Foreclosed Homes Available At Bargain Rates : Antelope Valley: There still remains a supply of cheap deals from federally owned homes taken in foreclosures.
Property owners in the Antelope Valley have been reeling in recent years as they’ve watched property values tumble and foreclosures escalate. Home sellers and home builders have had to compete with fire-sale prices being offered by lenders eager to unload their inventory of foreclosed property, sometimes called REOs (real estate owned by an institution).
Some Antelope Valley observers are beginning to see some improvement, though. There are 756 homes in foreclosure that are still unsold in Lancaster and Palmdale, according to Dataquick Information Systems in La Jolla. Builders and real estate agents in the Antelope Valley, however, say the foreclosure market is finally having a less harmful effect than before.
“The REOs had a very adverse affect on the market in 1992 and 1993. I don’t think those homes are as much of a problem today,” said Tom Thompson, owner of MarketMasters, a research company in Palmdale. Now that the inventory of foreclosures is declining, Thompson predicted, many more buyers will be seeking new homes.
Thompson also perceives a difference between the typical buyer of a foreclosed home or a U. S. Department of Housing and Urban Development home and the buyer of a newly built home in the Antelope Valley.
“The HUD homes particularly are lower valued homes of about 1,400 square feet selling for under $100,000,” he said. Many of the new home buyers in the Antelope Valley are opting for homes with 2,000-plus square feet that sell for $100,000 to $150,000, Thompson noted. There aren’t any such HUD homes, he said, and “there is no longer an REO market in the higher square footages”--those homes, for the most part, have already gone back to the bank and been resold, he maintained.
New home buyers want more space than ever before, Thompson said. One Palmdale housing project called Spirit by Inco Homes, for example, is offering buyers 3,000 square feet of space for just $159,900--including a washer, dryer and back-yard landscaping. Several years ago, Thompson noted, the same house would have sold for $100,000 more.
While many new home builders are beginning to see a better market in the Antelope Valley, that improvement isn’t yet helping folks who are trying to resell their homes, Thompson conceded. “The lower-value resale market is in competition with a large supply of foreclosures,” he said.
An oversupply of homes foreclosed on by private lenders and by the Federal Housing Administration has really hurt property owners in the Antelope Valley trying to resell their homes, said Raquel Ortega Payne, an agent at Century 21 Yarrow & Associates in Lancaster. The FHA, particularly, placed many homes on the market through HUD, and these foreclosed homes come with low interest rate loans and up to $5,000 for new paint and carpeting. Homes that sold in 1991 for $90,000 are often selling through HUD for about $65,000, Payne said. With just $2,200 for move-in costs and an 8% fixed-rate mortgage, she said, all it takes to qualify for a loan is less than about $35,000 a year in income. “You can even go out and walk in these neighborhoods at night,” Payne said.
The supply of these really cheap deals is beginning to decline. As a result, Payne said, many more buyers will soon think about buying a conventional resale home--or even a new home.
“One of the reasons we haven’t seen an increase in new sales is because of the large supply of foreclosures,” said Bob Bray, managing director for the Meyers Group’s Los Angeles-Ventura division in West Los Angeles, which provides research and consultation services to home builders. “There are some pretty good deals for buyers in the foreclosure market.”
Many of the homes in foreclosure were built between 1988 and 1994, Bray said, and “those are still pretty new homes: They compete directly with new homes.”
While the number of homes going into foreclosure has started to decline, Bray said, there isn’t any major increase in new home sales or in prices predicted any time soon. “Our feeling is that the new home sales will be about same as last year or a little less,” Bray said. That’s about 1,800 new homes.
“As the economy improves, foreclosure rates will be dropping,” he said, “But there will be no price appreciation in the near future.”
Builders are also making a real effort to keep prices down by paring away luxury items, he added. “The concept today is to give the buyer a lot of house for their money,” Bray said. “It’s back to the basics. Luxury items are out. It’s about shelter and affordability.”
Despite continuing weak sales of new homes in the Antelope Valley, home builders are readying several new large-scale projects that could eventually total more than 30,000 new homes.
The developers of Ritter Ranch are planning 7,200 residences nestled in the Sierra Pelona Mountains at the southwestern edge of the Antelope Valley. Kaufman & Broad plans to build 5,200 residences at a project named City Ranch in Palmdale. Another 4,700 homes have been approved at Serrano Ranch Co. in the Lancaster area.
Given the roughly 1,800 to 2,000 annual new home sales in the Antelope Valley reported by the Meyers Group, it would take about 17 years to sell out the major projects on the drawing boards in the Lancaster and Palmdale areas alone.
Patience is the key to success in home building, said Jeff Mezger, division president at Kaufman & Broad Home Corp. in Palmdale. While there seems to be an oversupply of projects proposed in the Antelope Valley, he said, “there is a difference between projects proposed and actually brought on line. Just because a project is proposed doesn’t mean it will get financed. The financial institutions are being fairly conservative.” That means that the surviving builders will be those who have deeper pockets and who can be patient.
Population in the Antelope Valley doubled from 1980 to 1990 to about 250,000 residents. Builders are counting on continued population growth of about 4% a year.
Postscript:
My column last week on “Finding the Funds to Fix Quake Damage” generated a great deal of interest. But I received several calls from readers who were frustrated because some of the funding sources mentioned in the column weren’t easily available. Several readers, for example, called the Community Development Commission of Los Angeles County--which seemed unfamiliar with its own assistance programs. I subsequently called the commission and advised it to read its brochure, “Owner-Occupied Home Improvement Program.” The commission, in turn, suggested that callers talk to FEMA first. It’s no wonder some callers felt that they were being led in circles.
But I did make a mistake. The Gas Co.--which in July launched a Community Partnership for Earthquake Repair program--is not making loans available to earthquake victims. It is only repair aid and services that are being offered to qualified low-income, elderly and disabled residents, such as providing work crews to repair stucco walls, doors, stoves, damaged chimneys and the weatherstripping of a home. Those interested in this help should call (800) 331-7593.
