Great article in Time Magazine about the housing meltdown in our area and problems for buyers! #fb

This article was in the most recent Time Magazine outlining the housing meltdown in the Inland Empire of Southern California. It shows the state of our region and the challenges facing buyers, especially first timers trying to take advantage of the tax credit.

There are a lot of regular buyers out there but they are competing against investors who are grabbing up much of the foreclosure inventory. Many buyers end up writing 15 or 20 offers before they are successful in getting a home. This article really lays out the frustration that many of them have.

Posted on Temecula and Murrieta Real Estate

ENLARGE PHOTO+

Where new developments once bloomed, “For Sale” signs now dot the landscape

Guillaume Zuili / Vu / Aurora

In the Dust Bowl years of the Great Depression, farmers who fled West out of the prairies found a paradise of citrus groves in Southern California: miles upon miles of navel and Valencia oranges, planted in a vast swath of Riverside and San Bernardino counties, which stretch from East Los Angeles to the Arizona and Nevada borders. Starting in the 1970s, that area, now known as the Inland Empire, became a mecca for a new kind of homesteader: young families lured by cheap land and an easy commute to L.A. By 2008, it was home to 4.1 million people and one of the fastest-growing regions in the country.

That all ended with the bursting of the property bubble, as home prices fell by nearly half. Today new homes sit vacant with dead lawns and boarded-up windows. Lawrence Yun, chief economist for the National Association of Realtors, calls the Inland Empire a “ground zero” for the nationwide housing bust. To first-time home buyers, though, its blighted cul-de-sacs appear as promising as the orange groves did to Dust Bowl refugees. Armed with an $8,000 tax credit and low mortgage rates, they have flocked to cities like Riverside, where auctioneers sell off foreclosed properties by the dozens from the courthouse steps. (See 10 things to do in Los Angeles.)

But despite the high volume of repossessed properties — the Inland region has the sixth highest concentration of foreclosures in the nation, according to the listing service RealtyTrac — house hunting here is an exercise in frustration. Banks have been slow to put properties on the market, sparking bidding wars among buyers. Overwhelmingly, the winners of these clashes are investors, who have been snapping up homes with high all-cash offers. “For the home seller, cash is king,” says Yun. “First-time buyers are at a disadvantage.”

Gus Serrano estimates it took seven months, about 100 viewings and 30 rejected offers before he succeeded this past fall in purchasing a home. “Every time I put in a bid that I thought was reasonable, they wouldn’t call back,” he says. Serrano, a project manager for a demolition company, finally bought a foreclosed three-bedroom, two-bath house for $150,000 — more than $40,000 above the list price.

In Moreno Valley, once one of the fastest-growing cities in the Inland Empire, the competition for foreclosed homes is intense. In December, only 532 houses were listed for sale, down from approximately 3,500 a year ago. “Pretty much anything under $150,000 is going to be bought with cash,” says Oscar Rodriguez, a Century 21 real estate agent. He calls his clients, primarily first-time buyers, “goldfish going against sharks.” (See pictures of Los Angeles.)

Beth and Brent Fite, of Redlands, Calif., prequalified in May for a $300,000 loan. After six months, they had three offers rejected. “They say it’s been a buyer’s market, but it really doesn’t seem like it,” says Beth, an administrative assistant for the city of Corona. At the end of the summer, the couple found the home of their dreams — a three-bedroom, two-bath house perfect for raising a family. They bid $25,000 above the asking price but were passed over for a cash offer.

Local officials have programs in place to help buyers but admit they’re frustrated they can’t do more. “We want to help families own homes,” says Tom Freeman, spokesman for Riverside County’s economic-development agency. “We do not want to see outside investors coming in and turning them into rental units.” For their part, investors say they are buying up houses in such disrepair that first-time buyers would not be able to secure loans for them — and helping neighborhoods by making these units livable again. “I don’t think anybody should have a problem with that,” says Bruce Norris, a Riverside real estate investor.

The Fites are among those who might disagree. In late November, with their lease up and their options narrowing, the couple put in one more offer, on a three-bedroom stucco house in Highland. Again they were passed over for cash, but the deal fell through; in the end, their offer was accepted. “It was quite the roller coaster,” Beth says. “We certainly lucked out.”