'A Lot of People Put Their Heads into the Sand'

From the Manteca Bulletin:

The courthouse steps in Stockton are about to become the busiest sales location for South County homes. In a 17-day period starting Monday, 69 homes in Tracy, Manteca, Lathrop, and Mountain House are going on the auction block.
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Brad Young of PMZ Real Estate who has created a niche in the market by learning the pitfalls of buying a short-sale from a lender and helping buyers and the seller negotiate them, noted that it isn't rare for those who go belly-up to strip homes of light fixtures, stoves, microwaves, light switches and even light bulbs.

“It's not that unusual,” [Tom] Wilson [of Wilson Group Realtors] said. “The homeowner going into default often gets angry and blames everyone else for their situation.”
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[Real estate broker Bev] Marlow said she wasn't surprised but was “dismayed” at the foreclosures. “A lot of people put their heads into the sand,” she said.
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The biggest impact of the foreclosures won't hit until the lenders repossess the homes officially on the courthouse steps since there will be few, if any bargains for even the most seasoned bankruptcy buyer.

That means in the coming weeks the lenders will be putting those homes back on the market. Unlike the buyers being foreclosed on who were desperate trying to put a short sale together - selling the home for less than is owed which also means they are taxed on the difference by the IRS - the lenders will price the homes to move to reduce their losses.

That explains why one lender who foreclosed on property on Victoria Trail in Lathrop's Mossdale Landing listed the home built in 2005 that sold over a year ago for $620,000 for $377,950 even though it passes inspections with flying colors and is in excellent shape.
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Wilson expects lenders to price those homes fairly aggressively which would put a damper on the sellers of other previously owned homes.

Compounding the market is the fact there are almost 570 resale homes for sale within Manteca's city limits as of Monday. That doesn't count new homes or homes being sold by the owner without an agent. “That kind of market conditions with an existing 10-month inventory means price is what is going to sell a home,” said Wilson...[W]ith the glut of homes on the resale market home sales are sluggish even for short sales where the owner sells for less than is owed of the home.

Wilson said it is also unfair to use subprime loans as the whipping boy for the rash of foreclosures. “The idea that subprime loans are entirely behind all of this is a fallacy,” Wilson said. “People let themselves get lulled into the idea they could afford more house than they could. They bit a lot more off than they could chew with escalating interest payments.”
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Sales activity in Lathrop has dropped almost 70 percent in the first four months of this year compared to the same period last year. Sales in Manteca are just a bit better being off about 60 percent.