Friday, May 11, 2007

'This Might Be As Bad As I've Seen It'

From the Sacramento Bee (hat tip Gwynster):

First it was houses. Now it's cars. Motor vehicle sales fell a resounding 7.6 percent in the United States last month, and analysts said the troubled housing market was a chief culprit. That could be worrisome for an economy already showing signs of cooling off. The sales decline was particularly bad in California and Florida, two states feeling the worst of the housing downturn. That was no coincidence.
...
First, consumers who had been tapping their home equity to buy cars during the housing boom are less apt to do so when the real estate market is soft. The shaky housing market also is having a psychological effect.

"There's consumer uncertainty. Housing is really having a big impact," said Jesse Toprak, executive director for industry analysis at the Edmunds.com car-buying Web site.

Second, building contractors are buying fewer pickups, vans and other vehicles -- a major part of the market -- for their fleets. "Suddenly your homes aren't selling -- the last thing you're going to do is go out and buy another truck," said Ron Pinelli, president of Autodata Corp., a market research firm based in New Jersey.

Beutler Corp., a big Sacramento-based heating and cooling contractor, normally buys 20 or 30 pickups and other vehicles a year. But this year, Beutler might not buy any -- not after having trimmed its payroll in half, to about 900 workers, since 2005. "You don't need new trucks for expansion," said Rick Wylie, the contracting firm's president. "We've got some trucks parked."
...
"So many car sales in California are home equity-based," [auto analyst Art] Spinella said. "Less equity, less money."
...
Geoff Pleau of Future Automotive Group, which runs a string of foreign and domestic dealerships in the Central Valley, said the health of the housing market is crucial. "We always follow what home sales are doing compared to automobile sales, and they kind of go hand in hand," Pleau said.
Also from The Bee (hat tip Cmyst):
An Auburn man pleaded guilty Thursday to defrauding a bank of more than $1 million, according to federal court records. Christopher M. Craig, 35, is in custody without bail in the Sacramento County jail awaiting sentencing July 19 before United States District Judge Morrison C. England, Jr. Craig faces 30 years in prison. Although most of the federal records in the case remain under seal, Craig admitted Thursday to promising loans to people on the verge of losing their homes to foreclosure, prosecutors said in a news release. In the process, he would provide documents that deeded away people's homes to co-defendants, who then applied for home loans from Washington Mutual Bank.
...
The bank gave Craig $1.2 million, but Craig paid back some of the loan, ultimately defrauding the bank of $974,452, prosecutors said. The homes were in Auburn, Lincoln, Stockton, Elk Grove, Sacramento and Manteca.
From the Stockton Record:
After some hope that existing-home sales were on the rise, the market slowed again last month, leaving some brokers and agents expecting a long downturn. Sales of existing homes in San Joaquin County had jumped from 265 in February to 363 in March but sagged again to 273 last month, according to figures from the latest Coldwell Banker Grupe-TrendGraphix monthly sales report, based on Multiple Listing Service data.

The median sales price also slipped for the third consecutive month, sliding from $385,000 in March to $380,000 in April [and down 9.5% yoy per chart].

"Dead" was how Mike Collins, of Century 21 Collins, Stockton, described to market these days. "It's just not coming back. This might be as bad as I've seen it." He said his agents reported maybe six lookers stopping by to check out any of the dozen open houses over the weekend.

Collins said he's puzzled by the continued slowness of the market, with the economy doing OK, employment solid and mortgage interest rates still traditionally low. He suspects that many would-be buyers still believe home prices, which have slid by single-digit percentages in the past year, are still sinking.

12 comments:

Lander said...

Beutler is Sacramento's largest mechanical contractor.

2005: 1,800 employees
2005/2006: 1,500
Feb 2006: 1,250
May 2007: 900

Sippn said...

Probably NorCa's largest.


If Ben won't fix the Fed rate, at lease the pick up truck manufacturers are offering no interest 60 month loans.

Patient Renter said...

Wow, 30 years for stealing 1 mil.

We have yet to see the full extent of all the housing related fraud that took place over the last few years. Our prisons are already overflowing though. Where are we going to put all of these white collar (some with the distinguished REALTOR pin attached) criminals?

Perfect Storm said...

Lets just face it foreclosures are going through the roof.

Housing/Mortgage Doom 2007

Were right on track for a 50% decline by 2009.

Gwynster said...

It's not bad enough apparently.Price came down and now we're at the sticky part again.

I did notice that KB lowered it's prices again. I'm wondering when Centex, Meritage, and Shea will do the same.

Diggin Deeper said...

The rest of the world hasn't hesitated in raising their interest rates to fight off inflation and draw investment away from the US dollar. We sit on our hands and try to figure which is the best of the resulting two evils we're going to allow...higher inflation or a further crushed real estate market. Big dilemma!

The economic data over the last two or three months indicate we're slowing down (and probably gone negative if you strip out all the BS variables intended to make those numbers look respectable). Now we get signs (retail sales) that the consumer might just be tapped out. Everyone jumped on the PPI numbers, yesterday, but investigating a little further you'd find that the food and energy volatiles are beginning to strip consumers of their ability to buy non-essential goods and services. I'm sure BB sent a big thank you card to Alan Greenspan for leaving him the mess he's in. Now the one that "spoke in parables" seems crystal clear about a potential recession that's coming our way.

As for Sacto, imho,we go the way the rest of the nation goes, with an added kicker that real estate and labor get hardest hit. Labor takes a hit because of declining State revenues and construction/retail related layoffs. Real estate because prices remain artificially high due to speculative forces, greed, and stupidity.

Sippn said...

Diggn - good point but what has BB done but sit on his hands and explain it away. I could have done that!

Perfect Storm said...

I think there are a lot of homes for sale that are not listed on MLS.

Cmyst said...

"I think there are a lot of homes for sale that are not listed on MLS."

I'm sure there are. I keep hearing from family about a particular house of a style that I find appealing, offered for sale on posters on various poles downtown and at one property management company's outside bulletin board. It isn't in MLS, and the darn kids keep forgetting to nab one of those posters. I want to see this place, because if the kids are right and there's nothing wrong with it, the owner is offering it for about 100k less than the current MLS listings for the same type/same builder home.

Sippn said...

There are always homes for sale not in MLS.

smf said...

"Collins said he's puzzled by the continued slowness of the market, with the economy doing OK, employment solid and mortgage interest rates still traditionally low"

First, plenty of illegals came to fill the holes, and they are not reflected in the stats.

Second, prices are still too high. We are paying Mercedes prices for a Chevy home, and most people cannot afford the homes.

slow burn said...

check out this site:

http://hardtack.osgcorp.com/osg-hardtack/index.jsp?levelType=City&levelValue=Roseville,%20CA