Skyrocketing foreclosure rate ripples across industry

Skyrocketing foreclosure rate ripples across industry

Posted 7/25/07

BAKERSFIELD - The skyrocketing foreclosure rate in Bakersfield is rippling across the real estate industry.

Many home buyers are staying on the sidelines until the market corrects itself, and home sellers are caught in a market that could be several years away from staging a comeback.

A trustees sale in downtown Bakersfield has homes that have been foreclosed on the auction block.

It’s something we’re seeing more and more these days. The auctioneer asked that we not use his name.

“There's a lot of over encumbered properties going to sale,” he said, “and a lot of people are struggling to make a profit on these sales. I get a lot of people showing up, but most of them go away empty handed. There are quite a few foreclosures going on right now and it seems like it's increasing.”

The numbers tell the story. In the second quarter of 2006, there were just eight single family home foreclosures.

Second quarter of 2007, there were 461 foreclosures—nearly six times the foreclosure rate for all of California.

The Daily Report tracks the housing market in Bakersfield, and Anne Marino, the owner, has an opinion on what’s behind the downward spiral.

“I think a lot of borrowers were naive, young kids and older folks excited about getting a new home, and they fell for the fancy financing,” said Marino. “We call it creative financing.”
Marino’s referring to tactics employed by lenders during the housing boom.

Adjustable rate mortgages and 100 percent financing designed to help cash-poor borrowers in pursuit of the American Dream.

Now, countless homeowners are living real estate nightmares.

“You have a buyer who's not really ready to purchase a home, being offered to buy more home than he can purchase on terms he can afford when it starts, but if there's any hiccup, or when the rate goes up, they can no longer afford the home,” said Real Estate attorney Richard Monje.

What does the spike in foreclosures mean to you? It depends on whether you’re in the market to buy or sell, but in both cases, most analysts agree—mounting foreclosures are depressing home prices.

“If you're selling right now, you're going to experience delays in how long it will take to sell,” Monje said, “and if you have pressure to move, because of a transfer or something, you're going to drop the price ... and now you've sort of set a market for everyone else.”

Monje and other analysts agree that with all things considered with Bakersfield’s slumping real estate market, it is a buyer’s market.

“I think it's a pretty good time to buy,” Monje said. “Prices may go down more, but there's a good selection right now, and you can wait, and maybe prices will go down, but you'll be left with what's left.”

As for the person looking to upgrade in a home, the upside is there’s a lot of inventory to choose from.

Prices are going down, but lenders are getting tougher and the creative financing craze we saw during the housing boom is less creative with more qualifying guidelines.

July 25, 2007 9:00 PM
Posted By: brynn galindo

Real estate market perks up

Real estate market perks up

The clouds may be breaking over Bakersfield's gloomy winter real estate market, though the number of home sales has tumbled in recent months.

About 1,380 existing houses were sold in the first three months of 2006, a 13.2 percent drop from last quarter, according to a report released this week by local appraiser Gary Crabtree. The decline was even larger when compared to the same time last year, showing a 24.7 percent drop.

The dip in sales mirrors what's been happening throughout the state and country, Crabtree said.
"It wasn't like Bakersfield was the Lone Ranger," he said.

Bakersfield's median house price also took a hit during the winter months, dropping by about 6 percent, Crabtree said. March's median price was $295,000.

But new signs of growth this spring have local real estate agents hopeful. February and March brought modest home price increases, but agents say the phones are starting to ring again.

"The buyers have started calling and coming out," said agent Nancy Harper with McKinzie Nielsen Real Estate. "I'm actually very encouraged, but I do know that it's going to require a little more patience."

It's a matter of getting sellers to price their houses realistically and coaxing nervous buyers back into the saddle, Harper said.

Not everyone's convinced, however, that Bakersfield's current prices are here to stay.
The plunge in sales and rise in the number of homes on the market -- currently about 2,900 -- should be driving prices down, said Robin Ablin, owner-broker of RSC Realty.
Houses are now staying on the market an average of 45 days, up from 26 days last year, according to Crabtree's report.

People just haven't been calling, Ablin said. He recently had to reduce the asking price of a well-kept house in east Bakersfield's Hillcrest neighborhood by roughly $15,000 because only four people had looked at it since September.

Even if prices dip, though, demand will grow again, he said.

"As long as people keep moving here, Bakersfield's going to keep growing," Ablin said.
Commuters from Southern California will keep turning to Kern County as an affordable option, said Russ Valone, president of San Diego-based MarketPointe Realty Advisors. A leveling in prices is healthy, he said.

Buyers now have more to choose from and won't be entangled in bidding wars. Local agents say sellers need to set more realistic asking prices.

Bakersfield's market was long undervalued, and houses have reached a price where they should be, said agent Alice Profeta with Watson Realty.

"(Buyers) might as well go out there and buy now while we have a decent interest rate," she said.

An agent from Florida recently told Profeta, "It took longer to sell a house than it does to have a baby," she said. Compared to that, Bakersfield's still in good shape.

BY MISTY WILLIAMS, Californian staff writere-mail: mwilliams@bakersfield.com Friday, Apr 21 2006 10:10 PM

Bakersfield & Kern County History and Location

Bakersfield & Kern County History and Location

Bakersfield, incorporated in 1898, is located in the County of Kern and is the county seat.

The City of Bakersfield covers approximately 114 sq. miles, (metro area is 224 sq. Miles) and is 492 ft. above sea level.

It is located at the southern end of the San Joaquin Valley. The valley is partially surrounded by three mountain ranges.

The Temblor Range is to the west, the Tehachapis to the south and the Sierra Nevadas to the east. The Kern River flows through the valley adding natural beauty to the area.

Bakersfield was designated an All America City in 1990 by the National Civic League.

Source: Greater Bakersfield Chamber of Commerce

Bakersfield, CA Real Estate Market Bakersfield

Bakersfield, CA Real Estate Market Bakersfield
by http://www.real-estate-bakersfield-kern-county.com/
7/4/2007

California is located in between two of the biggest cities in the state – Los Angeles and Fresno.

The city has experience economic and social growth over the past ten years and has become comparable to other large American cities. The real estate market in Bakersfield is currently a buyers market. The number of buyers exceeds the number of sellers in the area. Additionally, there are a large number of houses on the market right now. This gives the buyers a number of choices when they are choosing a home. Prices have been falling during recent years, which also works in favor of buyers.

In Bakersfield real estate, houses have been staying on the market longer. This is due in part to the fact that there buyers have so many different choices of houses in the area. They do not feel pressure to sign a contract or close a deal because there is a great chance that they will find something better in another part of down. Sellers find themselves forced to bring prices down. In recent years, there is been a sizeable amount of appreciation on Bakersfield real estate. Because of this, sellers are still able to make profits even when they have to reduce the price of their offerings. Even though buyers have such a tight control over the market, there investors still have an opportunity to make a profit on Bakersfield real estate.

Investors that are looking for get-rich-quick deals won’t find much success in this area. On the other hand, the investor that is willing to put a little extra time and effort into Bakersfield real estate can receive sizable profits. Both investors and home sellers alike can sell Bakersfield real estate by making sure that it is priced right. Since buyers have so many choices for real estate, they will be quickly turned away by prices that are too high. Sellers will be forced to drop prices leaving potential buyers wondering why the priced has been dropped. Even when you drop the price of the property, buyers will shy away from homes that have stayed on the market for too long. Whenever a piece of real estate stays on the market for too long it becomes stagnant. This makes the property difficult to sell. The right pricing is vital for selling Bakersfield real estate.

The best way to price Bakersfield real estate is by comparing to other homes that have sold in the area. Many investors and sellers are inclined to price Bakersfield real estate based on the price of homes currently on the market. However, this isn’t the best way to determine the price of your property. Since buyers have control of the Bakersfield real estate market, you must make sure that you price homes according to what the buyers want.

Don’t let what’s going on in other parts of the Bakersfield real estate market fool you into thinking that you can’t make money in this area. The appreciation of homes counters the control that buyers have on the market.

USA Home sales hit slowest pace in 4 years

USA Home sales hit slowest pace in 4 years

By MARTIN CRUTSINGER Monday, Jun 25 2007 3:39 PM
Last Updated: Monday, Jun 25 2007 3:59 PM

Sales of existing homes fell for a third straight month in May, dropping to the lowest level in four years as the median sales price declined for a record 10th consecutive month.

In a troubling sign for the future, the inventory of unsold homes shot up to the highest level in 15 years, meaning more downward pressure on prices in the months ahead until the inventory glut is reduced.

Sales fell by 0.3 percent in May to a seasonally adjusted annual rate of 5.99 million units, the National Association of Realtors reported Monday. Sales now stand 10.3 percent below where they were a year ago.

The median price of an existing home sold last month fell to $223,700, down 2.1 percent from a year ago. It marked the 10th straight price decline compared with a year ago, the longest stretch on record.

After rising more than 100 points earlier in the day, the Dow Jones industrial average lost those gains to finish down 8.21 points at 13,352.05.

The drop in home sales was in line with expectations, providing relief on Wall Street where analysts had been braced for an even worse showing.

Economists predicted home prices would likely head lower in the months ahead because of continued troubles in reducing the stockpile of unsold homes, which rose 5 percent in May to 4.43 million units. That was an 8.9 months supply at the May sales pace, a level that has not been seen since July 1992, the last time the country went through a serious housing slump.
"The only way we are going to chip away at this Mount Everest-sized pile of inventory is by price cuts and so far, sellers haven't been aggressive enough," said Mike Larson, a real estate analyst at Weiss Research. "Don't look for a lasting bottom in the housing market anytime soon."
The sales decline was led by a 3.4 percent drop in the South. Sales also fell in the West, dropping 0.8 percent. Sales rose by 5.8 percent in the Northeast and 0.7 percent in the Midwest.
Economists predicted further sales declines in coming months as housing is affected by recent troubles in subprime mortgages, which have caused banks and other lenders to raise their qualification standards, making it harder for potential buyers to obtain financing. Rising mortgage defaults also mean more homes dumped on a glutted market.

Some analysts said they believed the once high-flying housing market was going through a crisis of confidence. Sales of both new and existing homes set records for five-straight years, prompting what many believe was a speculative bubble in some parts of the country as investors rushed in to buy properties in hopes of a quick resale to take advantage of home prices that were climbing at double-digit rates.

Lawrence Yun, senior economist for the Realtors, noted that household formation had slowed. He said that implied many people had decided to put off buying a home and were doubling-up in rental units or moving back home with parents.

"It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market," he said. "The lack of buyers' confidence is a major factor in the lower sales."

He said activity in the existing home sales market, which accounts for about 86 percent of annual sales, would continue to suffer until builders were more successful in trimming their production levels for new homes, which make up the other 14 percent of annual home sales.
The National Association of Home Builders reported earlier this month that builder sentiment dropped in June to the lowest reading since February 1991, reflecting the spreading troubles with subprime mortgages, which go to borrowers with weak credit histories.

Trimming their forecasts, the Realtors now expect existing home sales will fall by 4.6 percent this year, down from a previous forecast of a 2.9 percent drop. They expect the median price of a home to fall by 1.3 percent this year, which would be the first annual price decline on record.
Adding to the problems in housing, mortgage rates have recently begun to rise, although they remain well below their historic averages. According to Freddie Mac, the average commitment rate for 30-year mortgages was 6.26 percent in May, up from 6.18 percent in April.