'2008 Is Going To Be A Year To Remember'

From the Sacramento Bee:

Statistics released Thursday showed that median sales prices declined 20 percent during the year in Sacramento County for new and existing homes combined. Property researcher DataQuick Information Systems Inc. declared it the steepest fall for a large urban county in California.
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"What you're starting to see right now with the foreclosure inventory swelling is the banks are getting aggressive," said Lincoln-based real estate agent Mike Toste. "They're the ones wheeling. If all their competition is bank-owned and they drop prices 30 to 40 percent, then they've got to do the same thing. If they can't sell within 60 to 90 days, they're getting extremely hungry. I think 2008 is going to be a year to remember."
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[T]he prospects for another tough year have some of 2007's buyers already re-examining their decisions. John Reed moved to Sacramento last year from Portland when he became a computer programmer for the state. He bought a new home in West Sacramento last July. "I have a lot of second thoughts now," Reed said. "I knew the prices were dropping a little, but I didn't expect them to go down so much. They've probably gone down 10 percent in six months."

DataQuick home sales and price trends by zip
DataQuick home sales and price trends by county

From CBS 13:

From October to December of 2006, the median selling price of a home in north highlands was $264,000. In that same quarter of 2007, 63 homes were sold here, and the average price was $153,000. That's a 42.5% decline in home values according to data quick information systems.
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But, for the Mahans, and the thousands of families like them across the valley, there is hope on the real estate horizon. Suzanne O'Keefe, a Sacramento State professor, says, "All the information I've seen has pointed to hopefully a turnaround by the end of 2008."

From the Sacramento Bee:

The customary real estate experts have had their say about the state of the Sacramento-area housing market for 2008. In last week's column their consensus called for a rough first half of this year, a more stable second half and some sense of a turnaround and recovery in early 2009. But we asked, too, for your take on the market. The responses seemed a little more pessimistic than the authorities we quoted.
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Dave W. Walker, general building contractor in Citrus Heights: I disagree with all their expert guesses. I have been in the construction field for over 38 years, and this is the worst I have ever seen the housing industry...My personal feeling is that a big problem is only starting.
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Diana Sanger, partner with RBI Builder Solutions in Loomis: What I think: The Sacramento market will not turn around until mid-2010.
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Steve Topper of Sacramento, a former banker who writes an online newsletter about marketing and advertising: We are a long way from the bottom. I believe the best guess for the duration of this correction is that it will take as long to deflate the bubble as it took to inflate it. So, assuming the bubble started inflating in 2002 and peaked at the end of 2006, it will take five years to reach equilibrium, which puts it at the end of 2011.

From News10:

Many small business owners admit their profits are on a downward slide due to current economic conditions..."I believe everyone across the board is down," [restaurant owner Carl] Steagall said. "With the housing market kind of settling down quite a bit, disposable income and the entertainment dollars have decreased pretty drastically."
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Even before Christmas, News10 started working on a series of stories about an impending recession. It was clear people were already feeling the pinch of reduced wages, layoffs, and rising gas and food prices.

Still, just mentioning the "R" word gives most economists the jitters. They've been reluctant to name this economic climate as a recession because a significant part of a recession is the public's frame of mind and how it can affect consumer spending. But, UC Davis economist Brad Barber says there's no ignoring the fact that "the indicators of recession are growing stronger, not weaker."

Video: Local Businesses Feel Economic Punch
Video: Has the U.S. Hit a Recession?
Video: Sagging Housing Market Compounds Troubles for Natomas

From the Sacramento Business Journal:

Greater Sacramento lost a net 300 jobs in December and saw annual job growth fall to a puny 0.3 percent as the jobless rate increased in both California and the capital region, the state Employment Development Department reported Friday.

From the Sacramento Bee:

Sacramento's unemployment rose three-tenths of a point to 5.9 percent, the Employment Development Department said Friday. It was the highest unemployment Sacramento has seen since March 2004.

From Central Valley Business Times:

The confidence California workers have in their economic future is at a record low, according to a survey done for Spherion Inc. (NYSE: SFN). Its California Employee Confidence Index dropped 2.5 points to 50.3 in December, the lowest level seen in the history of the survey.

From the Sacramento Bee:

Yuba County voters, do Gary Gallelli a favor on Feb. 5: Vote against his housing development. Never mind that the developer has fought for a decade to build the Yuba Highlands – 5,100 suburban-style homes in the oak-shrouded foothills near Beale Air Force Base. And disregard the thousands of dollars he's poured into newspaper and television ads touting the controversial project as an economic savior.
Gallelli doesn't want to build it anymore. At least not as proposed on the ballot. "If we win in February, we'll have to spend money on something we no longer believe in," the Rocklin developer said in an interview Thursday. "So, yes, we're asking people to vote 'no.' "

Gallelli's emerging campaign against his own campaign is testament to a housing market slump that is hitting the Sacramento area harder than just about anywhere. Gallelli said he'd been pushing so hard for the Highlands, on the ballot as Measure N, that he failed to recognize how sour the market had turned. "You never step back to think of the consequences of what you're doing or ask if this still is a good project," Gallelli said. "I guess you could say we were in the heat of battle."

Weekend reading/viewing:

• The new bubble-prone economy (LA Times)
• Why Baby Boomers May Bust the Housing Market (WSJ)
• The “generational housing bubble” (The Economist)
• How I blew off the housing bubble and cleaned up financially (LA Times)
• Warning lights (The Economist)
• This is not your father's recession (MarketWatch)
• They're all double-digit declines now (Mess That Greenspan Made)
• Video: Bulls and Bears on Housing (California Housing Forecast) Summary (CNN)
• Is U.S. heading for Japan-like troubles? (APP.com)