"Like Riding a Roller Coaster - Headed Steeply Down"

From the Stockton Record:

Home foreclosures and a slammed residential market in San Joaquin County continue to make dark headlines, but there are growing signs about the negative effects of the home-market downturn on other parts of the area economy. Offices vacancies - typically lean in recent years - have jumped, as has unemployment related to the housing industry. There also are signs that consumer spending is slowing, both in retail employment and such a mark as new-car sales.
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In recent years, office vacancies been less than 2 percent have most of north Stockton, she said. These days, office vacancies have climbed to 16 percent, a level not seen since the early '90s, [Shelly] Cannon-Keely, [CB Richard Ellis] said. Half the vacancies are sublease spaces from downsizing, she said, "and we haven't had subleasing for years."

Also, now that the area's population boom has slowed, the market is much quieter, she said. "There aren't all the companies out there expanding because of the population growth," she said. "They are conservative, waiting to see what's going to happen."
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John Solis, executive director of the San Joaquin County Employment and Economic Development Department, said the residential housing-market downturn has hurt. "There definitely has been a loss of jobs with real-estate brokers, title companies and construction in the hundreds," he said.
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"It's a buyer's market but nobody's buying. In the next six months, the prices of housing will continue to drop, and nobody will buy because they don't want to buy until prices are down." There really not much place in the employment market to absorb the workers from real estate-related fields, he said.
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Ian Poth, a tile installer for a Modesto tile company, figured he's lucky to be working on the few homes still being built these days in Spanos Park West. Right now the construction field feels like riding a roller coaster - headed steeply down. "The job market is slowing down in construction right now," he said. "I got a lot of buddies out of work."

From Bloomberg:

Federal Reserve policy makers underestimated the role that housing plays in triggering recessions and merit an 'F' grade for their failure, said Ed Leamer, director of an economic forecasting group at UCLA...The Fed ought to have raised interest rates more aggressively to head off the "bubble" in home prices that grew from 2003 to 2005 and should have lowered rates by now, he said.
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Leamer said in an interview today at Jackson Hole that some former "hot markets," such as pockets of California, may see declines of 30 percent to 40 percent.

From Bloomberg:

Homes may lose as much as half their value in some U.S. cities as the housing bust deepens, according to Yale University professor Robert Shiller. "The examples we have of past cycles indicate that major declines in real home prices -- even 50 percent declines in some places -- are entirely possible going forward from today or from the not too distant future,'' Shiller wrote in a paper presented today at an economic symposium in Jackson Hole, Wyoming.
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Because price gains were larger and more widespread this time compared with past speculative booms, the risk of "substantial'' price declines is greater, wrote Shiller, also the chief economist and co-founder of MacroMarkets LLC.
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Shiller noted that 50 percent declines in the worth of some cities' homes wouldn't be unprecedented. Prices in London and Los Angeles fell by almost that amount from the late 1980s to mid- 1990s.

U.S. home values, adjusted for inflation, rose 86 percent from the end of 1996 to early 2006, the peak of the most recent housing boom, Shiller said. Economic factors such as rents and construction costs don't appear to explain the jump in prices, suggesting "speculative thinking'' and a "boom psychology'' was at work. "Extravagant'' expectations for future price increases since the late 1990s fueled the bubble, Shiller said.

From the Fresno Bee:

A real estate mystery lingers in southeast Fresno: Why would a developer build two dozen houses, sell only two and then disappear?

Few cars visit this ghost tract south of Butler Avenue, known as Ashwood Park. Weeds choke many lots. The model home complex is closed. There are no real estate signs in the yards, and no phone numbers posted anywhere. Just placards in the windows that read "available."
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It's unclear what happened to this neighborhood. Officials at Lafferty Homes did not respond to repeated phone calls...But experts say the developer likely turned the tract over to lenders because it couldn't sell houses fast enough to cover debt payments -- much as some troubled home buyers walk away from a house they cannot afford and cannot sell.
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Regional builder Dunmore Homes is pressing ahead with tracts in Dinuba but is putting one at Temperance and Dakota avenues in Fresno on hold....The company will finish grading the site but won't go any further right now, said Mike Lutz, division president. "In light of the current marketplace, we are concerned about putting more money into it and bringing it to market," he said. "We will sit and wait." Dunmore's office staff in Fresno, which oversees projects in Dinuba, Bakersfield, Merced, Atwater and Livingston, has shrunk from 12 employees to five, Lutz said.

From the Stockton Record:

Rosalee and Ernie Schimpf have enjoyed the country life east of Stockton for nearly three decades...But now they want to get on with the next phase of their lives - retirement and relocation to Colorado near their children.

This isn't the real-estate market for such dreams, so they are discovering as they try to sell in a brutally slow home-sales market that has left them feeling as if they have hit a brick wall. There have been lots of lookers, they said. They can't get any serious offers, though, for their 1,700-square-foot home, plus finished basement and a 600-square-foot workshop on two acres. They got the property appraised and initially set the price at $589,000 in May, later lowered to $549,000, a price below anything similar in the area, they said. Still, the only offer they have gotten came in at almost one-third below asking price.
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The Schimpfs said they have followed the rises and falls in the real-estate market over the years but never expected to see a downturn so severe..."We didn't know whether to laugh or cry," Rosalee Schimpf said. "We look at each other and ask, 'Could we have chosen a worse time to sell?'"
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"Buyers right now are saying the market is going to come down even more, so if we're going to buy now it's going to be for a lot less than they're asking," [Jerry] Abbott [president and co-owner of Coldwell Banker Grupe] said.

From the Sacramento Bee (hat tip Gwynster):

Tracy Trammell sold the boat, the extra vehicles and tried everything to "find a way to refinance, or do what I could not to lose the house for my children." She is in a bind all too common in Sacramento: a home losing value and an adjustable-rate mortgage with payments that jumped $1,000 a month in June.
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Trammel made her new $3,000 payment in June. She made another in July. Then she considered reality. She is bound to lose the house with this loan, a loan with one more year before its pre-payment penalty expires. When Countrywide suggested a roommate, Trammell felt insulted. She skipped a payment. It is one more foreclosure now in motion.
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As many attempts at solutions fail and foreclosures rise, arguments abound about who bears responsibility. Consumer advocates say lenders freely gave cash to people with risky profiles and now owe them waivers of prepayment penalties and options to restructure loans.

Lenders, for their part, say it's a two-way street. Staffers often find people unwilling to give up cell phone service or satellite TV to finance strategies to save their houses, Ed Delgado, a senior Wells Fargo executive, told the California Senate Committee on Banking, Finance and Insurance last month.