OR mad dash over

Statesman Journal



In a year's time, the mad dash to buy houses is over.

The Mid-Willamette Valley's residential real estate market has cooled. Real estate agents say it's still good times for the industry, but the numbers show the area is not immune from the national housing slump:

# Sales have dropped 12 percent this year, according to June statistics from the Willamette Valley Multiple Listing Service.

# Home prices are rising but not nearly as fast as a year ago. The total average price for the area, including Marion, Polk, Linn and Benton counties, has risen about 6 percent this year. That compares to more than 16 percent from 2005 to 2006.

"The market has been so hot over the last few years, at some point it had to cool off," said Mike Erdman, executive vice president of the Home Builders Association of Marion and Polk Counties.

"A lot of people rushed into the market and bought, and that's an extraordinary event," said Peter Rogers, the president of Coldwell Banker Mountain West Real Estate, of 2005 and 2006.

Conditions today are similar to 2004, Rogers said, and it's a return to a "good old-fashioned market."

Booming sales had become almost routine for real estate agents and home builders. The area's real estate industry hasn't experienced a down year since 2000, when the number of sales fell by more than 4 percent.

Jay Gordon, executive vice president of the Willamette Valley Multiple Listing Service, said the statistics need to be put into perspective. For the year-to-date, about 4,710 houses have been sold, and that's above average.

Byron Hendricks, the president of Prudential Real Estate Professionals in Salem, said 2007 is shaping-up to be a "normal market." The Prudential office is enjoying its third-best year on record, he said.

So far, the slowdown in home sales has had no measurable effect on construction employment in Oregon.

Art Ayre, a state employment economist, cautions that a more serious downturn on the national level could mean job losses in Oregon.

Real estate industry observers say it's shifted from a seller's to a buyer's market. For June, about 6,325 houses were for sale in the Mid-Willamette Valley -- or about 1,960 more than in June 2006.

"The buyer has a big choice, and it's taking a bit longer to get sales," said Gladys Blum, a real estate agent with Gladys Blum Group Real Estate Services in Salem.

The conditions aren't entirely bad for real estate agents. For one, home sellers might feel an increasing need to hire a professional instead of going the for-sale-by-owner route.

"Last year, they could toss out a sign and it would sell," Blum said.

Despite the large inventory, those shopping for a modestly priced house might be disappointed. The average sale price of a three-bedroom home in the Mid-Willamette Valley is about $228,000.

Alan Jeffers, a first-time buyer who is in the midst of closing his purchase of a house in Southeast Salem, said most of the houses he looked at were either too expensive or needed major repairs.

"For the price range I was going to pay, the quality of the homes was pretty ratty," said Jeffers, 43, who serves in the military. He has made an offer on a home -- a newly remodeled three-bedroom built in the 1940s -- that was close to his $170,000 comfort zone.

Prices above $300,000 are common in new subdivisions. Some buyers, however, are willing to pay top-dollar to get their dream house.

Pam and Bob Martocci, retirees from Arizona, recently paid about $489,000 for their house in West Salem. The couple chose Salem primarily for its lifestyle, not its real estate prices. They wanted to live in a small city and be within easy driving distance of Portland, the beach and the mountains.

"I think we got a great deal," Pam Martocci said.

Eric Larson, a real estate agent with Coldwell Banker Mountain West Real Estate in Salem, said a slowing market usually gives buyers more leverage in negotiations with sellers. Up-and-down cycles are part of the real estate business, he said, and what's happening now amounts to a correction.

Home builders have taken note and revised their strategy.

Dave Glocar, a Salem-area builder with three decades in the business, doesn't think the market has hit bottom. His Dave Glocar Custom Homes began scaling-back its projects a couple years ago.

"Most people thought I was a little premature, and maybe I was, but Oregon tends to go into things later and come out later," Glocar said.

At present, he isn't building any houses.

The Portland metropolitan area is seeing a similar softening of the real estate market. Closed sales for June were down by more than 18 percent from a year ago, according to the RMLS multiple listing service.

Fewer speculators buying houses for investments, and lenders requiring more stringent standards for "subprime" borrowers, often are blamed for the real estate slump.

"It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market," said Lawrence Yun, a senior economist with the National Association of Realtors.

When economic growth and low mortgage interest rates are taken into account, the national housing market is under-performing, Yun said. The national real estate group's latest forecast indicates that home prices will recover in 2008. It maintains that existing home sales should pick up by late this year, and new home sales are expected to rise by early next year.

mrose@StatesmanJournal.com or (503) 399-6657

CA visalia

Advance Register



Michelle and Dennis Kogler moved to Visalia in September 2005 from Colorado.

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Dennis Kogler had a new job here.

It was the height of the real estate boom and the Koglers bought a new home for $376,000.

Six months later, as they noticed that similar homes in the neighborhood were selling for $125,000 less, plus incentives, Dennis Kogler decided to accept another job in northern California.

That's when the Koglers got into trouble.

They tried for 18 months to sell the home while Michelle Kogler remained in Visalia. The real estate market was bad and they were faced with selling at a loss. They had two sets of living expenses.

"We bought the home at an inflated price and it dropped to the point where we were immediately losing money," Michelle Kogler said. "It was a disaster."

The Koglers aren't alone.

For real estate professionals, increasing default notices are an early warning sign that escalating numbers of foreclosures are on the way.

And as the real estate market in Tulare County keeps tumbling, the number of default notices has skyrocketed, from 623 in 2005 to 1,165 in 2006 and 864 in the first half of this year.

Susan Welch, a loan officer for Resource Lenders in Visalia, said lenders typically send default notices when a homeowner misses at least three mortgage payments.

Lenders sent California homeowners the highest number of default notices in more than a decade in the last quarter, the result of flat or falling prices, anemic sales and a market struggling with excesses of the 2004-05 home buying, according to DataQuick Information Systems, a La Jolla-based real estate information service.

The time between default notice and foreclosure can be as short as six months, although foreclosure is not inevitable.

Some homeowners who get default notices will be able to sell their homes or work out a deal with their lenders; others will lose their homes to foreclosure. From April to June, that's what happened to 142 homeowners in Tulare County, compared to 17 in the same period last year — a 735 percent increase.

While the rapidly increasing number of default notices may seem high, it's

not, historically, for Tulare County.

Between 1997 and 2003, the average annual number of default notices in Tulare County was more than 2,400.

Visalia real estate broker Brad Maaske said what's happening now is that the number of default notices and foreclosures is falling back in line.

"We just came off the biggest market we've ever experienced in real estate," Maaske said. "What's stupid is we had the lowest interest rates in 40 years and people took a variable rate loan because they thought it would get lower."

According to DataQuick, most of the loans that went into default last quarter originated between January 2005 and February 2006.

Experts say the reasons for missed payments and default notices vary from medical issues and lost jobs to poor choices in loans to refinancing at the wrong time.

Maaske said some home purchases during the 2004-05 home buying frenzy were destined for foreclosure.

"Some bought homes and never moved in because the value of the home fell immediately," Maaske said. "It caught a lot of people off guard."

Maaske said some longtime homeowners put themselves in a bind because they refinanced with adjustable rate loans, which offered low interest rates for several years, then inflated to the point where they couldn't make their monthly payments.

"For some, it was just bad financial management," Maaske said.

That bad financial management has left some homeowners in default.

During the default period, the homeowner can try to keep the home by refinancing or selling. If that doesn't work, potential investors, for example, can buy the home and assume the loan. If all else fails, the lender ultimately repossesses the property and resells it to recoup the loan.

That's what happened to the Koglers.

"We couldn't get rid of that home to save our lives," Michelle Kogler said.

Finally, she said, she got homesick, left Visalia and rejoined her husband.

"It financially ruined us," Kogler said. "It will take us years to recover."

At the steps of Tulare City Hall Monday, the Koglers' home was put up at public auction. It didn't sell, and the lender took it, adding to a portfolio that will eventually have to be placed on an already depressed housing market, where, according to DataQuick, home prices have fallen at the rate of 1 percent a month.

For homeowners in Tulare County, the steps at Tulare City Hall are the end of the road. That's where some bargain-hungry house hunters have turned to feast on the growing pool of foreclosures.

At 2 p.m. every weekday, auctioneers are there to try to sell foreclosed homes.

They use Tulare City Hall because of its access to Highway 99: It's easier for buyers from Southern California.

Carlos Lopez, 23, of Visalia knows all about it.

Lopez had his sights set for months on a defaulted home on West Dorothea Avenue in Visalia. He discovered the home on a foreclosure Web site. It had last sold for $130,000 in 2002. He and his mother drove to the neighborhood a few times to see if the home had investment potential — make improvements, then sell it at a profit.

"We just thought it was a good time to look for property," Lopez said.

He and his mother bought the house Monday at the auction, after a bid war with another potential buyer, for $25,000.

# The reporter can be reached at jchernab@visalia.gannett.com.

DC Wash Post

Wahshington Post

Little Kid on the Block
Glut of Condos Pits Private Sellers Against Developers

By Nancy Trejos
Washington Post Staff Writer
Saturday, July 28, 2007; F01

Shauntise Harris expected competition when she put her one-bedroom condominium on the market in April.

But she didn't know how intense that competition would get. Not only was she up against some of her neighbors at 555 MassAve, a 246-unit luxury building in the District's Mount Vernon Triangle neighborhood, but she also was competing with the project's developer, the JBG Cos. Nineteen months after starting sales, JBG still had units to unload and was offering a year of no condo fees on one-bedroom units -- an incentive Harris could not match.

"I'm like, you guys are still here?" she said.

During the real estate frenzy that ended in 2005, the developer would have been gone within weeks or months of starting sales. But contract cancellations and excess inventory have kept developers tied to projects much longer, pitting them against owners reselling their units.

"It certainly makes for interesting competition," said Gregory H. Leisch, chief executive of Delta Associates, a real estate research firm based in Alexandria.

There are 20,217 new condos on the market in the Washington metro area, by Delta's count. Marketing on another 18,867 units is expected to begin in the next three years, Leisch said, citing his firm's midyear analysis of the condo market.

What's hurting new projects the most are contract cancellations -- when buyers back out of deals.

"A lot of times these projects were sold out. But people would put down deposits and wouldn't go through with the closing," said William Rich, vice president of Delta.

At the same time, the resale market is flooded with investors who thought they could flip properties, people who took out exotic mortgages that they can no longer afford or homeowners who need to sell because of life changes.

Individual sellers and developers both say they lose out in the competition.

For sellers, matching developers' incentives, such as closing cost subsidies, can be difficult.

"The developers have a lot deeper pockets than we do," said Jae Lee, whose condo at the Artisan, a 160-unit building in the District's Penn Quarter that was also developed by JBG, recently went under contract after months on the market. "If I try to match them or try to outdo them, I will be losing money."

Private sellers also cannot match the marketing power or large professional sales staff of a developer.

Such is the case at 555 MassAve, which has a large sign near the entrance and a long banner draped down one side. A sales office is immediately to the left of the front entrance.

The building's Web site offers one-bedroom condos starting at $359,900 and boasts of amenities such as a security guard, fitness room, rooftop pool and e-lounge. Until July 1, anyone who bought a one-bedroom would not have had to pay condo fees for one year.

Harris paid $319,000 for her one-bedroom unit almost two years ago and spent thousands more to upgrade it, adding stainless steel appliances, granite countertops, hardwood floors and lighting.

Because she was moving to North Carolina, she put her place on the market for $355,000. With sales costs, if she budges on the price, she will lose money, she said.

"Once I pay the agents, I don't have anywhere to go," she said.

Some real estate agents said they don't bother holding open houses in such buildings because they know potential buyers will be lured away by the developer's sales staff.

Condo owner Rebecca Velinsky said people on their way to her open houses at Shirlington Village ended up talking to the builder's sales representatives instead. The building had been sold out, but 20 of 159 units went back on the market after cancellations.

Desperate to sell because she was getting married and needed more space, Velinsky dropped her asking price for her one-bedroom with parking from $349,000 to $338,000.

She sold it for $330,000 in January. The developer, Trammell Crow Co., recently finished selling all its units.

Developers acknowledge that they have advantages, especially because of their large marketing budgets.

"If anybody's got the bigger sign, it's us," Matthew Blocher, JBG's senior vice president, said of 555 MassAve, where about 10 units are available.

And the units they're selling are brand-new.

"In the minds of a lot of buyers, new is better even if [the resale's] never been lived in," said Erich Cabe, an agent at Fairfax Realty who represented Velinsky.

But private sellers have one thing in their favor: If they can afford to, they can slash prices. Developers are reluctant to do that because it can upset early buyers.

"We don't want to devalue the property for folks," Blocher said.

Since the start of the housing sales slump, developers have increasingly included clauses in contracts prohibiting resales within a certain period of time. Developers particularly try to avoid competition from those who bought before construction, when prices were lower.

"Let's say your last units are selling for $500,000. . . . Some of these people may have bought for $300,000. That puts the developer in a tough spot," said Lynn Hackney, president of D.C. marketing firm Urban Pace, which represents the Chastleton, a condo conversion project near Dupont Circle that is 70 percent sold out and has had a handful of resales.

For buyers, the competition can be a blessing.

But agents say they should still do their due diligence and look at all available units, both resale and brand-new.

Sometimes a resale unit may come with a storage area or a parking space when a developer's unit does not. Or it may have more upgrades, such as marble bathrooms or hardwood floors. Or it may just be in a better location in the building or have a better layout. Of course, any given new unit could have those advantages, too.

"It could cut either way, and that's why they need to look at options and upgrades very carefully," said Thomas K. Meyer, president of real estate brokerage Condo 1 in Falls Church.

Meyer said potential buyers should not be afraid to offer less than asking price, especially when they're dealing with the developer. The price they offer may not be accepted, but they might get a free storage unit or hardwood floors out of it.

"It's a much more competitive world for the builders now," he said, "and the farther away you get from Washington, the more competitive it is."

Rachel Valentino, an agent at Long & Foster in Friendship Heights, showed client Rebecca Lewis more than a dozen units at the Artisan.

The building had been sold out, but 10 percent of the units went back on the market after cancellations, Blocher said. A recent e-mail from marketing firm McWilliams Ballard to potential buyers advertised immediately available condos starting from $389,900 and no condo fees for one year, for a limited time.

Andrew A.J. Johnson, an agent at Long & Foster in Chevy Chase, was representing the owner of a one-bedroom there. He first listed it for $397,500 and offered help with closing costs because the developer was doing so. He then dropped the price to $375,000 but took out the closing cost concession to compensate.

"The important thing was we had to stay aware of what the developer was doing in terms of marketing their properties and react accordingly," Johnson said.

Lewis liked the unit Johnson was selling more than the brand-new ones because she liked the layout, the color of the floors and cabinets, and the terrace off the courtyard. Although it was a resale, it had never been lived in. "I got the benefits of a brand-new unit," she wrote in an e-mail.

"I bet I got a better deal because there were other units available by the developer and many units had been on the market for some time, making the seller eager to sell as well as keep their prices competitive for fear of me just picking another unit," she said.

Valentino knew that the developer would pay closing costs. So she offered Johnson the full price but asked for a closing cost subsidy. Johnson agreed to $9,000. The agents struck a deal in May.

"I feel bad for the sellers because that absolutely puts more pressure on them to compete with the building," Valentino said.

Still, she said, "that definitely helped us get the deal."

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MT qts!

Whitefish Pilot


A growing backlog of homes for sale in the Flathead Valley coupled with increases in foreclosures and bankruptcy filings have drawn the attention of professionals concerned about local real estate trends.

Northwest Montana Realtor Association president Ted Dykstra Jr. said he was surprised in March when the number of local homes in foreclosure increased from the typical 12-20 to as high as 80.

Annual foreclosure figures countywide had declined 34 percent from a high of 253 in 2002 to 166 in 2006, according to the Flathead County clerk and recorder's office. But on July 23, www.foreclosure.net listed 55 Flathead homes in foreclosure. A search of preforeclosures, foreclosures and bankruptcies showed 117 properties countywide.

*
"A lot of people have gotten themselves overextended," said Dykstra. "We've always been about six months to a year behind the rest of the nation. When 9/11 came, we were climbing in sales. Now that a recession or downturn in the market is here, we might be down for a little while, but it will probably turn around again by the end of the year."

He said the correction in the local real estate market began last March, traditionally the busiest month of the year for sales, and it's continuing.

"It came on in a slow spurt," said Dykstra. "I think it was due to the market being flooded with houses. Sales are just as strong this year, but there are more agents, more offices and everybody feels a little pinch. This March was the first quarter with a little bit of a downturn from the last six or eight years."

Whitefish appraiser Ellie Clark said she has noticed a large increase in real estate inventory.

"Historically, there's been a 12-month-or-less real estate inventory," Clark said. "Now we're facing 18 months or more, exceeding the past several years. I don't know that in Whitefish there is necessarily a slowing, but I don't think the sales volume is what it was."

Over the past few years we have seen in specific neighborhoods 15-30 percent annual increases for non-waterfront property in the Flathead Valley. We're not seeing that this year, she said.

"The preliminary data we have now is not indicating those appreciation ranges," Clark said. "It also seems as though the condo market is softening. There's a large inventory, and in the valley, we have an unprecedented number of new lots being created."

Leo King owns North Country Builders, in Whitefish. As a contractor with a wide niche, from multi-million dollar homes to small remodels, King said his business is solid, but it has slowed down a little lately.

"There's a lot of development going on, but whether or not they sell is another story," King said. "My feeling is there won't be as many buyers as there are lots being created, not by a long shot. It's a fact, there are a lot of for-sale signs on homes, and they're staying up a lot longer. Anybody can see it."

After riding a steady climb in development for about the last seven or eight years, now it's time to settle back and go a little slower, King said.

Whitefish Credit Union president Charlie Abell said his loan agents are still writing loans, but he's noticed homes over $300,000 staying on the market longer, beginning this past spring.

"The upper-end fancy places are still selling, and the lower-priced places are pretty active," Abell said. "It's the middle-upper level that is slow right now. We might be a little over-built in that area."

Dan Henderson, a Realtor with Realty Executives of Northwest Montana, said he's noticed "a definite downward price bias in the market."

Lisa Mack, of Whitefish, a mortgage broker for going-on-two decades, also watches the market carefully.

"Phones were ringing off the hooks for so many years with people buying here, but not anymore," said Mack. "That's why you're seeing 'for sale' signs on little houses. People are trying to get out from underneath, but it won't be as easy to flip them anymore. In my little neck of the world in Whitefish, with the quality of our high-end buyers, I don't see that many people in hot water with adjustables."

One recent Whitefish transplant who asked to remain anonymous has first-hand experience with adjustable rate mortgages, foreclosure and bankruptcy, experiencing what he called "the triple whammy."

Following a long illness, his father died. Then he was laid off from work in Colorado. Deciding to start fresh in Montana, he put his home up for sale and was shocked to realize he owed a lot more than it was currently worth. His whole world came crashing down.

"Never refinance your home," he said. "The interest rate was 5.3 percent when I bought my home. The first time it jumped, it was up to 10 percent. My monthly payments rose from $1,000 to $1,400 a month, and they changed the laws. A couple of years ago, you could do a clean wipe out with bankruptcy, but not anymore. I'm about to turn 57 and I've got nothing."

Borrowers with a limited or tainted credit history can turn to subprime lenders like Countrywide Financial Corp., known for their adjustable-rate mortgages. Countrywide's foreclosed properties have quadrupled from March through May of this year compared to the previous three months, according to the Orange County Register.

"Look at the newspaper any day of the week," said bankruptcy attorney Jim Cossitt, of Kalispell. "Countrywide is foreclosing left, right and sideways. Collection activity is up."

Cossitt said depressed values in the nationwide real estate market relate to the Flathead with an increase in bankruptcies and foreclosures. In the last six months, he's seen bankruptcies increase 15-30 percent. A new bankruptcy law that took effect October 2005, however, favors creditors not debtors, Cossitt said.

"The old law allowed people to get in and out of bankruptcy quickly," Cossitt said. "But the new bankruptcy law raised the bar. Consequently, people linger longer in what I call 'Debt Hell' -- that place between the onset of serious financial difficulties, where creditors start calling, wages get garnished, lawsuits and foreclosures start, and the comprehensive resolution of those problems. I think foreclosure rates and bankruptcy filing will intensify. A lot of it is related to the real estate market."

In more than two decades helping clients through bankruptcies, Cossitt said he has personally known two cases where the debtor committed suicide.

"For a lot of these folks, its not just financial problems," Cossitt said. "It's a compendium of things -- loss of job, medical problems, divorce, for example. We're all human, and at some point we reach the breaking point."

For more information about preventing foreclosure and bankruptcy options, contact a bankruptcy attorney or credit counseling service.

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Tracy Press

Bloated housing market in Tracy is a pain for sellers.

A record number of "for sale" signs line the streets in Mountain House and Tracy.

Eighty homes in Mountain House and 971 homes in Tracy are elbowing to stand out in the crowded market. And sellers and real estate agents who compete with housing developers and banks for buyers have cut prices and turned to unique methods to sell.

The number of homes for sale dipped slightly in late 2006 before it began a steady climb in February.

That has real estate agents advising sellers who can’t wait the average 65 days to sell a home in Mountain House and Tracy to get creative in marketing and prepare to drop their prices.

Some real estate agencies and sellers have turned to Kimmie Pitcock at First Impression Home Staging and Design for help. She spruces up one home a week and takes several calls each week from sellers desperate to stand out in the market.

"With this market and record number of homes, sellers are getting a little desperate and trying different strategies," said Annabelle Ramirez, a real estate agent with RE/MAX in Tracy. "The strategy is about pricing now."

The few homes that sell each month have either low price tags set by housing developers or homeowners who can afford to drop their price. Or they’re houses that have been foreclosed.

Manuel Fabriquer hung a "sold" sign in his yard Saturday after it sat a month on the market. Pacific Auction Exchange out of San Jose auctioned off the 3,011-square-foot home in southern Tracy for a price between $550,000 and $610,000. Fabriquer had bought the house for $400,000 in 2001.

"Because I had enough equity in it, I could afford to be flexible in my pricing," he said. "Now, I’m just happy to be done."

Dipping prices and plenty of homes to choose from have done little to attract buyers during the past year. About five homes sell in Tracy each month.

"People are waiting for the bottom to drop out before they buy," said Christine Lynch with Preferred Real Estate Group. "The prices will rise soon. It’s a fantastic time to buy right now."

The market has pushed many local real estate agents out of the business and into other jobs, according to Neil Metal with Metal and Brooks Preferred Real Estate Group.

"As a whole, most of your agents are dying out here," he said.

He says his office has been saved by a deal with KB Homes to market and sell homes in Lathrop, Stockton and Merced.

Metal advises potential buyers to wise up and take advantage of the market.

"You can find the same home in the same neighborhood for a significantly different price," he said. "Look around."

Lynch blames the spike in the number of homes for sale not on the stagnant market, but on too many eager buyers.

A lot of people who bought homes three or five years ago signed on to loans that offered low interest rates for just two years, Lynch said. Once the interest rates rose, as according to the terms of the loans, owners saw their monthly payments soar.

As of Monday, Fannie Mae Foundation requires potential home buyers to qualify for a principal payment plan and an interest payment plan even though the buyer might only sign on to an interest payment plan, which means monthly payments only deduct from the interest.

"This is the banks’ way of helping people not get into a bad situation down the road," Lynch said. "California’s market will bounce back. It’s just a matter of time."


reports on


California mortgage defaults rose to the highest level in a decade in the second quarter as falling home sales and higher interest rates battered the housing market.

Homeowners received 53,943 default notices, more than double the 20,909 filed a year ago, DataQuick Information Systems, a La Jolla, California-based provider of real estate data, said today in a statement. Last quarter's default level was the highest since the fourth quarter of 1996, when 54,045 notices were recorded in California.

Californians are struggling to repay their home loans as mortgage rates jumped to an 11-month high, and tighter lending standards limited their ability to refinance. Southern California home sales last month slumped 36 percent to the lowest level for a June in 14 years and San Francisco Bay Area sales fell 26 percent to a 12-year low, mirroring the national slump, DataQuick said last week.

Most of the loans that went into default in the second quarter were originated between July 2005 and August 2006. Loan originations peaked in August 2005. At the top of the market, when price appreciation rates topped 10 percent, lenders let many households stretch their finances beyond what they could afford, DataQuick said. Those borrowers are now at risk of default.

`More to Come'

``We're going through a lot of that activity,'' DataQuick analyst John Karevoll said in an interview. ``There's more to come.''

The number of default notices sent to homeowners in California, the most populous U.S. state, has averaged 34,172 quarterly since DataQuick began tracking the data in 1992.

Default notices are the first step in foreclosing on a home. Such notices in the second quarter rose 15 percent compared with the previous three months. About half of homeowners stop the process by catching up on their payments, refinancing or selling their homes to pay down debt, DataQuick said. A year ago the figure was 88 percent.

The number of defaults resulting in foreclosures is the highest since DataQuick began keeping records. The previous high was in early 1994, when about 30 percent of defaults resulted in foreclosures, Karevoll said.

Only 55 percent of homeowners are able to avoid foreclosure because a greater number now have multiple loans on their properties. In the past, when a homeowner had just one mortgage, the lender would often allow the borrower to sell the home for less than the amount owed on it and take the loss, known as a short sale, Karevoll said.

``They can't do it that way anymore because the primary lender can't tell the secondary lender, `We'll take all of the sales price here and you get nothing,' '' Karevoll said.

The rate for a 30-year mortgage was 6.73 percent for the week ended July 19, up from 6.15 percent two months earlier, according to Freddie Mac.

To contact the reporter on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net .
Last Updated: July 24, 2007 13:57 EDT


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Arizona Daily Sun


Townhouse and condo sales are dominating the summer real estate season.

Second quarter sales figures show a sharp spike in the number of condos and townhomes sold, up 90 percent over last year's figures during the same quarter.

Three large condo conversions projects helped drive down the median price for the townhouse/condo market. Median sale price was $197,000 for the second quarter of 2007, according to figures from Northern Arizona Association of Realtors' Multiple Listing Service. This represents a 26 percent drop in sale prices for the second quarter of 2007 when compared to the same time period last year.

Stephen Brighton, a Realtor with Century 21 Metro Alliance, said that last year, townhomes primarily dominated sales in the condo and townhouse segment of the real estate market.

Brighton said as condo conversion projects came online last fall, the converted apartments began to outsell townhomes. He said the condos generally have lower prices than townhomes.

The single-family detached house market also saw a 2 percent decrease in median sales price compared to last year's second-quarter figures.

The number of single-family homes sold slowed over last year's figures, down 22 percent for the second quarter compared to last year. Second-quarter sales totals for single-family houses this year were 205 compared to 2006's totals of 263 houses sold.

Median sale price for single family home is currently about $377,000.

NOT AN ILLUSION: A TACO BELL NEXT TO A TACO BELL

Drivers on South Milton Road may be seeing double this fall as construction crews build a new Taco Bell alongside the existing Taco Bell.

Officials with Taco Bell confirm the company is building a new restaurant to replace the aging restaurant in an adjacent parking lot.

Cost of remodeling the existing location to the company's "Bold Look," the latest architectural design for the fast food chain, exceeded the price of building a new location.

Company officials expect the new Taco Bell will be up and running later this fall. Once the new location is functioning, the older location will be demolished and made into a parking lot.

GROUPS BEGIN TO LINE UP FOR NAU CONFERENCE CENTER

Groups are beginning to book the High Country Conference Center for conferences next year even as construction continues to shape the 37,000 square-foot center.

Scheduled to open in the spring of 2008, the conference center will be able to accommodate groups ranging from 200 to 1,000 participants. Missouri-based Drury Hotels is building a 150-room hotel adjacent to the conference center.

Major bookings to date include: Stabilizing Indigenous Language Symposium, Society of Women Accountants, Transportation Administrators of Arizona, Edward Jones Investments, and W.L. Gore and Associates holiday event.

GATED COMMUNITY BREAKS GROUND IN WILLIAMS

Developers in Williams have recently broken ground on a private, gated community named Escalante at Williams Mountain.

Built on 240 acres off Route 66, the master-planned community will build a total of 280 homes catering to high-end buyers.

Officials did not speculate on pricing for homes and expect to begin selling homes early next year.

The developers will build a new well system tapping into the Red Wall aquifer. The 3,700-foot well will feed directly into the water supply for the city.

J. Ferguson can be reached at 556-2253 or jferguson@azdailysun.com.

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Ann Heitland wrote on Jul 23, 2007 8:04 AM:
" Further to yesterday's comment, between June 1 and this a.m., there were 219 closed sales for Flagstaff addresses (according to MLS data) of which only 79 (or 36%) were identified as condos/townhomes. Especially given the introduction of the apartment conversions as an entirely new, low-priced condo product this year, I wouldn't call that dominance. But, love 'ya, Steve and Joe. "

Ann Heitland wrote on Jul 22, 2007 7:43 PM:
" My other quibbles with the article are the headline and the word "dominate" -- that implies too much. "


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NV dfs

http://www.recordcourier.com/article/20070722/News/107220021


Three vacant properties will be auctioned for back taxes on Aug. 6, something that almost never happens in Douglas County, said Clerk-Treasurer Barbara Griffin.

"This is very unusual," she said. "More than 99 percent of the property owners here pay their taxes on time and in the last 13-15 years, we've had only one other property auctioned."

According to Nevada law, properties are held for three years and if in that time the taxes aren't paid, the property goes to public auction. Two other homes would have been auctioned, but the taxes were paid on the last day, Griffin said.

She didn't know the reasons people failed to pay their taxes on these properties, but feels the economic slump may have played a role.

When compared to last year's figures, existing home sales have dropped 33 percent in Douglas County for the period ending in June. The $400,000 median sales price is down 7 percent and the sales-dollar volume is down 44 percent, according the most recent report from Sierra Nevada Realtors Association.

Those figures don't include homes sold by owners or new home developments that don't participate in the multiple listing system, but Douglas County's building permit total has dropped dramatically, from 574 single-family dwellings during fiscal 2005-06 to 175 for fiscal 2007, which ended June 30.

According to RealtyTrac, an Internet Web site, Gardnerville has 55 single-family home foreclosures and Topaz Ranch Estates has one. Minden, Indian Hills and Genoa have none.

Michelle Godde, spokeswoman for Syncon Homes, said everyone is taking a hit in this market and new home sales have suffered.

"Luckily we're diversified and have projects in other areas, but our strongest sales are in Douglas County," she said. "La Costa is doing best. It's a lot of house for the size of the lot, but our target buyers are the empty nesters. They travel and don't want to deal with a lot of yard maintenance."

Despite the slump, Syncon is moving forward with plans for a large-scale project in north Douglas County's Clear Creek area, Godde said.

"There are so many variables, like weather and engineering issues," she said. "The safest thing I could say is, it's a work in progress."

Mick Cavnor of Beverly Realty in Gardnerville said the real estate market is caught between buyers waiting for the price to come down and owners who think their home is still worth what it was a couple of years ago.

"There's a stalemate," he said. "But buyers need to realize prices could start up and if they wait, they could miss the boat."

There are about 88 homes for sale in the Gardnerville Ranchos for under $300,000, but two years ago realtors would be lucky to find seven homes in that range. Buyers had to make their decision before the property was sold to someone else, Cavnar said.

"About every three weeks we hear something in the media about the sagging market, but the sub-prime market has blown the statistics out of proportion. Interest rates are still good," he said. "It's still a buyers' market and it's to a buyers' advantage to jump on it."

One developer Cavnar knows said he expects the slump to last another six to eight months, while another thinks it will last three to four years, he said.

The cost of renting is between $300 -$400 under the cost to purchase a home, but as the demand for rentals grows and prices increase more people will consider buying, he said.

"I think this winter will be slow, but if buyers are educated the housing market will pick up," he said.



Susie Vasquez can be reached at svasquez@recordcourier.com or 782-5121, ext. 211.



BREAKOUT



Properties to be sold for taxes in Douglas County include a 10-acre parcel in Fish Springs, an 11-acre parcel in Lake Tahoe that is unbuildable and a residential lot in the Gardnerville Ranchos.

For more information, contact the county treasurer's office at 782-9018.

CA OMG

Merced Sun Star


http://www.mercedsunstar.com/local/story/13804005p-14381950c.html

So much for summer being the hot selling season.

June home sales were dismal throughout the northern San Joaquin Valley, and sales prices plummeted.

Merced County home prices plunged more than 23 percent in June compared to a year ago, dropping to a median $290,000 selling price.

That was the biggest decline in California, according to DataQuick Information Systems, a real estate research firm that released sales statistics Wednesday.

Stanislaus County homes sold for a median $343,250 in June, which was about 9 percent below last year.

San Joaquin County homes sold for $396,000, which was a nearly 12 percent drop.

As low as those prices were, homeowners who sold property in June should consider themselves lucky because most who tried failed.

Home sales nose-dived throughout the region by more than 43 percent, compared to last year.

Things were even worse in some places:

Northeast Modesto, including the new home developments of Village I, had sales volume drop 31 percent and prices tumble 23 percent to a median $336,000.

Ripon sales dropped 60 percent and prices fell 27 percent to $455,000.

Patterson sales dropped 54 percent and prices fell 23 percent to $407,000.

Waterford sales dropped 46 percent and prices fell 28 percent to $285,500.

Atwater sales dropped 42 percent and prices fell 25 percent to $275,000.

Livingston sales dropped 70 percent and prices fell 25 percent to $310,000.

The continued price plunge means Merced is settling into a "normal market" after a period of hyperinflated activity, said Scott Oliver, president of the Merced County Association of Realtors.

Oliver said it's a good sign that prices are moving closer to where they were in 2003, before the pull of UC Merced's opening drew out-of-town investors and sent prices soaring.

In June 2003, the average sales price on Merced County's Multiple Listing Service was $177,056, said Oliver. The Multiple Listing Service includes agent-listed sales of existing homes, and usually does not record figures related to new houses.

By June 2006, the average price had climbed to $362,398. Last month, it was down to $314,908.

But the large gap between what sellers are asking and buyers are offering means owners will likely continue to lower prices, said Oliver. When will prices stop coming down? "We're almost at the bottom," said Oliver. "We still have the winter to go through. I think in 2008 it will stop. Everyone will have gotten the message and the prices will stop dropping. I think 2009 is probably going to be a very good year for us."

"Home prices now are back to about what they were in 2003," said Ernie Ochoa, who manages the Century 21 M&M and Associates office in Merced.

Even those rolled-back prices are too high for most families.

"The median-income family earns about $47,000 a year in Merced County," Ochoa said. "So it only can afford to buy a home priced about $175,000."

Ochoa said Realtors listed 1,437 used homes for sale last month in Merced County, but they sold only 53 of them.

"We're got a huge supply of homes for sale," Ochoa said. So to attract buyers, successful sellers slashed prices. "On average, the homes sold for about 10 percent below their list price."

The downward slide may last awhile, predicted Loren Gonella of Coldwell Banker Gonella Realty in Merced.

Gonella expects prices to continue falling throughout 2007, then flatten in 2008 before starting to rise in 2009.

"Today you should be buying, for heaven's sake. But it's tough for people to go against the grain," Gonella said. "There are buyers out there, but they're sitting there taking a good look at the market."

Buyers have lots to look at. They can pick between foreclosed properties repossessed by banks, new houses just finished by builders, and older homes offered by anxious owners.

"People have been asking about affordable housing. Well, here it is," said Steve Madison, the Building Industry Association of Central California's executive officer. His association represents builders throughout the northern San Joaquin Valley.

"Builders are lowering their prices to lower their inventory," Madison said. "Once the standing inventory is gone, the prices will go up."

To get houses sold, Madison said builders have made many upgraded amenities standard, so buyers are getting more value.

Summer normally is a brisk time for home sales, Madison said: "This is when folks tend to move their families because their kids are out of school."

But sales have been unusually sluggish throughout the state.

California home sales hit a 12-year low for the month of June, according to DataQuick.

Only 38,291 new and resale houses and condos sold last month across the state. That was down 32.8 percent compared to June 2006.

"Obviously there's still a bit of a standoff between buyers and sellers," DataQuick President Marshall Prentice said. "It looks like unsuccessful sellers would rather take the home off the market than bring the price down, which is remarkable after almost 2½ years of sales declines."

The statewide median sales price fell to $479,000 in June, a 0.2 percent decline from last year.

Modesto Bee reporter J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.

Sun-Star reporter Leslier Albrecht can be reached at 209-385-2484 or lalbrecht@mercedsun-star.com

Merced County home sales and prices

PERIODHOUSES MEDIAN SOLD PRICE

Jan. 2005 485 $282,000

Feb. 2005 451 $297,250

March 2005 589 $301,750

April 2005 678 $309,500

May 2005 661 $313,000

June 2005 681 $325,000

July 2005 655 $338,500

Aug. 2005 716 $350,000

Sept. 2005 669 $351,750

Oct. 2005 618 $352,500

Nov. 2005 530 $360,000

Dec. 2005 504 $382,750

Jan. 2006 383 $361,500

Feb. 2006 347 $372,750

March 2006 509 $370,250

April 2006 437 $375,750

May 2006 454 $367,250

June 2006 424 $377,000

July 2006 354 $369,000

August 2006 442 $352,750

Sept. 2006 394 $350,750

Oct. 2006 340 $340,000

Nov. 2006 313 $329,500

Dec. 2006 347 $326,000

Jan. 2007 235 $325,000

Feb. 2007 190 $317,000

March 2007 no data no data

April 2007 no data $314,000

May 2007 160 $295,000

June 2007 236 $290,000

Source: DataQuick Information Systems

CA SLO qts!

http://www.sanluisobispo.com/business/story/92731.html



Saddled with a glut of homes, builders in San Luis Obispo County have spent the last year trying to coax buyers back into the market. They’ve been doing it by offering extras such as Sub-Zero appliances or long-term financing with interest rates of less than 5 percent. In some cases, builders will help sell a buyer’s current home as a way to get the purchaser into a new one.

While those sweeteners have worked to a point, some builders have followed up with more drastic price reductions— as much as $100,000 in certain neighborhoods.

Others are settling for fewer sales in an effort to protect profit margins.With inventory levels dropping and fewer new homes being constructed, builders are hopeful that the local housing-market downturn is nearing the bottom.

Blue-light sale

New-home sales in San Luis Obispo County are arguably the weakest segment in the current housing market.

“The new-home market has been long on supply, and homes have been sitting for months,” said Ed Steinbeck, a broker associate with Re/Max Park-side Real Estate in Paso Robles. “There are definitely deals out there to be had.”

Sales of new homes in San Luis Obispo County were down nearly 60 percent in May year-over-year compared to 20 percent for re-sale, detached homes, according to DataQuick Information Systems, a Southern California real estate tracking firm.

The median price for new homes fell in May nearly 14 percent to $525,500 from $609,000 in May 2006. In contrast, the median for re-sale, detached homes actually edged higher by 1.8 percent, to $565,000.

Unlike an individual homeowner who often has the luxury of waiting — particularly in the current environment of low unemployment and historically low long-term interest rates — builders must meet their construction loan commitments. They lose money when a new home stands empty.

After months of focusing exclusively on upgrades and financing deals, some builders have used price cuts to jump-start sales.

Dallas-based Centex Homes, the nation’s fourth-largest home builder, has been among the most aggressive in the county at reducing prices. In February— ahead of its fiscal year close at the end of March — the publicly traded company embarked on a selling blitz.

“We made cuts in every product line in February because we had to make our numbers,” explained Chris Bowley, Central Coast division manager for Centex Homes, which has projects in Paso Robles, Templeton, Arroyo Grande, Atascadero, Nipomo and San Luis Obispo. “We have an obligation to our shareholders.”

Prices in most Centex neighborhoods in the county are more than $100,000 less than they were last summer, said Bowley. The sales campaign yielded results: Close to 80 homes were sold in March, about 4.5 times the activity in a typical month.

“We want to keep the engine running, even if we have to take less profit on a house—or sell it at a loss,” said Bowley. “We can afford to take short-term losses. The negative, of course, is that we are forced to do that.”

Centex is the only publicly traded builder with homes in the county.

Selling property — even at a loss — is a decision that privately held JM Development has also made. The Santa Barbara-based developer, which has properties throughout the Central Coast, has dropped prices by about $80,000 at Petersen Ranch in Templeton, said company President Mike Rider.

SOURCE: DATAQUICK INFORMATION SYSTEMS

Home prices start at $490,000, down from $570,000.

“We’re trying to be more realistic about pricing,” said Rider. “We’ve already closed more homes in six months than we did all last year, but we’ve also lost more money than we did last year.”

Like Centex, JMDevelopment initially began by offering incentives. While those worked for a while, “they eventually became ineffective because everyone was offering them,” said Rider. That’s when the company moved to significant price cuts and was able to sell

much of its inventory. Rider estimates that 20 of 43 homes at Petersen Ranch sold so far this year were below the cost to build them.

Fewer but profitable sales

Other private builders in the county have resisted fire sales. They continue to use incentives as a major enticement, protecting profit margins as much as possible, even though it may mean fewer sales.

Atascadero-based Midland Pacific Building had success with its Home Buyer’s Advantage program, which guaranteed buyers that if their existing home did not sell within a certain time period, the company would purchase the property for 90 percent of its appraised value. Reed Harris, vice president of development, said the program helped to drop their inventory levels significantly.He notes that Midland has been able to stave off huge price drops.

“We are careful at how we price the product,” Harris said. “I may have sold three homes one month when my competitor sold many more, but I made money.”

BDC Development Corp., a Pismo Beach-based building and development company, is putting $30,000 to $40,000 in upgrades into its homes at Kingfisher Canyon in Avila Beach. Features such as appliances and wide-plank wood floors have become standard.

“Raising the spec level has been an incentive that helps close the homes we have and keeps sales at a steady pace, which is still very slow,” said Eron Loughead, who is a partner with his brother Jeff in the company.

BDC also joined with Pottery Barn to showcase its home furnishings in a Kingfisher model home. Buyers can purchase the house with the furniture.

Being a private company has helped BDC, Loughead said.

“We can stop supply, as we don’t have to put up a phase within a certain time frame or cut prices to keep up the sales volume,” he said.

Of course, he notes, BDC lacks the kind of access to money that Centex or other publicly traded builders enjoy.

To ride out this downturn and reduce risk, BDC has increased the work it does for clients, which Loughead says has minimized labor cuts to 7 percent to 10 percent over the past year. That’s in line with the cuts that Midland has made but just a fraction of the 50 percent decrease in staffing that Centex has taken as it begins to close its Central Coast division.

Bottoming out?

Builders predict that the housing slump for new homes may be reaching the bottom.

Inventory has come down from its peak, and most builders are balancing supply so they are releasing enough homes for potential buyers to look at, but not more than they need.

Permit activity on single-family residences in the county is down sharply this year to an average of 63 per month, compared to 106 in 2006, 135 in 2005 and 158 in 2004, according to the Home Builders Association of the Central Coast.

Centex’s Bowley thinks Centex has found the right prices for its properties for current market conditions as evidenced by the company’s recent sales activity. During the second quarter, Centex sold 140 houses in the county. That compares to 210 homes sold in all of fiscal 2006. Consequently, Centex is nearly sold out of every one of its neighborhoods in the county except at Dove Creek in Atascadero, where it plans to build the second half of the 270 lots.

JM Development’s Rider said the company intends to complete its Petersen Ranch project this coming year, putting up an additional 24 homes. “But we’re waiting on what we don’t need to build,” he said.

Like everyone watching the real estate market, builders are looking for positive signs of improvement. Steinbeck of RE/MAX Parkside Real Estate says he sees signs of firming, but there is little consistency.

BDC’s Loughead expects the new home market to remain quite stagnant for the next six to 12 months. He doesn’t anticipate huge price drops or a big pick-up in sales in the market. Neither does Rider.

CA 3 articles grt qts

The Union

With the housing market in a slump, more people are enticing buyers with creative selling tactics - but local real estate agents said the right price works better than any gimmick.

In Alta Sierra this weekend, one developer will auction his home to the highest bidder after failed attempts to sell the house on the traditional real estate market.

"In the depreciating market that we're in, you have to be creative," said Gary Stokes, who runs an affiliate branch of Fidelity Housing Solutions from his home in Lake of the Pines. The Phoenix-based company buys homes in seven days and offers non-traditional selling options.

The 3,400-square-foot custom home on more than 2 acres is appraised for $875,000, Stokes said. But bidding will start Sunday at nearly $560,000.

Stokes has received a number of hits on his Web site, www.sellingsunday.com, he said, and expects more than 200 people to show up for the auction.

It's a bit of a gamble to sell this way, Stokes said, but was confident the bidding would reach the price he wants.

"It typically ends up closer to the appraised value," Stokes said.

In western Nevada County, 1,070 homes are for sale, compared to 400 in 2004, according to figures analyzed by Skip Lusk, executive president of the Nevada County Board of Realtors. Houses for sale from June to July have spent an average 122 days on the market, compared to 115 days the year before, Lusk added.

"We've tripled in inventory, and we have less buyers today," said Lynn Griggs, with ERA Cornerstone Realty Group. "People are having a hard time even getting homes shown."

The philosophy of "whatever works" has become more commonplace in the realty business, Griggs said, although she doesn't use the approach herself.

Cheryl Rellstab, of Keller Williams, worked with a homeowner who offered a new mustang to sell a home several months ago. When that didn't work, the seller lowered the price and switched to a Ford pickup - also without success, Rellstab said.


More conservative approach

"I'm not a firm believer in gimmicks," Griggs said.

Instead, sellers should consider setting a price at ten percent under market value.

"You're going to have more people look at a house in the first 30 days," Griggs said. As the third agent for one client, she recently sold a house that had been on the market for two years. The house sold for $150 less than the original asking price.

"Staging" a home is another effective tool.

An interior designer who visits the home can advice on ways to make the home more presentable to a buyer. Things like reducing clutter, painting and keeping things clean and neat all help sell a home, Griggs said.

"What sold two years ago is not selling today," Griggs said.

Rellstab agreed. Seller financing incentives also help clinch the deal, she added.

On Friday, Rellstab was finishing a deal for an $875,000 home using a seller buy-down on a loan called a hybrid fixed-option ARM. The arrangement gives the buyer a lower monthly payment for the first five years, Rellstab said.

The homes that sell in a slow market are the ones in the best shape with the best price.

"You have to be the pretty boy on the block. That's what I tell my clients," Rellstab said.

ooo

To contact Staff Writer Laura Brown, e-mail lbrown@theunion.com or call 477-4231.

The SGV Tribune

Those proverbial chickens are coming home to roost in the

mortgage market, and the picture isn't a pretty one.

The Riverside/San Bernardino metropolitan area ranked fourth in the nation for foreclosures in June 2007, according to a report released Thursday by Realty-

Trac, with one of every 134 homes in the two counties in some stage of the foreclosure process.

"It's getting worse," said broker Pat McKenna of Bristol Home Loans in Ontario. "A lot of the ARM loans have been resetting, and a lot of people are finding they don't have enough equity to refinance. They can't sell, so some of them are just getting desperate and walking away."

In California, which ranked behind only Nevada for rate of foreclosure, the numbers were nearly 287 percent higher in June than a year ago, although they did fall 2.16 percent from May 2007.

Stockton, Merced and Modesto were the three hardest-hit markets in the nation. All three - plus Riverside/San Bernardino - had foreclosure rates in June that were more than five times the national average.

Two other California cities ranked in the top 10, with Vallejo/Fairfield, seventh, and Sacramento, eighth.

"Foreclosure activity nationally
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subsided somewhat in June after hitting a 30-month high in May," James J. Saccacio, chief executive officer of RealtyTrac, said in a release. "The drop in activity was fairly broad, with 33 states reporting month-over-month decreases.

"Still, the foreclosure rates in most states remained substantially above last year's levels."

McKenna says they're actually higher than they need to be, that if borrowers who find themselves in arrears would go in and talk to their lenders, they might get some help.

"Most lenders would rather renegotiate than foreclose," she said. "When people walk away from their houses, they typically trash them. Some of them look at a foreclosure like it's a car repossession, but there really is a lot they can do."

Some lenders will adjust loans, others might give a breather to give borrowers a chance to catch up.

"But they've got to go in, sit down and be honest about their situation," she said. "Some of these people got into loans they couldn't afford even though they knew it. They wanted the house. That's the dream. There might not be much that can be done for them."

The problem for some folks is that housing prices went up so fast until about 2005 that they figured they could buy a house and flip it for a profit before they got into trouble.

When the housing boom ended, though, people who had gotten interest-only loans or option ARMs found themselves unable to make their payments.

McKenna pointed out that loan documents always include numbers showing what will happen when loans readjust, but some borrowers either don't bother to read them or if they do, they ignore the possibility of getting into trouble.

Regional economist John Husing says it will be next year before the foreclosure market settles down and the housing market recovers.

m_rappaport@dailybulletin.com

(909)483-9395


The Sacramento Business Journal.

The outlook for homebuilders and homeowners looking to sell keeps getting worse.

New-home sales were dismal in the second quarter. The number of new and existing homes on the Sacramento market has eclipsed last summer's inventory and stands at close to 22,000. Foreclosures in Sacramento County are 10 times what they were last year. And mortgage rates have risen over the past few months.

"It's really a combination hitting all at once," said new-home analyst Greg Paquin, founder of The Gregory Group in Sacramento.

The company issued a report showing that the region's new-home sales in the second quarter fell by 42 percent compared with the same period last year, and 33 percent lower from the previous quarter.

"We are probably going to see this (situation) through this year and most of next year," he said.

Experts say it's a buyer's market, but despite plunging prices, buyers largely skipped the start of the traditional home-buying season. The region's homebuilders sold 1,788 new homes in the six-county area, a disappointing number to many who had seen slightly stronger sales figures over the previous six months as an encouraging sign. The latest quarter's performance was the worst since the end of 2004.

"The second quarter was terrible for us," said Kevin Carson, Sacramento division president for John Laing Homes. The company is the region's 16th-largest builder based on volume through May, according to Hanley Wood Market Intelligence. Carson said the company, which has projects in Roseville, Folsom and Natomas, has had much better sales recently. Its 16 sales over the past three weeks were more than its April and May sales combined, he said.

"There is still a lot of uncertainty," about where the market is headed, he said.

Investors, who created an artificial demand for homes in Sacramento, have fled the market. DataQuick Information Systems of La Jolla tracks investor properties by noting when tax bills aren't sent to the home in question but instead to a separate address. In 2000, about 14 percent of the tax bills for Sacramento County homes were being sent to other addresses. At the peak of the housing boom in summer 2004, that figure had climbed to 23.2 percent. The number has since fallen back to 13 percent for 2007, which is below the state average of 14.1 percent.

Despite builder promises of reduced inventories, one of the more surprising developments in 2007 has been a new-home inventory increase, which includes ready-to-build lots, over last year. At current sales rates, there's a 20-month supply.

"This is the biggest issue," Paquin said. "We looked into this and found that building permits are down on that side of things. But over the last two years, you've got 120 more projects out there. They're doing smaller phases, but opening up more projects during that time."

Paquin reported the number of new-home projects in the six-county region increased from 253 two years ago to 377 today.

"This is land they bought in 2005 and 2006," he said. "They can't sell it, they can't sit on it, so they're going to build on it."

The Gregory Group reported inventory of 4,899 new homes or lots, the largest figure since the company began tracking new homes.

Existing homes on the market in Sacramento, Placer, El Dorado and Yolo counties, including condos and townhomes, total 17,041 as of the end of June, according to Lyon Real Estate's information company, Trendgraphix Inc. That's above the 15,900 resale homes on the market at the same time last year.

"We knew it would go over last year .... That's too much food on the table, and the buyers are going for the caviar," said Lyon chief executive officer Michael Lyon. "It goes to show that any sellers who thought there would be a quick recovery need to get that out of their heads. Things are selling when they're priced below the last comparable sale."

A bright spot, he said, is that home affordability may be returning for many Sacramento residents.

The inventory of homes on the market has been boosted by foreclosures. Foreclosures.com, the Fair Oaks online real estate firm, reported that homes repossessed by banks in the four-county area increased from 477 for the first half of last year to 3,641 so far this year.

Prices are continuing to fall after an unprecedented run-up between 2000 and 2005. For new homes, the median price in the six-county region fell to $400,400, about a 12.9 percent decline from the same period last year. The median price for resale homes in Sacramento County is $339,000, about a 10 percent drop from last year.

New-home incentives, which aren't reflected in prices, have increased from about $12,800 at this time last year to about $18,000, Paquin said.

KB Home has had the best performance through May of all Sacramento builders, selling 346 homes. Territory president Barry Grant said he had no crystal ball to predict future results, but he attributed the company's success so far to its strategy of concentrating on starter homes and lowering prices rather than offering more incentives.

"Candidly, we've been adjusting the price until it's at a point we think will attract buyers," he said.

mshaw@bizjournals.com | 916-558-7861

CA ripples grt qts

http://www.montereyherald.com/ci_6331035

Follow the ripple effect of foreclosures, and chances are the rings start at the lower end of the housing market: new subdivisions attractive to young families, and the less expensive neighborhoods in a region.

Those areas are often hardest hit by foreclosures because they tend to be where many first-time homebuyers start, said Dan Thomas, a certified public accountant with Thomas & Thomas in Newport Beach and a spokesman for the California Association of CPAs.

In Monterey County, that's certainly the case, as default notices climb in pockets of Salinas, Marina, Seaside and Soledad.

It's the lower ends of the market that suffer the most, but homeowners in more established neighborhoods of Monterey and Carmel have also been affected. From Big Sur to Aromas, foreclosures are an ugly reality for nearly every part of the county these days.

The reasons are plentiful, says Thomas.

As home prices soared here in recent years, home-buying got reckless. Money was cheap, and lenders looked for ways to make credit available to more people. New mortgages emerged with artificially low introductory rates; qualifications got loosened.

"No longer were people qualifying for loans that perhaps they could afford," says Thomas. "There were more stated income loans, and without doing any paperwork to back it up, lenders were basically packaging loans pretty much based on people's assertions that they could qualify."

In the early 2000s, everybody wanted to jump into a home,
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or a second home, or investing in homes. Many of those buyers overextended themselves.

"It just seemed like it was a never-ending boom," says Thomas.

Now that home prices are falling in some areas, stagnating in others, homeowners find themselves losing equity or without any equity left in their homes.

And there are other situations: Job losses, interest-only loans with rates that soar after the introductory period ends, and mortgages worth more than the home itself.

"It's a terrible situation," says Bob Hammel, an agent with Century 21 Scenic Bay. "People get wrapped around the axle because the properties are upside down; people owe more than they're worth today."

Real estate broker Leslie Hill knows of many cases where homeowners are struggling to hold onto their homes as loan payments rise steeply.

"A lot of people are saying there are no innocent parties here," said Hill, "but all of a sudden they're getting a mortgage payment for $5,000 a month, and they only make $3,000."

Can't refinance|

In the past, if people faced trouble with steep payments, they refinanced. That's not a solution for many homeowners these days. Some have borrowed against equity, and many owe more than their house is now worth.

Some Seaside Highlands homes purchased for over $1 million a few years ago have depreciated to $700,000. In Creekbridge, houses whose values approached $700,000 last year are being priced at $500,000, even $480,000. A house appraised in Las Palmas a few years ago for $900,000 might now sell for $750,000, according to Hill — after competing with five other houses on the same block.

Some just sign a deed in lieu, turning their property back over to the bank. Others, trying to avoid foreclosure, try to qualify for a short sale, a document-heavy process that requires bank approval to sell for less than is owed. Out of 10 recent short sales Hill handled, only two resulted in closed sales. The rest — 80 percent — went into foreclosure anyway.

Frustrated sellers, stuck with properties that don't budge, switch agents, pull their homes off the market, then relist them. Their houses wait and wait for sellers while their mortgage clock ticks on.

A blind eye|

In some cases, homeowners turned a blind eye to the reality of their mortgage, said Hill, because the rates were so good.

"Where people got in trouble were these option-ARMS, where they started out at 1 percent, or the negative ARMS, where they're paying less than even interest."

Enticed by low introductory rates, many were told they could trade up or refinance before the rates adjusted.

"That makes sense in the old climate. But that's not what has happened," said Hill. "Now they're getting this huge payment they can't handle, they're falling behind, and now they go into foreclosure."

It's not just first-time homebuyers who have gotten into trouble.

Hill has seen cases where people started out with a good, manageable home loan, then started using their house like an ATM, pulling out $20,000 or $25,000 with each refinance. Even longtime homeowners who owed little refinanced, sometimes with drastic consequences.

New cars, or a new roof, or whatever the reason, but now they're in a position where their last loan was an option ARM and with no equity left, and they're stuck with it.

"These are people who make a good living, they pay their bills," she said. "It's really sad."

Tip of iceberg|

Monterey County Association of Realtors CEO Sandy Haney calls the current spate of foreclosures the tip of the iceberg, predicting that the real wave will hit in 2008.

"It's just a scary, scary thing," she says. "It's not good for anybody; Nobody wins in a foreclosure."

It's not the first time Monterey County experienced a swell of foreclosures: Owners lost homes in the early and latter 1980s. But the economy had everything to do with those eras, said Haney, which isn't the case today.

"This is because of an overheated, frenzied market," said Haney, who estimates that 40 percent of buyers in recent years were investors or second-home buyers.

Agents shared stories of lenders offering field workers $5,000 to sign forms, sometimes not knowing they'd bought a home until default notices started arriving in the mail.

Forms were retyped with new information, said Haney, and some lenders reaped premiums for imposing prepay penalties and writing negatively amortizing loans.

And many of the lenders who hurriedly set up shop have also disappeared.

Skating on the edge|

"Some of them were skating the edge, but figured nobody would tell on them," said Haney. "Now, if you drive around Salinas, you'll see a lot of empty mortgage company buildings. They came, they made money and now they're gone."

"There was," said Haney, "an ugly side to this market."

Likewise in the southern end of the county.

"We just about had a new lender on every street corner," says Lucy Jensen, managing agent for a Soledad real estate company. "Soledad was the fashionable place to be."

These days, it has gone from a town ripe with 100 percent loans, even 110 percent financing, to a town up for sale. Two years ago, there were seven houses on the active market; last month, said Jensen, there were 150.

As Monterey County Assessor/Clerk Recorder Steve Vagnini watches low-interest loans in Salinas, Marina and Seaside adjust, he's reminded of the savings and loan crisis. Lenders, he says, apparently didn't learn.

It was a crisis bound to happen, as housing prices appreciated more rapidly than wages or salaries ever could. The impact will be a hit to the county tax base, which he predicts will grow only 7 to 8 percent.

Foreclosure has obvious personal implications for a consumer: the loss of a house, blemished credit scores and much higher financing rates in the future, if they can get credit at all. Those who lose a home may find it a challenge even to rent an apartment or buy a car.

It also affects the neighbors.

Homes can sit abandoned for months before a bank sale. Owners — frustrated, broke or disgruntled — often give up maintenance long before moving out.

"You can see 'em, you can spot 'em," says Hammel, "the shades drawn at high noon, no cars around, you look over the fence and there's broken toys in the yard."

Haney likens it to the neighbor who parks his car on the front lawn: "It doesn't help your property value one bit."

And if those homes are sold for less than what they're worth, it resets the value of every comparable home in the neighborhood.

"It somewhat becomes a downward spiral because then those valuations impact everyone else," said Thomas, "and that might impact someone who wanted to refinance, or thought that their home was worth more."

Turn to rentals|

Some buyers, frustrated by houses that won't sell, are turning them into rentals, said Gloria Moore, whose Salinas realty company handles more property management these days than home sales.

She predicts that the next round of foreclosures will affect more established homeowners, those at higher income levels who may have more resources to tap, and cause a small exodus as former homeowners leave the county's high-priced market.

But the real question, she asks, is what the banks are going to do with all those reclaimed homes, and what impact their pricing levels will have on the real estate market.

"The debt on some properties is so far above what the properties are worth," she said, "so the question is, how much is the bank going to want to absorb in their ability to get rid of the property?"

And if sub-prime mortgages were sold off to secondary financing markets, how much loss might a pension or insurance fund in New York be willing to swallow?

The ripple effect has affected jobs, as real estate agents return to jobs they left years ago and title and mortgage companies cut staff.

If a vacant office is being shown right now, Moore says there's a good chance it's either a former real estate or mortgage office.

"You drop that teeny-tiny pebble in the marketplace," says Moore, "and it just goes out that far, you can't even imagine."

CA REO

http://www.mercurynews.com/breakingnews/ci_6320572

Article Launched: 07/07/2007 01:32:28 AM PDT



The house in Silver Creek that real estate agent Nancy Vanegas will soon put up for sale has five bedrooms, views of the foothills, and is part of a growing category in the housing market: homes that fail to sell at foreclosure auctions and are repossessed by lenders.

The increased presence of lender-owned homes in the market - known in the banking industry as REOs, for "real estate owned" - is fallout from the real estate fervor that marked the first half of this decade. Loans were easy to get, adjustable rates made monthly costs more bearable, home values were rising, and many homeowners leveraged themselves to the maximum. But conditions have changed and foreclosures have risen. REOs, once rare in Silicon Valley, may soon contribute to lower home prices in some neighborhoods.

One of the reasons so many foreclosure properties fail to find buyers is because the bidding typically starts at the amount of the unpaid balance on the first mortgage, and in a soft market, some homes are no longer worth that much. When that's true, no one bids. "There's no quick upside for the investor," said Greg McBride of Bankrate.com.

In May, $2.8 billion worth of California real estate went up for sale in foreclosure auctions, according to ForeclosureRadar.com, a Discovery Bay company that sells foreclosure information to subscribers. Of that amount, about $2.6 billion worth failed to find buyers, and so became bank-owned. The figures represent the total value
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of the outstanding loans that went up for auction.

Those figures are way up from early this year. In January, for example, $1.49 billion worth of property was auctioned statewide, and $1.32 billion went back to banks. January is typically a busy month because trustees usually refrain from foreclosing during the December holidays.

With so much property be ing foreclosed upon, "Even if every one of them was a great deal, I don't know that we'd have enough investors to buy them," said Sean O'Toole, ForeclosureRadar's founder. "As the banks take back $2.6 billion a month, they're going to get more motivated to get a short sale done," he said. "The conditions are ripe right now for them to start discounting."

Short sales occur when a lender agrees to let owners sell a home for less than they owe on the mortgage, to avoid costly foreclosure proceedings.

When banks take back foreclosed-upon homes, they sometimes hire auction houses to unload properties. Several companies specialize in showcasing REO or foreclosure properties, said Laura Pephens, a director of the California Mortgage Bankers Association and a mortgage-industry consultant in San Clemente. Among the sites with California listings are www.kwiauctions.com and www.ushomeauction.com.

Lenders also list homes with realty agents who specialize in REO transactions, which can take much longer than normal sales. Every aspect of the sale - and preparation for it - must be vetted by the lender or mortgage servicer that holds the property.

The REO listing agent typically finds an attorney to handle the eviction of the previous owners or tenants, if they're still in the home. Often, residents are offered "cash for keys," an incentive to move out quickly, saving the lender the costly hassle of evicting them.

Cash-for-keys is always the better deal for owners, O'Toole said, because an eviction appears on a person's credit record as a court judgment against them.

When the home is vacant, the agent takes care of cleaning and repairing the place (after the lender has approved the cost estimates). The agent provides an estimate of the home's worth; the lender also gets a separate appraisal.

"Sometimes it takes two weeks, sometimes it takes two months," to get a bank-owned home listed once she lets the lender know her contractors have cleaned it up, said Vanegas as she walked through the Silver Creek home's parched, overgrown back yard in late June.

Vanegas, who works in the Willow Glen office of Intero Real Estate Services and specializes in REO transactions, had three such listings last year. Currently she has 27, ranging from condos to the Silver Creek home, where a neighboring home sold for $1.3 million last fall. (Her listing has not been priced yet.)

When she stepped into the vacant, 2,900-square-foot house through a back door in late June, she surveyed what the former residents left behind - an empty bottle of creme de menthe liqueur, half a withered lemon and a promotional flier from Club One at Silver Creek on the kitchen island. Milk and a can of dried beef in a fridge that still bore some decorative magnets. A tiny dead mouse under a built-in desk.

Compared with some newly repossessed homes, she said, "this is clean."

An estimated 8 percent of homes for sale - or about 450 houses and condos - in Santa Clara County as of June 30 were "distressed" in some way - either being sold in a "short sale," or in foreclosure or as REOs, according to a new report from Movoto, a brokerage based in Redwood City. Movoto gathered the data by scouring the agent remarks that accompany homes on the multiple listing services.

There probably are not enough bank-owned homes on the market in Santa Clara County now to drive down prices single-handedly, especially as the trustees that own them are not deeply discounting. But that could change as the market does, Pephens said.

"All mortgage servicers are buried in this issue right now," she said. Trustees - the entities that have assumed ownership of the properties, be they the original lender or a mortgage servicing company - are still trying to get a handle on the increased number of REO properties they are managing, and on how much leeway they have to discount home prices without encountering resistance from investors in the mortgage-backed securities .

"In this market right now, I hope trustees are being more flexible in terms of the purchase price offers," she said.

Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.

CA auctions

Modesto Bee

Auctioneers' calls for bids on used cars and unsold furniture soon will ring out more frequently at The Auction Park in Modesto.

In a sign the valley's economy is cooling, The Auction Park's owner, Roger Ernst, said his 22-acre site is filled with repossessed vehicles and furniture ordered by retailers but never sold.

The Auction Park, which usually holds sales twice a month, will begin weekly auctions Saturday. Ernst said the weekly auctions will last at least through the end of summer.

"Physically, we can't do it in two weekends (a month)," said Ernst, who founded The Auction Park, at 824 Kiernan Ave., 20years ago. "This is the first time there's been this much product."

When the Northern San Joaquin Valley economy hummed along a few years ago, he said, many consumers bought vehicles with little or no money down.

As a result, many people got in over their heads, and vehicle repossessions have doubled over the past four months, Ernst said.

"Now people are getting a reality check," he said.

He's had 275 vehicles to sell at recent auctions, he said, and of those, about 100 have been repossessions.

Some consumers have gotten so far behind, he said, they've voluntarily had their vehicles repossessed to get out from under the loans.

One of the hot economy's main factors, the explosion in real estate, helped spur a corresponding flood of unsold furniture.

Stores bought a lot of furniture from Asia, Ernst said. But because sales slowed as the housing market cooled, he said, there was no market for that new furniture when it arrived.

His facility has 100,000 pieces of new furniture, and warehouse manager Joe Gomes said it's almost impossible to fit everything indoors.

"We're receiving more than we're able to sell," Gomes said, adding that he's noticed fewer buyers at recent auctions.

He said that's depressed sale prices at The Auction Park, which often are below normal retail prices for such merchandise.

"The furniture stores hate us right now," Gomes said.

Inside the warehouses, every corner is filled with bed frames, cabinets, couches, easy chairs and coffee tables.

Gomes said he recently saw a coffee table that normally would retail for $125 go for $25 in an auction.

"Whoever's out here, if they put up their hand, we're going to sell it to them," he said.

The Auction Park gets its items from a variety of sources, including bank repossessions, seizures from law enforcement investigations, business liquidations and consignments.

But while the flood of inventory is great for buyers, Ernst said, it's less desirable for sellers.

"We tell the consigners, if they put out an item for $10,000, we're just wasting time. It won't go for that," Ernst said.

The yard, which opened in 1987, has had up-and-down cycles but never with this much inventory, Ernst said.

"Every week, we're working, but that's what we do," he said. "If you wait about 30 seconds, it all changes."

For more information, call 527-7399 or go to www.theauctionpark.com.

Bee staff writer Ben van der Meer can be reached at bvandermeer@modbee.com or 578-2331.

FL grt qts

Ledger



You don't see many "Built by Donnie True" signs around Polk County.

That's because the former Bartow building official has built only six homes this year as a one-man company with a handful of subcontractors. Last year he capped out at four homes.

And if he doesn't build any more houses this year, he will still finish 2007 comfortably in the black.

In this unforgiving climate for home construction True and others like him say the advantage has turned to small builders.

"I sub everything out," True said. "I don't have the overhead that they (the large home builders) have. Just a few a year, that's plenty for me. I don't want to get into building 10 or 15 homes a year."

True's Construction and Inspection Services Inc. in Fort Meade avoids costs that other builders incur at a larger level - large land holdings and an in-house staff.

True knows the market and knows how to make it work for his company. For him, low overhead and limiting projects equal a profitable business.

"It is good, but it's slow all over," he said of the local market. "If I don't do another house this year it will be enough for me."

Typically, a home built by True costs in the $150,000 to $200,000 range. And when it comes to new homes these days, prices don't get too much lower than that.

Median home prices for Polk were $171,000 in May, down 4 percent from the prior year. At the same time, Florida's median home price fell 5 percent to $237,000, and the national median dipped 2 percent to $223,700. But those figures include both new and existing homes.

"I think we have seen the bottom during the first part of this year," said John Wood, CEO of John Wood Enterprises in Winter Haven. "We have certainly seen a pullback from prices from a year ago."

For new homes, he said, those pullbacks have been an average of about 10 percent.

"The new-home market is a little different," Wood said. "The trends are similar, but not identical in the new homes and resales."

But other parts of the state are worse, especially in the metropolitan areas in South Florida that were flooded with beachfront condominiums and investors looking for a quick profit.

"We don't have it too bad," said Scott Coulombe, executive director of the Polk County Builders Association. "It is much worse outside of our area."

For nearly the past year, the county has experienced double-digit decreases in the percentage of housing permit totals for new construction. Building permit totals for single-family homes were still down 29 percent in May, dropping to 455 from 637 a year ago.

And existing-home sales haven't fared much better, dropping 35 percent to 367 homes in May, compared with 564 in May 2006, according to the most recent figures by Mid-Florida Regional Multiple Listing Service.

Coupled with a glut of new-home inventory generated by much larger regional and national builders, the prospect of an immediate turnaround in the market is grim. Builders expect at least another year of lower-than-normal sales before the pace of home sales picks up.

And it's going to take time to clear out the 4,500 to 5,000 homes the Polk County Builders Association estimates is waiting in builder inventories.

"Nothing is hot," said Mark Hulbert, president of Hulbert Homes in Lakeland. "Everything is moving at a slower pace."

Hulbert, who specializes in building custom homes, said his company isn't regulated by the same formulas as larger builders. Fluctuations in the market don't have as great of an impact.

In fact, Hulbert's home sales are bouncing back to near-2005 levels, the peak of the real estate boom.

"It is remarkable," he said. "We are having a really good year."

Already, the builder's sales are up nearly 80 percent this year at 43 sales, compared with 24 during the same time period last year.

Offering homes at a variety of prices helps Hulbert.

"We really can't pinpoint a hot spot," he said. "We are having sales from the $200,000s up to $1.7 million. The price range is pretty broad for us."

But the immediate future for other builders isn't so hot.

Companies like Lennar and KB Homes have been forced to lay off employees.

Southern has laid off three of the company's nine building superintendents.

"That is how you stay lean and mean," Jared Weggeland, Southern Home's director of sales and marketing, said of the company's recent layoffs.

Other companies are selling tracts that were slated for residential development.

"Until you get some of that inventory gone, you aren't going to see much new product coming from the big guys," Coulombe said. "The smaller builders have been able to avoid that because they don't have the large holdings."

For Highland Homes, which typically produces 750 homes a year, sales are down 30 percent, said Joel Adams, the Lakeland company's vice president. But there have been no layoffs and the company is expanding its operations into Lake, Pasco, Hillsborough and Hernando counties.

"We think we are better off than most," he said. "Several years ago, we sold off some of our land base. Basically, if you have a high land base now, you are in trouble. Our land base is low."

Many of Highland Home's house packages start between $150,000 and $160,000.

"If you're not a price-conscious builder and run a tight ship, you're going to be in trouble the next eight months to a year," Adams said.

For Southern Homes, layoffs on the company's operations side were a necessity and home sales projections are also down for the year, Weggeland said.

The Lakeland-based company, which typically builds more than 300 homes a year, is projecting it will not exceed 200 homes in 2007. And while not all of the company's inventory has been discounted, buyers can find homes up to $30,000 off the sticker price.

"We are taking it on a case-by-case basis - on cutting home prices," Weggeland said. "In some cases, we haven't had to reduce our prices. It just depends."

The residential construction in some parts of Polk is at an all-time low. Sales are so bad, some national builders are planning to move out until the market bounces back, he said. "Some builders have cut their prices up to $90,000 off. That should tell you something."

To help spur sales, many builders have opted to bring back buyer incentives.

While closing costs and home upgrades are common, cuts like $35,000 off a new home with Florida Home Designs, headed by Robert Nunez, in Lakeland are becoming more common. And now, buyers can find newly built homes starting at about $140,000.

If you were to back up to 2005, a home at that price was a steal.

Traditionally, price cuts of about 10 percent are more common, said Wood, whose company builds about 50 homes a year.

"An empty house does no one any good," he said. "The worst I've heard of is a 30 percent cut. To me, that's a little overboard. Ten percent is more in line with the market. I think just about every builder is offering some incentive."

And while the inventory of new homes may be high because of mass production, there are other factors that have led to the slowdown in real estate, Coulombe said: The uncertainty of property taxes, insurance and inflated prices that are out of reach for average wage earners.

"It's a buyer's market," he said. "It is not a seller's market. But we are dropping down to what the norm was in 2001-2002, which is what we were expecting."

For Richard Gifford, vice president of Gifford & Gifford Construction in Lakeland, sales are down 10 percent from 2006.

"But we are holding steady," he said. "We haven't had any layoffs. The market has slowed down without a doubt."

Last year the company completed 60 homes. And this year, Gifford predicts the company will complete between 45 and 50 homes.

"For us, the market is off, but not way off," he said.

Local builders said they are hopeful that, because of its prime location in the center of the state, Polk's record building will return, prices will continue to climb and, if you are going to buy, now is the time.