"Artificially Cold" Real Estate Market

From the Sacramento Business Journal:

The area's first developer-driven auction of new homes attracted a lot of attention and bids -- but none high enough to close a deal. Twenty bidders left the auction late last month thinking they'd landed a steep discount from the asking price for a piece of an award-winning housing development near the river in West Sacramento.

But the deals never closed escrow. Two weeks after the auction, the bank that holds title to the homes canceled the sales, citing auction rules that the bids didn't meet minimum prices. Other than sore feelings from some of the bidders, it's as if the auction never happened.
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Even though the auction saw some lively bidding, the homes failed to get anywhere near the reserve prices, let alone the list prices. For River's Side, the final bids were an average of $88,000 less than the reserve prices, [John] Leonard said...Leonard said a confidentiality agreement with the lender prevents him from discussing details, but that the bank didn't think the auction environment correctly tested the value of the homes.

From the Redding Record Searchlight:

Here's another sign of a stagnant real estate market: Some developers in town are taking their homes off the market and turning them into rentals. Two weeks ago, East Oak Estates in south Redding announced this would be the last weekend some of its homes would be for sale. They were going to start leasing them out.

But East Oak developer Karen Margrave said buyers waiting for some colossal closeout sale will be sorely disappointed. She has no plans to sell her homes at below what she paid -- nor she says will other builders. So they're getting into the rental business while waiting it out..."We know prices are going to go back up, and we believe they will start rising again next spring," Margrave said in an e-mail.
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Brad Garbutt, who's been selling real estate in Shasta County for years, said it's unusual for developers to rent back their homes. "I don't recall any developer on a large scale doing something like that," Garbutt of Real Estate Professionals GMAC said. "Developers usually can't do that. They can't stop everything because the bills keep coming." Glen Jones of Greater Shasta Homeplaces in Redding agreed that it's strange to see a builder get into the rental business. "I have never seen it before, but we have never had this situation," Jones said.

From the Tri-Valley Herald:

In light of the lethargic housing market, local home builders are asking city leaders to alter the structure of existing development agreements to give developers more time to build. During Mondays Manteca City Council meeting, developers of some of the newer subdivisions plan to ask for an across-the-board extension in the amount of time they have to build homes once theyve obtained building permits. If approved the deadline would be extended from three to five years. The builders believe that an extension would offset some of the problems caused by an overabundance of houses and a downturn in the housing market
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The proposed increase was spread out over the period of time real estate experts predict the market will reach bottom and turn around. The market was artificially hot a couple years ago and is artificially cold now. People are worried, but the market is resilient, [George] Gibson [of Stockton-based FCB Homes] said.

From the Modesto Bee:

[Sarah] Huff and her husband, John, say their contractor, Viking Pools Mid-Valley Inc., has closed its doors without finishing their pool, and she doubts she'll ever get her money back or a finished pool out of the defunct business.
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[Viking western regional sales manager Aaron] Stahl and other pool industry officials said the housing market bust has hurt many pool contractors, which prospered when it was easier to buy a home or refinance a home loan. As a result, some business owners may be more likely to cut corners to stay afloat, industry officials and consumer experts said.

That may have been the case with Mid-Valley. [Tina] Hill, who worked there for 2 years, said orders slowed dramatically over the past year, mirroring the free fall in home prices and sales. "I'm sure it's a direct result of that," she said. "There were a lot of problems, off and on, and the last three months there were just more of them." Don Burns, president and chief executive officer of the California Spa and Pool Industry Education Council, said many pool contractors are struggling because of the housing slump.

From the Stockton Record:

Countrywide Financial Corp., sharply paring its work force nationally in the midst of an on-going housing slump, has closed its Stockton loan-processing center. A company phone message and a notice posted on the front office door said the March Lane center has closed and has been consolidated with a Countrywide center in Elk Grove.
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One Stockton resident, Susan Feighery, has been trying to get a Countrywide mortgage loan for a condo purchase, but she said she is frustrated because her loan application has been delayed as it has seemingly bounced from one person to another as staffing dwindled...[S]he was told several times that her loan application was being passed to someone else and that the previous handler no longer worked for Countrywide.

From the Sacramento Bee:

Speaking of office vacancies, the Sacramento region is holding its own for now. But look out for next quarter. "There are not enough tenants to go around," says [local Cornish & Carey exec John] Frisch, who reports that the region's vacancy rate is 15.22 percent, up a hair from the previous quarter.

The cause for concern: Nearly 3 million square feet of new office space is under construction in the multicounty region. But there's not nearly enough business growth to absorb it. "I expected a lot more red ink at the bottom of the (space absorption) tables," Frisch says of his company's third-quarter vacancy report. "I think there will be next quarter."