The Housing Chronicles Blog: The Countrywide impact on Ventura County

Saturday, January 12, 2008

The Countrywide impact on Ventura County

A few months ago, while producing a market study for a master-planned community in northern Ventura County, it became apparent that two companies -- Amgen and Countrywide -- were responsible for a huge portion of new home sales in Simi Valley, Thousand Oaks, Calabasas and surrounding areas. In fact, buyers' agents working for the two companies would only show prospective buyer certain areas with the best schools, and streets were filled with employees that made neighborhoods modern-day versions of a 'company town.' It was certainly great while it lasted!

But with Amgen laying off up to 2,600 workers last year and now the BofA-Countrywide deal likely to result in layoffs to achieve promised savings, it could put more pressure on prices for move-up homes in the county. According to today's L.A. Times, the impact could be considerable:

The troubled mortgage lender is a major presence in the business and residential corridor that straddles Los Angeles and Ventura counties on both sides of the 101 Freeway. More than 600 people work at the headquarters complex in Calabasas, with about 4,500 more a few miles to the northwest in Simi Valley.

Thousands more work at sites scattered from the west San Fernando Valley to Thousand Oaks, as well as in offices throughout Southern California.

How many of those jobs will be jettisoned by Bank of America Corp., the North Carolina-based financial giant that has agreed to buy Countrywide for $4.1 billion, is unclear. But when one corporation buys another, it generally expects cost savings, and that usually translates into job cuts...

In September, Countrywide said it would cut as many as 12,000 jobs as the downturn in the housing market and chaos in the home-lending business devastated the firm's finances...

Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., predicted that "a lot of the headquarters staff will disappear." He expects the firm's nerve center, a low-slung, Mediterranean-style building perched on a hillside, to be on the market within the year.

That would affect not only Countrywide workers who are laid off or transferred but also the various companies that do business with Countrywide, including law firms, print shops and janitorial outfits, Kyser said.

The fallout from that could further weaken the area's wobbly real estate markets, said Delores Conway, director of USC's Casden Real Estate Economics Forecast. She noted that earlier layoffs at mortgage firms in Orange County dinged home prices there. Commercial real estate in the Calabasas area also would suffer, Conway said.

"Countrywide has already had some layoffs, and you will see it reflected in the office market," she said.

The outcome could be better in Simi Valley, Kyser said, especially if Bank of America opts to expand Countrywide's mortgage servicing and origination operations. Countrywide's nationwide servicing arm -- which handles bill collection, foreclosures and workouts with troubled borrowers -- grew from 8,059 employees to 8,854 from July through September last year as the firm shifted its emphasis from making loans to servicing them.

"Sooner or later the housing market will recover, and Bank of America will be in a position to really generate a lot of business for themselves with this acquisition," Kyser said. "The mortgage servicing operations will stay, and could actually get bigger."

In the long run, "it could be Simi Valley's gain."

Let's hope so.

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