Sonoma not immune to housing crisis

ConsumerWatch reported on Jan. 17 that overall housing prices, which have been declining steadily for over two years, were down 14.8 percent from a year ago. The median price for a home in San Francisco County declined 1.9 percent to $731,000. But of the nine Bay Area counties, Sonoma County posted the sharpest decline, plummeting 21.9 percent to $410,000 from December 2006. Sonoma is not immune to the housing crisis.
Nor is Sonoma immune to the nationwide sweep of foreclosures. A recent listing of foreclosures in the Sonoma area numbered 73. The number includes properties in various stages of the foreclosure process, which can take as much as six months to complete. Each represents some kind of individual trouble, and together they represent trouble for the community.
When foreclosure proceedings are underway, banks may just dump the properties for the lowest price, just to get rid of them. “Banks don’t want to be homeowners,” said Laura St. Leger Barter, of Pacific Mortgage Consultants. “They don’t want the upkeep, the liability, or the cost of protecting it from vandalism. So if a property forecloses, they just want to unload it.” But each foreclosed home, selling at below market rate, drags down the value of the neighbors as well.
“If a property goes through foreclosure,” said Ron Pfleger, loan consultant at First Security Loan Corporation in Sonoma, “it will lower the values in the neighborhood 5-10 percent for at least six months.” A neighbor, should he find himself unable to pay his ballooning adjustable interest payments and want to refinance, using his house as equity, will suddenly discover he has not a $500,000 property, in Pfleger’s example, but since the nearest “comparable” has been drastically reduced, he has only a $400,000 property. That down-valuing may cost him the loan he needs, and then he may be in trouble, too.
This is happening neighborhood-wide, even here in Sonoma, where the cluster of foreclosures centers in the lower income areas where there are many first-time homeowners. And the effects are long range. “Individually,” said Pfleger, “it impacts your credit score. Credit score is your Holy Grail. The foreclosure can be on your credit for the next 10 years. Foreclosure is a judicial thing. It goes through the courts. It’s a very, very significant thing.”
Among those indirectly affected are renters. Sy Lenz, recently selected as the Sonoma Alcalde, focuses concern on the homeless. He said that when owners have to sell, the renters have to leave, and in this current environment, they may not be able to afford the security deposit and last month’s rent on a new place, thus they can end up needing his help. “Overall, it makes it more difficult for everybody,” he said, “it’s important for the community to see that there is some special rate housing.” Meanwhile, he added, the new homeless shelter should be opening by the end of the month.