Tuesday, October 09, 2007

'Our Neighborhood Has Depreciated Tons and Tons of Thousands of Dollars'

From CBS 13 (and video):

Northern California is home to one [of] the highest foreclosure rates in the entire country. Some homebuilders are leaving half-built homes in new developments. One of 15 sites in Elk Grove are on hold after struggling Dunmore Homes company sold [to] a local business man.

"My personal best guess would be a few more months. It's going to take some time. It's a long process," said V.P John Slaughter who thinks it could be a white before the bulldozers break ground again, "The market has really hurt us." He's also concerned about the half built homes with winter coming. "Currently, with our lenders, we're looking at completing those homes to the point of making their weather proof," said Slaughter.
From the Elk Grove Citizen:
Home foreclosures and disruptive tenants are affecting many Elk Grove residents these days, especially those who watched their neighborhood and property decrease in value because of it...Sergio Perez lives off of Bilby Road in East Franklin. Recently, a neighbor abandoned their home and left it. The neglect could be seen in the lawn. Perez took it on himself to maintain the exterior. “I’m watering the lawn,” he said. For the sake of his neighborhood’s appearance and value, Perez has been looking after property he does not own.

[Tim] Chan said that situations like this are the main problem in the area. “The issue is with all the abandoned houses, all the foreclosures, because that is what sets it all off because A affects B, B affects C, C affects D,” Chan said. “Why are we having to pick up the slack for somebody else?”
From ABC's Good Morning America (with video):
A troubled real estate market in Manteca, Calif., has forced a town to resort to gimmicks to sell homes, including big one-day sales, much like the ones at car dealerships or appliance stores. Real estate is on the edge. Around the country there are communities of brand new luxury homes with no buyers. So the developers have now taken the drastic step of putting dozens of them up for auction at a huge discount.
"Within the last 13 months our neighborhood has depreciated tons and tons of thousands of dollars. I can't believe it," said Sherry Bergquist, a homeowner in Manteca, where developers will soon begin to employ this sales tactic.
Randy Brown's dream backyard is now just a patch of dirt. He can't bear to spend any more money on the house. "I paid $440,000 for this house," Brown said. Today, he could buy it for $285,000.
[H]omeowners are at their wit's end. "We can't sell. We can't refinance," Bergquist said. Even as the homes sit empty on the verge of a controversial auction, construction continues and new homes continue to go up in the neighborhood.
From the Tri-Valley Herald:
For the fourth consecutive quarter, the amount of money Tracy collects in taxes has dropped, this time by nearly 6 percent, the largest fall since revenue began declining a year ago. Coupled with fewer new homes being built in Tracy — limited to 100 until at least 2012 through Measure A — the city might have to tighten its belt before the end of the year.
Jeff Morri, with Stan Morri Ford in the Tracy Auto Mall — the largest tax engine in the city — said the industry is in a downturn nationwide. "We all wish we could tell you why," Morri said. "Personally, I believe, with the housing market as soft as it is, and so many foreclosures, its creating a vacuum. It's a very symbiotic relationship."


andnee said...

Tons and Tons of thousands...

Wow, need we say more?

Jacob said...

"We all wish we could tell you why," Morri said. "Personally, I believe, with the housing market as soft as it is, and so many foreclosures, its creating a vacuum. It's a very symbiotic relationship."

Its not that hard to figure out. People cant afford to buy at these prices.

Foreclosures will only continue since "tons and tons" of owners had 100% financing and have never paid any principle.

So tighter credit standards + Home is worth less than you owe + you have no cash to make up the difference means you cant sell, and cant refinance so you will lose the home and nothing can stop that.

Max said...

Apparently there's increasing demand at the homeless shelters as well:

Credit Scar Left by Foreclosures Leave Many Without Homes

Roughly 10,000 homes in the Sacramento region are in some stage of foreclosure. That means thousands of homeowners, often with their children, are in a fix to find some place to live.

Shelters in the area are showing the first signs that some in search of a new roof over their heads will be luckier than others. Michelle Steeb, the director of St. John's Shelter for women and children recently checked in a family after their home wound up in foreclosure. "The bank showed up on their doorstep -- this was about four or five weeks ago -- on a Monday morning and told them they needed to leave, and they lost everything," Steeb said.

Steeb says finding the families on the rebound from foreclosure a new permanent home won't be easy.

"Their credit is affected. Their families aren't going to be able to take care of them forever," said Steeb.

St. John's is limited in what it can handle. It's already at capacity, and the shelter is now turning away 55 women and children each day. That's more than twice the 25 a day it had been turning away during the first half of the year.

"Though you can't tie anything directly to the economy and the foreclosure rate, something has to be there because we've never seen an increase like this so rapidly and so dramatically," said Steeb, who adds a third of the women have jobs.

Her big fear is if there is an onslaught of families who need shelter, there are only a handful of agencies. St. John is not one of the facilities that will accept men into facilities where there are women and children. Many families will not be able to stay together.

SacramentoCrash said...

Thank the bloodsucking developers who kept raising the prices $10,000 per month during the bubble years.

Also thank the lenders that would lend to anyone that could fog a mirror.

And of course we have the suicide no doc, ARM, option pay liar loans that were so prevalent in SacTown.

And what would it be without the greedy flippers and idiotic investors from the Bay Area?


Cmyst said...

Lately, I'm not getting any flack when people find out I'm a renter. And I'm also not hearing any protests or chuckling when I tell them that I might buy in another few years when prices will be much lower.
Just silent and thoughtful nodding of heads now.

pavlovianvestor said...

A ton of one dollar bills is about $900k (see, here). So, you're losing tons and tons of thousands of dollars? Don't think so, looser©. Typical FB!

anon1137 said...

This is an odd situation, with people flooding homeless shelters while thousands of homes sit empty with brown lawns and green pools. What's wrong with this picture? Could prices have anything to do with this?

Brings to mind an interesting factoid from an article I read this weekend: the risk of foreclosure was more highly correlated with the debt/equity ratio than the credit score of the borrower or the amount of debt that the borrower had, or the amount of debt compared to income. In other words, when home values fall much below what borrowers owe on their mortgages, they walk, regardless of their ability to pay. This may become clearer during the next 12 months.

Also, as a buyer at the top of the last real estate boom, I can completely relate to the homeowner in the Good Morning America story. When your home is falling in value, you are *not* motivated to invest in home improvements.

Mike said...

"Lately, I'm not getting any flack when people find out I'm a renter. And I'm also not hearing any protests or chuckling when I tell them that I might buy in another few years when prices will be much lower."

Yep, same here Cmyst. People thought I was crazy 2-3 years ago when I told them, housing is due for a serious correction. And I told lots of people, anybody who would listen. But really nobody listened at that time. In fact, I often was ridiculed for my belief. And when I sold my house in late 2004 and rented for the first time in 12 years, most thought I was really CRAZY.

Things have changed indeed, now when I see friends and coworkers they asking me how the housing market is doing. Just last month, I got two calls out of the blue from people I haven't heard from in a long time asking my advice about the housing situation and what they should do. I guess they realized now what I was preaching 2-3 years ago was true. It sure feels good to get vindicated.

Gwynster said...

Mike and Cmyst,

Last year, we were called crazy. This year, we're all brilliant -Nobel prices for us all!

Anyone could have predicted this by just looking at local econ numbers. I guess what makes us "brilliant" is that we bothered to look beneath the surface at all.

foreclose_me said...

If it were just a housing crash, yes the homeless shelters would be empty as soon as prices normalized. But this will be more. There is no money for some people.

Not that there's anything wrong with that. But if they are going to exclude men from shelters and break up families, they ought to at least have the decency to segregate them too.