In Central Valley, the Ruins of the Housing Bust

[Liberal_in_LA]

http://www.nytimes.com/2008/08/24/business/24house.html?src=linkedin

In Central Valley, the Ruins of the Housing Bust

**snip**

But hardly anyone in Merced planned very far ahead.

Not the city, which enthusiastically approved the creation of dozens of new neighborhoods without pausing to wonder if it could absorb the growth.

Certainly not the developers. They built 4,397 new homes in those neighborhoods, some costing half a million dollars, without asking who in a city of only 80,000 could afford to buy them all.

Obviously not the speculators turned landlords, who thought that they could get San Francisco rents in a working-class agricultural city ranked by the American Lung Association as having some of the worst air in the nation.

***snip***

In Merced, Calif., frames of houses in the Riverstone development have bleached in the sun for more than a year. Three-fourths of existing-home sales in Merced County are foreclosures


A sidewalk leads to nowhere in one development in Merced, a city of 80,000. The experience of Merced, which flew higher and crashed harder than nearly anywhere else, suggests that recovery from the national real estate debacle will be painful and protracted.


Mayor Wooten at the stagnant pool of a foreclosed home she listed. The foreclosed owner paid $532,000 for the house, which sold for $225,000.


Many lots in the Moraga development were left unbuilt. With as many as 2.5 million homes in the United States entering foreclosure this year and, at best, sales of only 5 million existing houses expected, the foreclosure price is becoming the rule in many areas.



A slab for a house that was never completed at Riverstone, which is probably the bleakest Merced subdivision.

[Truth4Justice]

1. Looks like the Golden State isn't so golden anymore. It had to happen sooner or later.

[AlCzervik]

2. well everyone better pay attention cause the wind blows eastward.

i live in the heart of the foreclosure mess and i hope people learn from what's happened out here.

[Tektonik]

5. CA doesn't have it nearly as badly as the north does.

[Truth4Justice]

52. I am from CA. It wasn't the same job market since the dot.com bubble burst.

Great state to live in as far as sights and climate, but lousy politics & wages
going south well before this downturn in the housing market made it a bad place
to live, unless you have money, of course.

Just pray the "Terminator" doesn't terminate Prop.13.

That would depopulate the state even further. :-(

[Whoa_Nelly]

19. It's looking like that here just about 60 miles south of Merced

not pretty

[Truth4Justice]

53. I lived in the Bay area where it was quite progressive, but quite expensive too.

The central valleys were always much cheaper to live in due to the summer heat
and flat farmlands.

Merced was a nice town last time I was there, but I cant imaging the job situation there being
very good in this economy as that was mostly agribusiness territory. Then again, people have to eat so who knows?

[EFerrari]

3. This is so sad. We used to go to a peanut bar in Merced

and play for grocery money when we were in college. These poor people.

[XemaSab]

4. THERE IS A GOD!

One of the most FOUL projects I ever worked on was literally across the street-- part of the same development.

The developers are the SCUM OF THE EARTH, and I am happy to see that their shitty project failed.

Fuck 'em.

I hope they burn in hell. :grr:

[Liberal_in_LA]

6. Karma?

[XemaSab]

11. Let's hope so

Let's hope that the taxpayers don't bail these assholes out.

I had to go to the site three times:

The first time I went there there were terrific raptor nesting trees and terrific burrowing owl habitat, and I said so in my report.

Two weeks later, they cut down all the trees and totally disced the site based on what I had said (which is CRIMINAL--LITERALLY CRIMINAL), so I made a return site visit.

On my second visit, I found burrowing owl sign in a tiny corner of the property they hadn't disced, so they ran the discer through again. (And haha you FUCKERS, the owl hole was up against the fence where you couldn't get your equipment, and I withheld that information from you CROOKS.)

My third visit was in the winter, and the site was under a foot of water, with about 20 snipe right in the middle of the field.

I mapped the whole fucking site as a GIANT WETLAND.

Had they not kept fucking with the site, I would never have seen all the water on the site in the winter.

And I'd like to think my wetland report not only saved the site, but caused the president of the company PERSONAL ANGUISH.

Have I mentioned I hate developers? :shrug:

[villager]

58. I always loved the old slogan, "Developers, go build in hell....

n/t

[NuttyFluffers]

59. that's a particularly evil developer. mean, criminal people should lose out.

when i last saw the valley, particularly Merced, i was looking at all this natural habitat and farmland being churned under for new homes. but it was ridiculous. who in their right mind will willingly commute 4 hours one way to get to work? it was designed to steal the dreams of the working class. wholly illogical expansion.

[Gormy Cuss]

62. We don't need no stinking wetlands.

Houses are much better than icky places for birds to congregate anyway.

Developers like that shouldn't be allowed to build, period.

[LeftyMom]

7. A few thoughts on the housing mess:

1. Where did all the reasonably sized houses go? Now back when dinosaurs roamed the earth and I was growing up (not all that long ago, the house I grew up in was built in the Ford administration) there were plenty of 3 bedroom, single story, 1500ish sqft houses to be had here in the valley. Families didn't get larger, and the climate didn't get cooler (cooling a second story in the 100+ degree heat is somewhere between stupid and impossible) but for the past fifteen years or so at least houses have just inflated enormously, so that new homes were almost invariably 4+ bedroom, bonus room having, multi-level things with bathtubs that could float oil tankers and more commercial appliances than some restaurants that make more sense for an extended family or something than for the usual fourish suburbanites and their gear.

2. People lost sight of how much houses actually cost. When you're signing away the next thirty years of your life to a loan, you have to be damn sure you can meet that commitment, and the loaning bank should be damn sure they're getting their money. Somewhere along the way, both sides seemed to decide they were playing with monopoly money, and not the fruits of actual people's actual labor, which is how things got so stupid and prices got so out of hand.

3. A house is a house. If you make money on it, great. But you need housing first and foremost. Your house should not be your investment strategy. Your investment strategy should be the thing that pays for your house.

-Another dispatch from the epicenter of the housing crisis

[Liberal_in_LA]

9. People came to expect that their homes have the following: Bonus rooms, man rooms, kitchens big enuf

to include and island and maybe a breakfast nook, a room for each kids, playroom, computer room, den, three car garage. What the housing hunting reality shows on cable - Childless couples want 4 bedrooms, 3 baths.

[LeftyMom]

10. We had a playroom when I was a kid: the yard.

If it wasn't raining we could count on being chased outside any time there was daylight and we weren't eating, cleaning or doing homework.

[Liberal_in_LA]

12. We had the breakfast bar between the kitchen and the dining room. That was it...

None of this fanciness that is now considered standard for new housing.

[LeftyMom]

17. We had one of those terrible 70's galley kitchens.

The ones that were clearly designed more for warming things up than for actually cooking.

[madrchsod]

24. 70`s kitchens?

i have one of those....enough room for one person to cook.

[AlCzervik]

13. we had one bathroom. I'm sure that would strike horror into the hearts of most

people today.

[Liberal_in_LA]

14. On the house hunting shows is strikes major horror into the buyers.

And the master suite cannot share a bathroom with the rest of the floor...musthave a fancy marble fantasy bathroom.

[AlCzervik]

20. that show House Hunters on HGTV makes me feel stabby.

"I don't like the paint" ok so buy a gallon of a color you like asshole, paint isn't a deal breaker! "Oh i get this huge closet, you can have one draw dear" "I want room for a man cave" oh STFU!

[Gormy Cuss]

25. The paint comments drive me nuts too.

For most of those buyers it's relatively cheap to buy a painter to make the rooms the perfect colors. That and the morans who insist that each CHILD must have a private bath make me scream at the TV.

[AlCzervik]

27. oh and the best--some guy and his wife were looking for a house in Aruba and their

budget was like $600k, they ended up spending almost 2 million.

[Liberal_in_LA]

28. saw that one.

[AlCzervik]

29. right? And the wife had her sister living there and the sister was basically her domestic?

wtf? "Oh she's happy now that we have a dishwasher". If i were the sister/domestic i would have looked for a house that came with a wood chipper.

[Liberal_in_LA]

26. and if you don't have granite countertops and stainless steel appliances you are a loser.

On 'what's my house worth' they badger the owners of perfectly good kitchens to swap out the countertops and appliances. yikes.

[Thirtieschild]

43. The most common statements are "it's so outdated" and "so 80s"

They don't get that they may update but in 10 or 15 years what they've updated to will be outdated.

For 36 years we lived inside the City Limits of Atlanta in a house built in the late 30s. We paid $20,000 for the house in 1966; the couple who bought it from us turned the kitchen into one of those you see on House Hunters and it sold 15 months ago for $550,000. It's now valued on Zillo at $600,000. Where do young people with children get that kind of money?

[XemaSab]

51. Nothing will say 2008 in 30 years like a beige granite countertop

:P

[bean fidhleir]

64. A granite countertop still emitting radon (nt)

[XemaSab]

66. .

:thumbsup:

[shanti]

67. EXACTLY!

:hi:

[Liberal_in_LA]

63. zero downpayment and interest only mortgage payments.

[LeftyMom]

15. We had two, but going through the master bedroom to use the second was an on-pain-of-death thing

so you really only did it if waiting meant a significant risk of staining the carpet.

[XemaSab]

16. Word

:thumbsup:

[arcadian]

8. They thought they would be able to get people working in San Jose to commute.

Merced is too far out, Los Banos is pushing it.

[ContinentalOp]

18. Yeah, that's ridiculous.

Merced? Who the hell pays $500k to live in Merced? No offense to Merced residents but... This says less about CA as a whole and more about one particular pocket of insanity. Then again, I wouldn't pay $500k to live in San Jose either but I already did 17 years of hard time there. :P

[EFerrari]

21. A LOT of people moved over there from the bay area

because there was a housing shortage here -- going back to the 80s.

[ContinentalOp]

32. I don't think San Jose real estate was THAT out of control in the 80s.

I mean, I was just a kid then, but it was much different there than it is now. I'm pretty sure that there was still a lot of affordable housing to be had.

Obviously a 2 1/2 hour commute from Merced to San Jose is the only option for some people and it's sad that they are the victims of this insane development bubble. I just have trouble wrapping my head around that $500k figure.

[EFerrari]

34. It wasn't so much the price back then although there was that, too.

There just wasn't enough housing. No, there wasn't a lot of housing to be had, affordable or otherwise. The dot com boom, remember?

That price for a home in Merced seems insane to me, too. But, that's what people have been doing.

[ContinentalOp]

36. The .com boom started late '90s at the earliest.

I graduated from high school in '94 and had many friends and family members who were fairly poor but able to rent nice enough places in San Jose around that time. I guess they had all been there for a long period of time though. It may have been tough for newcomers. But the crazyness definitely started in that 5 years or so after I left. The housing situation is much harder for some of those same family members now.

[EFerrari]

37. I grew up in Sunnyvale. My own young family had a hard time

finding housing in the mid 80s and my family was in real estate. By the late 80s, people were going over the hill. The incoming professionals overloaded the market. The craziness started before you left but maybe you were mercifully spared. lol

My mom sold a house in 1992 for half a million dollars that she'd bought in 1963 for under 20K. It was just a three bedroom tract house and nothing to write home about. The insanity was on.

[ContinentalOp]

46. Yes, I probably shouldn't pretend to know what was going on in bay area real estate,

since I was 17 when I left. :blush:

[Liberal_in_LA]

30. 500K was the going price due to the competition. 700K would have got you a shack in LA

People who don't live in CA don't understand. There was a bidding frenzy 2 years ago that made everyone go a little insane. Not only did you have to be the highest bidder, in many cases you had to write pathetic, begging letters to owner.

[AlCzervik]

33. there were lines and lotteries in Elk Grove at new subdivisions, seemed ridiculous then

and now, well now it just seems absurd, these same neighborhoods aren't finished and probably won't be for a long time and the ones they are completed are loaded with foreclosures. I remember seeing houses similar to mine being bought for over $500k and now you can get that same house for $275-300K.

[Truth4Justice]

57. Those partiality built houses will warp after a year or two unfinished. They will be worth nothing.

[Ex Lurker]

60. there's a positive side for that

Fewer vacant habitable dwellings to work through the system before the housing recovery starts.

[ContinentalOp]

35. Hey, did you notice my avatar?

;) I live in L.A. and bought a nice house in the hills with a view for a little under your quoted "shack" price in 2004. At the height of the boom, some of our neighbors' houses sold for around 800. Now, I'm a totally bigoted L.A. booster, but I have trouble seeing how anyone could think that a cookie cutter tract home in the central valley would be worth half a million dollars!

[Liberal_in_LA]

40. Me either but the new UC Merced campus was a draw.

You have to admit, some of the LA houses that sold for 700K was little more than shacks. come on!

[ContinentalOp]

44. Yeah, I just read about the uc merced thing in the article. It makes more sense now.

Pure speculation. Very sad for the people who just needed a home and weren't trying to make a quick buck.

[Truth4Justice]

56. San Jose is one of the safer cities in the Bay area. Safer then SF by a long shot. But expensive.

like most of the area. Lots of folks were commuting 70 to 100 miles ONE WAY to San Jose jobs
when I was there.

Yahoo maps says 115 miles from Merced to SJ.

At 4.00 per gallon? Ouch!!!

[depakid]

22. Wait til gas prices are up to $6, $8 and $10 per gallon

Sights like these are going to be much more common in places like California, where corrupt, irresponsible land use planning is the norm rather than the exception.

[LeftyMom]

23. Don't get me started.

We have whole subdivisions near me where the tops of the roofs are below the tops of the neighboring levees, which are known to be inadequate. The area in question has about 100,000 people, a lot of businesses, and one fire station.

Finally the feds put a moratorium on new building in that area until the levee problem is fixed because of the danger, and the city rushed through more subdivision approvals before it took effect, saying that they needed the tax revenue!

[XemaSab]

38. (cough, cough, Natomas, cough)

Nothing wrong with that area that 40 feet of floodwater wouldn't fix. :(

[LeftyMom]

39. You're giving away the surprise!

And our dipshit Mayor can't admit it's a deathtrap, because it's her district. Whoops.

[XemaSab]

42. I wouldn't live there

without 3 stories and a raft permanantly inflated and stowed on the top floor.

Everyone knew it was a deathtrap back in oh... 1850, and that's why nobody ever built out there.

Your gopher-infested wall of dirt won't save you, folks.

[LeftyMom]

45. Fine rice growing land.

Sure, it's close to downtown, but downtown's only reasonably safe from flooding because the street level was raised a full story above the original level and the whole thing was filled in. Safety-wise Natomas is 1850 Sacramento, minus the malaria.

[XemaSab]

47. They not only raised downtown, they built solid concrete levees.

We need another malaria outbreak in this state... West Nile's been a dud so far. :(

[LeftyMom]

49. Speaking of malarial swamps and West Nile, apparently DC mosquitos love vegan food.

x( It'll be interesting to see what exciting new diseases I get out of that little adventure.

[XemaSab]

55. They got nasty little jobbers out there

Hope they don't itch too bad. x(

[Truth4Justice]

54. Lots of the homes that were going up in the northern valleys were on PRIME ag topsoils

not lesser soils. Talk about cutting your own throat.

Of course, I am sure the lawns looks great....if there is anyone to water them.

[bean fidhleir]

65. All that's going to be rewound if we want to stay in business as a species

We've sprawled over too much of Earth's surface. Lovelock estimates that Earth needs a minimum of 1/3 of her land area to grow "lungs" (trees) on, so we're going to have to shift to highly concentrated farms and living space. A third for us, a third for non-humans, a third for Earth.

Or die, of course.

[musiclawyer]

31. They overestimated the effect of UC Merced

,,,, among other things. The new UC's growth has been slower than expected. The lenders were stupid, if not criminal. And the houses were too big for the area. Their competition was not houses in Merced, but ranchettes out in the foothills that cost less. Houses are coming down to more realistic prices. This is not a bad thing were it not for the hurt that a lot of not savvy people have suffered.

[Liberal_in_LA]

41. Exactly!

[ContinentalOp]

48. By the way, what's up with the mayor being a real estate agent?

:shrug:

[OutNow]

50. My in-laws live in Merced

Most of my wife's family live in Merced and we drive down from Oregon 2 or 3 times a year to see them. The development around Sacramento seemed out of control, but I've never seen anything like the overbuilding in Merced. My wife and I said several times, "Who is going to buy these houses? Certainly not people that currently live in Merced." My SIL and her family live in a small 1960s 3 bedroom and had the same question. Well, now we know the answer. No one.

[riverdeep]

61. The morning after...

What happens when delusion and greed meet reality.

To skew a line from Reagan-

"It's morning after in America..."