Wednesday, May 17, 2006

Running Out of Gas, Bay Area Transplants Head Home

Speculators are not the only people fleeing the Central Valley housing market. CBS 13 looks at how gas prices are pushing Bay Area transplants into foreclosure and back across the Altamont Pass.

Mechelle Sanders is a foreclosure counselor. Today she's following up on as many as 14 leads in the Stockton area. In many cases, Sanders says foreclosure victims are former Bay Area residents who underestimated the high cost of commuting. "They commute, but with the prices being high in gas...they're going back because it's not making the difference," said Sanders.

The Westin Ranch development was the object of desire for Bay Area bargain hunters three years ago. But real estate agent Cynthia Carter says the number of homes here up for sale has quadrupled since last year. "The commute you can do for about a year," said Carter, "and then it becomes really hard on the body physically for people."

But this is no longer a sellers market.

In April of last year there were 935 homes on the market in the bedroom communities of Stockton, Tracy, Lathrop and Manteca. This April the number skyrocketed to almost 3,500...a 270% increase.

7 comments:

Happy Renter said...

lander,
Wow. This is excellent. Great reporting.

Yes, the recent gas spike can mean
a commute from Sac or Stockton, in an efficient vehicle, can cost you up to $400 a month.

and the bay area transplants were what everyone was depending on to reinforce home prices. $400 dollars off the monthly payment on a home in Sac vs. a home in the bay area is what 20%.

Happy Renter said...

To all the people that called me a bubble head,
I hate to quote Tom Cruise but in "The Color of Money", while slowly sinking every shot in a game of pool he stated

"It just keeps getting worse and worse, doesn't it"

Anonymous said...

Any evidence of the opposite effect, i.e., homes and condos rising in price (or holding steady) in urban centers and near major employers?

sf jack said...

anon #456,443 said:

"Any evidence of the opposite effect, i.e., homes and condos rising in price (or holding steady) in urban centers and near major employers?"

There is evidence that rents are no longer falling in SF City proper. Other than that, I'd say that prices are holding in some areas of SF, but certainly not all. In time, I would expect all areas to "go negative", if barely, and especially when taking into account inflation over the next several years.

I don't think anyone who just gave up the Stockton to wherever commute for financial reasons is going to turn around and buy a house closer to the urban center.

For one, it's a lot more expensive. And aren't they under some financial duress? Also, rents are half to 2/3 what a monthly mortgage payment would be for a comparable property.

It's a "renters market" for the forseeable future.

Happy in SF said...

Yes, for some reason rents have gone up a few hundred dollars recently in San Francisco. About a year or so after the gold rush there were "for rent" signs on literally every building. I had the satisfaction after a nightmare of bidding wars and brides during the .com boom where I barely got into a tiny crap studio for 1,100.00 to walk in to view (alone) a HUGE 1 bedroom flat, that could easily be used as a 2 bedroom, across the street from the Ritz for $1,200.00, and was approved same day. they're renting for $1,600.00 now. You can walk to anywhere downtown in about 10 minutes.
Sacramento, please keep the transplants! The thinning of the population was a really good thing.
I guess I'll have to keep living in the heart of San Francisco until Sacramento costs less and pays more, wait, am I in bizzaro world??

Patient Renter said...

"Sacramento, please keep the transplants! The thinning of the population was a really good thing. "

You don't want 'em and we don't want 'em.

Diggin Deeper said...

Happy Renter said...

"Yes, the recent gas spike can mean a commute from Sac or Stockton, in an efficient vehicle, can cost you up to $400 a month."

Let's not forget that food costs are rising almost every month(today, milk is projected to rise 9% by fall). Add this to the commuting costs, along with the rising costs for services including clothing, restaurants, dry cleaning, medical and dental costs, utilities, etc. and you find less money available to pay the mortgage.

The good news today is that consumer spending rose last month twice what the ANALysts projected (.6% vs .3%)and incomes rose by the same amount and disparity. But the savings rate this month for all Americans was another negative savings month (-1.2%) This negative savings number always puzzles me, because the only way I can see that savings can be negative is to go into debt ie. credit cards,home equity loans, etc. I guess if you have a "pick your poison" loan and your balance is rising, this might skew the numbers as well.