Foreclosures pepper county
Foreclosure rates in San Benito County have skyrocketed from
last year. With four foreclosures this week and an additional 13
letters of default sent out to homeowners, it would seem to
indicate trouble for the real estate market.
Foreclosures pepper county
Foreclosure rates in San Benito County have skyrocketed from last year. With four foreclosures this week and an additional 13 letters of default sent out to homeowners, it would seem to indicate trouble for the real estate market.
To date, there have been 213 property foreclosures this year, according to an industry newsletter.
Pam Gibbs, a resident of Glenview Drive, lives next door to an abandoned house, the result of a foreclosure. The grass is dying and the plants are unkempt, one of the windows upstairs is broken.
“The house has been abandoned for several weeks,” Gibbs said. “The family that lived there left in the middle of the night. It’s not uncommon. I think the bank was going to auction it off. I talked to several of my friends who have seen the exact same thing. I don’t know what it’s going to do to our property value. It’s a sad situation.”
Down the street at 2611 Glenview Drive there is a sign for a live auction to be held Saturday.
Lender Greg Dolan of Shamrock Funding said this situation is happening all over.
“Everybody that bought two to three years ago and paid too much is now calling back to re-finance their loans,” Dolan said. “But they have no equity because their homes have depreciated $80,000, $90,000, even $100,000. Many people are just walking away. On the upside, it’s a great rental market.”
Business for lenders like Dolan dropped close to 90 percent because the majority of borrowers took 100 percent financing on their loans, he said. Then something happens and they can’t make the payments.
“Anybody and everybody could get loans two years ago,” Dolan said. “People were qualifying by moving their entire extended family into a house, then something happens and they can’t make the payments.”
Since January 167 mortgage companies in California have closed their doors, four of those in Hollister alone, according to Dolan.
A lot of lenders are unsure of where the market is going, according to Karl Skow of Pacific Finance Co. in Hollister.
“It’s harder for [borrowers] to get jumbo loans – those over $417,000 – because the market is in flux so their credit scores have to be higher,” Skow said. “People have to put more down otherwise they won’t be able to borrow more.”
Not everyone whose homes have been foreclosed on was the victim of a multi-rate mortgage suddenly going through the roof. Many of the borrowers got themselves into trouble by taking out a second or a third mortgage and then couldn’t make the payments.
Chuck and Mary Stetson didn’t want their street identified, but said that four of their neighbors have had houses for sale at one time or another during the last year.
“Only one of them still has his house for sale, but the price has been dropped four times,” Mary Stetson said. “It’s gotten to the point where I think most of them are renting the houses because they can’t get what they’re asking for them. It’s sad. We used to know everyone in the neighborhood. Now we don’t know anybody.”
Another problem people are seeing is short-term sales that are devaluing surrounding properties. Short sales are where banks foreclose on a home and then have to sell it quickly. In order to make that happen they have to drop the price to get the house sold. This depreciates the value of the surrounding homes in the area.
According to Reil.com, a real estate Web site, there was a 25 percent decline in the average price of houses sold in Hollister during the past three years.
In 2005 the average sales price of a home in Hollister was $638,000; in 2006, the average sales price was $591,000 and in 2007 the average sales price is $547,000.
It can be deduced that the combination of plunging real estate values added to the higher mortgage payments created an ideal breeding ground for foreclosures.
Homeowners who could not afford escalating monthly payments also could not refinance, if their homes were worth less than their mortgages and could not sell for enough to pay off their loans. Thus the most likely outcome was foreclosure.
The majority of loans issued two years ago were made with adjustable-rate loans, according to Skow.
The housing market has slowed considerably, according to Skow. In his research he found that during the last eight months there have been an average of 15 homes sold per month.
Further proof of this is that in Hollister during the third quarter of 2005 realtors sold $121 million worth of real estate, with 190 closed sales. Last year during that same period they sold $51 million worth of real estate and closed 81 sales. During the third quarter of this year realtors sold $31 million worth of real estate and closed 57 sales, according to Reil.com.
One person’s loss is another’s gain. There are more affordable homes out there priced for first-time homebuyers.
“This is a good time to start analyzing the market and analyzing what you’re capable of financially,” Skow said. “If you’re asking me if it’s turning into a buyer’s market, I say absolutely. This is the start of a true buyer’s market. We might not be there yet, it might be the spring, but it’s a start. There are first-time homebuyer starter homes out there. That’s not to say that there is a home for every person, but people who want to legitimately own their own home and know the true value of their money can make it happen. They just need to inquire.”
