Stockton foreclosures became a symbol of what went wrong with the U.S. housing sector particularly for the first months of the housing meltdown, but over the past several months, foreclosed homes in the area have become opportunities for investors and for Bay Area workers looking for homes they can afford.
During the housing boom, many houses in Stockton, which is an 80-mile drive from San Francisco, were sold for over $500,000. After the meltdown, these houses were being sold for $200,000. In several communities, fixer upper homes were being given away at less than $20,000.
During the peak of the foreclosure crisis in Stockton, one in ten homes in the city was being foreclosed. It was the most wretched city during that time, according to Forbes.
But in the last months of 2009, Stockton showed that it has been slowly recovering. Based on the Associated Press Economic Stress Index for November, San Joaquin County, where Stockton is located, has improved its stress index to 23.55, becoming fourth in a stress chart of counties with more than 25,000 residents.
Currently, there are still about 3,000 Stockton foreclosures for sale, according to a foreclosure research firm, and around two-thirds of residents with mortgages are underwater. But local officials are now more optimistic. The pace of foreclosures has slowed and the city has received $12.1 million in housing aid from the federal government under the Neighborhood Stabilization Program.
The city has allocated $7.2 million to acquire foreclosed properties for sale, rehabilitate them and resell them to families who could not own homes without assistance. City officials estimate they can acquire and repair 150 foreclosed homes during the four-year term of the program. They have purchased 39 houses, with 25 units already fully repaired, six unit resold and nine units in escrow.
Residents of Stockton commute 46 miles on average each way, but those who have purchased their homes at affordable prices after the foreclosure crisis do not mind because they now live in homes they could have not afforded if the housing meltdown did not push down prices to affordable levels.
Speculators still abound in the area, but there are now more flippers who buy foreclosed properties in cash and therefore are more committed to their investments. They repair and renovate their acquisitions, helping neighborhoods prevent blight.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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