In Merced, 'A tsunami of bank-owned properties'
Buckling under a "tsunami" of foreclosed houses, sections of suburban Central California are turning into weed-choked ghost towns, marked by vacant houses and unfinished developments, the L.A. Times' Peter Hong reports today in the second article in his four-part series on foreclosure in California.
"We're experiencing a tsunami of bank-owned properties," real estate agent Andy Krotik tells Hong while touring foreclosed houses in Merced. Krotik's job is to inspect foreclosed houses to make sure they are free of squatters before they are put on the market.
The economic fallout from foreclosures has damped economic activity in the region, Hong reports. "There's just no equity," says Mark Torrence, owner of Merced Pools. "Most houses are upside down.... It's over for the industry. I'm done building."
Even housing developments built as recently as 2006 are showing signs of age and neglect. Hong describes the view from a house built in 2006 at a development that stalled: " ... a kind of modern-day ghost town. The developer never finished building the neighborhood as demand for new homes vaporized and would-be buyers canceled their contracts." The new homes that were built are now "ringed by vacant lots and empty houses, and the neighborhood is overrun by dry weeds and brush."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Los Angeles Times
GOOD!!! level those uninhabitable dumps and return that land back into farm land like it should be.
a new home in merced...... come on
Posted by: mike | June 03, 2008 at 10:19 AM
I grew up in Merced. Your choice of careers there are limited. As a blue collar, you can work in Agriculture, Construction, Retail Management, Healthcare, and for City of Merced to name a few at around $12 hourly pay. Prison Guard Jobs are popular too. You have to commute to Fresno or the Bay Area to find a $20/hour + job. Of course Gas (AKA The Man), will effect ones income. My family lives there. Two of my siblings purchased older homes near the Old Courthouse in the mid 1990's before the Dot Com Boom. Those homes are 2 Bedroom Bungalows purchased for 70 thousand each. One even had a remodeled bathroom and add on den. They are doing just fine with their low fixed rate $500 mortgage payments. During the real estate boom similar homes were selling in the $350,000 range. We knew there was no way those prices would hold because of the types of jobs available. Result, hundreds of foreclosures. City Leaders and Developers have destroyed that town. They've taken up the beautiful Farmland and put up cheaply constructed poor quality homes and sold them to people that could not afford them. The job market was horrible when I left in 97. It's even worse now that all of the construction jobs are gone.
My wife and I are very tempted to buy one of those old foreclosed homes, like the one I grew up in, as a rental property. We can practically buy an old bungalow in Merced outright. We have a rent controlled apartment in TL/Burbank and have adequate savings to buy. Yeah, we know Prop 98. The question is should we buy a Bungalow In LA/Burbank when prices are falling or keep renting and buy a rental in Merced on the cheap. By the way, we are blue collar, debt free, and gross a combined income of 100k yearly.
Posted by: gbot | June 03, 2008 at 11:48 AM
I think the UC campus put a lot of dollar signs in people's eyes. And I think the campus will bring stability to the region in like 15 years.
Posted by: Lou | June 03, 2008 at 02:28 PM
We moved to Texas from Merced in June 05. We kept our 4 bedroom, 2 bath 2284 sq ft Oakmont House in Merced built in 1998 as a rental thinking it would be a good investment with the new UC being built. Dumb mistake due to foggy crystal ball. It was worth about $465,000.00 in June 05, now Zillow shows it at $314,000.00. Depressing and discouraging to say the least.
Do we sell it at the low price now or keep it, hoping prices will go back up? We could take our 300k and invest in rental property in Paris, Texas where property is much cheaper and cap rates are much higher. There is a 32 unit complex in Paris with a cap rate of about 16 for sale for 375K. Any advice?
Posted by: John T Watts | June 04, 2008 at 04:36 AM
House flipping now can draw hefty fines
http://www.spokesmanreview.com/
breaking/story.asp?ID=15096&ref=patrick.net
Posted by: Enlightenment | June 04, 2008 at 05:26 AM
My niece just closed on a 4 bedroom house close to Merced Community College off of San Jose Drive. It was listed at 450k durring the boom. The agent told my niece and husband to offer 350k. They told the agent 180k. The owner accepted the offer. It's what my niece told me anyway.
Posted by: gbot | June 04, 2008 at 05:34 PM
Try living thru a foggy and cold Merced winter. Yikes! Merced! I grew up in Fresno and still remember walking to school in the fog stomping frozen puddles.
If you must live in the central valley get some altitude so you can enjoy some winter sunshine.
Posted by: dilbert dogbert | June 05, 2008 at 07:24 AM
JT Watts:
If the rent covers the mortgage, keep it! You might want to return to Ca in a few years. Many newer Texans do...my in-laws are there now.
If the rent doesn't cover the mortgage, sell that Oakmont home for whatever you can, while you can. It's probably too late though. Zillow is known to be off by as much as $100K; get it appraised.
Merced is home for me, and personally, I love the affordability. Teachers, Firefighters, and Policemen can afford homes with pools; and that's the way it should be. An affordable mortgage and disposable income is the life for me! I've lived in much more affluent areas, but now I just go there on vacations....
Winter in Costa Rica!!!!!! No fog!
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