CA mod bee

Modesto Bee


The housing market news just keeps getting worse for the Northern San Joaquin Valley.

Stanislaus, San Joaquin and Merced coun- ties had the highest foreclosure rates in the country during August. Statistics released today by RealtyTrac showed the valley's homeowners were six times more likely to be in mortgage default last month than the national average.

And home values have plunged. August statistics show home prices fell about 15 percent in Stanislaus and San Joaquin counties and nearly 20 percent in Merced County compared with a year ago, according to Data- Quick Information Systems.

Stanislaus County's median-priced home sold for $315,000 last month. Compare that with the market peak in February 2006 when the county's midpriced home sold for $392,000.

Values have been sliding since. But even at today's dramatically lower prices, home buyers are hard to find.

Only 450 homes sold in Stanislaus County during August. That's a 43 percent drop compared with last year.

Lenders, meanwhile, foreclosed at record rates last month.

RealtyTrac statistics show 407 Stanislaus County homes were repossessed in August. An additional 1,388 of the county's home- owners were served legal mortgage default notices, and 329 more were warned their homes were on the verge of being sold at public auction.

The number of default no- tices, trustee sale notifications and lender repossessions totaled 2,124 in Stanislaus County.

RealtyTrac calculated that such notices went to 1-in-79 homes in Stanislaus County, 1-in-81 homes in San Joaquin County and 1-in-82 homes in Merced County.

The foreclosure notice rate was 1-in-510 homes nationally and 1-in-224 homes throughout California.

"It's amazing to me how those foreclosure numbers continue to go up in your region," said Daren Blomquist, a spokesman for RealtyTrac, which publishes a national database of foreclosure and bank-owned properties. "Your notices of default (the first step in the foreclosure process) don't seem to be decreasing, which indicates you've still got some more pain to go through, unfortunately."

The foreclosure process typically takes a minimum of four months before a home can be repossessed. The process starts with a formal notice of default, then ends with homeowners catching up on payments, selling their homes, renegotiating their loans or losing their homes to lenders.

"What we're hearing from a lot of investors is that there's just not a lot of equity in these properties," Blomquist said.

When homes aren't worth as much as the mortgage on them, usually no one bids for them at foreclosure auctions. Such auctions happen at noon daily on the Stanislaus County Courthouse steps. When no one bids, lenders end up owning the property.

"For people who are being fiscally wise, this could be a pretty good opportunity to buy prop-erty," Blomquist said. "There are a lot of homes at discounted prices out there."

That's particularly true in cities such as Patterson, where median home sales prices have plunged nearly 33 percent during the past year, according to DataQuick records.

Waterford and Atwater prices dropped 24 percent, Lathrop fell 23 percent and Newman declined 22 percent.

Prices in central, western and southern Modesto decreased more than 20 percent.

About the only valley city where home prices haven't declined is Ripon, where the median sales price has stayed about $525,000.

Prices statewide slipped to a median $465,000 in August, down 1.1 percent from a year ago. There were 33,429 new and existing houses and condos sold statewide last month, which was down 34.5 percent from August 2006.

Last month's sales made for the slowest August since 1992 in California.

The typical mortgage payment that California home buyers committed themselves to paying last month was $2,251, according to DataQuick.

Press Enterprise


The Federal Reserve is expected to lower bank borrowing rates today, but buyers will not rush back to the housing market and foreclosures will not stop their upward spiral, economists and mortgage industry officials said Monday.

They said the expected drop of one-quarter percent to one-half percent in the rate that banks charge one another for overnight loans could translate into some relief for homeowners with adjustable-rate mortgages in that their monthly payments might not jump as high.

But the biggest potential benefit of the Federal Reserve's action would be a psychological one, they said, by convincing the financial markets, including companies that invest in mortgages, that it will do whatever it can to prevent a credit crunch from pushing the national economy into a recession.

"It should first and foremost prevent the economy from going into a recession," said Rich Weiss, executive vice president and chief investment officer for City National Bank. "No matter what they do, there is no quick fix to the housing issue. But this is clearly good medicine and going in the right direction."

Mortgage industry officials said it would require several rate cuts and consequent reductions in adjustable rates before homes would become significantly more affordable.

Chapman University economist Esmael Adibi said because the Federal Reserve rate is a benchmark for all short-term interest rates, a change is likely to be reflected in rates charged to holders of credit cards and adjustable-rate mortgages.

But any adjustment will have no impact on long-term rates, such as those on 30-year fixed-rate mortgages.

It was uncertain whether an interest-rate downshift by the Federal Reserve this week would be followed by many more cuts because of the agency's concern that rate cuts could spur inflation.

"The Fed's fear is that inflation is still a problem and if they reignite the housing market, that inflation ...will get out of control," Adibi said.

Brian Weide, owner of SunStar Mortgage Services, a mortgage broker in Ontario, said mortgage rates have been less of a problem for the Inland housing market than a drying up of mortgage money, reflected in a requirement for borrowers to show higher credit scores and to make larger down payments.

The most-needed outcome of the Federal Reserve's action, Weide and others said, would be to give investors confidence to put money back into the mortgage market.

Economist Chris Thornberg said he doesn't believe anything the Federal Reserve does will prevent an impending round of foreclosures.

"We have to take our lumps, period," he said. "We have a housing debacle on our hands that has to be cleared out of the system. It is going to be a painful."

Leslie Appleton-Young, chief economist for the California Association of Realtors, said, "It is certainly a step in the right direction and will calm the markets a bit and make credit a little more available. Every little bit helps.

Will it stem the tide of the downturn we are in? No."