It is early afternoon in the high desert between Los Angeles and Las Vegas and Steven Mazzei is watering his plants, sustaining them in their battle against the harsh sun, hot wind and bone-dry dirt that extends for miles around.
When he is not looking after the plants, Mazzei tends to a trio of residential properties in the area. He had hoped to sell one — a two-bedroom, two-bathroom home — this year, but the market is still well short of the highs it reached just over a decade ago and he is considering renting it out instead.
“The prices are just not there for me,” says Mazzei. “But then I guess that’s the way it is everywhere.”
In fact, it is not: 10 years after the collapse of Lehman Brothers and the devastating financial crash that followed, most housing markets in the US have either recovered to their pre-crisis levels or surpassed them.
According to Zillow, the property website, in June 2017 the median price of a home in the US returned to its pre-crisis peak, restoring an estimated $9tn in value that the crash wiped from the US residential housing market. The median home is now worth 9.8 per cent more than it was at the height of the housing bubble in 2006.
But Victorville, one of a handful of sprawling, low-rise cities in the arid, lands that stretch north-east from LA into the Mojave desert, stands as a stark reminder that there are communities across the US that have yet to see a full recovery in house prices. “The national figures are back but they hide a more complicated picture,” says Aaron Terrazas, senior economist at Zillow. “During the crisis, everything moved in sync but now we have reverted to a more traditional US housing market with different regions, and there are quite a few that still bear the scars.”
In the early 2000s, as the US economy shifted into top gear, Victorville and other cities in the high desert offered Angelenos the prospect of owning a spacious home — and being able to pay for it all with a couple of blue-collar jobs.
Developers swept across desert tracts, throwing up generous homes for families who couldn’t afford LA itself. Some found jobs locally. Many others felt that the two-hour commute each way was a small price to pay for a piece of the American dream.
Jennifer Caracciolo, a local property broker, was making a tidy living off the boom, bringing in more than $150,000 a year in sales commissions. Then, almost overnight, the bottom fell out.
“Thousands of people in this area lost their homes,” she recalls. “I was staying up all night trying to figure out a way I could survive.” She applied for jobs at local Walmart and Target stores, both of which then closed down. She lost her own home before finding work with the banks, preparing foreclosures for sale.
One owner who defaulted on his home smashed all the tiles and removed the doors from the custom kitchen cabinets, to make it harder for the bank to sell the property. Another time, Caracciolo had to tell a woman with her young son that they had to give up their home. “The little boy was crying, ‘mummy, tell her not to take my house’ . . . those are the memories that haunt you,” she says.
Eric Hunley, a property broker and Caracciolo’s business partner, says that house prices in the Victor Valley, which includes cities such as Hesperia, Victorville and Adelanto, fell as much as 65 per cent in the crash — and are still between 20 per cent and 30 per cent off their peak. “It was brutal,” he says.
A lack of land and the difficulty of obtaining construction permits help to limit supply in cities such as LA, which cushions prices in a downturn and helps boost them in a growing economy, says Paul Habibi, professor at the UCLA Ziman Center for Real Estate. But there are fewer such constraints in places such as Victorville. “There is generally a lot of available land and a much easier entitlements climate,” he explains. “That means you have a lot less friction on the way down — and less momentum on the way up.”
Some of Victorville’s residents have benefited from the financial storm that ripped through the city a decade ago. Sharon — who did not want to use her surname — bought her five-bedroom property on Bow String St for $160,000 in 2009; in 2005, before it was even completed, it had sold for $425,000.
According to Zillow, Sharon’s former two-storey home is now worth $345,000. Around Victorville, prices have rallied from less than $50 per square foot in 2010 to around $150 today, according to closing prices for the area. New businesses have opened, and the city even boasts a new Cracker Barrel, the restaurant-cum-gift-shop chain.
But for others, the scars remain. Joseph Duardo, a 19-year-old co-owner of a family business that makes speaker cabinets, still dreams of the day he and his family can own their own home again. They were forced to live with relatives when they lost theirs during the crash. Then the relatives lost theirs, too, and so did Duardo’s older brother.
Now renting, Duardo says that his dream is still some way off. “The family business is doing better, and we’ve been looking at buying again,” he says. “But when you’ve lost a home, it’s hard to get your credit score back.”
- Victorville is about two hours’ drive from Los Angeles, and three hours from Las Vegas. Phoenix, Arizona, is five hours away
- Annual property taxes in California are limited to 1 per cent of a property’s assessed value
- Buyers are advised to budget around 1.25 per cent per year to include other local taxes
What you can buy for . . .
$325,000 A four-bedroom, three-bathroom single-storey home on one acre of land
$775,000 A 6,400 square-foot home with six bedrooms and a four-car garage
$1.4m A five-bedroom house on 7.5 acres
More homes at propertylistings.ft.com