been able to hold off a second eviction, filing a lawsuit in federal court without the help of a lawyer. Since the foreclosure last year, she has not made a mortgage payment.”

The Valley News. “Riverside County supervisors tentatively approved an ordinance today that will prohibit solicitation on county property — including ending the long-held tradition of holding foreclosure auctions on the courthouse steps. Mortgage lenders have been holding public foreclosure sales on the courthouse steps for almost as long as the building has been there, according to county officials.”

“Since the region’s real estate market went into free-fall nearly four years ago, auctions have been a regular — sometimes daily — occurrence, routinely attracting anywhere from 80 to 100 people. ‘It degrades our courthouse,’ Riverside City Councilman Mike Gardner told the board. ‘We need to relocate that activity away from the building. It would be good for the county and the city and respectful of the courthouse.’”

The Hesperia Star. “Foreclosed properties falling into disrepair will come back to haunt the banks that own them, if the Hesperia City Council has its way. Tuesday night, the council directed staff to develop a foreclosed property management program that would identify foreclosed properties falling into a blighted state and then penalize the new owners if they did not bring the buildings back into good repair.”

“‘There’s a higher than normal amount of foreclosure properties’ in the city, Hesperia’s Principal Planner, Dave Reno, said Wednesday. The city estimates there are approximately 1,400 foreclosed-on properties in Hesperia. ‘You have bank-owned properties and which are in some state of foreclosure … sitting around, unmaintained. … They have a blighting effect on the community.’”

The Desert Sun. “A Los Angeles-based real estate development firm has purchased The Villas of Mirada, a gated, upscale residential development on 27 acres in the hills of Rancho Mirage that had fallen into foreclosure. Meriwether Management Co. acquired the property and has begun offering eight completed homes for more than $1 million apiece.”

“Forty-six additional homes with panoramic views of the Santa Rosa Mountains are planned for the area adjacent to the Ritz-Carlton resort. Graham Culp, one of Meriwether’s three principals, said it was an opportunity for the firm to acquire a distressed, luxury residential project with fully completed infrastructure and standing inventory ‘at a significant discount to replacement cost.’”

“‘Our sense of the Coachella Valley is that there is lots of inventory on the market, and you have to find something that distinguishes itself,’ Culp said.”

“The eight homes have asking prices of $1.25 million to about $1.5 million. They were built between 2007 and 2010. Roughly 15 homes built and completed in 2006 that were part of the first phase of the development sold for $2.25 million and up. Those homes are not part of the Meriwether sale.”

The Ventura County Star. “SouthShore, the 1,500-unit residential development proposed in south Oxnard, if approved by the Oxnard City Council, would eliminate over half of the large open space that serves as the buffer between existing urban development and the fragile Ormond Beach wetlands. Here are some other reasons why this proposed project is a bad idea.”

“In Oxnard, there are many, many unsold homes and bank foreclosures. Incredibly, the city of Oxnard has already approved the construction of thousands more new homes that are not yet even under construction. For example, the NorthShore development in west Oxnard is empty and undeveloped. The developer started construction, destroyed the natural coastal dunes and then halted construction indefinitely when it went into receivership.”

“According to RealtyTrac, almost 2,000 homes in Oxnard are in foreclosure, the majority of them are currently empty, with no one paying taxes on them. Homes in new housing developments throughout Oxnard are similarly unsold and empty. One of them, Westview Development, about one mile from the proposed SouthShore development, has five homes in foreclosure, several new homes remain unsold and the development has not yet been completed.”

The Record Searchlight. “In May, Redding’s Building Department issued 122 permits, the most since June 2010 when 150 were recorded. Much of the work is concentrated in the home remodel and repair market, in which the number of permitted projects through May is up 18 percent over a year ago. But despite the increase, 2011 remains in a deep funk that is threatening to outpace 2009 — a year many consider the worst ever in Redding — for futility.”

“Home construction has slowed to almost a standstill as just one housing start was recorded last month, bringing the year’s total to 10, a 71 percent plunge from 2010 when the city recorded 34 single-family home permits from January through May. ‘It’s the economy, but the weather is a downer,’ said Jeb Allen of Palomar Builders, which is building the Highland Park subdivision.’

“Anticipating greater demand, Palomar gambled in December when it took out nine permits to build spec houses (homes that haven’t sold) in Highland Park. Six of the homes have been built, while the remaining three are foundations waiting to be framed. ‘We are off considerably from last year,” said Allen, whose company has taken out three more single-family home permits since December. ‘If we can sell three houses in the next 30 days, we will be fine and can start over again.’”

“Allen has sold two houses in the last four weeks. He says foreclosures continue to siphon off potential customers. ‘People are still coming through,’ Allen said. ‘Some are hesitant because they don’t want to make a decision or they need to sell their house first.’”