Hollister
– Local home foreclosure rates skyrocketed during the first
quarter of this year.
Hollister – Local home foreclosure rates skyrocketed during the first quarter of this year.
San Benito County had 103 foreclosure filings in the first three months of 2007, according to data from the real estate tracking firm RealtyTrac. That’s more than double the 44 seen during the same period in 2006 and even exceeds the 90 foreclosure filings that occurred here during all of 2005.
Meanwhile, sales closed on 75 homes during the first three months of 2007. That means that during the first quarter of this year, there were more San Benito County houses in some stage of foreclosure than there were homes sold.
The increase follows a national trend of rising foreclosure rates, but Karl Skow, who operates Pacific Finance Company in Hollister, said San Benito County has been somewhat sheltered because of the sewer moratorium.
“In San Benito County, homes held their values a little bit better because of the building moratorium,” he said.
Skow said the foreclosure epidemic has been caused by buyers who got in over their heads.
“Many people felt values could not stop going up,” said Skow, who is the president of the California Association of Mortgage Brokers. “Nearly anyone could get a loan. Then people started realizing what they’d gotten into.”
Many home loans secured during the recent housing boom started out with low, adjustable rates that would increase substantially down the line, Skow said. When the rates went up, homeowners discovered they couldn’t make the higher payments – and with a slowing housing market, they couldn’t sell their houses either.
Skow said there may be more mortgages that haven’t yet been reset to new, higher rates, which means there could be more foreclosures on the horizon.
A number of real estate agents have said the foreclosures are also contributing to the local housing slump.
Rick Pennington of Pennington Town and Country Realty said that when homes are foreclosed, or homeowners struggling with high payments decide to sell their house, those homes go back on the market and drive housing prices down.
There were 427 homes on the market in March 2007, up from 286 homes in the same month in 2006, according to data from the REInfoLink database. And those homes are sitting on the market for a longer time: an average 154 days in March 2007, compared to 78 days in March 2006.
But Pennington, who is the president of the San Benito County Association of Realtors, also said some of the problems may be exaggerated. He noted that just because a homeowner has defaulted on his loan – which RealtyTrac counts as a foreclosure activity – doesn’t mean that home will be repossessed. He estimated that bank repossessions only account for one-third of the total foreclosure filings.
Although things look bad now, they are likely to improve over the next year, Pennington said.
“The worst is probably past,” he said.
Even homeowners who aren’t having any problems with their payments are being affected by the foreclosures, Skow said.
“If a house on your block is foreclosed, that runs the value of the whole neighborhood down 1 percent,” he said.
And Cynthia Kroll, the senior regional economist at the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, said a slowdown in home sales can hurt everyone’s pocketbook.
“Real estate sales are one of the drivers of the economy,” she said.
If homes aren’t selling, the building industry also takes a hit, Kroll said. She also noted that new homeowners do a lot of shopping for furniture and new appliances – and in a slow housing market, many of those sales are lost.
Kroll and Skow both said they’ve heard about many loans that just shouldn’t have been made. But Skow said things have changed, and lenders are tightening their rules.
Melissa Mitchell, a real estate agent with Intero Real Estate Services, said that it’s become more common for an agent to think they’ve sealed a deal only to discover weeks later that a buyer can’t get a loan.
If future homeowners want to avoid these problems, they need to do their homework, Skow said.
“Clients should be careful to work with a licensed, educated, professional with a good reputation – which you have checked,” he said.
Anthony Ha covers local government for the Free Lance. Reach him at 831-637-5566 ext. 330 or ah*@fr***********.com.
