Even in Storied Napa Wine Country, Foreclosure Crisis Hits Home

By: Evelyn Nieves AP
By: Evelyn Nieves AP

NAPA, Calif. (AP) - For many residents of this, one of the most storied valleys in the world, life is still a bowl of grapes. But beyond the picturesque vineyards and stonewalled estates, times are shaky, the future unclear.

Tourists sipping their way up the 30-mile valley from the city of Napa to Calistoga may never see this other Napa Valley. But this celebrated wine country is proof that there are few places in the nation left unsmacked by the housing crisis. Beautiful Napa is experiencing foreclosures, plunging housing prices, unheard of drops in home sales and the nervous sense of foreboding that has spread across the country like a flu.

"I don't recall anything like this, and the end is not in sight," said John Tuteur, the Napa County assessor-recorder-county clerk, who has witnessed several recessions in the three decades he has served the county.

In the nine county San Francisco Bay area, where home sales tumbled in January to their lowest levels in 20 years, Napa County suffered the sharpest drop of all - more than 55 percent from a year earlier, according to Dataquick Information Systems, a real estate research firm. In the same period, houses at any stage of foreclosure jumped by 152.9 percent.

What has happened in Napa mirrors what has happened all over, said Andrew LePage, an analyst at DataQuick. For prospective first-time home buyers, houses sprang up to accommodate their desire to own, LePage said, and mortgage brokers found ways to secure the buyers' loans. "It's the same story playing out everywhere."

Not that little Napa County (population 134,000), which has some of California's highest home values, is ready for bankruptcy. For now, the wine towns of Calistoga, Yountville, St. Helena and Rutherford, where starter homes start at over $1 million, remain relatively unscathed; the worry in those towns is that the broader economic downturn will depress tourism.

But the city of Napa, which is both the county seat and the largest population center with 75,0000 residents, and its lesser-known neighbor, American Canyon, are where Napa's working people live, and they are bearing the brunt of the housing crash, not to mention its collateral damage.

American Canyon, known for the visitors center that is the usual first stop on the Route 29 wine trail, is a new town. It incorporated in 1992 and grew from 6,000 people in 1999 to over 14,000 residents in 2007. But excitement over fast-sprouting single-family-home developments has given way to concern over unsold houses and languishing businesses.

"Everybody knows somebody whose house is in trouble," said Larry Kudrna, a 40-year resident of American Canyon and former president of the city's chamber of commerce. He has owned his business, Larry's Truck Toppers, which outfits pickup trucks with roofs and other amenities, for 30 years and has never experienced a worse slump in sales.

"Something has affected my business," Kudrna said. "It makes me think that maybe I'm doing something wrong."

Houses in new developments are already for sale - either because of foreclosure or because the owners are threatened with it - even as developers are still building the rest of the planned sites.

Richard Ramirez, the city manager, said American Canyon is looking on the bright side. "Obviously," he said, "any community that had a very large spurt in housing starts between 2001 and 2006 would have a disproportionate amount of stress in this environment."

Perhaps the best bellwether of the times is the city of Napa, which has spent the last seven or so years playing catch up with Yountville, St. Helena and its other illustrious neighbors. Within seven years, median housing prices in Napa rose 99 percent, to $550,000 last June ($532,500 now), according to DataQuick. But the people who flocked to the city seeking refuge from the million-dollar houses in San Francisco, Marin and other parts of Napa County are now seeing the same flurry of "for sale" signs that are hitting so many other once-booming cities across the country. Downtown Napa is still a maze of construction as
developers proceed apace with plans for more than $300 million in new stores, offices and condominiums. But tourists, at least during the off-season, are few and far between and Main Street has a forlorn, empty feel.

Mary Rocca and her husband, who own two vineyards on the outskirts of town, opened a tasting room on Main Street two and a half years ago. It is too soon to tell whether the national recession will mean fewer tourists coming to buy Napa wines, county leaders said, although reports from luxury retailers like Tiffany's indicate that people are spending less. But Rocca said she is not worried about Napa's promise dissolving in the slow economy.

Even if they have to wait a few years for the economy to recover, she said, she is not concerned.

"I think people will still want their wine," she said. "At least, I hope so."

(Copyright 2008 by The Associated Press. All Rights Reserved.)


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