Inland area has winners and losers as housing prices fall

By LESLIE BERKMAN
The Press-Enterprise

Never have home prices fallen so steeply and quickly in Riverside and San Bernardino counties as they have since reaching dizzy heights two years ago.

The phenomenon is creating winners and losers. Families straining to pay the mortgages on very modest homes or losing them to foreclosure while other families move into homes of their dreams at what they consider bargain prices.

Even in Southern California, where the real estate market is renown for its boom and bust cycles, what has happened is extraordinary.

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Chapman University economist Esmael Adibi noted that in the last downcycle that began in 1990 the median price of Inland homes fell slightly more than 19 percent over five and a half years.

By contrast, he said this time in just two years the median price of an existing home in the two-county region has plunged more than 50 percent, from $410,000 to under $191,000, according to the California Association of Realtors. And there is no sign that the price decline is over.

A major reason for the steep fall, economists say, is that prices previously soared too high, boosted by exotic loans that did not require people to prove they could afford the homes they bought. The failure of those mortgages and job losses in a recessionary economy are converging now to drive down prices, with the vast majority of homes being sold in foreclosure.

Chris Thornberg, founding partner in Beacon Economics, said "in the long run it is a zero-sum game. For everyone who loses, someone makes a profit."

Among the losers are Miguel Bravo, a 29-year-old construction worker, and his 23-year-old wife Maria Lopez who in May, 2006, bought a 902-square-foot house on Lily Court in Corona for $362,000. Lopez, the better English speaker of the two, whose primary language is Spanish, said at that time the house was the most affordable in the area, where everything else was at least $400,000. She said Bravo's co-workers convinced him to become a homeowner.

But now they regret that decision. They pointed out that the kitchen is so small that when the refrigerator door is open, it blocks anyone from entering.. They barely squeezed their table and chairs into the dining area. And they shoved a couch in front of the fireplace to have enough space in the living room to watch television with their son.

Their concrete topped backyard is too small to hold family gatherings. She paused as her voice was drowned by a train rumbling by. Lopez said when they bought the house they had no idea there was a railroad track on the border of the community.

Unable to keep up their monthly mortgage payment, which they said after a year rose from $2,500 to $3,500, they expect to be evicted in a month or two.

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A couple miles away on August Circle in Riverside, another family has just bought a bank-owned, three-bedroom house of 2,205 square feet with a marble inlay fireplace, hardwood floors, granite kitchen countertops, a garage with custom cabinets and a backyard pool and spa.

Jennifer Ferguson, an agent with Fontana-based Statewide Homes who represented the family, said they paid $310,000 for the house, which needs a few repairs before they move in. She said the house is roomy enough for the buyers' three sisters and a brother who are immigrants from Vietnam. She said they never could have bought a home if the housing market had not tanked.

Family-sized

Feras Alhaddad, a 25-year-old Jordanian immigrant who owns a smoke shop in Rancho Cucamonga, said he and his 23-year-old sister are in escrow to buy a house in Fontana for $350,000. The house is 3,000 square feet, big enough to provide overnight accommodations for visitors, he said.

Two years ago, $300,000 would have bought a much lesser house in Fontana. In January, 2006, a buyer paid $295,500 for a 600-square-foot house with a large dirt back yard on Catawba Ave. Built in 1952, the place was touted in the multiple listings as a "great starter home."

Before that sale, the house had seen a sharp run-up in price. It sold for $76,000 in April 2002, $104,550 in 2003 and $215,000 in April 2005, according to RealtyTrac, an online service that monitors the foreclosure market.

The house, which was repossessed last month by Wells Fargo Bank, is now worth between $80,000 and $90,000, said Mike Nunez, owner of The Nunez Team, a real estate company in Ontario.

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Frank Bellino / The Press-Enterprise

Debbi and Jon DeRyke bought a 3,731-square-foot home on Brigin Place in Murrieta recently. The couple say they were surprised they could buy a house with the floor plan they wanted and all the features -- granite countertops, hardwood flooring and wrought iron fencing -- they once had "drooled over."

Falling prices are luring first-time home buyers and investors, creating a record surge in sales. Nunez said he gets many calls from renters who have waited and saved, and are ready to take advantage of lower prices.

He said he also gets calls from homeowners who want to know how much value their homes have lost. He said some tell him they want to abandon their houses and let them go to foreclosure after seeing neighbors buy houses for half what they paid.

Jeanne Brigman, 44, who bought her house in Perris for $491,000 in July, 2005, said she has had a hard time seeing similar houses sell for $265,000. She said because of a divorce she no longer can afford her mortgage and she is appealing for her lender to lower her monthly payment so she can avert foreclosure.

Brigman said she avoids watching new neighbors move in.

"It makes me sick. Like I don't even want to go in the front yard and see how happy they are. I don't want to see that because it depresses me," she said.

Benefiting from better timing, Jon and Debbi DeRyke, have moved into a 3,731-square-foot home with a stone façade and a view.

They bought it last month in Murrieta for $315,000. The house is twice as large as another in Murrieta they bought in 2001 and that they hope to sell at a small profit.

Step up

DeRyke, a 49-year-old construction inspector for the Eastern Municipal Water District, said he and his wife, a teacher, were surprised they could buy a house with the floor plan they wanted and all the features -- granite countertops, hardwood flooring and wrought iron fencing -- of the new home models they once had "drooled over."

"We never thought we could afford a house like this," DeRyke said.

Reach Leslie Berkman at lberkman@PE.com or 951-368-9423.
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