Friday, June 27, 2008

Last Resort

From the Sacramento Business Journal:

Members of a Placer County country club stand to lose an estimated $11 million in initiation fees because of the club’s foreclosure. Winchester Country Club members will be allowed to play golf there for a nominal fee while the course’s fate hangs in limbo. They’re hoping a buyer will honor those memberships when the course, clubhouse and remaining land are sold by the foreclosing companies, led by Wachovia Bank. If not, they would lose $25,000 to $85,000 each, depending on when they joined and the type of membership.
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Winchester was the most expensive country club for members in the Sacramento region, said golf appraiser and consultant Ron Carciere of Auburn..."Not a lot of people around Auburn can afford a $1 million or $2 million home, so you’re relying on attracting people from L.A. or the Bay Area to relocate outside of Sacramento," he said. "It’s a market that won’t support the values they were looking to get. It struggled from the beginning."..."There are a lot of sophisticated people here who didn’t realize what we could lose," [a resident] said.
From the Modesto Bee:
The Western Hills Water District that serves the Diablo Grande resort development in western Stanislaus County has been cited by the California Department of Public Health for failure to clean up problems with the water supply in the development.
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Residents of Diablo Grande are frightened and frustrated with the problem, said Kristina Ross-Ortiz, who with her husband owns two homes in Diablo Grande, an investment property and their residence. "We have to use bottled water for drinking and cooking," she said. "There's no way around showering. We are just stuck. We are terrified of getting cancer or having children with birth defects," Ross-Ortiz said.
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Home prices at Diablo Grande have shrunk to half of what she and her husband paid, Ross-Ortiz said, making it difficult to move. "It makes you think we should just walk away. It comes down to the health of yourself and your family," she said.
From the Sacramento Bee:

It would have been easier for Rick Zibull to take it if his restaurant was closing because the competition beat him. But Z's Wine Bar and Bistro in El Dorado Hills is shutting down Saturday night for reasons beyond its owner's control: Gas at $4.50 a gallon. Soaring food costs. And that rotten housing market. "People having to make a choice: 'Do I spend a hundred bucks to put gas in my tank, or do I spend a hundred bucks on a night out?'" Zibull said. "You can guess which way that decision goes."
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The number of customers visiting Z's to dine from a menu that includes $7 onion soup, rack of lamb for $19, and $25 for filet mignon and the trimming has fallen 50 percent from last year, Zibull said.

From Bloomberg:
Rising mortgage rates are driving up the cost of buying a house even as prices fall, making property more expensive across the U.S., according to a new study by Zillow.com, an online provider of home valuations.
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The trend holds true in California metro areas including Sacramento, San Francisco, Los Angeles, San Jose and San Diego, where mortgage payments on median priced homes range from 7 percent to 10 percent more now than in April.
From the Sacramento Bee:
Tom Kunz has been president and chief executive officer of Century 21 Real Estate LLC since June 2004.
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Q: Year-over-year sales are up in the Sacramento area for the first time in three years. What might that signify?

A: A lot of that is because you have seen some decline in pricing. That has opened the marketplace to more buyers, both first-time buyers and move-up buyers. I think that's a good sign. I don't declare victory in any way, shape or form yet. I think we're not going to see an absolute V in the market. We're going to see somewhat of an elongated U. We're going to bounce around there for awhile.
From socialistworker.org:
It wasn't only an influx of outsiders that created the housing bubble. The root of the problem in Stockton is the same as everywhere else--people were convinced to buy homes at inflated prices, reassured by a whole cast of unscrupulous characters that everything would work out. The realtors, lenders and banks--and the corporate boards that oversaw the whole process and orchestrated massive profit margins out of it--are responsible for this debacle.
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The former escrow manager told me that when realtors or lenders were called on to explain the full implications of the contracts, they always found a way of convincing buyers that it would work out in their best interest. As she explained, "They would say, 'Interest rates are going down, the price on your home is going up, your salary is going to increase, so this will all work out. You can trust me.'"

7 comments:

smf said...

Diablo Grande is the perfect example of the bubble gone wild.

A 'luxury' development in the middle of nowhere.

That was destined to lose from the moment they started to build it.

Diggin Deeper said...

"reassured by a whole cast of unscrupulous characters that everything would work out. The realtors, lenders and banks--and the corporate boards that oversaw the whole process and orchestrated massive profit margins out of it--are responsible for this debacle."

Just another way to socialize the housing problem...push the problem off on people while they still have the means to pay....

Buying Time said...

I can muster a lot of sympathy for everyday folks who are suffering from the effects of the housing market......but I doubt anyone who can piss away $85,000 on a country club membership is suffering all that much.

Rich said...

I thought I'd share a house buying tip that a local realtor was nice enough to leave in my mailbox. The realtor is Rindy Merrifield, but the tip if from Rusty Mendoza, Innerwork Mortgage

7 Tips For Buying a Home

(1-4 are all about credit score and pre-approval)

5) Don't be scared by "housing bubble" mis-information
For the last four years, the national media has been scaring potential home buyers with continuous chatter about a so-called "housing buble". For the last four years, the national media has been wrong. It is always wise to base your decision to buy or not to buy on fact, not emotional hype. CMPS professinoals help you evaluate condition in your lcoal real estate market to determine whetehr there is indeed a "housing bubble" in your local market. The data they can evaluate for you includes: local housing inventory, local unemployment rate, speculation and other factors that can help you make intelligent choices about whether to buy a home.

---

This would have made sense a couple of years ago, but now I don't hear anyone saying there's a housing bubble, they're saying there's a housing bust. And I'd love to see a location around here where the numbers don't support that.

norcaljeff said...

"Not a lot of people around Auburn can afford a $1 million or $2 million home, so you’re relying on attracting people from L.A. or the Bay Area to relocate outside of Sacramento," he said.

I love the Monday morning quarterbacks. Where was this guy 5 years ago when they were planning on building this mistake? I bet he and his other consulting buddy's were telling developers, "Yea, of course people from LA and SF will be willing to move to Sacramento and spending $1-2M on a home on a golf couse." We've been saying this all along, pointing to the fact that LA and SF would not continue to prop up this market. Besides, I love this area but no one really wants to move from SF or LA to this area if they can help it. Commuters from the east bay and part of SF did help this area for 8 years but with gas going to $7, those days are looooooooong gooooooooone.

Rich, I remember partying with Rindy and her friends back in the 80s when she lived in my neighborhood. Not sure I'd take any advice from either one of them about the RE market.

Aidian said...

I love the citation from socialistworker.org

Kip said...

"reassured by a whole cast of unscrupulous characters that everything would work out. The realtors, lenders and banks--and the corporate boards that oversaw the whole process and orchestrated massive profit margins out of it--are responsible for this debacle."

I'm not saying this isn't partially true, but the language here really pisses me off. If all these industry people are to blame, is there any responsibility left for the buyer? Do they think the government should also wipe people's asses for them? yeah, realtors and mortgage brokers are going to try to convince you to buy. They are essentially salespeople and it is their job to convince you to buy, not to analyze the market for you.