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| Patterson businesses mired in housing mess |
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| Written by Jonathan Partridge / Patterson Irrigator | |
| Saturday, 24 November 2007 | |
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Moe Messaoud can sum up the impact of the local housing market on his furniture business in one word: disaster. The owner of Venetian Furniture at West Las Palmas and Ward avenues said business has dropped since the beginning of the year and shows no signs of picking up anytime soon. “Like the air for the human is the furniture for the housing market,” Messaoud said. The local furniture store is one of many local businesses that have been hit hard by the housing market crunch. As many people’s mortgage rates adjust upward, causing them to have an increasingly tough time making their monthly housing payments, fewer people are spending money on “luxuries” such as new furniture and nights out on the town. Meanwhile, the real estate market and industries related to housing are also taking a hit. In the words of Heidi Vento of Re/Max Executive in Patterson: “The real estate market affects everything.” Housing headaches Those who question the dire nature of the housing market these days need only take a drive through some of Patterson’s newer housing developments to see its effects. Dead lawns and overgrown brush on many streets mark homes that were vacated after properties were foreclosed or neglected by investor-owners. The San Joaquin Valley has been ground zero for the national mortgage crisis.  From left, Valadez Jewelers manager Maria Ramirez and employee Karla Iniguez help Newman resident Matt Torrez look for jewelry. Valadez Jewelers is on of many businesses in tow nthat has taken a hit since the foreclosure crunch. Photo by Jonathan Partridge / Patterson Irrigator A report from RealtyTrac indicated the Stockton metropolitan area had the highest foreclosure rate in the U.S. between July and September, with one foreclosure being filed for every 31 households. Many local residents and out-of-town investors got into trouble after taking out risky adjustable-rate loans, gambling on the hope that property values would continue to skyrocket, as they had in the past few years. As property values decline and people’s mortgage rates adjust upward, many folks cannot make their payments and end up defaulting on loans. That already has dealt a direct blow to the local real estate industry. Heritage Plaza Mortgage and American Pacific Mortgage, for example, both closed their Patterson branches within the past year. All three title companies that had offices in Patterson also have closed their local branches. Meanwhile, Vento said, a rising number of real estate agents are either getting out of the business or working part time. Those who remain must contend with a troubled market. As of Friday morning, Mary Ann Arendsee of Realty World/Scheuber-Arendsee Properties said that 87 of the 408 listings in Patterson were bank-owned properties. Another 94 were short sales, where lenders agree to forgive part of a loan, with certain conditions, to prevent a default.  Photo by Elias Funez / Patterson Irrigator Indirect hit After the housing market took a hit, it was not long before home improvement-related businesses were hurting, too. Joe Freitas, manager of Yancey Lumber, said sales started dropping about five months ago, particularly on construction supplies such as lumber and paint. “There’s a whole lot of nothing going on right now,” Freitas said. Louie Barletta, manager at Bennett’s Hardware on South Second Street, said the store has had fewer sales of garden hoses and other home improvement-related items this year, but the store’s agricultural customer base has kept sales relatively strong, he said. Patterson’s two furniture stores both have suffered a major slowdown in sales since the beginning of the year, their owners say. “It’s really bad,” said Abraham Bayoudh, co-owner of Tigers Furniture and Home Décor on South Del Puerto Avenue. Bayoudh and Messaoud of Venetian Furniture noted that furniture stores are struggling everywhere in the area. Messaoud said he personally knew of 10 stores that had closed in the past six months. These days, he said people only come in to shop at his store when they need something, not to fulfill desires. “Furniture is just a luxury,” he said. “It’s not a necessity.” Luxuries ignored Coffee houses and restaurants also find themselves casualties of the crippled “luxury” markets. Next door to Venetian Furniture, Las Palmas Grill has taken a big hit as a result of the housing market, employee Ana Yepez said. “It’s been terrible,” she said. “It’s affecting everything, I guess.” Nearby China Star Eatery has also seen a major drop in sales during the past five months, owner Boreth Khun said. Thomas Gheen, co-owner of Signature Espresso on North El Circulo, said his business has dropped by half from a year ago. People who used to buy coffee every day are now only coming in once a week, he said. He said he has talked to people at other businesses, ranging from restaurants to cell phone retailers, who also have seen a slowdown in sales. “(People’s) priorities have changed this year,” Gheen said. “The whole town is feeling the crunch.” Rick and Leticia Barron, owners of Blues Café and Blue Floral Co., described a less noticeable decrease in foot traffic in the two businesses. Rick Barron said not as many construction workers are patronizing the café as in the past, and sales have slowed. In addition to the housing market, he said high gas prices and the economy in general have likely played a role in the drop in demand. However, when it comes to the floral business, some things never change, he said. “People are still in love, so they’re coming here,” Rick Barron said with a smile. Valadez Jewelers owner Enrique Valadez said sales have dropped about 20 percent from a year ago. Still, he said he expects a typically busy Christmas season. He cited news reports that lines were no shorter than usual on the busiest shopping day of the year Friday at department stores nationwide. Future uncertain Despite the challenging economy, Shawn Kantor, professor of economics at University of California, Merced, said it is too early to start calling it a recession. Gross domestic product is still growing at a healthy pace, he said, and unemployment is only 4.7 percent nationwide. However, the economy could move into a recession if there is a loss of consumer confidence, Kantor said. As for what will happen with the local housing market, Kantor said it is hard to say. He does not put much stock in people’s predictions about when things will change. “I just think it’s pure guessing,” he said. Still, Arendsee said the number of “bad loans” that are still out leads her to believe things will not change any time soon. “I think we’ll start seeing things level off by this time next year,” she said. Vento said she believes that lower prices coupled with lower interest rates will lead to a stronger market next year, though still not normal. One thing everyone in the real estate industry seems to agree on is that it is a “buyers’ market.” And many folks are trying to maintain an optimistic outlook, saying things could be worse. “The real estate agents in town — we’re still eating, I think,” Vento said with a laugh. To reach Jonathan Partridge at the Irrigator, call 892-6187 or e-mail him at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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