FW: AP: California home prices fall 26 percent amid foreclosures

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From: <char.ayers@att.net>
Date: Fri, 18 Apr 2008 23:08:26 +0000
To: Charlene Ayers <char.ayers@att.net>
Subject: AP: California home prices fall 26 percent amid foreclosures

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From: "Karen Gruber" <witchywoman@earthlink.net>
Subject: California home prices fall 26 percent amid foreclosures
Date: Fri, 18 Apr 2008 18:01:12 +0000


Associated Press 4/17/08
 
 
Karen Gruber
witchywoman@earthlink.net
By Associated Press <file:///C:/Documents%20and%20Settings/Owner/Local%20Settings/Temp/C9AAC354-D1BE-4847-80A5-305CC536BC94/http://www.forexfactory.com/member.php?u=35334> , Today 6:27pm, Topic Economic Indicators <file:///C:/Documents%20and%20Settings/Owner/Local%20Settings/Temp/C9AAC354-D1BE-4847-80A5-305CC536BC94/http://www.forexfactory.com/news.php?topics=106>
California home prices fall 26 percent amid foreclosures
SAN DIEGO (AP) - A glut of foreclosed homes helped prompt a 26 percent plunge in California home prices in March, highlighting a trend that experts said is likely to continue as low, introductory interest rates expire for people who bought near the height of the housing boom.

More than 38 percent of California homes sold in March had been foreclosed at some point during the previous year, DataQuick Information Systems said in its survey released Thursday.

Figures for previous years were not immediately available, but company analyst John Karevoll said the March percentage for foreclosed home sales was believed to be an all-time high for the state.

The state's median home price was $358,000 last month, down from $484,000 in March 2007, when the market peaked, DataQuick said. The number of ne w and resale houses and condos sold during the month fell 38.3 percent from a year earlier to 24,565.

DataQuick said the numbers also reflect difficulty in getting financing for expensive homes.

In March 2007, loans over $417,000 accounted for nearly 40 percent of home sales. Last month, those so-called jumbo loans accounted for less than 15 percent of sales.

The percentage of foreclosed homes on the market is growing as many potential sellers hang on to property and wait for prices to rebound.

Foreclosed homes in California sell for about 15 percent less than non-foreclosed homes in the same neighborhoods, bringing all prices down, Karevoll said.

The nationwide foreclosure glut is expected to worsen in May and June as two- and three-year introductory interest rates expire on homes purchased in 2005 and 2006, said Rick Sharga, vice president of marketing at RealtyTrac, a research firm.

As higher rates kick in, few er homeowners will be able make payments, though possible rate cuts by the Federal Reserve may soften the blow, he said.

Nationwide, foreclosed homes have been selling for about 20 percent less than similar non-foreclosed homes, Sharga said.

California housing prices may bottom out in summer or fall, around the same time that foreclosures peak, said Karevoll. Lenders appear to have loosened the spigot in recent months -- a trend that will likely continue into the fall -- though credit will not be as easy to find as it was during the market's heyday, he said.

The big uncertainty is whether the economy will sour even more, making it more difficult for people who lose their jobs to make payments, Karevoll said.

'If we do have a recession in California, things will get bloody out there,' he said.

The affordability of some foreclosed homes has helped some buyers.

Cyndie Schubert, who earns $16.94 an hour as a parking garage attendant, said she b ought a San Diego home out of foreclosure for $250,000 after two years of looking for places that were out of her reach.

The first-time homebuyer had to buy a water heater and kitchen appliances but the plumbing was new.

'I walk to work, I have my white picket fence,' said Schubert, who lives with her 25-year-old daughter. 'It's got a little yard but that's all right.'

Her mortgage payment of $1,104 eats up much of her first monthly paycheck, but it's only $300 more than what she was paying to rent an apartment in a crime-ridden neighborhood where she was raised in suburban El Cajon. She pays her other bills with her second monthly paycheck.

'I got caught up on my bills, and it was time for me to do something,' said Schubert. 'I'm 52. It was time for me to leave (my daughter) some kind of legacy.'

The foreclosure glut has hit California especially hard. The state ranks only behind Nevada -- and just ahead of Florida, Ari zona and Colorado -- in the percentage of households in foreclosure, according to RealtyTrac's March rankings.

California and Arizona are victims of an overheated market in the early part of the decade, when banks lent money for homes that buyers could not afford, said Sharga. Nevada and Florida had lots of speculative buyers.

Los Angeles Neighborhood Housing Services, a nonprofit group, is counseling about 2,000 financially troubled homeowners a month this year, up from about 200 a month during the same period last year, said Lori Gay, chief executive officer.

The group developed a 'triage system' to accommodate the flood of people seeking to avoid foreclosure, Gay said. Previously, the organization worked with people over three or four months, often in classrooms. Now it asks people to tackle questions online and aims to give them quick answers.

'We're expediting in a way that we wouldn't have to before,' Gay said. 'Now there's not a lot of time. They' re up against the wall.'


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