Housing Market Struggles To Recover In Southern California
SCOTT SIMON, HOST:
Well, the JPMorgan Chase news this week got us to thinking about one of the areas that were hardest hit by the foreclosure crisis: Southern California's Riverside/San Bernardino metro area. We asked NPR's Sam Sanders to check in and he found some signs of recovery.
SAM SANDERS, BYLINE: Doug Shepherd has been a realtor for 30 years. He's spent most of that time working in Riverside, California. He lived and worked through the housing crisis. Now he's eager to tell people his region is recovering.
DOUG SHEPHERD: As you look down this street, you see only one for-rent sign and no for-sale signs. At the peak you would have seen three or four for-sale signs, several dead lawns, and now you don't see that.
SANDERS: Since 2006, more than 200,000 homes in the area have been lost to foreclosure, 200,000. That's 13 percent of the houses here. The metro area was regularly on the Top 5 list of foreclosure regions in the U.S. Doug Shepherd points to one house that shows just how much was gained and lost.
SHEPHERD: It's a modern ranch-style house, three bedrooms, two baths, single story, 1350 square feet, two-car attached garage...
SANDERS: In 2006, at the peak, it sold for $407,000. After the housing bubble burst, its value hit a low of about $180,000. Just last month, in a short sale, it went for $245,000. That's Riverside today. Prices are beginning to rise again, but they're not nearly as high as they were at the peak of the housing boom. And there's another important change. This house is now owned by an investor who's renting it out.
That's commonplace now. Individuals and big financial companies are buying up properties.
DAREN BLOMQUIST: Ten percent of all sales in June were to these institutional investors, and so that's one in every ten properties.
SANDERS: Daren Blomquist is a vice president at the data firm RealtyTrac. He says there's a lot to be excited about in Riverside's housing recovery, but a few things still worry him, like all the investors.
BLOMQUIST: These investors and cash buyers are helping to list the market up more quickly. The flipside of that is that homeowners who don't have cash on hand are sometimes being left out in the cold.
SANDERS: Also, says Blomquist, a lot of the homes being sold now in Riverside are still distress sales.
BLOMQUIST: There's still a lot of foreclosures that have already happened that are selling, and then on top of that, many of those people who are underwater are having to sell via short sale.
SANDERS: That, he says, keeps all home prices lower than they should be, which isn't good for a place where still almost a third of all homes remain heavily underwater. Driving down a commercial strip in Riverside, you see the main reason why housing is still shaky here. Empty office after empty office, with for-lease signs everywhere.
BLOMQUIST: Commercial office space, there's a lot of it.
SANDERS: Shepherd admits there's a shortage of employers. Unemployment remains around 10 percent. In spite of this, he's optimistic and grateful it's not worse. Riverside, he says, has found a new normal.
SHEPHERD: Maybe not as much happy, but it's not as painful.
SANDERS: And you see it, even in the neighborhoods that suffered the most in the bust. There are lots of empty houses for sale, some no-trespassing signs, but they stand next to other homes with Range Rovers in the driveway. Every yard, for sale or not, is impeccable. No broken windows, no brown grass. If you didn't know what to look for, you'd think everything was pretty good. Sam Sanders, NPR News.
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