'I Knew it was Coming'

Here's the understatement of the year:

"I knew it was coming," he said. "I kind of got the feel that prices were getting out of control. I knew something had to change." [Home-sales prices in Stockton went from a median of under $100,000 in 1999 to $350,000 a year ago.]

More from the Stockton Record:

Kirk DeJesus, a Stockton real-estate appraiser, got into the business 51/2 years ago when the residential-sales market was just taking off..."Over the summer, I kept eight appraisers busy," said DeJesus of DeJesus Appraisals. "I could almost work 80-hour weeks without thinking about it."

Those days are over. He basically echoes the sentiments of others in the local real-estate appraisal scene: Although he's still got enough work to keep him busy, his business is a shadow of the frantic work scene since a home-sales slowdown hit in the fall. "It's week-to-week, to be honest with you." DeJesus estimates business has dropped 45 percent since the summer...

One part of the appraisal business is starting to pick up, though, he said. "Foreclosures are becoming the new thing now," he said. "We hadn't done any foreclosures for three or four years and, now all of sudden, we're getting hit with them..."

First-quarter foreclosure activity in San Joaquin County hit the highest level in two years as the slow housing market made it tougher for owners to sell homes to pay off their mortgages, according to the La Jolla-based DataQuick Information Systems, which has tracked California foreclosure activity since 1992.

Speaking of foreclosures, RealtyTrac recently ranked Stockton-Lodi #1 and Sacramento #2 in California for percentage of households involved in foreclosure activity. From the Sacramento Bee's front page:

A new survey released Tuesday confirms what steadily has become more obvious to local real estate experts: More homeowners in the four-county Sacramento region are drifting toward foreclosure. According to Irvine-based RealtyTrac Inc., the Sacramento area ranks second in the state for percentage of households in some stage of foreclosure activity. That means the area ranked higher than every other California metro area except neighboring Stockton-Lodi, which ranked 15th...

"We're not seeing a lot of people at that foreclosure stage yet, but we're sure seeing a lot of people who are headed that way," said Jeff Tarbell, president of Sacramento-based ATM Mortgage. Tarbell said that many people can't afford both rising mortgage payments and their cars, credit cards and other amenities. "We're starting to see the beginning stages of a little panic about not controlling your spending," he said.

Rick Sharga, RealtyTrac vice president for marketing, said some level of foreclosure activity at 2,514 homes in the four-county area during January, February and March likely stems from households struggling with adjustables that are increasing as interest rates rise; slowly falling home values that limit the amount of home equity loans; rising inventory of homes for sale; and a history of speculative buying. "Something as simple as demand softening can have a huge impact on a local area's foreclosure listings," Sharga said.

After a five-year boom that saw many homes double or more in value, the Sacramento-area housing market has cooled significantly. Sale prices of existing homes remain below their 2005 peaks in all four counties, while inventory of homes on the market climbed to 11,344 last month.

Last fall one of the nation's largest financial companies, Cleveland-based National City Mortgage, listed Sacramento and Stockton-area markets among the nation's most overvalued. The company said Sacramento prices were 54 percent overvalued and Stockton's 58 percent too high. Business Week, too, recently labeled Sacramento one of the nation's riskiest real estate markets.

That is old information. The most recent National City study says that Sacramento is 64% overvalued (and Stockton is 80% overvalued).

Last year, about three-fourths of Sacramento homebuyers used adjustables, and two-thirds of buyers were still using them in March, according to DataQuick Information Systems, a research firm based in La Jolla. "The difference between a payment that's $1,700 a month and an adjustment that brings it up to $300 more is huge," said Linda Bennett, a real estate agent with Sacramento-based Riverpoint Realty. Agents are seeing more homes listed by people who are struggling with payments, she said...

Most of the big payment jumps will happen next year and the year after, Christopher Cagan, director of research and analysis at Santa Ana-based First American Real Estate Solutions.