It's getting messy down south

Though we've moved hundreds of miles to the north, the electronic version of the LA Times still shows up in my inbox and, this morning, another story on foreclosures was prominently featured in the business section:

Flood of foreclosures could drive home prices lower

This report tells of the waves of additional supply coming onto the market as banks look to dump property that has been returned to them because the owner couldn't keep up with their payments.

On Kentucky Derby Drive in Moreno Valley, the houses with "for sale" signs on their lawns boast Craftsman-style facades, roomy floor plans and granite-countered kitchens.

Four of the nine have something else in common: They're owned by lenders.

Saddled with properties the borrowers could no longer afford, banks and mortgage companies have joined the legions of individual homeowners trying to sell on the open market — and at a pace not seen in more than a decade.

The trend could further weaken a housing market already pinched by high inventories and tougher lending standards, although experts say it's too soon to tell how extensive the damage will be.
...
"Like any seller, they have a cost to carry," said Mike Ela, founder of home-valuation service HomeSmartReports.com "Eventually they will feel the heat of having a nonperforming asset on their books and lower the price."
...
One study suggests that discounts are likely to become common if foreclosures — which increased 18% in Southern California from March to April alone — keep rising.

Owners are likely to discount their asking prices 20% or more in communities where foreclosed homes make up 8% or more of sales, according to the study by Christopher Cagan, an economist with title insurer First American Corp.

A check on the old SoCal neighborhood shows only a few sales, some at dramatically lower prices, and asking prices that are going steadily lower.

For example, what sold for $800,000 or more in late 2005/early 2006 might have sold in the low to mid $700,000s earlier this year, but with so many more sellers than buyers right now, asking prices are now in the low $700,000s. And there are a lot of them on the market.

There are still exceptions to this rule - apparently when couples just fall in love with a place and think they're getting a good deal at $20,000 off the purchase price.

These buyers will live with that emotional decision for quite some time. That is, unless they're like the people across the street from our old rental who paid top dollar in late-2006, then bailed six months later, only to see the place sell for about $100,000 less than what they paid nine months later.

Going North

As for the new neighborhood, here are a couple photos.

The first one we snapped after breakfast the other day, just after the rain cleared. There are lots of 1850s era historical sites near here, the vast majority of which are made of brick since all the wooden structures eventually succumbed to fire - Bodie, high up on the eastern slope of the Sierra Nevada Mountains, is a notable exception.


After breakfast, a trip to a nearby golf course that has lots of trees.


So far, it seems that pine trees tend to spit errant shots back out onto the fairway, however, the sample size is still quite small.

Below is yours truly lining up a putt on a hole with a beautiful view of the Sierras - it's an action photo of sorts as I'm in the process of either crouching down or standing up, patiently considering the potential future path of the ball.


Yes, it was a birdie putt. No, it didn't go in.

More trees below - you just have to pretend that they're not there.


On this round of golf we saw two deer, a bunny with big ears, a (hopefully) harmless little snake, lizards, partridges, one lady cutting the fairway grass, and few other golfers.

Normally, here on a Friday afternoon, some commentary would be provided about what's happened in financial markets, but, given what transpired in commodity markets today, assessing the results for the day and the week is being put off for as long as possible.