Prices are down, but Realtors say mortgage crunch is easing

By JENNIFER HUFFMAN
Register Business Writer

There’s good news and bad news in the local real estate market.

The good news?

“First-time buyers can buy a home for significantly less than they could in 2005 or 2006,” said Realtor David Barker of Frank Howard Allen. “Some buyers priced out of the market can now buy.”

The bad news?

In the past 12 months, the median price of a Napa County home has fallen approximately $200,000, according to Trendgraphix, Inc. In June 2007 the median price for a Napa County home was $660,000. As of June 2008, the median was $446,000.

The number of homes for sale and sold has remained relatively steady, however. In June of 2007, 882 houses were for sale in Napa County. In June 2008, that figure was 804.

In June 2007, 97 Napa County homes sold. In June 2008, 86.

American Canyon, which like the city of Napa has witnessed scores of foreclosures in the last five months, could be seeing a turnaround. In June 2007, 157 homes were for sale in the city of about 16,000 people, with only 10 sales. This June, 102 homes were listed, and 18 sold.

But the median also dipped in American Canyon, from $604,000 in June 2007 to $434,000 in June 2008.

“For buyers, the lower prices make homes significantly more affordable,” said Barker. “Homes that are well priced receive multiple offers. Hopefully, this demand will help to stabilize the market.”

American Canyon has grown substantially in recent years, with neighborhoods of new homes cropping up on both sides of Highway 29.

While the old adage in real estate is “Location, location, location,” professionals say timing is a key factor in the foreclosure figures.

“Homeowners who have purchased or refinanced over the last year or two are the most vulnerable, so it is not surprising that newer developments in all areas of California are the perhaps the most visible foreclosure areas,” writes Doug Fowler of Coldwell Banker.

“It is not so much the area but the date of purchase,” added David Barker. “Most of these foreclosed homes were purchased in 2005 or 2006, at the top of the market.”

The for sale signs on so many homes in the low-to-medium price range is slowing the market for higher-priced homes, a phenomenon that was not common in the early stages of the crunch.

“There is a lack of a move-up market into the $750,000 to $1.5 million dollar range,” wrote Mike Silvas with Morgan Lane. “Those homes are not selling well right now.”

The industry is reacting.

“Banks are attempting to streamline systems to deal with delinquent properties,” said Lynda Jensen of Heritage Sotheby’s International Realty. “Investment buyers have entered the marketplace, particularly as the rental market becomes more lucrative. Agents are becoming more skilled at handling the market.”

“Historically Napa has shown the ability to bounce back from economic downturns,” said Jensen. “Good times are ahead.”

Silvas agreed. “My opinion is that the worst is over, especially locally.”

Silvas said that some previously troubling economic signs are evening out. “Adjustable rate loans that were to reset in 2008 did not go up the way it was forecast,” he said.

But some professionals say the wave of foreclosures is not yet over, especially since credit is not nearly as easy to get as it was a few years ago.

“I believe this is the largest loss in wealth for moderate and middle-income families in the history of the country,” said Stephen Cogswell of Fair Housing Napa Valley. “However, lower housing prices may open up opportunities for some who were otherwise unable afford to purchase ... providing they can find someone willing to lend.”

Anne Schabacker with Select Mortgage Planning in American Canyon said she is selling loans.

“I have never been busier,” said Schabacker.

“We have well-qualified buyers,” she said. Banks are still lending, she said. But, “the banks are tighter than ever in their underwriting guidelines.”

“This time a year and a half ago, you could get a loan with a Fair Isaac Corporation (FICO) score of 550, 100 percent financing, stated income — you name it, lenders were standing there waiting to hand out money.”

Today, so called “stated income loans” without documentation are out, she said.

“Now we have to provide tax returns, W-2s and pay stubs. There’s more paperwork involved.”

These days Schabacker’s selling conventional loans to investors and Federal Housing Administration loans to first time homebuyers.

“I have investors buying two and three homes,” she said.

Schabacker said the bottom line for any would-be buyer should be simple: “Can you make the payment?”

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