Central Valley Cities: Where Even Vultures Fear to Peck?

From CNN Money (hat tip spacebar):

Real estate investor Matthew Martinez is the point man for a private equity group that plans to invest $200 million in Florida condo developments. But recent forecasts show many housing markets in the Sunshine State are looking at double-digit drops in home prices. What is he thinking? "The smart money is thinking about buying there right now," says Martinez. "It may be six to 12 months early, but it's a good time to be searching for deals."

Local housing markets that have fallen far, yet have the potential to recover soon, are ripe targets for "vulture investors," who buy cheap in the hope that prices will rebound.
...
[Jonas] Lee [of Redbrick Partners, a private equity firm that invests in real estate] is also is interested in Florida, and the Boston and D.C. areas as well.

Some of the down markets he's not considering include the Central Valley cities of California, where prices in places like Stockton soared for several years. Moody's projects prices there will fall 25 percent. Lee doesn't like Stockton's prospects because, "It was so overpriced there and there are few constraints on building." If prices start to recover, developers can quickly build again, putting a damper on price growth.

From the Fresno Bee:

Stockton is the foreclosure capital of the nation for one key reason: Families had to stretch financially to buy a house. Families that fled the high-cost Bay Area to buy a house now are losing them at record rates, according to samplings by RealtyTrac, which monitors default activity. Other regions close to high-cost urban centers -- Modesto, Merced and Riverside/San Bernardino -- are also high up the foreclosure list.
...
About 25% of home buyers in Stockton used risky, or subprime, loans -- some featuring payments that start small but rise sharply within three years -- to finance purchases. Many of those transactions occurred between 2003 and 2006 when prices were tripling in some areas. And today, with home values falling and strapped owners unable to sell their properties, a quarter of those who took out such loans are in default at least 60 days, according to LoanPerformance, a Bay Area company that tracks mortgages.

From the Lodi News Sentinel (UPDATE: follow-up article here):

Ralph Bilbrey had finally had enough. Grass on his neighbor's lawn had grown several inches high, but there isn't a homeowner to mow it. Yet there is a "for sale" sign with the name of Prudential California Realty on the lawn. The neighbor's Park West home is in foreclosure. Residents estimate that no one has lived at the Tejon Street residence for a year or more. And nobody is mowing the lawn. Until Wednesday, that is.

Despite reportedly being told by a Prudential representatives to stay off the property, Bilbrey took his lawn mower, saw and pruning shears and did about three hours of work Wednesday morning.

Bilbrey and a neighbor, Rob Rodriguez, have brought the matter to the attention of Lodi City Hall and Prudential during the past two weeks. They feel they haven't received a satisfactory answer. "Why do you let this home go so bad when you're trying to sell the property?" asked Rodriguez. "The lawn was so high you could deer hunt on the property."

The situation in Park West is just another example of how the downturn in the real estate market and the mortgage crisis have left homes unoccupied in Lodi, San Joaquin County and throughout the nation.

From the Appeal Democrat:

If misery loves company, area residents trying to sell a home should be feeling plenty of love...The Yuba-Sutter market’s 35 percent drop in housing sales between August 2006 and August 2007 puts local homesellers in the same lousy neighborhood as nearly everyone else, according to numbers compiled by the Sutter Yuba Association of Realtors.
...
Comparing August to August sales, Yuba-Sutter weighed in with a relatively steep median sale price drop of 8.1 percent – $290,000 to $260,000, according to the SYAR numbers. Yuba City Realtor Lloyd Leighton noted that in December 2005, when the area’s house prices peaked, the median sale price was $315,000 – 17.5 percent higher than in August 2007. “That’s been a pretty dramatic decrease over less than two years,” Leighton said.
...
Leighton’s glass-half-full message for area home sellers: The current trend is much like that of the early ’90s. “So the good news for those who bought homes (during the latest price peak),” he said, “is that people have gone through all this before, recovered, and are now doing well.” Realtors’ long-term predictions for the future are not so bad, he said, “but the short-term stuff looks pretty ugly.”

Hey, Hey, Ho, Ho. That auction has got to go!