MERCED, CALIF — .
It wasn't long ago that Andy Krotik was selling houses to out-of-town investors who would sometimes buy two at a time.
Now, Krotik spends his days warily entering abandoned houses, checking for angry holdouts or startled squatters. He wants to make sure the properties are empty and secure so he can sell them for the banks that have repossessed them.
"We're experiencing a tsunami of bank-owned properties," said Krotik, who has been selling real estate in this Central Valley town since 1989.
Few places in California flew as high in the real estate boom and crashed as hard as Merced.
Three years ago, home values were rising at 30% a year or better, making it one of the hottest markets in the state. Now it has one of California's highest foreclosure rates.
In the hardest-hit part of town, there were 112 foreclosures in the first three months of 2008, up from 19 in the same period a year earlier, according to DataQuick Information Systems.
Along with the pain felt by individuals losing their homes, foreclosures have reversed this community's fortunes.
Houses vacated by their insolvent owners have become damaged eyesores on many blocks. Businesses such as plant nurseries and paint stores have seen sales plummet as construction and remodeling work has stalled. The local association of real estate agents has seen its membership drop to 650 from more than 1,000 two years ago.
"It definitely has affected every business around," said Dan Perry, a salesman at Kerr Rug, who added that the store's business was off about 30% from two years ago.
Merced officials say they'll need to cut spending by 5%, forcing them to leave 20 open positions vacant.
"The whole foreclosure problem and the economy is our major concern now," city spokesman Mike Conway said. "Some people are torn between spending their money driving to work in Silicon Valley or on the house payment."
Faced with that choice, he said, the job will come first. "If they don't have the job, they won't be able to make the house payment anyway."
Mark Torrence, owner of Merced Pools, had 15 employees a couple of years ago. The company had plenty of work, installing three or four pools a month. Not only was there a steady stream of new houses, but many existing homeowners also took advantage of their rising equity to install pools.
Today, the business has just Torrence and two other workers. And forget about building pools; these days, all they do is clean and service them.
