Part of the Bay Area News Group

Hayward home values hurting

By Eric Kurhi
Thursday, November 13th, 2008 at 5:06 pm in Alameda County, Ashland, Business, Cherryland, Development, Fairview, General, Hayward, Other unincorporated areas, San Leandro, San Lorenzo.

It’s true that they’re down just about everywhere, but Hayward is being hit especially hard, according to a real estate report released Wednesday by zillow.com. Hayward neighborhoods make up three of the five biggest value losers in the East Bay, with Longwood-Winton Grove leading the pack.

Homes there lost, on average, 44.7 percent of their value compared with this time last year. Jackson Triangle didn’t fare much better, with a 44.5 percent loss, and Whitman-Mocine values down 43.7 percent.

Citywide, the average loss was 37.2 percent, and the current median value is about $335,000. That’s about the same as the San Lorenzo average of a 35.2 percent dip to $334,000. San Leandro homes fell 27.9 percent to $373,000.

The Alameda County average is down 18.9 percent, to $479,000.

[You can leave a response, or trackback from your own site.]

  • J. W. Kyle

    What qualifies me to make a comment on this subject?

    Prior to retirement at the beginning of 1991, I spent the last 30 years of a 40 year banking career, toiling as a real estate appraiser. Beginning with Bank of America and concluding with Security Pacific Bank. Between banks I worked either independently or at two Savings and Loan Associations but managed an escape to Security Pacific Bank, prior to the calamitous Savings and Loan fiasco. I have experienced both good and poor bank management practices.

    Real Estate values took some heavy hits in this state even before the Depression of the 1930‘s. There was a ‘recession’ occurring shortly after the first world war, which was instrumental in aiding the education of a particular banker of the day. Shortly after WW I, he learned and subsequently taught something about the advantage of ‘holding the bag of woe’ as land values, in California’s agricultural areas, threatened to slump severely when food sales, in the form of dried fruit shipments to Europe, were no longer available to growers in San Joaquin Valley,

    In the current situation, had regulatory leadership followed the exemplary experience of A.P. Gianninni, the founder of Bank of America, whose loan foreclosure practices in the early 1920’s continued through the period of the 1932 “Bank Holiday” and long afterwards, we would not presently be faced with the continuing disaster seen in California, as well as in the whole country. It is important to note here that Gianninni was induced into assuming control of several distressed banks by the then Superintendent of Banks in California. Some had already done most of the foreclosure actions which caused the takeover.

    Real property value estimates are easy when ‘comparable sales’ are readily available as they almost always are when the economy is on the rise. Two appalling aspects of human nature arrived on the scene a few years ago when they ‘took us’ down the primrose path to the present disastrous fall in real property values..

    The first factor involves the greed of both the buyers, the sellers and most importantly the loan ‘officers’ or, as they are presently called, ‘loan agents’. Buyers were in many cases greedy in their approach when, in the belief that the rapid run up in values would continue indefinitely, their delusions resulted not in valid thought but toward fantasies of easily grasping large sums of unearned wealth. All they thought they had to do was hold the property for two or three years and then sell, taking the profit, to acquire something more modest but becoming to their position on the scales of life.. Did that same attitude of the public not lead to the great depression after the stock market crash of 1929? Did we use property title deeds as substitute for stock certificates? Were home equity loans or refinance transactions employed in the same manner as ‘borrowing on stock margins‘?

    Then too, Loan ‘agents’ in many cases, were behaving without scruples when they wrote loan agreements which would not have been acceptable just a few years prior to the ‘bust’. Even their bank employers closed their eyes. What do you think of the idea that loan officers work on a ‘commission basis’? Is it difficult to understand that an employee should not be permitted to stand at the front door and hand out money, then be paid on a commission basis? A.P Gianninni forbade the practice when the State Banking Authorities asked him to ‘take over’ and absorb the business of banks which were failing in the 1920’s.

    The second factor, and this too is a major problem, occurs when the banks ignore principles of the market place when dealing with any ’factors in the production of wealth’ but especially when dealing with big ticket items, as with Real Estate. Many good citizens had been relying too heavily on the equity in their homes to meet their future retirement needs. Value is created when a home is priced at a level, in keeping with good sense, but only while money is also available at a balanced price, to assist in the purchase. If supply of purchase money is not available or if there is an over supply of the desired product, value declines.

    What is happening at this moment in time is that value is declining because banks are not lending due to lack of ready cash. They then shoot themselves (and the general public) in the foot by ‘dumping’ the foreclosures at prices below the level of the mortgage amount as determined in the original purchase. Why? Non availability of purchase money is the wrong moment in time to sell a foreclosure! Nothing is more self defeating than what is known as a ‘short sale’. A ‘short sale’ occurs when an item is sold at a price less than the amount owed on the home. Is there an ulterior motive?

    Why did they not hold the property off the market and rent it out in the fashion practiced by A.P. Gianninni during the recession of early 1920’s ? We see in his experience a proper approach with those banks which he took possession of, (at the behest of the State Banking Controller,) where agricultural land had previously been foreclosed by the banks, prior to his controlling acts of ‘rescue’! Had he held ‘quick sales’ of that land, as many urged him to do, he knew that the value of similar land, held as collateral by competing banks, would decline and thus induce additional foreclosures involving long term successful growers who had continued business with those profitable markets for product which existed prior to WW I.

    Threat of foreclosure and immediate re-sale would induce other bank failures if successful farmers were forced to use working capital to pay down loans whose sums in the loan to value ratio requirements, threatened foreclosure. When Bank of America became a National Bank thus coming under Federal rather than State supervisory authority, he resisted the new instruction to ‘dump’ the land and in that act saved competing banks from the losses which might have incurred with unnecessary foreclosure. He well knew the concept of supply and demand that Federal Authority had momentarily forgotten.

    So here is what I believe prompted the idea to dispose of foreclosures at any price, even if the price was below the mortgage amount. Almost as fast as they were written and recorded, the involved loans had been sold to Fannie Mae or Freddy Mac or had been insured by Private Mortgage Insurance. The banks were motivated to avoid direct loss, thus leading to a violation of the law of supply and demand, preferring instead the law of the jungle. Fannie Mae etc. were the ultimate victims of those poor loan practices when they relied upon what they thought were reputable sellers. Fannie Mae had sold ‘stock’ and those stock holders were also victimized. Now, Joe the plumber will also aid in that rescue!

    Instead of holding the properties off the market and renting them out at rental market prices, they were left unoccupied and in some cases subject to vandalism. There were many banks which let us down and in that process shot themselves, as well as the general public, in the foot.

    Here in Hayward, ramifications of the problem grows heavy when we realize that reduced prices justify reduction in County Assessor valuations of our many involved residential premises. That being the case within the Hayward Unified School District, how then will the assessed values, (upon which the recently issued bonds are dependent for repayment,) remain sufficient to repay the bond indebtedness for the first five new schools?

    My suggestion is that the five new schools ought be less elaborate than I suspect is the present desire or promise to voters who supported the recent School Bond election. Perhaps they ought be built using the example employed at Stonebrae School where a modular building concept was employed.

    The minute HUSD hired and signed contracts with a different architectural firm, for each site, I knew we were not going to be able to use the modular concept. That idea is compounded by the fact HUSD Administration has created a separate ‘citizens committee’ at each of the five sites presently scheduled for construction,. Those citizen committees are neighbors of each separate site in the separate school service areas. Those folks are almost sure to want something equal to the amenity found at Burbank School whose cost could not be supported by the bond assessment income now subject to major reduction. Vulgar as it may seem, it reminds me of the scene where, after the first snow storm of the year, little boys are observed engaged in a ‘pee’ contest.

    I fear that unless an immediate change to a cost saving modular construction concept occurs, the second, third and fourth bond elections are in jeopardy and the Hayward Unified School District will become even more tragic than at present!

    My suggestion is that, we the electorate, flood mail boxes of state and national elected officials and demand that re-sales by mortgage holders be held in abeyance and rented out. When recovery comes about, no more than 5 % of those held off the market should be released in any calendar year. In other words, create a little scarcity balanced to the purchasing power of the average Joe Citizen. The theme of your letter should be to let the banks take a number and wait until they have authority to release their holdings on a regulated scale. Do not employ ‘form letters‘, they are not too effective!..

    Then having written that letter, write another to individual HUSD Trustees, (not the Administration,) and urge them to take control and ‘reign in’ an un-thoughtful administration!
    .

    What qualifies me to make a comment on this subject?

    Prior to retirement at the beginning of 1991, I spent the last 30 years of a 40 year banking career, toiling as a real estate appraiser. Beginning with Bank of America and concluding with Security Pacific Bank. Between banks I worked either independently or at two Savings and Loan Associations but managed an escape to Security Pacific Bank, prior to the calamitous Savings and Loan fiasco. I have experienced both good and poor bank management practices.

    Real Estate values took some heavy hits in this state even before the Depression of the 1930‘s. There was a ‘recession’ occurring shortly after the first world war, which was instrumental in aiding the education of a particular banker of the day. Shortly after WW I, he learned and subsequently taught something about the advantage of ‘holding the bag of woe’ as land values, in California’s agricultural areas, threatened to slump severely when food sales, in the form of dried fruit shipments to Europe, were no longer available to growers in San Joaquin Valley,

    In the current situation, had regulatory leadership followed the exemplary experience of A.P. Gianninni, the founder of Bank of America, whose loan foreclosure practices in the early 1920’s continued through the period of the 1932 “Bank Holiday” and long afterwards, we would not presently be faced with the continuing disaster seen in California, as well as in the whole country. It is important to note here that Gianninni was induced into assuming control of several distressed banks by the then Superintendent of Banks in California. Some had already done most of the foreclosure actions which caused the takeover.

    Real property value estimates are easy when ‘comparable sales’ are readily available as they almost always are when the economy is on the rise. Two appalling aspects of human nature arrived on the scene a few years ago when they ‘took us’ down the primrose path to the present disastrous fall in real property values..

    The first factor involves the greed of both the buyers, the sellers and most importantly the loan ‘officers’ or, as they are presently called, ‘loan agents’. Buyers were in many cases greedy in their approach when, in the belief that the rapid run up in values would continue indefinitely, their delusions resulted not in valid thought but toward fantasies of easily grasping large sums of unearned wealth. All they thought they had to do was hold the property for two or three years and then sell, taking the profit, to acquire something more modest but becoming to their position on the scales of life.. Did that same attitude of the public not lead to the great depression after the stock market crash of 1929? Did we use property title deeds as substitute for stock certificates? Were home equity loans or refinance transactions employed in the same manner as ‘borrowing on stock margins‘?

    Then too, Loan ‘agents’ in many cases, were behaving without scruples when they wrote loan agreements which would not have been acceptable just a few years prior to the ‘bust’. Even their bank employers closed their eyes. What do you think of the idea that loan officers work on a ‘commission basis’? Is it difficult to understand that an employee should not be permitted to stand at the front door and hand out money, then be paid on a commission basis? A.P Gianninni forbade the practice when the State Banking Authorities asked him to ‘take over’ and absorb the business of banks which were failing in the 1920’s.

    The second factor, and this too is a major problem, occurs when the banks ignore principles of the market place when dealing with any ’factors in the production of wealth’ but especially when dealing with big ticket items, as with Real Estate. Many good citizens had been relying too heavily on the equity in their homes to meet their future retirement needs. Value is created when a home is priced at a level, in keeping with good sense, but only while money is also available at a balanced price, to assist in the purchase. If supply of purchase money is not available or if there is an over supply of the desired product, value declines.

    What is happening at this moment in time is that value is declining because banks are not lending due to lack of ready cash. They then shoot themselves (and the general public) in the foot by ‘dumping’ the foreclosures at prices below the level of the mortgage amount as determined in the original purchase. Why? Non availability of purchase money is the wrong moment in time to sell a foreclosure! Nothing is more self defeating than what is known as a ‘short sale’. A ‘short sale’ occurs when an item is sold at a price less than the amount owed on the home. Is there an ulterior motive?

    Why did they not hold the property off the market and rent it out in the fashion practiced by A.P. Gianninni during the recession of early 1920’s ? We see in his experience a proper approach with those banks which he took possession of, (at the behest of the State Banking Controller,) where agricultural land had previously been foreclosed by the banks, prior to his controlling acts of ‘rescue’! Had he held ‘quick sales’ of that land, as many urged him to do, he knew that the value of similar land, held as collateral by competing banks, would decline and thus induce additional foreclosures involving long term successful growers who had continued business with those profitable markets for product which existed prior to WW I.

    Threat of foreclosure and immediate re-sale would induce other bank failures if successful farmers were forced to use working capital to pay down loans whose sums in the loan to value ratio requirements, threatened foreclosure. When Bank of America became a National Bank thus coming under Federal rather than State supervisory authority, he resisted the new instruction to ‘dump’ the land and in that act saved competing banks from the losses which might have incurred with unnecessary foreclosure. He well knew the concept of supply and demand that Federal Authority had momentarily forgotten.

    So here is what I believe prompted the idea to dispose of foreclosures at any price, even if the price was below the mortgage amount. Almost as fast as they were written and recorded, the involved loans had been sold to Fannie Mae or Freddy Mac or had been insured by Private Mortgage Insurance. The banks were motivated to avoid direct loss, thus leading to a violation of the law of supply and demand, preferring instead the law of the jungle. Fannie Mae etc. were the ultimate victims of those poor loan practices when they relied upon what they thought were reputable sellers. Fannie Mae had sold ‘stock’ and those stock holders were also victimized. Now, Joe the plumber will also aid in that rescue!

    Instead of holding the properties off the market and renting them out at rental market prices, they were left unoccupied and in some cases subject to vandalism. There were many banks which let us down and in that process shot themselves, as well as the general public, in the foot.

    Here in Hayward, ramifications of the problem grows heavy when we realize that reduced prices justify reduction in County Assessor valuations of our many involved residential premises. That being the case within the Hayward Unified School District, how then will the assessed values, (upon which the recently issued bonds are dependent for repayment,) remain sufficient to repay the bond indebtedness for the first five new schools?

    My suggestion is that the five new schools ought be less elaborate than I suspect is the present desire or promise to voters who supported the recent School Bond election. Perhaps they ought be built using the example employed at Stonebrae School where a modular building concept was employed.

    The minute HUSD hired and signed contracts with a different architectural firm, for each site, I knew we were not going to be able to use the modular concept. That idea is compounded by the fact HUSD Administration has created a separate ‘citizens committee’ at each of the five sites presently scheduled for construction,. Those citizen committees are neighbors of each separate site in the separate school service areas. Those folks are almost sure to want something equal to the amenity found at Burbank School whose cost could not be supported by the bond assessment income now subject to major reduction. Vulgar as it may seem, it reminds me of the scene where, after the first snow storm of the year, little boys are observed engaged in a ‘pee’ contest.

    I fear that unless an immediate change to a cost saving modular construction concept occurs, the second, third and fourth bond elections are in jeopardy and the Hayward Unified School District will become even more tragic than at present!

    My suggestion is that, we the electorate, flood mail boxes of state and national elected officials and demand that re-sales by mortgage holders be held in abeyance and rented out. When recovery comes about, no more than 5 % of those held off the market should be released in any calendar year. In other words, create a little scarcity balanced to the purchasing power of the average Joe Citizen. The theme of your letter should be to let the banks take a number and wait until they have authority to release their holdings on a regulated scale. Do not employ ‘form letters‘, they are not too effective!..

    Then having written that letter, write another to individual HUSD Trustees, (not the Administration,) and urge them to take control and ‘reign in’ an un-thoughtful administration!
    .

  • J. W. Kyle

    Well gang, I followed some good advice but in my dotterage,( I am now 78 ) SO THE ‘PASTE JOB’ APPEAARED NOT ONCE BUT TWICE ! GOD HELP US FROM NEW FANGLED STUFF WHEN WE PASS 75!

    COMPLAIN TO THE EDITOR…. MAYBE SHE CAN BACK OUT THE SECOND COPY!

  • Kim Santos

    As I’ve stated before, I am unable to edit comments. The program does not allow it.

  • Hayward339

    Another part of the problem is that the City of Hayward is just dead-set against building anything taller than 80 feet! A project that is backed by Joe Montana is being stalled because our Mayor wants to hold neighborhood meetings to discuss the height issue citing complaints from those that aren’t even impacted by the development. He has been no-growth even from his first term and that has severely hampered Hayward’s growth – even when the development is for a transit center that would benefit a huge number of us. No other city in the East Bay has this restriction so, guess where those business go. So sad…

  • J. W. Kyle

    Hayward 339 ought consider the fact that 80′ height is a bit taller than any residential projects seen in Hayward. The advantage of such height is that you can ‘pack in’ more uits per acre of land; unless you want glass/concrete canyons of tall buildings from one end of the street to the next’ you must consider an appropriate amount of open space,. presumably at gtound level, so that the mass of hunmaity contained in 6-8 story buildings, will have an area set aside to get out into the sunlight.

    Given the scarcity of money abailabl;e for housing I hardly think Joe Montana is in a positiohn to hurry his project…. let Mayor Sweenry have time to review the matter and see if something is more appropriate for that area near South Hayward Bart Station.

    When consideriong high density housiong for use by the folks fitting Hayward’s dempgraphic profile, do not be in a big hurry lest you wind up with something similar to what happened in the area just a bit northeasterly of the Cow Palace in San Francisco. It became a vertical slum when young kids who had no real, well supervised place to play, turned to use of the elevators as a toy and the elderly living at the top had much difficulty ‘when the toy got broke’…. then, not having use of the elevator, started air mailing their garbage at night as an alternatice to stairs and/or when denied use of the trash chutes which, as an additional amusement, where deliberately jammmed with broken bycycle parts; much amusement for kids who exhibted early prpensity for ‘builduing dams’ ( as indication of potential for engineering skills? )

    Both of the Geneva Towers were subsequently torn down when both were less than 30 years old. Direct Cause ?…. No commonly accepted, usable open space!