Originally published January 2010
For years, lovers of mid-century modern have been living a dream. Window-walled houses, which lenders once shunned and real estate agents disparaged, were suddenly hip.
Modern homes that once sold for less than their non-modern neighbors were suddenly going for a premium, particularly those that had been well-preserved or sensitively remodeled. Encouraged by ever-rising housing values and spurred by cheap home equity loans, fans spent generously to restore original Eichler siding, replace skylights in Streng atriums, and much more.
Then, as 2007 neared its end, the real estate market shuddered. Within six months it was staggering. People who'd bought homes with sub-prime and adjustable rate mortgages felt the pain first. Soon, many who had taken on interest-only mortgages were hurting too.
By December 2007, the real estate crash had brought on a recession. Unemployment rates soon soared to higher than ten percent nationwide and in California higher than 12.
By that time, even people with conservative, fixed-rate mortgages were losing their homes as they lost their jobs. As home prices plunged, many people who'd considered themselves financially prudent found themselves owing more on their homes than they were worth.
Mid-century modern neighborhoods were far from immune. Even in such high-end neighborhoods as Eichler's Upper Lucas Valley, whose pristine homes nestled in a rural valley regularly sold for $1.3 million, disasters struck.
"Upper Lucas Valley has had the unthinkable," says Catherine Munson, a real estate broker who has been selling in the neighborhood since it was built in the mid-1960s. "We have had two foreclosures. The last foreclosure here [before that], oh, it was so long ago, I can't remember."
Many other modern neighborhoods have suffered foreclosures and short sales, homes selling for less than the owners owe on them. There have been between five and ten in the Eichler subdivision of Rancho San Miguel in Walnut Creek, according to Heidi Slocomb, a Walnut Creek broker who focuses on Eichlers, and a handful in the Eichlers of Concord.
In some neighborhoods, it was much worse. In River City Commons, a beautifully tended 30-year-old neighborhood of attached 'half-plexes' in Sacramento's neighborhood of South Natomas, homes that were going for $300,000-plus in 2006 plunged to $100,000 by mid-2009, although by the end of the year prices began firming up, with sales in the $125,000 range.
"They got hit really hard there," says Steve Streng, a Sacramento broker who focuses on modern homes. His father, Jim, and uncle, Bill, built River City. "It's a great neighborhood. All of a sudden so many of the houses hit the market, and the banks wanted to just get out from under them and sold them really cheap."
The housing type also hurt, says Michael Triglia, a broker who lives in one of Sacramento's 50-plus Eichlers. "When the market goes down the first drops are in condos, then half-plexes, then single-family homes," he says. "But River City fared better than the other half-plexes in the Natomas area because they have a good neighborhood association. The sense of community helps a lot."
Nick Correale, a 20-year resident of River City, said many of the buyers who lost big were investors who bought near the height of the market and were renting their properties out. "The long-term owners, I don't really think they've been affected," he says.
Pat Sandlin, president of the neighborhood's active homeowner association, says. "It's the newer buyers who bought at the height of the real estate boom. Their homes have devalued, and some of them have walked away from them."
"It's sad," she says.
The real estate meltdown may spell the end of the great 21st century housing bubble. But does it spell the end as well for high times for high modern?
Don't bet on it.
Modern has become firmly established in the marketplace as a style that people appreciate, says James Ebert, a Los Angeles appraiser who has worked with many buyers and sellers of well-known modern homes. "The original mid-century properties will maintain their strength, just like the classic Mediterranean and Spanish of the 1930s, and like the well-maintained Craftsman style before, have," he says.
"There will always be sustained interest in mid-century modern, in contemporary homes," Munson agrees. "It's not an anomaly."