In this city that traces its roots to California's Gold Rush, real estate agent Cesar Dias believes there are fortunes still to be made.
That's why he leads the weekly Repo Home Tour, filling two 18-seat buses with prospective buyers eager to view foreclosed houses that can be snapped up at dramatically reduced prices.
Dias, a Stockton native, said that when he started the free tour in September, some residents criticized it as a tasteless marketing gimmick. But as headlines announce record foreclosures and weeds sprout in the yards of abandoned homes, their tune has changed.
"We're bringing in homeowners to get the grass green again," he said.
As the brightly colored buses recently rolled through a subdivision dotted with "For sale" signs, a couple who were stringing up Christmas lights waved. The bargain hunters aboard waved back. Dias, who said his business was booming, offered a friendly beep.
"At this point, I wish the foreclosures would dry up. We could use an end to the free-fall," Dias said, adding that the rate-freeze plan President Bush recently announced would help, even if it reached only a fraction of struggling homeowners.
Dias' home tour is just one more high-profile sign of the mortgage crisis that has hit the Stockton area particularly hard. RealtyTrac, a real estate data firm, has pegged Stockton as the U.S. city with the highest rate of foreclosure filings, edging out even such troubled metropolitan areas as Detroit.
Other experts question the significance of such conclusions, pointing out that the company counts delinquency notices for late payments as well as actual foreclosures. Even so, nobody doubts that Stockton and the rest of the Central Valley have been severely jolted. By October, foreclosures in Stockton's San Joaquin County were more than eight times last year's levels, outpacing the state's increase by 41%, according to DataQuick, a La Jolla-based information service.
At the waterfront Stockton Arena on Dec. 1, about 500 anxious residents lined up at a foreclosure workshop to see loan counselors from government agencies and nonprofits. Clutching bank documents, they wanted to know how to short-circuit the foreclosures they saw looming, how to negotiate for freezes in their adjustable interest rates, how to buy some time.
Some recounted loan officers having urged them to inflate their incomes to qualify for bigger loans. Others said they had snagged 100% loans but had unwittingly agreed to double-digit interest rates and prepayment penalties as high as $10,000.
Pete Ponce de Leon, a 50-year-old machinist, said he and his wife were barely keeping up with their monthly mortgage payments, which shot up from $1,700 a year ago to $2,500 now. He said he cashed in two IRAs, sold his tools, sold a truck and was bracing for another rate increase this month. Along the way, he lost his job, and his lender refused to cut him a break.
"Why don't they just screw us all at once instead of a little at a time?" said Ponce de Leon, who has found another job and hopes to renegotiate his mortgage.
Asked whether the higher payments took them by surprise, Ponce de Leon struck the same note as many other homeowners in trouble. "We just thought we'd be OK," he said, explaining that he and his wife had planned to use what they'd expected to be the rising equity in their home to refinance the adjustable loan at a lower rate.
It was a bet that backfired. Like homes almost everywhere else in California, the Ponce de Leons' lost value and their interest rates kept going up.
As more homes entered foreclosure, more neighborhoods were riddled with problem properties -- some in disrepair because of their owners' financial problems, a few boarded up to deter squatters.
Median home prices in the county tumbled from a high of $425,000 in July 2006 to $319,000 in October. Last summer, San Joaquin County officials sent out crews to dump chemicals and larvae-eating fish into the stagnant water of abandoned swimming pools, where mosquitoes were breeding.
"The mortgage crisis was, in a way, becoming a public health crisis," said U.S. Rep. Dennis Cardoza (D-Atwater), who, with Rep. Jerry McNerney (D-Pleasanton), sponsored last weekend's foreclosure workshop. "It's one more symptom of a sick situation."
In some ways, the Stockton area's mortgage crisis has played out much like that of the Inland Empire. In both places, commuters from big metropolitan areas were finding homes they could afford -- if barely -- in vast, recently built tracts that could be more than a two-hour drive from their jobs. And in both, speculators -- an estimated 40% of the home buyers in Stockton -- were buying houses in order to flip them quickly at a nice profit.
Little wonder: Although San Joaquin County home prices in recent years soared from the 2000 median of $133,000, they still drew thousands of people squeezed out of the Bay Area, where a median-priced home now goes for more than $810,000, according to the California Assn. of Realtors.
And Stockton, the county hub, was improving. Home to a busy inland port that once was a jumping-off point for gold miners, the city started to revitalize its tired downtown with a new ballpark, the $65-million arena, spruced-up hotels and other amenities.
So people came.
"There were so many relatively affordable houses in the region that there were many more opportunities for bad loans to be made," said Bob Bressani, deputy director of Stockton's housing department.
Monaliza Botello, a 25-year-old nurse, said she was surprised when her father, who brings in $4,500 a month, last year secured a loan requiring a $4,000 monthly payment.
The idea was that Monaliza's father would own the new $495,000 four-bedroom for a year or two, at which point she and her husband, Isaac, could afford to buy it from him with a refinanced loan. But the three of them, who were all living there, fell behind in their payments, and Monaliza lost her dream home.
"It still hurts," she said. "We were getting phone calls and notices from the lender: 'If you give us the balance in full, you can keep the house.' It was nothing like 'Call us and we'll see what we can work out.' "
As home prices plunged, Botello's cousin around the corner also went into foreclosure, as did her godmother -- a real estate agent nearby. "Everyone was going, 'We can't refi? How can we afford this?' " she said. "Everyone was just shocked."
Occupied by Monaliza's family for just seven months, the Botello home in Lathrop, just south of Stockton, is on the market for $300,000. After the foreclosure, the Botellos lived in a rental home for a few months -- until it too was repossessed by a lender.
For the Repo Home Tour's Cesar Dias, such stories are tragic but predictable.
"Not to be callous about it, but what goes up must come down," he said, adding that he expected the market to boom again in a year or two. Already, he said, the demand for lower-priced homes is perking up, with multiple offers not uncommon.
His three-hour tour rambled from stately, tree-shaded bungalows close to downtown to sprawling subdivisions on land that just a few years ago was growing corn and alfalfa. The group visited a sprinkling of new homes and eight foreclosures, ranging from a century-old fixer-upper (listed at $129,900) to a tri-level, five-bedroom tract home ($339,000).
Some in the group were investors. Others, including Dan Noel and his wife, Debbie, were checking out homes for themselves.
In fact, the Noels, who live in a one-bedroom apartment with two teenage sons, had already put money down on a home they discovered on a previous tour.
"We're so excited we can hardly contain ourselves," said Dan Noel, who said their full-price offer of $179,450 for the three-bedroom house beat seven others.
Piling out of the buses, the group trooped up stairs, peered into bathrooms, noted the crumbling plaster in the fixer-upper, and raved about the marble countertops in one of the new homes.
At a $170,000 home in a comfortable, older neighborhood, Yolanda Salazar, an agent in Dias' office, took in the new lighting fixtures, the half-redone bathroom, the new roof and the falling-down wooden fence surrounding a yard of advancing weeds.
"This was someone's dream," she said. "You can tell they started fixing it up, they had all the right ideas -- but they never got to finish."