The Housing Bubble

The Bay Citizen reports from California. “The Obama administration’s flagship anti-foreclosure program is failing California homeowners according to a report released Tuesday by the San Francisco-based California Reinvestment Coalition. In San Francisco and the East Bay, the group found that only 1,807 homeowners — 11 percent of those applying through HAMP — had successfully gotten their lender to lower the amount of their loan. That figure, however, was significantly better than in Los Angeles and Fresno. In both areas, fewer than 5 percent of loan modifications included some degree of principal forgiveness.”

“‘Loan servicer intransigence continues to plague borrowers and communities,’ said Kevin Stein, the group’s associate director.”

“Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, said he was not surprised by the findings. ‘A one-size-fits-all approach does not work for everyone. There is no silver bullet,’ he said. ‘If the expectation was to change the world and solve everyone’s problems, you were bound to be very disappointed.’”

The LA Times. “Local residential real estate prices and the number of pending sales dropped off in May, casting gloom over the traditionally strong spring housing market. The average sale price of a Glendale home in May was $456,000, down $50,000 from the same time last year, according to statistics compiled by Glendale Keller Williams agent Keith Sorem.”

“Sorem said foreclosed homes are often in poor shape, driving down prices on comparable properties. The fact that those deals are a growing percentage of local transactions is a sign that prices likely will remain soft in the foreseeable future, he said. ‘Properties are coming on the market, not because people are moving, but because they can’t afford to stay there,’ Sorem said.”

The Bakersfield Californian. “A lot of homeowners can’t sell right now because they owe more on their mortgage than their home is worth. There are also huge numbers of homes tied up in the long and cumbersome foreclosure process due to the region’s double-digit unemployment. Lender-owned property sales accounted for about 44 percent of home sales in the area, nearly unchanged for both the month and year.”

“Demand for lender-owned properties is falling as buyers move toward short sale inventory, which usually is in better condition and commands better prices, said Gary Crabtree of Affiliated Appraisers. Crabtree said he is troubled that homes listed as short sales are sitting on the market for about 150 days, versus about 70 days for a foreclosed home.”

“‘The banks are taking a long time to close these deals, and that raises an alarm,’ he said. ‘Obviously if a seller is doing a short sale they’re in distress, and if they can’t get an answer, those are future foreclosures. At some point, they’re going to walk away and you’re going to see some of those convert to strategic defaults.’”

The Martinez News Gazette. “It was after midnight when the last public speaker approached the City Council podium to air their oppositions to the Alhambra Highlands development project on Wednesday. The Council was charged with deciding on four separate appeals to the May Planning Commission approval of the 110-home subdivision.”

“During the hearing, the Richfield Development Corporation team pointed out the company has spent $30 million to date on trying to secure the necessary building permits, and the entire project was going to cost them an estimated $114 million before it was finished. If completed, each home would go to market with a $1.25 million price tag. Council member Lara DeLaney questioned the figures, saying, ‘It’s going to cost over $1 million just to build each house? That’s pretty interesting.’”

“‘Richfield president Ricardo Sabella admitted to the Council that at this point in time, he was doing ‘damage control,’ by moving forward on the project. ‘If we quit now, that’s $30 million gone … it’s more or less damage control at a certain point, we’re chasing that. We’re not going to make a killing or any reasonable profit,’ Sabella told the Council. ‘We’re trying to save as much money as we can and I think we’ve learned our lesson.’”

The Long Beach Post. “Richard Daskam’s name has become synonymous with the million-dollar-listings on Signal Hill that started popping up after the turn of the millennium, the Keller Williams agent is also quite active in Long Beach, a city on which he maintains a positive outlook when it comes to property. Q) When the last spate of foreclosures hit Southern California, it negatively impacted many communities, creating blight in the form of unoccupied homes and uncared for communities. Are you seeing this in Long Beach? If so, which communities?”

“A) Surprisingly, I do see some of this in almost every neighborhood. And it’s not just the homes that have already been foreclosed on, it’s also the short sales and loan modifications. My neighbor is trying to do a loan modification and hasn’t cut his grass in months. I guess he thinks that if the outside looks terrible then the bank will grant his loan modification!”

From MSNBC. “Single women have become a major force in the real estate market. According to the National Association of Realtors, last year unmarried gals made up 20 percent of all home buyers, where single guys accounted for 12 percent. Why the discrepancy between men and women? No one seems to be able to put their finger on it exactly. I personally think it’s because the concept of home resonates so strongly with women. Regardless of our marital status, we want to come home from work to a place that feels like ours.”

“‘I’ve been in real estate a long time, and this is the best market I’ve ever seen for buyers,’ says Jan Gray, a Northern California realtor who specializes in coastal properties south of San Francisco. ‘The rates are super low, and don’t believe people who say it’s hard to get a loan. It’s just not like the old days, when banks accepted you if you had a pulse.’”

“As a single woman, Gray knows the joys of feathering a nest by oneself. ‘When women shop for a home with a man, I always see them deferring to him: his need for a garage, or a work space, or a man cave. When women buy for themselves, they are excited about turning this place into something that reflects them and who they are — they know they could even paint the bathroom pink if they wanted to!’”

The Hollywood Gossip. “Carnie Wilson has no one to blame for her unhappiness. She likely purchased a home during her musical heyday, watched it tripled in value during the boom years of 1990-2006, and then borrowed against it to support a lifestyle beyond her means. This member of iconic 1990s trio Wilson Phillips is facing a serious situation: foreclosure.’

“As first reported by TMZ, Wilson has defaulted on her California home loan and has until July 21 to fork over the $1.6 million owed on the residence. Otherwise, the house goes up for auction.”

The Vallejo Times Herald. “‘How do you tell a 2-year-old that you failed as a provider?’ It was the question Yvette Harris of Vacaville asked herself as she and her family prepared to vacate the home they lost to foreclosure last year. Since March, the family — including now 4-year-old twin sons and an infant daughter — has been leasing to own a new home through a program available to qualified Solano County residents that will last only as long as its funding, local Realtor Linda Cook said. ‘My husband saw (the program) advertised in the paper, and I called, and it couldn’t have worked out better for us,’ Harris said.”

“Harris and her family consider Fresh Start ‘a godsend.’ ‘My husband got sick and almost died and he lost his job and the bank wouldn’t work with us to modify our mortgage,’ said Harris. ‘We lost the house and moved in with my mother. It was really, really, tough.’”

“The process took nearly two years. One of the Harris’ sons helped Harris put the episode into perspective, she said. ‘My little guy said when we were moving, ‘our house is broken, huh?’ And I said, ‘yes,’ and that’s how I see it now,’ Harris said. ‘I consider myself a homeowner again.’”

The Ventura County Star. “Housing in Southern California and Ventura County has stagnated, local experts said, with little change expected for the near future aside from the month-to-month shifts in sales and price numbers. Dennis Torres, adjunct professor and director of real estate operations at Pepperdine University, believes the housing market will remain stagnant until about 2015. Torres said there are a lot of foreclosures on the market bringing down prices — and more waiting in the wings.”

“Torres predicts a different future housing market after things turn around. He expects to see more joint-ownership of homes, with several generations living under one roof, and a return to the smaller homes of the past. American neighborhoods could start to look more like those in Europe or Japan as long-overdue inflation raises the cost of living and people reconsider what they can afford, he said.”

“‘People who have lived through this recession will never spend the same way we did years prior to the recession,’ Torres said. ‘We have felt the sting of it, the reality of it.’”