Homes dip into the $200,000s | Napa Valley Register

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Homes dip into the $200,000s

Sunday, August 10, 2008

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By JENNIFER HUFFMAN
Register Business Writer

Napa County foreclosure map

AmCan, Some Napa Neighborhoods Feeling Foreclosure Pain

Prices are down, but Realtors say mortgage crunch is easing

If you thought the days of a $200,000 starter home in Napa were gone, think again. A number of neighborhoods in Napa and American Canyon have reached new levels of affordability.

But declining values have meant tough times for some homeowners, including a number on Harrison Avenue in Napa.

This Westwood street of about 60 homes built in the early 1940s is just two blocks long. Back in late 2004 and early 2005, a number of the typically 800-square foot homes on Harrison Avenue sold in the low-to-mid $400,000s.

Between March and July 2008, five of those homes foreclosed. Another three are in pre-foreclosure, meaning the owners must renegotiate their debt or make arrangements to stave off loss of the properties to banks and other lenders.

“I don’t think Westwood is the only place this is happening,” said Melanie Muters with Heritage Sotheby’s International Realty. Muters has a bank-owned listing on Harrison Avenue.

“It’s a widespread problem.”

In fact, the problem is typical for areas around the state where sales or new home construction were brisk in 2005 and 2006.

“The homes (on Harrison Avenue) were purchased a few years ago and now they’re not worth as much, so it leaves people upside down” in terms of equity, said Muters, meaning the house is worth less than what the owner owes on it. Other homeowners fell victim to adjustable rate mortgages, she added.

The majority of the foreclosed Harrison Avenue homeowners from the last five months were between $10,000 and $13,000 delinquent on loans, according to a review of title company reports for all Napa County foreclosures between March 10 and Aug. 6, 2008.

Today, five homes on Harrison Avenue are listed for sale in the low $200,000s.

All are either bank owned or are so-called short sales. Short sales occur when an owner attempts to sell a home for less than the loan amount.

Last sold for $424,000 in February 2005, Muters listed 5 Harrison Ave. at $231,900. The home foreclosed in March 2008.

Other listings on Harrison Avenue include bank-owned 9 Harrison Ave. Currently listed for $250,000, it last sold for $400,000 in November 2004.

Bank-owned 131 Harrison Ave. is listed for $249,900. It last sold for $435,000 in April 2005.

Muters’ listing at 5 Harrison Ave. may be off the market. Muters said an investor who will likely turn the home into a rental has made an offer.

But the house next door is for sale. It’s also a foreclosure.

“A cute little house in the $200,000 range will definitely attract a first-time buyer,” said Muters. ”In Westwood or anywhere else.”

23 comment(s)

comment wrote on Aug 10, 2008 12:50 AM:

" But don't go jogging after midnight. "

Skip M. wrote on Aug 10, 2008 7:40 AM:

" For first time home buyers (who can still qualify for financing), the falling home prices and glutted foreclosure market is quite the boon. The story is a little different for those of us who already own a home, especially when that home is the first property. Those who bought more home than they could afford have really messed things up for those of us that bought within our means (we bought just before the bubble took off). But these things have always been cyclical, and the market will come around again. I doubt very seriously that we will see the type of insanity that was the previous peak, but the market will rebound at a steady pace once all these foreclosures are swallowed up. The question is: Can we hold out through the slump?

My job may require us to move to another part of the country soon. At current rates, our home is almost back to what we bought it for. So our contingency is to rent the house out if we need to move, and wait for the market to rebound some before selling. We won’t make any money on the deal, but we may “slow” the bleeding a little. I know a few other folks in the same situation. But these things are cyclical. Most of us in our adult lives have seen this happen more than a few times. You just have to tough it out as best you can. When you cut and run, everyone loses (in any situation). "

momtoo wrote on Aug 10, 2008 8:00 AM:

" The funny thing is, those houses are still overpriced! Although, I say bring on the forclosures! House hunting has never been so fun! I hate to compete with investors that are just going to rent it out but maybe I can still find a deal! "

jwk wrote on Aug 10, 2008 9:30 AM:

" These Homes were NEVER worth $300,000 let alone $400,000. And most of The people that bought them, couldn't afford them in the first place.. AND Guess who gets to pay for the bail outs now?? "

Dwayne wrote on Aug 10, 2008 10:00 AM:

" I wonder if the reported high percentage of people who bought these homes that are now in foreclosure, would have signed all those mortgage documents if they were able to read and understand English fluently. There are a plethora of story's from people who say they "didn't know" or "that's not what they were told in a verbal translation...

Would you open an expensive mortgage contract in Japan, if the paperwork was all in Japanese, and you relied on what the salesman translated...???

On the flip side, maybe some of these folks were just trying to get something for almost nothing out of pocket.

There are still plenty of people who fall for SPAM scams, thinking they'll get a "good deal"..... "

Maya wrote on Aug 10, 2008 11:03 AM:

" I am enjoying seeing housing prices fall because I would love to buy a first home, but they still need to be a little lower to be affordable for us. Now I bet the news is out it might be harder to find what we were looking for. I guess we won't own a home. I don't want to get into a mess of taking out a loan for more than we can afford, even if the bank will lend it to us. "

Winewoman wrote on Aug 10, 2008 11:24 AM:

" Have you SEEN the homes selling in the low 200's? Many have garages and sheds converted into substandard living spaces with more than one family living to a house. Yuck. I've been looking at homes for 7 months and am still shocked and disgusted to see how some people live. "

make napa better wrote on Aug 10, 2008 11:30 AM:

" Call me when they reach 180,000.

My parents live in Westwood. It's not THAT bad... I'd totally move there.

At least it's not Wilkins or the other part of Laurel by the Valero. Now those are bad areas. "

Maya wrote on Aug 10, 2008 1:11 PM:

" Oh, I also forgot that there really aren't any homes in the low $200,000s. Those are getting snatched up for more money than they're asking or are unlivable. We've been looking for several months now. I'm getting discouraged. "

vocal-de-local wrote on Aug 10, 2008 1:42 PM:

" Skip, actually the low market can be advantageous to a home seller as long as they turn around and purchase another home. The home that you will purchase will also be lower in value and so it usually balances out unless you purchase in an area which is not as affected by a decreasing market such as St. Helena. Most areas of the country have been impacted by the falling real estate prices. And you are lucky. It sounds like you will not be taking a loss because you bought prior to the bubble burst. We are back to an era, at least for awhile, where people are buying homes to live in rather than purely for investment. In the old days, it would take take ten years to recoup the costs of home ownership. Most of the time the transaction was a loss but people enjoyed the benefits of home ownership and accepted it as par for the course.

Think about it this way. Let's assume you sold at the height of the bubble and bought another home at the same time. Your taxes would be elevated as a result. When you sell close to the bottom and then re-purchase, your tax rates will be lower Those who suffer the most are the ones who purchased at the height of the bubble and were unable to re-purchase. Not many people had enough foresight to purchase at the height, rent awhile, and re-purchase at the bottom. "

funnyme wrote on Aug 10, 2008 2:17 PM:

" VDL,
You make a great point.
As a matter of fact, right now property taxes are being re-evaluated to current market appraisals regardless of how much you paid for it during the "bubble" and I believe that is as an "incentive' to hold on to what you have.
Skip M...Please don't go too far, unless you are willing to travel the distance to come to our Bloggermanias. "

Unclestuy wrote on Aug 10, 2008 5:09 PM:

" My parents bought their Foster Road home for $53,000 in 1957. Lived in the same home for nearly 50 years. When Dad died, Mom eventually sold the home for $585,000. Unbelieveable! As we understand it, the home went into forclosure, because the homeowner could not afford the payments. "

Dwayne wrote on Aug 10, 2008 5:19 PM:

" funnyme wrote on Aug 10, 2008 2:17 PM: ".....right now property taxes are being re-evaluated to current market appraisals regardless of how much you paid for it...."

So, you are saying that proposition 13 is just falling off the books, and will no longer be law...???

That's news to me... Where'd you get that idea, or are you just being good ol' 'funnyme'...??? "

Skip M. wrote on Aug 10, 2008 6:15 PM:

" Dwayne: Funnyme writes the truth. Many communities, Napa, Elk Grove, and West Sacramento, (to name a few that I know of) all offered reassessments on homes bought during the height of the bubble. I thought this was really odd when it was happening (September-November time frame). But in the course of earning my BA in Accounting and Business Management, I learned that there is actually a formula written into Prop 13 to allow for such adjustments during downturns. But the criteria are pretty strict for when this is allowed. You need to remember that the spirit of Prop 13 was not to stiff the schools, it was to prevent arbitrary tax rates and schemes from taxing people out of their homes.

The real target was Grandma and Grandpa who had lived on the family farm all their lives. Perhaps that farm was bought a hundred years ago for a few thousand dollars and has remained in the family ever since. So here we have Grandma and Grandpa still living on that farm, only now that property is worth a couple million. Prior to Prop 13, Grandma and Grandpa would be out and the property would be sold off for the taxes. This was happening with increasing frequency prior to the passage of Prop 13. However, I do believe that the reduction in the tax bill for people who KNOWINGLY bought at the market high, and knew (or should have known) what that tax bill would look like. But the law is written as it is and these folks get a wind-fall as a result. "

Dwayne wrote on Aug 10, 2008 7:43 PM:

" Well, Skip M., I keep my ear pretty close to the ground, and haven't heard a thing about this... It seems to me that if this were happening there would be a huge outcry, and there isn't...

I'll take you at your word, but something just isn't right... It takes a vote to repeal Prop 13, and that has never been in the works...

Y'all are just messin' with me, arentchya......??? Haaaaa.... "

edwest wrote on Aug 10, 2008 7:45 PM:

" some of us make lemonade- I am buying as many as I can get my hands on- keep complaining, they will bounce back. "

Skip M. wrote on Aug 10, 2008 8:15 PM:

" Dwayne: All I can tell you is look at the NVR archives between September and November of last year. The story, and some of my own comments on the subject, are there.

In fact, I am a major supporter and fan of Prop 13. It has not been repealed. The adjustment clause is part of the law as originally written. "

gatekeeper wrote on Aug 10, 2008 9:07 PM:

" Dwayne,
We bought our house 2 years ago-right when the bubble was bursting, on August '06- and our property tax bill for 2008 was adjusted to a much lower price of what we originally paid for our house.
I don't know much about Prop 13 other than it was meant to protect old properties.

Hey, watch it when you call me old! :)

Thank you Skip M! Let me ask you a question though. We are not complaining that we are paying less on property taxes due to home values being low, but what would happen if my house catches on fire tomorrow. Will the Insurance pay based on what I bought it for or what it's been assessed by the tax man? "

make napa better wrote on Aug 10, 2008 11:37 PM:

" edwest:

I'm taking advantage too, buying my 1st home. But at least I'm not being arrogant about it. These are peoples lives. They lost lots of money out of making bad decisions. "

John Richards wrote on Aug 11, 2008 7:52 PM:

" Gatekeeper, the homeowners insurance will basically pay whatever it costs to rebuild the house, up to some maximum limit.
You raise a valid point. Over the years my insurance agent has talked me into increasing the coverage "to keep up with inflation". Now that housing prices have deflated, shouldn't we be paying a lesser insurance premium? Anyone know what the scoop is? "

Skip M. wrote on Aug 12, 2008 9:41 AM:

" John Richards:

Have you asked for a new recalculation since the bubble burst?

Gatekeeper: Sorry for not responding. It was a busy day. "

vocal-de-local wrote on Aug 12, 2008 11:13 AM:

" With homeowners insurance, try to keep in mind what it costs to "rebuild" a structure under the worst circumstances (the entire home is burnt to the ground). What are the average per square foot costs of rebuilding in Napa County? "replacement" costs have limits. You can contact a building contractor and get some feedback on your particular home. Also consider that construction costs are driven up due to demand after a forest fire has swept through a region, burning numerous homes at once. Most people are under insured. "

jeeper16 wrote on Aug 12, 2008 6:24 PM:

" Anyone that paid over $400,000 for a home in WESTWOOD should have their heads examined. The houses are not worth half the price even if they were in a GOOD neighborhood! "

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