Experts predict extent of local real estate drop

CA Foreclosure News

Article Abstract: Dropping homes sales in Ventura County continue to be a concern.  Many are asking the question-how long and how strong- will this trend last.  The number of Southern California foreclosures will soon near “unprecedented levels,” says one expert.  Some predictions conclude that Ventura County prices will drop a total of around 10 to 15 percent.  For the entire Ventura foreclosure article, please continue below: 

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By Stephanie Bertholdo 

Home sales in Ventura County continue to droop, and home prices are just beginning to sag, but exactly how long the real estate market will stagnate and how low prices will go is still a question mark according to a speakers at last week's Ventura County Real Estate and Economic Outlook Conference at the Hyatt Westlake Plaza.

The vicissitudes of real estate aside, the subprime mortgage debacle has pushed home loan defaults to a 15-year record high said Mark Schniepp, director of California Economic Forecast, a Goletabased firm that cosponsors the biannual look at real estate.

"The number of foreclosures is surging and will soon reach unprecedented levels," Schneipp said in 2007 Ventura County Real Estate and Economic Outlook, a book produced for participants. He predicts the downward real estate cycle will continue for a number of months.

Schneipp said thousands of subprime loans, coupled with declining home prices, rising mortgage rates and a "spate of foreclosures" has created the "perfect recession stew" for California real estate well into 2008. But, Ventura County is expected to fare better than the norm.

Schneipp predicts Ventura County real estate will level out and experience a total price drop between 10 and 15 percent, he said. Not bad if predictions on other California real estate markets are expected to dip down 18 percent.

While a record number of default notices have been sent to California homeowners, only 317 homes have been foreclosed upon in Ventura County according to Schneipp. Please visit www.foreclosure.com for updates.

The current real estate slowdown shouldn't be compared to the 1990's recession, Schneipp said. At the time, the downturn continued for 71 consecutive months resulting in a 27 percent drop in prices. Schneipp said it seems "unreasonable and improbable" that history would repeat itself in such a cycle.

On the commercial end, office vacancies in the county are among the lowest in the state. Apartment rentals remain tight, and rents continue to rise. "I don't see any major fallout in this area," Schneipp said.

Two local business giants- Countrywide and Amgen- laid off thousands of employees, adding to California's economic woes.

Although home sales are at a 20year low, Schneipp believes other indicators should breed optimism. Incomes remain steady, widespread layoffs haven't happened, and "homebuyers are not fleeing," Schneipp said. Job growth, however, has slowed.

Terry Paulson, a psychologist, columnist and author, offered a different spin. His talk, "Reclaiming the Optimism Advantage in Challenging Economic Times" demonstrated how bad news about subprime loans, a volatile stock market, foreclosures and corporate layoffs have a psychological impact on people that perpetuate the bad economic cycles longer.

"We're grossly over informed about bad news," Paulson said. After monitoring the evening news for 100 nights, George Washington University counted 8,600 negative news reports versus 370 positive accounts.

Paulson sees a silver lining. Young, first time buyers have a better chance buying a home if prices drop, and new investment or business opportunities often open during stressful events.

"You have to position yourself for opportunity," Paulson said. "Difficult times force you to do things that are not in your comfort zone.

William Dallas of Dallas Capital Management, who also founded Oaks Christian High School, spoke on "Rising from the Carnage in Real Estate- What's next?"

Dallas also sees opportunity in the wake of economic downturns. He said credit markets may be in a shambles but a return to better lending practices will be a healthy move.

Dallas sees three possibilities for economic recovery. First, the subprime crisis may be overblown, he said. "It's about people who are credit damaged," he said. In geopolitical terms, the issue is minute.

"We're about to enter a normal cyclical recession," Dallas said. The crisis may lead to major changes in how United States banking and mortgage industries operate. Dallas expects real estate to begin recovery in 2008.

"During the past 10 years, a comatose dog would have made money, but now you have to be a lot smarter," said conference participant and personal investor, Andrew Snelgrove.

 

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