Thursday, May 01, 2008

Sacramento Real Estate's 'Ripple Effect'

From the Appeal Democrat:

Six people are expected to lose their jobs and funding to 25 others cut back as the impact of the housing slump hits home in Yuba County. The Community Development and Services Agency Director Kevin Mallen said he had anticipated the slump and began closing positions when vacancies occurred in order to absorb the effects, but not all employees were safe. "This is directly tied to the volume of work. Building permits are off," Mallen said...In 2006, during the housing boom, the building department was issuing 1,200 permits; about 30 permits have been issued each month for the last six months.
From the Sacramento Bee:
Far removed from billion-dollar writedowns and the subprime meltdown, the Sacramento area's community banks appear to have escaped the worst of the housing slump. But they aren't immune, either. The downturn in real estate and the overall economy has cut into their profits just like the big banks. Although they largely sidestepped subprime lending, many are bracing for losses on loans to construction firms, subcontractors and suppliers. Two banks are owed millions by John Reynen, the prominent Sacramento home builder who filed for personal bankruptcy recently.
...
Court papers say River City and Bank of Sacramento are each owed about $6 million by Reynen, who personally guaranteed the loans and then was forced into bankruptcy by the housing market collapse. "Sacramento is so real-estate driven," [chief executive of Bank of Sacramento William] Martin , said. "There's a ripple effect."
From the Redding Record Searchlight:
We are seeing subdivisions or developers that are experiencing either a slowdown in sales ... or price declines that are such that banks can no longer cover in terms of collateral," North Valley Bancorp CEO Mike Cushman said Tuesday afternoon.
...
Cushman said higher housing inventory as a result of foreclosures, especially in the Sacramento area, are affecting every bank's bottom line...Cushman, who's been a banker for more than 30 years, said the current housing downturn is the worst he's experienced. "We actually feel pretty lucky. Most of our markets are still performing pretty well. ... It's the Sacramento area where we are experiencing the greatest reduction in values," Cushman said.
From the Modesto Bee:
Dennis Swann of Swann's Automotive Repair in Modesto said he's seeing more people forgo repairs for things they see as unnecessary, such as air conditioning. Dennis Slewoo of USA Auto Service, also in Modesto, said he's had to schedule more repairs in stages, rather than doing them all at once. Both men see the same standard: Consumers, stung by high gas prices and a downbeat economy, are clamping down on their automotive expenses.
...
"Buying a vehicle because it looks good is less and less of a reason," [publisher of Automotive Digest Chuck] Parker said. "People are looking for utility, for cars to last. People are fighting to keep their kids in school and pay their mortgage."
...
In Modesto, car dealers have reported a drop in sales over the past year that mirrors the decline in housing.
From the Sacramento Bee (updated):
By eliminating 174 jobs at its Elk Grove campus, Apple Inc. created more economic problems for a suburb that's been hit particularly hard by the real estate downturn. Apple said Thursday it's moving some of its sales and support functions from Elk Grove to the company's site in Austin, Texas.
...
[T]he job cuts come at a particularly difficult time. Real estate analysts say Elk Grove is doing worse than most other parts of the Sacramento region. Vacancies at its smaller strip malls were three times as high as the region's average at the end of 2007.

Residential foreclosures there have more than quadrupled this year and are growing at a faster rate than in Sacramento County as a whole, according to Foreclosures.com, a Fair Oaks-based Web site for investors.
CBS13: Foreclosed Home May Have Been Burned For Insurance

From the Stockton Record:
A Stockton man accused by federal officials of spearheading a multimillion-dollar house-flipping scheme has pleaded guilty and faces a maximum prison sentence of 21/2 years, his attorney said. Iftikhar Ahmad, 36, admits he was wrong, but that he also was a symptom of a broken mortgage system failing people throughout the nation, San Francisco defense attorney John Runfola said, adding that Ahmad became the fall guy for powerful bankers and brokers who go unpunished. "I'm sure there are tens of thousands of people like Iftikhar," Runfola said.
...
Runfola said his client got caught up in a "gold rush" mentality, where a lot of people were taking advantage of the skyrocketing real estate market and at times bending unchecked rules. Runfola also said Ahmad rehabilitated abandoned homes that are still occupied today.

10 comments:

rocklin renter said...

Apple Inc. eliminated 174 sales and support jobs at its Elk Grove facility Thursday, transferring the work to a site in Austin, Texas.

My brother will be stepping off the plane in Austin, TX in just a few short hours.

He got pretty sweet deal from the fruity company, enough to move with little regret.

Those "lost" jobs were partially commission based, and some there made a fairly good living.

They can move to Austin under the relocation option, but from what I hear very few are likely - maybe 15%.

C'est la vie.

My father and I are going to help him move - ROAD TRIP!

Bob said...

I worked at apple in EG in the past, and still have some friends there. Apparently "support" means the sales support team, as the folks I talked to in tech support hadn't seen any one given their walking papers.

Enjoy the road trip to Austin. I went when I worked for Apple on business, and have been meaning to head back ever since for pleasure. Austin reminds me a lot of Sac, only with more culture to enjoy (large D1 college, Austin City Limits, great live music scene, etc) and better food.

Deflationary Jane said...

If UC offered us a transfer just about anywhere out of this state, we'd be on the road in less then 24hrs.

Been to Austin several times. I love the place. UoT, Austin's MFA program was my #3 choice.

The SJ Merc had an article on white boomer and middle class outmigration from CA. Expect to see more.

Sippn said...

DJ - the "C" stands for California - but I don't really know if UC has facilities in other states - stranger things have been...

72 hours ago the city gave fire fighters (fire administrators) huge raises...

Last night the city was looking at cutting other public safety costs....

Deflationary Jane said...

LOL I suppose I shouldn't be surprised that you don't get my dark humor. The chances of UC sending us outside of C is utlra-slim to none. But we'd be thrilled to death if that miracle occured.

Local gov is hosed. They just haven't figured out how hosed they are. No one seems willing to make the tough decisions.

Patient Renter said...

72 hours ago the city gave fire fighters (fire administrators) huge raises...

Last night the city was looking at cutting other public safety costs....


I KNOW! They just approved a 10% raise for firefighters 2 days ago, which floored me when I heard about it (in the midst of layoffs elsewhere).

Then yesterday they announce they're going to hit the fire department with an 8% cut? WTF is going on!?

sacramentia said...

DJ-For an OC native, you just never picked up the live for today don't worry about tomorrow that has defined California since the Gold Rush.

Best of luck to you and the Mr. in moving to a state that is a better fit.

I still think CA has a bright future for a long list of reasons, but I wish the politicians would be as shrewd as Texas on economic policy. Texas economic policy and California's natural assets would be an absolutely unstoppable force.

alba said...

My understanding is that regional banks are highly leveraged with loans to commercial and regional residential builders. Speaking of ripple effect, there appears to have been a rather aggressive commercial building boom in this area, that has yet to implode.

Austin is a nice city; good nightlife; somewhat liberal views with the state capital and university. The rest of TX really sucks.

STOP ROSEVILLE CRIME said...

Lander, the Apple jobs link isn't working...

RR, no income taxes, cheaper homes, not a bad place to go.

sf jack said...

I believe UC does have some out of state jobs.

It still manages the Los Alamos National Lab in New Mexico, right?

Perhaps DJ could work on getting a tranfer there.