Tuesday, January 08, 2008

Foreclosures.com: Sacramento County REOs Top 1,000 in December

December 2006 REOs: 283
December 2007 REOs: 1,155
Change: 308.1%

Total 2006 REOs: 1,326
Total 2007 REOs: 8,155
Change: 515.0%

December 2006 Pre-foreclosures: 1,052
December 2007 Pre-foreclosures: 2,380
Change: 126.2%

Total 2006 Pre-foreclosures: 10,505
Total 2007 Pre-foreclosures: 19,453
Change: 85.2%

More statistics at Foreclosures.com

From the Modesto Bee (video):

Monday was a record-breaking day for foreclosures in California. A staggering 5,238 properties were scheduled to be sold in auctions on courthouse steps across the state, including 145 in Stanislaus County. "This is the single largest day ever for foreclosures," said Sean O'Toole, owner of ForeclosureRadar, which tracks mortgage defaults throughout the state. By comparison, 400 to 500 auctions a day were scheduled statewide a year ago, O'Toole said. That average rose to about 2,500 per day by the end of 2007, but he said there's never been nearly as many auctions as happened Monday.
In Stanislaus County, for instance, about twice as many properties were scheduled for auction as normal, said David Absher, president of Dual Arch International, which does most of the foreclosure auctions in the county. Absher said that during the past six months, typically 60 to 80 auctions were scheduled a day, but "the volume is mounting."
Although an abundance of homes in all price ranges are facing foreclosure in the Northern San Joaquin Valley, fewer and fewer bids are being made at foreclosure auctions, Absher said. "No one wants to buy this stuff because they don't know where the housing market's going," Absher said. "When the prices are continuing to slide down, how do you know you're getting a good deal?"
From the Sacramento Bee:
Lots of developers are putting up "loft" housing in the downtown-midtown area. But Jeff Kraft says his 42-unit condo project at 1600 H St. is the real deal...Now, even though the building looks far from finished, Kraft expects the first units to be ready for occupancy next month. Prices range from $213,000 for a 395-square-foot studio to $699,000 for a two-bedroom, two-bath, 1,249-square-foot unit.

Can Habitat unload them when home sales are tanking and larger high-rise condo projects have flopped? Despite troubles elsewhere, Kraft says midtown is still a residential hot spot. He expects the comparatively low prices for his modest-sized units will bring in buyers. In fact, the project originally was envisioned as a "rent-to-own" complex. Now the emphasis is straight sales. "We just think there's a pent-up demand from people who want to buy," Kraft says.
From the AP via sacbee.com:
Treasury Secretary Henry Paulson said Tuesday the administration was exploring what would be a significant expansion of the program to help at-risk mortgage holders. Paulson, in an interview on CNBC, said the administration was involved in discussions with the mortgage industry to expand a current program to freeze adjustable rate mortgages for five years to include borrowers of loans at prime rates. Currently, the rate freeze only covers a much smaller segment of adjustable rate loans, those made to subprime borrowers. Those are borrowers with weak credit histories. "One thing we will consider with the HOPE NOW alliance is ... maybe expanding this beyond subprime borrowers to other borrowers," Paulson said in the CNBC interview.
From the Federal Reserve Bank of Boston [pdf] (hat tip Paper Economy):
In 2007, residential investment was the laggard among the components of Gross Domestic Product (GDP). Residential investment began declining in the first quarter of 2006, and has continued to decline in each quarter since. It seems all but certain that residential investment also declined in the fourth quarter of 2007 – and many economic forecasts expect residential investment to continue to decline at least through the first half of 2008...Should the forecasts prove to be right, we will have experienced a longer string of back-to-back quarters of declining residential investment than at any other time in the past 50 years...Previous periods where residential investment declined for a year or more were either accompanied by, or closely followed by, an economic downturn.
The sharp declines experienced in many regions of the country have occurred despite low real interest rates and, until December, an unemployment rate below 5 percent. This highlights a risk to the housing sector going forward: Since prices have declined substantially even in a relatively benign economic environment, one cannot discount the possibility that they could fall more rapidly should economic performance not remain strong in 2008.


andnee said...

Where's Sippin?

Perfect Storm said...

So we have more foreclosures than sales in December, that can't be good.

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

Gwynster said...

He was hanging out on Average's site last I saw him.

Jacob said...

anyone know of a chart plotting sales vs foreclosures vs total inventory?

Max said...

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

P.S., I'm going to start calling you "Mr. 50%:. ;)

The Habitat is doomed. Who wants to live on 16th and H? There's no grocery store or gas station nearby, the traffic sucks, and there's nowhere for your friends to park when they want to visit.

PeonInChief said...

Uh, folks, the "loft" developments are largely meant for lobbyists. The cost comes off their taxes as a business expense and it's convenient to the Capitol.

Gwynster said...

I just can't get over the 213k for less then 400 sqft. This guy deserves to fall on his face.

For contrast, my friend rents a gorgeous 1908 900 sqft flat with all the original moulding, murphy bed and built ins for 850 mo a few blocks away in a better neighborhood near Naked Coffee.

I had a loft in LA for years. The appeal of urban lofts was they used to be cheap enough for artists and had room enough for live/work. It has nothing to do with the charm of exposed plumbing and concrete floors. I look at the people buying lofts now and they are such a grabbag of posers - sheesh.

The good news is that with commercial RE beginning to tank in major way, live/work spaces may be reasobable again down the road when they are back to $75 to $80 per sqft.

PeonInChief said...

I remember the Goodman Building in San Francisco. Great art space, big rooms, big windows. But cold and drafty all year (San Francisco, remember), inadequate plumbing, and everyone cooked on hot plates.

Project Artaud was a big room with sheets as room dividers.

These were wonderful spaces for artists, but even in the 1970s I wanted heat and a bedroom door that closed.

smf said...

Uh, folks, the "loft" developments are largely meant for lobbyists

And there are not enough lobbyists to buy them all.

All these new developments weren't bad, but quantity-wise, there were too many of them.

Patient Renter said...

Be very very weary of the stuff that Hank Paulson is working on. Very weary. I smell an epic bailout coming around the corner at a time when we're still paying interest on the S&L bailout along with a dozen other bailouts going back a few decades. Why wouldn't another bailout be coming?

anon1137 said...

Plenty of people want to live near 16th & H, but *not* the same kind of person who is looking at two story stucco boxes in the burbs. I'm not trying to defend the prices, but that neighborhood has great restaurants, is close to parks, museums, clubs/entertainment, shopping, public transportation, and a lot of people could walk to work from there. It's right on the edge of 95816, one of the highest priced zips in Sacramento. If reproduction is your number one priority in life, this isn't for you.

HappyinSF said...

I had a friend who lived in a loft in the mission that was not drafty or run down at all. It had been a small factory of some sort and it was HUGE but also somewhat renovated for living in, nice new kitchen, washer/dryer, a few rooms built out of the perimeter of the largest living space I have ever seen. It also had all windows all the way around the space with views and a deck. Three people easily split the rent of 1200.00 back in 1998 or so.
I have to agree, these tiny studio apartments are not lofts, well I guess they technically are if they have a sleeping loft above the tiny living space but from the sound of it "a bedroom with a door" they can't even claim that.

Sippn said...

Nice using a credible source - Foreclosures.com - I like her.

commercialag said...

patient . . .

I assume u are talking about this:

H.R. 4135: Family Foreclosure Rescue Corporation Act

To establish the Family Foreclosure Rescue Corporation to provide emergency relief to refinance home mortgages of homeowners in foreclosure or default.

i.e., the idea backed by the liberal think tank "Center for American Progress", and the Mortgage Bankers Association. Proposed that the government buy some mortgage-backed securities and create a new agency, the Family Foreclosure Rescue Corp. It would issue new, more affordable fixed-rate mortgages for those facing foreclosure whose homes are worth less than what they owe.

current status: introduced

Nov 9, 2007: Referred to the House Committee on Financial Services.

This bill would still be a ways out. I personally think it would not take effect until late 2008.

Was there something else that Paulson has up his sleeve that u are aware of? I would love to hear. Please share if u know more.
Everyone, please vote against this. Our nation is at a critical point of no return, and if we can just have a backbone and let this mes clean itself up we may stand a chance of not speaking Chinese in 20 years. Please.

This bill is being pushed by the dems on the house financial services comittee, and was written by Saca (D-CA).

commercialag said...

Oh I get it, what a dummy I am.

You were talking about the "Banking Liquidity Crisis".

$64 billion+ already poured in.

Proponents of this think: If the Fed's actions are successful, and liquidity is restored, then the money will be repaid, and it shouldn't cost the taxpayers directly. Two things will restore stability by the end of 2008. The first is that there are plenty of investors from China, Saudi Arabia and other countries that are happy to invest in these well-known financial institutions. This liquidity will prevent large-scale bankruptcies and layoffs. The U.S. economy is so important, and the global economy is so inter-related, that no one wants to see this crisis become cataclysmic.

The second is that the crisis was basically caused by a pricing problem, which is easily solvable. According to Federal Reserve Governor Kroszner, CDO's are so complex that it is difficult for investors to determine what the real value and price should be. The financial markets will figure it out, but it will probably be at a lower value.

However, what signs have we seen so far that real value and price are going to "work themselves out" in 08'. I haven't seen enough myself.

Very good point, and now I am worried Patient, my friend.

My two cents: Buy Gold

commercialag said...

Oh, and one more thing.

I have heard several of pondering on the status of the commercial RE and commercial paper over the past month, so I will give you all a tidbit.

As you all are aware what is going on with WaMu stock, it is now in the low teens. Amazing. Do you think it has anything to do with the fact that they were aggressively passing through commercial loans up until two months ago while everyone else was starting to tighten things up and get a bit more conservative. The cat has been out of the bag for two years now. As of December they have pretty much halted all review of commercial loans in NOCal region

If I had some of this stock, I wouldn't even want to know what the books look like there. I would be praying for someone to take a run on them.

Other shoe has dropped on commercial. We will see more and more re-appraisals in 08 as the national accounting firms come in to do the 80%/20% check and realize things are under.

Diggin Deeper said...

"CDO's are so complex that it is difficult for investors to determine what the real value and price should be. The financial markets will figure it out, but it will probably be at a lower value."

Actually, the financials are afraid of the open market on these debt instruments. The cat really comes out of the bag when a WaMu steps up and sells the first one at a "market determined" price, rather than the "institution determined" price. That would set the benchmark price for the entire universe of CDO's and SIV's. The financials would rather see them fail in chunks, over time, rather than have to take the hit all at once. The word "toxic" doesn't really explain just how dangerous these notes are.

As far as commercial paper is concerned, it stands to reason that these same IED's are ladened throughout commercial debt. I believe the regional banks will start getting hammered as they are usually front running commercial loans in their backyard. A major project can take a few years before completion, and no one would have known 2-3 years ago that these loans had any problems.

Gold opened at $880 this morning.

Diggin Deeper said...

Bush considering a $500 tax rebate per family along with other business tax cuts to stimulate the economy.

Goldman Sachs sees recession in 2008


One day after Merrill signals recession Goldman Sachs agrees. They predict a Fed Fund rate at 2.75% while Pimco's Bill Gross sees 3%. Anyway you cut it the dollar is set to weaken further.

Deja Vu...1970's all over again. Low or negative growth with higher inflation. Not really the best of conditions to bring Sacramento real estate out of hybernation.

Foreclosures? We're just getting warmed up with the December report.

Protect your a**ets now!

Sippn said...

Damm, who raised the IQ around here?

I read Gross was talking 1%, BTW.

Gwynster said...

1137, if you're out there


So you could rent this or buy it for 385k (lol I can find SFRs for less now- this guy is dreaming) or you could buy a 400 sqft shoebox. No thanks.

Gwynster said...


You know we read the same blogs you do. Why are you surprised? >; )

PeonInChief said...

Unfortunately it's not the 1970s all over again. It's the 1970s after 30 years of government policies designed to prevent stagflation by wringing wage concessions out of workers, cutting government spending on infrastructure, social services (including housing), and allowing capital to chase after whatever bubble happened to be blowing by.

If we do get stagflation, it will be stagflation with far fewer options.

And to gwynster and anyone else who is interested: there's an article on Olof Dahlstrand, a Bay Area modernist architect, in the SF Chronicle Home section, just FYI.

Diggin Deeper said...

Here you go Sippn...updated Bill Gross prediction. You must of read the Gross prediction of 1% back in '03.


Peon...far fewer options...yup, including wasting the dollar to levels not yet seen. There are no more tricks in the bag. This time we pay.

jmf said...

Anyone else read Paulson's comments as a foreshadowing that he sees a big mess coming for Prime Mortgages - that he is trying to get ahead of that mess without alarming the markets? Soft sell-off over time rather than fall off a cliff in a month or two.

...also Countrywide's data released this morning points to bad juju for Prime Mortgages.

Diggin Deeper said...

The Plunge Protection Team met late last week and started lining out the stimulus package Bush will propose shortly. Paulson and Bernanke are part of that group. You can bet they were dealing with fresh data. These meetings only occur when something's amiss so just covening is a important signal

Jacob said...

I think a stimulus wont really do anything. So you send out 5-10 billion to people to spend, but there are trillions of dollars in trouble mortgages.

Of course I am happy to take the $500, but it won't do anything.

anon1137 said...

Gwyn - I wasn't defending the prices, just the location. *Everything* is overpriced now, IMO. I think you'll be able to buy bungalows in East Sac for the price of this condo in a few years, maybe sooner.

It looks like a nice remodel though. I'm glad that developers are creating these kinds of living spaces near downtown, the kind that preserve the historic feel of the building, but update the insides.

Gwynster said...

No worries 1137, just thought you'd appreciate the difference since you watch the area as well.

I lived down there for 10 yrs and I know the art community there intimately. Those "lofts" are attracting all the wrong kind of attention, mostly of the pointing and laughing variety.

If something good pops up, we may move back into downtown. I really miss it. I'm quickly going postal in Davis.

norcaljeff said...

Sippin' probably in the spin room with Billary trying to figure out how to spin all the horrible RE news. Maybe if we ignore him he'll just go away like a good little boy.

Max, isn't that the case for all of downtown Sacto? :) I hate the inconvenience down there.

SacramentoCrash said...

Fox 40 in a segment on Tuesday night said that there are 34,000 preforeclosures in the Sacramento region.

paranoid renter said...

What a bummer...looks like another 2 - 3 years before we see the bottom.

With the impending recession things should be even more interesting.

I hope I don't lose my job. If I do, then I'll head back to school just like everybody else. :-)

Diggin Deeper said...

What if we finally get to the point where real estate becomes a home, and not an investment? If this was Indianapolis, Indiana, there would be no reason to have a blog like this. Prices are stable and have remained that way for years.

Once we find a bottom, we could bump along at zero growth for 8-10years, or longer, before all the speculation damage, risk, and excess is pumped out of the market. It happened in Japan, and it could happen here. Afterall, California housing has been viewed as a tradeable investment for over 40 years. Once that mindset changes, public sentiment will change buyers will start to come back to the market.

Sippn said...

Diggin, I apologize, Gross's comment was about a 1% "real" rate (1% over inflation) and the blogster I was reading misquoted him.

Thanks for setting me straight, I won't plan for cheap money soon! But at least we won't wait for the 1% painfully reached 1/2% per meeting.

BTW, I'm checking Krugman's comments alot lately, he's sharp and not afraid to say "I don't know", nailing wall street on their crap, etc.

Q: for fun thinking about buying some play shares of Countrywide. Once the PHeD settles on a rate and resets come again, refi's should be busy.

Sippn said...

Diggin, on your last point I don't agree.

What is there in Indianapolis besides left turns and brick?

Read Krugman's commments on 2 Americas - flats lands vs zoned lands.


It will be clear why the bubble was here and why it will come again and again.

Cmyst said...

I'm not sure where Sacramento stacks up on zoning regulations, and hopefully someone in the know will comment.
One thing I'm sure of. So long as I am able to rent a safe, decent house in this area I'd much rather do that than buy a house in my old hometown in downstate Illinois, or Indianapolis, or just about any Midwestern area I can think of.
However, that's just me. I hear a lot of ex-Californians opining that the state has become overpopulated and overpriced, and they're all too willing to move out of state. I suspect that a lot of younger people will move when the recession begins to cut into jobs. (I moved back and forth to several states during the 70's and 80's in recessionary periods, always due to the loss of a job and no impelling reason to stay.)
Cali is one of those places that is very attractive during the good times, and very brutal during the bad times. It is extremely hard on several different levels to be poor here. The "norms" here are much higher than in other parts of the US, and can only be achieved when people are earning above average US wages.

Gwynster said...

I wouldn't call me young but given the chance to leave this state, Mr. Gwynster and I would be off like a prom dress >; )

But you already knew that.

Diggin Deeper said...

"Q: for fun thinking about buying some play shares of Countrywide. Once the PHeD settles on a rate and resets come again, refi's should be busy."

Now that's what I call contrarian thinking!!! A bit too risky for me as failure may occur before Godzilla can scrape up enough money, or rates fall far and fast enough, to keep the doors from closing. Countrywide will likely be the first Wall St. darling to do a faceplant because of the real estate/credit crisis.As they should... they were front runners to most forms of problem loans in the first place.

As far as losing investment status or bubble status in favor of "housing status", Sacramento fits the bill for me. Too much of evrything real estate related, plus lots and lots of land surrounding the city. However, if this was OC or San Diego county, I'd be more inclined to agree that bubbles will come and go.

We've dug such a big hole here due to poor loan management, fairly low median wages, dramatic speculaion...all in support of a predominant service oriented economy. If it does take the better part of decade or more to settle the market, I'm willing to bet that investment becomes secondary to any buyer decision as prices will, imo, go no where for quite some time. Change the dynamics...bring in brick and mortar industries, hire people, make product for consumption outside the area, raise future wages, and I'd probably change my mind.

Gwynster said...

Rumor is of a BoA buyout of CFC. So are people buying on the rumor just like the Buffet rumor last year?

Sippn said...

Geez - I would have made 50% on my stock today!

Diggin Deeper said...

"Rumor is of a BoA buyout of CFC. So are people buying on the rumor just like the Buffet rumor last year?"

Could be Gwyn...BofA already has a $2 Billion investment in Countrywide so they've had some time to look over Mozilo's books. Rumor is that if they move forward they'll pick up those assets CHEAP.

You snooze you lose Sippn...

Patient Renter said...

I'd think there's not much of value at Countrywide other than the servicing group. I'm sure they'll manage a way to take what the want, and leave the rest for the taxpayers to cover.

Diggin Deeper said...

Looks like JP Morgan and WaMu are looking to hook up. BofA and Countrywide confirmed with BofA paying $4 Billion for Godzilla and company. Look for mass layoffs at Countrywide as there should be duplicaion of efforts that will shed lots of bodies at Countrywide.

Gwynster said...

The BOA/CFC deal is going to be interesting for the Ventura Co. market.... ouch.

We all knew Wamu was going to need bailing out as well. Citi is covered by foriegn banks now so who is next? Wells?

Diggin Deeper said...

I'm kinda at a loss with Wells... leaning that they'll be an acquirer rather than an acquiree...I don't think they're as exposed as others. Their loan portfolios were always too conservative, which probably makes them a survivor today. My bet is on Wachovia. Bear Stearns probably takes on more foreign ownership. Watch US Bancorp as they're probably the best of the bunch and likely on the prowl.

Gold pushes over $900 this morning

Gwynster said...

Interesting. Wachovia is actually my favorite to weather the storm before Wells because I have always found them to be more conservative then Wells. It's funny how we all see the lenders slightly different - except of course CFC which even my 3.5 yr old nephew knew was going to blow.

Diggin Deeper said...


When you spend most of your time in a tanning booth, it's kinda hard to tell whether it's sunny or rainy outside.

My wife and I have eight different accounts with Wells crossing 3 different businesses and then our personal accounts. In 2003 Wells would repeatedly want us to refinance with them at the very lowest rate they were offering. Every time we looked their rates were at least 3/8's to a half point higher than the going rate. I believe they did manage risk better than most. and if it was good enough for Buffet, who am I to question?

However, the reason I'm kinda waffling on them is that they got into Heloc's in a big way toward the end of the boom. To me, this is their achilles heel that might cause them the biggest grief over time. Not to mention their CEO's "Depression" like comments about how bad things really are in the credit world. Was he signalling to the market that Wells was deep into credit problems? We'll know shortly.

Any way you cut this up, consolidation is one way to keep a business from "officially" failing.