Wednesday, April 23, 2008

'Basically We're in Uncharted Territory'

From the Sacramento Bee:

California's severe housing downturn claimed another fixture of the Sacramento-area homebuilding industry Wednesday when John D. Reynen, co-founder of Reynen & Bardis Communities, filed for personal bankruptcy protection...It's the second major bankruptcy-protection filing involving a privately owned land developer and builder in the capital region.
The company, formed more than 30 years ago, has largely shut down homebuilding and recently laid off about half of its 180 employees.
Press release available via Home Front.

From the Sacramento Bee:
During the first three months of the year, banks repossessed a record-shattering 5,278 homes in the Sacramento region, La Jolla-based DataQuick Information Systems said Tuesday. Put another way: The area's first-quarter foreclosures already are half of last year's entire total.
The latest foreclosure count shows that for all the initiatives by government and nonprofit and private sectors to keep people in their houses, the telling trend remains a sustained, dramatic rise in home losses and loan defaults. The forecast is for more of the same in the months ahead.
"We expect foreclosure rates in Sacramento to rise as long as house prices are declining," said Mark Fleming, chief economist of Santa Ana-based First American CoreLogic. Fleming said 6.1 percent of mortgages in El Dorado, Placer, Sacramento and Yolo counties are 90 days late. A year ago it was 2.1 percent.
Here's a look at notice of default filings for Sacramento County.

2008 Q1: 6,898 (up 113.3% YoY)
1997 Q1: 2,441 (1990s Peak)

From the Appeal Democrat:
Yuba County saw the highest total number of the three counties with 357 notices recorded, an increase of 136.4 percent...Colusa default notices quadrupled to 81. Sutter County defaults zoomed by 195.6 percent to reach 337 notices.

Kory Hamman, a broker who handles foreclosure sales for Hamman Real Estate, of Gridley, said the trend is toward more foreclosures. And it shows no signs of easing soon. "We're seeing more foreclosure activity, and we don't see it slowing down," said Hamman.
From the Stockton Record:
In San Joaquin County, lenders sent out 4,657 notices of default - the first step in the foreclosure process - to homeowners in January through March, up from 3,746 in the final three months of last year. That's a 170 percent first-quarter jump from 1,721 default notices in the first three months of 2007...[T]he number of homes actually repossessed during the first quarter in San Joaquin County nearly topped 2,500, more than a fivefold increase from 440 a year ago.
Cameron Pannabecker, owner of Cal-Pro Mortgage Inc. in Stockton and a member of the board of directors of the California Association of Mortgage Brokers, said...he doesn't know any experts not projecting that the number of default notices will continue to double or triple last year's numbers quarter over quarter.
From the Sacramento Bee:
Like the hundreds of others in this Cal Expo exhibition hall, this young Yuba City couple were looking for a home at a bargain price for their three children at a two-day auction of foreclosed homes in Sacramento.

Some bargain hunters are like [Francisco] Cervantes, novices grasping at their chance for the house they've always wanted in a market they have been priced out of for years. Countless other shoppers are investors looking to one day realize a tidy profit in a capitalist economy that rewards good timing.
Armand Sarcomo and his wife, Rachel, were eyeing a ranch-style home on five acres listed in the Yuba County community of Browns Valley..."We're looking for a second home," said the 28-year-old union sheet metal worker. "It's a good investment. We're a young family trying to move up and take advantage of the market."
From the Modesto Bee:
Home prices in most Northern San Joaquin Valley cities have dropped significantly more than those elsewhere in California. Newman has suffered one of the state's largest declines in home values: The median March sales price was $177,250, down nearly 54 percent from last year...Stanislaus County homes sold for a median $232,163 last month, which was 33.5 percent less than March 2007....San Joaquin County homes sold for a median $265,000 last month, which was 36.1 percent less than March 2007....
From the Associated Press:
An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression....Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.
"Basically we're in uncharted territory," Shiller said. "It seems we have developed a speculative culture about housing that never existed on a national basis before."


Jacob said...

The chart tells a lot. Can you add a series for the total sales for the same period?

Patient Renter said...

It's nice to see Shiller tellin it like it is. I've seen him shy away from politically unpopular statements before, so this is refreshing to see.


Like the hundreds of others in this Cal Expo exhibition hall, this young Yuba City couple were looking for a home at a bargain price for their three children at a two-day auction of foreclosed homes in Sacramento.

These auctions are a scam, stay away from them. Just get a short sale or repo'd house and avoid the games these auctions play.

Perfect Storm said...

Falling U.S. home prices and a lack of available credit may result in foreclosures on 6.5 million loans by the end of 2012, according to a Credit Suisse research report on Tuesday.

Wow 6.5 million, that is a lot.

We are so far from the bottom.

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