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Home sales plummet in Kern
Prices are expected to keep sliding as city 'ready for fall'
| Wednesday, Jan 17 2007 7:10 PM
Last Updated: Wednesday, Jan 17 2007 7:13 PM
Home sales in Kern County were down 30 percent in December from the same month a year earlier, while foreclosures increased 37 percent during the same period, according to reports released Wednesday.
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The numbers appear to be the latest sign of a home market downturn.
"It is a normal correction. What is abnormal about it is the size of the correction," said Steve Cochrane, the senior managing director of Moody's Economy.com, who has studied the local real estate market. "It was to be expected, but the longer the boom lasted, the steeper the downside."
Moody's Economy.com predicts that home prices in Bakersfield will decline 5.5 percent in 2007 and 6.6 percent in 2008. Business 2.0 magazine recently listed Bakersfield as one of 10 housing markets in the nation "ready for a fall," using some of the numbers compiled by Moody's Economy.com.
But local appraiser Gary Crabtree said the local market is not all that bad.
"The market is reasonably stable," Crabtree said. "Pricing is pretty stable. New construction prices are continuing to drop, but that is to be expected after home builders made so much money in the last couple years."
The median sales price for existing homes in metropolitan Bakersfield was $281,000 in December, down from $291,349 in December 2005, Crabtree said.
"That's nothing earth-shattering," said Crabtree, who said he is forecasting a 5 percent to 6 percent decline in local home values in 2007.
The number of homes sold in both Bakersfield and Kern County in December fell about 30 percent from the same month in 2005, according to real estate research firm DataQuick Information Systems.
There were 881 new and existing houses and condominiums sold in Bakersfield last month, down from 1,247 the same month in 2005, DataQuick reported. But December's sales were up by 55 from November.
DataQuick reported there were 1,275 homes sold in Kern County in December, down from 1,831 in December 2005. December's sales numbers were up 37 from the month before.
Crabtree said new and existing home sales in Bakersfield were down 29 percent in December from the same month a year before.
The continuing escalation of foreclosure rates is also seen as a potentially troubling sign for the real estate market.
RealtyTrac, an online marketplace for foreclosure properties, reported Kern County had 227 properties enter some stage of foreclosure last month, up from 166 in December 2005.
But December's county foreclosure numbers were less than half of November's total of 504, according to RealtyTrac.
"I think we haven't seen the worst of it for foreclosures," said Cochrane of Moody's Economy.com.
Nationwide 109,652 properties entered foreclosure in December 2006, an increase of 35 percent from December 2005, according to the report. But December's national numbers actually showed a 9 percent decrease in foreclosures from the month before.
"The combination of slower home sales and rising interest rates on adjustable mortgages continues to drive foreclosures at significantly higher numbers than a year ago," said James Saccacio, RealtyTrac's CEO.
California, which led the nation in foreclosures for the three previous months, was second to Texas with 12,623 in December -- down 34 percent from November -- but still up 65 percent from December 2005.
Cochrane said because of affordability issues in California and other states, many families bought with exotic mortgages and had low interest rates for a year or two. He said many of them will soon see their rates reset.
"There is a risk that a number of homeowning households will have trouble making their monthly payments," he said.
"It is going to be a shock for a lot of households."
The number of notices of default in the Bakersfield area has increased from 33 in December 2005 to 179 in November and 243 last month, Crabtree said. He said notices of trustee sales are also up considerably.
"What we are seeing is the direct result of the creative financing that has been put in place over the last three years by lenders," Crabtree said. "If we see a big spike in foreclosures, that's going to add more supply to the market."
There were 3,181 listings on the market in Bakersfield last month, up 53 percent from December 2005, Crabtree said.
Cochrane did offer a silver lining, adding it's a good time to buy if you can afford it and plan on staying in the house for several years.
"There is plenty of inventory now and it is a buyer's market, so you can negotiate a good price," he said.
But, Cochrane added, if you are struggling financially "this is not the time" to buy a house.