Sacramento's Faux Economy Unmasked: Bald Tires on Beemers

From the Sacramento Bee:

That economic downturn bug that's going around? Local tire sellers have caught it. "My sales are off 20 percent," said Ahad Parvez, owner of A&A Tires on Watt Avenue in Sacramento. "Business is terrible. This is the worst it's ever been – and I've been selling tires for 20 years."

Local tire retailers are in a jam. Construction firms that used to wear out tires running between jobs during the home building boom haven't been driving as much since the bubble collapsed. Meanwhile, wary consumers are tapping the brakes on spending, especially higher-end tire and wheel purchases that give shop owners the most profit.
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As the economy has slowed, consumers have found more ways to save on tires. "I'm seeing more tires come in bald than ever," said A&A Tire owner Parvez. "Scary." Cunnington said that he also has seen a jump in the number of unsafe tires that roll into his shop, sometimes on expensive cars like Mercedes or BMWs.

From the Sacramento Bee:

As the spring real estate season begins, all the normal market rules have changed, frustrating not only sellers but also a smaller crowd of real estate agents. The 24,944 agents and brokers working now in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties today are 1,240 fewer than the same time last year, says the state. The Sacramento Association of Realtors says its membership has dropped by 12.6 percent over the past year. In Placer County, the Realtors association is down 7 percent from a year ago and 16 percent off its September 2005 high.
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"The level of frustration in the real estate profession is as high as I've ever seen it," said Howell Ellerman, a business and real estate professor at Folsom Lake College.

From the Sacramento Bee:

The big white bus rolled up to a dozen empty houses in Elk Grove, where last year something went badly wrong for those who lived inside them. Saturday, their swimming pools were green, the electricity off and pieces of a child's puzzle lay scattered across one upstairs hallway. The houses were the main attractions of a new phenomenon to rock this housing market: the foreclosure bus tour.
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"Oh, so that's what's going on," said a surprised Dena Ruiz in her 1990s neighborhood. "We've been here six years and we make our (mortgage) payments." She pointed toward several houses on the street in financial distress and lamented the collective effect on her home's value. "Our house was worth $450,000 2 1/2 years ago, and now it's worth $340,000, if not $240,000," she said. "They just keep dipping."
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[Lori] Mode, who plans another foreclosure bus tour March 29 in Elk Grove, said she was sorry there weren't more first-time buyers on the $20 tour. She said, "They don't know what they're missing in this market."

From the Sacramento Business Journal:

Kimball Hill, the Sacramento region's 24th-largest builder last year, might be one of the most honest about its financial position, but it is likely not the only one with serious doubts about viability. Looking at the Greater Sacramento market, there simply isn't enough business to go around. New-home sales fell to 7,500 last year, less than half of what they were in the boom in 2004, despite plummeting prices.

With thousands of foreclosures, the median price for resale homes dropped 23 percent in a matter of 10 months to $285,000 as of December, according to the California Association of Realtors. [Make that down 29% in 10 months as of January.] And brokers are predicting that land will be sold at pennies on the dollar as some firms struggle to stay afloat.

From the Sacramento Bee:

Sacramento County's financial officials got a huge shock last month. Their monthly interest payment on a single bond increased by more than $500,000. The hit is fallout from continuing turmoil in the nation's credit markets and specifically nervousness affecting a class of variable-rate bonds called auction-rate securities...The rising bond costs here show just how widespread the ripples are from a crisis tied partly to the collapse of the housing market.

From the Stockton Record:

When did it all change for the housing market? I've had plenty of discussions in and out of the office about the timing of events that led to the decline that caused Stockton to become the nation's foreclosure capital.
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Just like the stock market, fear and greed have driven the housing market. It's fear you'd be priced out of the housing market forever without doing something. It's the greed of those making big money through commissions or fees.

From Bloomberg (hat tip New Jersey Real Estate Report):

With no bottom in sight for the U.S. housing market, buyers are in game-show mode. There are plenty of deals out there, yet you have to make some decisions if you are buying a new home. Choices flash in front of you as if a host is badgering you to decide your next move. Do you wait for prices to fall further? Or do you buy now and take the builder's incentives or their financing?
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Whether you are looking in Florida, Southern California, Las Vegas, Phoenix or Ohio, one variable continues to taint several areas. Until the government can stem the number of foreclosed properties due to come on the market -- an estimated 2 million -- it's a good time to hold off.

Prices are going to fall a lot more than Freddie Mac's forecast 12 percent in the most overpriced areas, which may experience 50 percent declines or more. Patience is a virtue in this market. It will also net you a better deal if you can turn off your game-show impulses.