Prices of Repo Houses Down in Vallejo, California
Prices of repo houses in the Northern California city of Vallejo have been falling because of the continued effects of the recession, according to a study by the Business Forecasting Center and another study by a group of real estate analysts.
The prices of repo houses and other existing houses have depreciated to $157,546 in June this year, a drop of 0.12 percent from May 2009.
In the last 12 months, home prices have declined by nearly 20 percent. With nearly 39,000 households in the city, a total of 3,053 units have become repo houses ready for sale.
According to university researchers, Vallejo was the first city in Northern California to get clobbered by a wave of repo houses and the resulting recession. They also predicted that Vallejo will start to recover only after several years.
The study also reported that economic recovery will be slow in the counties of Merced and Sacramento and that the fastest metro areas to recover are San Jose and San Francisco.
The researchers pointed to employment as the major block to recovery. They said that Vallejo’s employment level was the first among Northern California cities to peak in 2006, but slowly declined in the later months of 2006.
Nevertheless, Vallejo is surviving because of its strong retail sector, according to the researchers. While the retail industry got battered in many areas of the country, retail activity in Vallejo did not decline as significantly as in other cities.
Jeff Michael, director of the business forecasting center, said the recession will ultimately push job losses beyond 1 million this fall, when the recession is expected by many economists to end.
Because of California’s budget deficit, more government workers are expected to get laid off in the coming months, pushing the number of the unemployed higher. Cutbacks in public-sector employment typically follow a slowdown in private sector economic activities.
The university researchers predicted that the unemployment rate will reach its highest level at over 12 percent in the first months of 2010 and remain higher than 10 percent for at least one more year.
San Francisco was not immediately affected by the nationwide recession, according to the researchers, so they expect the city to survive the recession and avoid a double-digit unemployment rate.
In a list of the 25 metro areas with the highest foreclosure rate in the first quarter of this year, Vallejo was eighth in the list together with Fairfield because of their relatively large numbers of repo houses. San Francisco, meanwhile, was not in the list.
