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Skies are gloomy for housing market
Credit woes worsen the real estate outlook here
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Photos by Joseph A. Garcia / Star staff Manny Vicente says he and his wife, who put their five-bedroom, 1,834-square-foot Simi Valley home on the market about two months ago, have had to reduce the price by $50,000. They've had calls mostly from investors offering much less.
Richard Quinn / Special to The Star Jan Christian, front, and Catherine Rossbach, both of Ventura, leave an open house at a midtown Ventura home hosted by Realtor Dave Dennis.
The Vicentes have boxed up some of their belongings in anticipation of their move to Texas, which they plan to do by the end of the year.
STORY TOOLS 
More from County NewsA credit crisis in the mortgage lending industry has aggravated an ailing housing market.
Buyers who were already nervous about taking a huge financial risk are now even more skittish, with experts predicting housing prices will fall further as inventory balloons.
This year's market outlook has deteriorated because of the credit difficulties precipitated by subprime lending, said Leslie Appleton-Young, chief economist of California Association of Realtors. As a result, transactions have dropped sharply.
Ventura County's sales fell 17.8 percent in July from the same month a year ago, CAR reported Monday. The median sales price for existing, single-family detached homes was $682,930, down 3.2 percent from $705,260 a year ago.
July's median dropped $9,800, or 1.4 percent, from June. The median is the midpoint, where half the homes sell for less and half for more.
Statewide, CAR's unsold inventory index rose to 10.7 months in July, up from 7.3 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales pace. California's median rose 3.2 percent year over year to $586,030 in July.
The turmoil in the housing and financial sectors has a trickle-down effect across the economy, said Todd Cook, president of Debt.com, a Las Vegas consumer-oriented financial aggregator for the debt industry.
"The mortgage industry is a complete mess," Cook said. "Every day, there are more lenders shutting down, and more people going into foreclosure." The only people who are in good shape are those who have a conventional fixed-rate mortgage, he added.
Subprime loans hurt
The economy has been rocked by the downfall of mortgage companies, such as Calabasas-based Countrywide Financial Corp., a volatile stock market with triple-digit swings and a growing number of foreclosures.
Mortgage lenders were bitten by a tool they used to fuel the tremendous growth in the housing market — subprime loans for people with less than stellar credit and below-standard income.
The housing downturn affects many people, not just buyers and sellers.
People looking to refinance now face tougher lending standards. And as home values decline, homeowners have less equity to tap for big-ticket purchases or remodeling projects.
Concerns about the economy might trigger a reduction in consumer spending, which accounts for two-thirds of gross domestic product growth, a key economic indicator.
At this point, economists and even some real estate professionals say sellers should put their homes on the market only when they must.
While inventory remains high, the pool of buyers is shrinking, said Tony Deleo, a real estate broker at Main Street Realty in Ventura. Most people who have contacted Deleo haven't qualified for loans.
Many sellers are still unrealistic, believing that their homes can fetch the same prices the could two or three years ago, Deleo said. He estimates most of the houses on the market are 10 percent to 20 percent overpriced.
Naiveté among sellers is a real obstacle, he says.
"You're the messenger, and you're the one getting shot," Deleo said.
He tells his clients to list homes 5 percent below what similar homes have recently sold for. Deleo suggests lowering the price if the house doesn't sell within two to three weeks.
Dave Dennis, a Realtor with Re/Max Gold Coast Realty in Ventura, says most of his sellers are keeping their homes on the market because they don't think conditions will improve in the short term.
"This is a terrible time to sell," said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project.
Still, Rose Vicente says she isn't worried. She and her husband, Manny, put their Simi Valley home on the market about two months ago, with plans to move to Texas by the end of the year.
The Vicentes recently reduced the price of their five-bedroom, 1,834-square-foot house by $50,000 to $599,900. They've since had plenty of calls, but mostly from investors offering much less than the asking price.
"We're not about to give it away," Manny said. "The house is almost paid for."
Rose says they will hold firm to the price.
"We're not in a big rush to sell," Rose said. "If it takes one to two months, it's OK. It's just a matter of waiting for the right person to buy."
Open house drew 40 people
Despite the gloomy picture, there does appear to be some buyers. Dennis of Re/Max said he had about 40 people come to one of his recent open houses, though they seemed to be very cautious.
Some economists project the market will rebound in late 2008 or 2009, and when it does, they forecast conservative, single-digit percentage increases of sales and prices.
Research firm Global Insight recently reported that California real estate prices will decline 16 percent, or about 20 percent after taking inflation into account, from earlier this year to a projected low point in 2009.
Watkins thinks the firm's projections are way too high for Ventura County, considering the economy's underlying fundamentals are strong — jobs are still increasing, unemployment rates remain low and durable goods purchases remain solid.
"I recognize the consumer sector is weaker than it's been, but most people still have jobs," Watkins said. "The trouble we have is in financial markets — Wall Street, not Main Street. In general, people are doing OK."
However, a sharp decline in local home values remains a possibility because of the turmoil at the county's two largest employers, he said.
Financial setbacks at Countrywide and Thousand Oaks-based Amgen Inc. could result in job losses, meaning there might be more homes for sale. That would put downward pressure on housing prices in the area, particularly in Thousand Oaks and Simi Valley, because of their proximity to the troubled companies, Watkins said.
Sellers are slowly coming to the realization that the market has softened, said Allen Reznick, president of the Conejo Valley Association of Realtors.
Reznick doesn't see panic among sellers yet, but concern has grown with the increase in foreclosures and "short sales" — when financial institutions accept less for the property than what is owed to avoid foreclosure.
Temple Schneider, a Realtor in Camarillo, says she is encouraging investors to buy.
"There are definitely deals," she said. "It's a buyer's market."
Schneider said she's been able to stay afloat by the friendships she has developed with clients. In July, she launched a chat site, AmericanAgentOnline.com, to help drum up business for herself and other agents.
The market's downturn has been hard, but "I'm surviving," she said. She's sold eight homes this year.
Posted by SmashyCrashy on August 28, 2007 at 1:09 a.m. (Suggest removal)
Go to http://vcrdsmls.rapmls.com/
select Find properties
Click "Residential" check box
Under Cities, select a city, and hit ok. Hit "preview count", write this number down. Hit "Revise Criteria"
Across the top, hit "Additional Criteria"
Select "Contingencies", check include "NOD File", "Lender Approval", "Short Pay" , hit OK
Hit Preview Count, write this number down. Hit revise criteria.
Uncheck include "NOD File", "Lender Approval", "Short Pay" , hit OK
Go down to "Showing Instructions", include "Keybox-Vacant" hit OK. Then "preview count", write this number down.
You now have the amount of inventory, inventory close to going to foreclosure and vacant inventory on the market.
Oxnard
1201 - Total units
292 - 24% short sales as % of inventory
256 - 21% vacant as % of inventory
Simi Valley
940
86 - 9%
187 - 19.8%
Thousand Oaks
608
41 - 6.7%
124 - 20%
All the areas of Ventura are under stress, some extremely so. These numbers wont be getting better any time soon. We will lose a bit of inventory in 30-45 days due to seasonality as unmotivated sellers take the overpriced homes that werent going to sell off the market. But that will leave the "motivated" sellers to define the market and new comps for next selling season.
The housing market in California is completely defined by the mortgage market. When lending standards are lax and rates are low, we boom, when standards are tight and rates go up, we bust.
Watch and record the above numbers monthly. Watch the number of sales posted by DQnews.com every month. You have a 99% chance of knowing more about your market than whichever random real estate agent posting on this thread does.
Posted by solvingadream on August 28, 2007 at 1:49 a.m. (Suggest removal)
The media is portraying subprime and Alt-A as a low income, bad credit score phenomenon. That's not true. I think people imagine hoards of swarthy minorities taking subprime loans and then being foreclosed upon. Statistics show that only about 10% of subprime loans were purchase money mortgages. The rest were refinances. There's a great article today in the New York Times about Countrywide's very evil machine that rewarded telemarketers and brokers with $30,000 commissions for closing someone with good credit and assets in a subprime loan with high rates, bad terms and prepayment penalties. Apparently, Countrywide didn't even have a field for recording assets in their loan software until recently because they wanted to assets excluded to put the person in the worst possible loan because it generates the biggest profits.
A lot of these people owned their homes outright, or had substantial equity and succumbed to a fast talking salesman who told them, "why you can refinance and take cash out to build an addition and INCREASE the value of your home." Or refinance and use the cash out to buy a car at a low rate and be able to write off the interest! Yeah, just what people need is to finance their cars over 30 years.
This is going to be very, very bad. It's either home price deflation and a nasty recession, or the Fed trying to manage fast inflation that doesn't get out of hand to hyperinflation. It's going to be a tough act to manage, but if they pull it off, in five or ten years the next one is going to be something so bad, it would be wise to leave the country before then.
I've talked with a lot of illegal aliens who are having trouble with their mortgages and reading through it all of them had good credit when they bought, but took HUGE stated income loans and their loans are Alt-A, not subprime. One guy was a restaurant delivery driver and made $40K a year and had a $650K option payment mortgage. His situation was conservative compared to some of the others.
Posted by desdave on August 28, 2007 at 7:24 a.m. (Suggest removal)
As home prices shot up far above what average incomes could qualify for, mortgagae co. came up with all these crazy financing methods to keep the business coming. Plus all the people that owned a house and decided to have a party with the on-paper equity. How short sighted do you have to be to not look at the worst case scenario and realistically decide if you could handle it BEFORE you signed on the line? Weird thing is how much emotion is involved in buying a house (and to a lesser degree, cars) as complared to other things we buy. It makes for some really poor decisions.
Posted by Face on August 28, 2007 at 7:37 a.m. (Suggest removal)
The chickens have come home to roost. When a 1200 sq ft 50 yr old home in Riverside is going for 400K, you say, "That's crazy!" and you are right. Home prices were artificially raised by the cheap availability of money. The market will correct, but not until at least a 30% drop in current values.
Posted by gimeabrk on August 28, 2007 at 8 a.m. (Suggest removal)
I am looking to purchase property,but ventura county is out of control, I understand a profit, but this county is too greedy, prices need to go way down before I buy, I urge other buyers to do same.
Posted by guy133 on August 28, 2007 at 9:07 a.m. (Suggest removal)
I've been tracking some of the real estate in Thousand Oaks, just to see what happens:
Posted by shaver_one on August 28, 2007 at 10:49 a.m. (Suggest removal)
If you are still thinking about buying in VC...
Approach the selling price as an "all cash deal". Negotiate with the seller based not on how much you will be financing, but as if you are paying cash. Get the best deal...in writing. THEN, and only then, negotiate the terms WITH THE BANK. Dont' let the seller and his/her agent get involved AT ALL with the finance end of it. It would also be smart to line up your lender, ahead of time, based on an approximate selling price. Get the terms spelled out...in writing. Once you have agreed to a price, go back to the lender for final details. It takes a little longer, but it will save you money.
Posted by surfing93035 on August 28, 2007 at 11:22 a.m. (Suggest removal)
Note to Sellers: Just because some idiot was willing to over pay by $200K last year, doesn't mean they will or can now. Your 3+2 Cracker box in Mission Oaks isn't worth $600K~ It never was. You people in Ventura with a 1920's "Vintage House" your 3+1's with 1200 SQ ft maybe charming, but 700-800K is about 300K too much. If ya didn't sell 18 mos ago, you missed out. Time for sellers to get real. If you have owned your house for the last 5-10 years, you are still sitting pretty. Maybe not as "Artificially Wealthy" as you once were", but still in pretty good shape. Your houses are still 20%+ over valued. "Get in there and Sell Mortimar - Sell"!
Posted by Fred on August 28, 2007 at 11:50 a.m. (Suggest removal)
I am with surfing93035.
Sellers have lost their minds and had better drop the prices quickly before they lose a lot more. We are looking at a 50% drop and anyone who buys now will get shafted.
Posted by Fred on August 28, 2007 at 1:49 p.m. (Suggest removal)
myrealtorjay - I dont get it.
You state that California is overpriced by 20-30% (an underestimate, particullarly in Ventura), yet you should buy NOW (all caps) if you are able to do so. All of the data says that housing will drop substantially. imho, no one should but a darn thing "right now" unless you absolutely must or have "the dream house" that you dont mind waiting for 10 years to return to the value that you purchased it.
Posted by angrygirl8284 on August 28, 2007 at 2:51 p.m. (Suggest removal)
In 2002, my husband and I were trying to buy a home (my "dream home") on Poli St. in Ventura for $330,000. We were out bid and I was heartbroken. About 8 months ago, the same house went back on the market for $990,000. It ended up selling for $979,000. I couldn't believe it. Those schmucks out bid me and then turned a $600,000+ profit in 4 years!
Posted by surfing93035 on August 28, 2007 at 3:51 p.m. (Suggest removal)
Angry Girl- your story is a prime example. If that house sold for $350K in 2002, It isn't worth more than a total of 30% more than it was 5 years ago, allowing for "Realistic" price increases, so lets say $420K is what it should be selling for. The fact some dork paid $900K doesn't mean it's worth that. Cheer up, it could be worse. What if you paid $900K? at least you didn't waste your money and when it goes into foreclosure by the end of the year, maybe you can get it then.
Posted by SouthernExile on August 28, 2007 at 4:19 p.m. (Suggest removal)
When I moved to Ventura County last year for a good job, I couldnt believe my eyes, looking at the prices. I had just inherited my mother's 34000 sf, 4+3 home outside Atlanta with 2 acres, a creek, and a beautiful yard which went for $210,000. I am a mid-career professional well above the median income for the county, and my wife does well too. I can't afford even a starter home by all conventional measures I'm used to. I knew that this housing market illusory was a house of cards that will all fall down one day. My apologies to current homeowners...but how I hope it falls, and falls hard...so the rest of us can have a turn at home ownership.
Posted by Fred on August 28, 2007 at 4:26 p.m. (Suggest removal)
Sorry angrygirl,
Many of us have a similar story but I again agree with surfing93035 - it was never worth anywhere near 900K.... but more like half that.
I hope that surfing93035 is right...
Posted by kbest on August 28, 2007 at 5:27 p.m. (Suggest removal)
Why price rocketed up?
-Fraud: cash back deal, if the house was 400K
offer 600K and pocket 200K
-Subprime: anyone can get a loan. NINJA (no income no job or asset). A strawberry picker bought
a 700K home. Zero down.
Remove the frauds, and price is coming down, back to 2002 level. Think about it, how much raise did one get since 2002 ?
A drop in home price is good for the community, people will want to live there, employers will move there.
Posted by dobbsj on August 28, 2007 at 7:11 p.m. (Suggest removal)
The Vicentes home is not worth $350K. People are foolish to pay so much more than replacement price. And the realtors are fraudulant cheerleaders.
Posted by dobbsj on August 28, 2007 at 7:31 p.m. (Suggest removal)
I agree with New York Times. Many who work at countrywide are almost criminal. Excessive rebates to screw customers. They should be shut down and everyone loose their jobs.
Posted by ecarson1958 on August 29, 2007 at 7:25 a.m. (Suggest removal)
I love reading these blogs! Back in 2004 when I was selling flooring for remodeling company, I would ask questions to the owners about how long they had lived there, the price they had paid, and what it was worth in Dec 04? When they told me, the first thing I would say is, "why don't you do a really crazy thing like sell your home, take the 450K you have on paper right now, and go rent a home for a while? I would always get the same response. "Why would we do that when the house keeps going up 20% a year?" I would then try to give them a lesson in economic reality, the value of their home versus the availability of money to buy their home. Nobody understood what I was trying to tell them. I wonder now how many had wished they would have taken my advice and could be sitting on a $500K bank account right now. Believe it or not, but one of the excuses I was given was that they didn't want to have to pay the capital gains taxes. I tried to explain to them that they weren't paying those taxes, it was the buyer of their home that would be paying them when they bought their home. The Vicentes are typical when they say they don't want to be "giving away their home." Are you kidding? Giving away their home? If they sold their home for anything above $375,000 in two years would be a huge profit. In two years that will be the value of that home again. I have no feelings of sadness for any fool that got suckered into a house that was $350k more when they bought it, then 4 years earlier. People were so mis- informed when they were told that the highway to heaven would continue until in 2010 the medium price of a home in Ventura County would reach a million dollars, and they believed it. Then they would sign a piece of paper and do anything to get into the flow and own their own home. Right. I am becoming happier every day knowing how right I was and seeing the repercussions now that I predicted 3 years ago. This is the same as '88 through '92 with real estate. In '96 300,000 house holds were upside down in Los Angeles county. This time it's going to be alot more upside down. And the money owed and the value of the home are going to be a whole lot further apart. Then, more home owners are going to walk away and more homes will be sitting on the market. This real estate debacle will end up in the history books in the future written how the exuberance and greed of the average worker ended up causing a real estate depression the likes never seen before. Just wait. The fun is just beginning.
Posted by stephen_90042 on August 29, 2007 at 10:29 a.m.
(This thread was removed by the site staff.)
Posted by justmeinsp on August 29, 2007 at 1:28 p.m. (Suggest removal)
angrygirl, you got ripped by one of those "flippers": people who only buy a house to make $ and nothing else... they don't live in "homes". I don't like "flippers", and I have a "flip" of my own for 'em...
Posted by ecarson1958 on August 29, 2007 at 3:06 p.m. (Suggest removal)
So Stephen tell me your credentials? Because I was selling flooring for 9 months, is that what you use to judge a person's intelligence? Why I was selling flooring was none of your business. But I will tell you that I've bought, remodeled and sold 4 homes in ten years. I made money. I also sold one and moved to Hawaii with the proceeds for four years and only had a $700 house payment. As a Flight Instructor I also flew tourists around the volcano and waterfalls. I had plenty of time to do that because being a successful Tile Contractor I hired people from the mainland and flew them out at my expense to work for me. So you see Stephen, don't jump to conclusions until you know what you're talking about. You seem like you have the same mentality as the fools that bought homes in 2006? Did you?
Posted by MattCooper on September 1, 2007 at 5:14 p.m. (Suggest removal)
solvingadream, you said, "This is going to be very, very bad. It's either home price deflation and a nasty recession, or the Fed trying to manage fast inflation that doesn't get out of hand to hyperinflation. It's going to be a tough act to manage, but if they pull it off, in five or ten years the next one is going to be something so bad, it would be wise to leave the country before then.
I've talked with a lot of illegal aliens who are having trouble with their mortgages."
Why do I even bother reading the comments? Occasionally I try to inject some intelligence to the Real Estate stories, being a REALTOR, but it's just to tough to break through the thick layer of moronity. www.mattcoopersells.com
Also, "mail", don't forget to tune in to my radio show Sundays, 4-5pm, on 1520 KVTA.
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