Dire home price prediction creates alarm

It was enough to strike terror into the hearts of local homeowners: An online story from CNN last week that had the following sentence in the middle: "In Hanford, Calif., prices are estimated to drop 26.9 percent [in 2010] and continue falling 9.5 percent in 2011."

CNN said the dismal estimate came from Fiserv, a financial information and analysis firm.

Within hours of the report being repeated on a local television station, Kings County real estate broker Mark Raeber said he had several messages on his phone from incredulous homeowners, buyers and appraisers asking whether the numbers could possibly be accurate.

Raeber told them to calm down.

"I think that [Fiserv] is absolutely wrong," Raeber said in an interview with The Sentinel.

Raeber said Fiserv likely failed to take into account the impact of Lemoore Naval Air Station, which poured $654 million into the local economy in fiscal year 2008. LNAS jobs aren't counted in local unemployment statistics.

Whoever did the Fiserv report "has never been to Kings County," Raeber said. His opinion of the Fiserv numbers was largely echoed by other local real estate professionals.

Appraiser Keith Crane said there's been stabilization in the Hanford-Lemoore market in the last two to three months.

"If you look at the whole county, we're still declining, but if you look at [Hanford], we're stabilizing," Crane said.

He said a good indicator of stabilization is the amount of housing inventory, which he said has been decreasing. He said houses on the market are getting several offers and are going for prices above the asking price.

But other analysts with bigger-picture perspective are less optimistic about the 2010 market.

They point to the effect of a tax credit for first-time homebuyers. By the end of November, the credit will have been used by 1.8 million homeowners, at least 355,000 of whom would not have bought a house without the tax break, according to the National Association of Realtors.

Congress voted Thursday to expand the  popular tax credit for homebuyers through May 1.

Aaron Norris, a Riverside-based analyst with The Norris Group, said he believes the true impact of the problem has been masked. He referred to the "shadow inventory" -- people still in their homes but falling behind in payments.

"Delinquencies are exploding, but somehow foreclosures are shrinking," he said.

Norris said that California moratoriums have helped to hold down foreclosure rates, but the latest moratorium ended in September. Norris said he suspects that banks may be way behind in initiating and processing foreclosures. Much will depend on how they decide to deal with the shadow inventories, he said.

Brad Hunter, an analyst with Metrostudy, called Fiserv's forecast "a bit too gloomy." But Hunter went on to say that a wave of prime rate foreclosures are about to hit.

"Will [the decline] be another 30 percent? I don't think so," he said.

Hanford Realtor Shanna Caldwell predicted a 5 to 10 percent decline in the local market next year. But, she noted, "Nobody can tell where the market is going."

"Nobody ever perceived that the market would do what it's doing now," Caldwell said.

The reporter can be reached at 583-2432.

(Nov. 7, 2009)