Their property market has fallen prey to the subprime mortgage crisis.
Soledad is touted as one of the fastest growing cities in California. The city is popular for its agricultural land that is good for growing greens. In fact, the Dole Food Company operates one of its plants in the area. Most people are proud of the place’s wineries the most popular of which are the Smith & Hook Winery and Estacia Estates that provide a good number of jobs to its Hispanic residents. These wineries are the main drivers to tourism growth where visitors enjoy wine tasting opportunities even on weekdays.
Properties. The local government has successfully launched the Housing to Jobs Housing Balance program that balanced job creation in housing starts in 2001. However, the current crisis has hit the city’s real estate activity severely. Data reveal that beginning 2007, housing values started to fall from its healthier days in the prior years. From more than $550,000 in the last quarter of 2006, it fell down to $225,000 in a matter of only two years. As Prashant Gopal quotes Gloria Ledesma, a broker in Soledad:
Soledad… experienced explosive growth during the boom. Four different builders had projects under way, each with long buyer waiting lists, seven real estate offices were open to accommodate frenzied buyers, mortgage fraud was rampant, and people stretched to purchase properties they couldn’t afford… It crashed hard. Only three real estate agencies survived, she said. And most of the homes that are selling are bank-owned properties or so-called short-sales in which lenders agree to accept less than the balance of the mortgage.
It is in fact, noticeable that the city has unfinished structures that stand barren on the ground. Like most cities caught in the subprime mortgage mess, the lending atmosphere has turned unfavorable to homeowners. More banks have tightened their credit and credit was very limited only to worthy borrowers who are most likely to belong to the high-income bracket.
Solution. One program that was launched by the California Housing Finance Agency is the Complete First Time Home Buyer Program. It offers down payment assistance to first-time homebuyers provided they meet certain qualifications. The problem however is that most lenders aren’t too congenial to such buyers since they are exposed to a higher risk of defaulting. Since no record of mortgage payment is available, lenders would have a hard time assessing borrower creditworthiness. It is a setback like this that may transform the city to a real estate ghost town in the coming months. Soledad is just one of the many Golden State cities that are devastated by falling home values.