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Bakersfield Foreclosures Largely Caused by Overbuilding



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By : John Cutts    99 or more times read
The record pace of Bakersfield foreclosures was largely caused by overbuilding during the boom times, according to Robert Denk, economist of the National Association of Home Builders.

A lot of builders speculated that the city’s spectacular growth would dramatically increase the demand for housing. They also thought that its 110-mile distance from Los Angeles and Fresno would further spur demand. In 2009, Bakersfield grew to become the third largest California inland city and the 11th largest city statewide.

But their hopes were dashed because they overbuilt. Inventory overwhelmed demand and caused prices to plunge. Combined with factors like adjustable rate mortgage lending and job losses, the excess supply contributed to the 12th ranking of Bakersfield in a chart of the most foreclosure-clobbered metro areas in 2009.

Buying foreclosed properties now in Bakersfield is not a difficult task as the metro area posted 19,174 foreclosure filings in 2009, based on data released by a California research firm. This number represented 7.1 percent of all households in the area and marked an increase of more than 18 percent from foreclosure actions in 2008 and a 155-percent jump from filings in 2007.

The record pace of Bakersfield foreclosures pushed prices down to levels never seen in the area. In December last year, one major broker sold an 803-square-feet property for only $25,000.

The Local Market Monitor, which releases its home price forecast every quarter for more than 300 local housing markets in the country, put Bakersfield on top of its list of cities with the worst price performance in 2010. Other California metro areas in the list were Fresno, San Jose and Stockton.

California foreclosures also surged in 2009, with more than 630,000 of its residential properties getting notices of delinquency or foreclosure. This number marked a 21-percent jump from 2008 and represented 4.8 percent of all California households.

In 2009, California was fourth among all states in foreclosure activity, the same ranking as in 2008. It also accounted for 9 of the 20 most foreclosure-battered metro areas, with the state of Florida following with eight.

Bakersfield was the sixth hardest-hit in California and 12th among 203 metro areas in the U.S. The most clobbered in California was Merced, with 10.1 percent of its households in foreclosure.

Bakersfield foreclosures will still rise in 2010, according to analysts in the area, despite the infusion of federal funds to stimulate job creation in California because of the record number of mortgage borrowers already in default.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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