Tuesday, June 03, 2008

'It's Kind of Like Bleeding to Death'

From Bloomberg:

Home prices fell in 23 U.S. metropolitan areas in March, led by Sacramento and San Diego, as rising foreclosures prolonged the housing recession. The price per square foot in Sacramento, California's capital, dropped 31 percent to $160 from a year earlier, according to a report released today by New York-based Radar Logic Inc., a real estate data company.
From Housing Wire:
Most key markets in California saw motivated sales comprise a growing portion of transaction volume, as well. In Oakland, distressed sales were 35 percent of the housing market in March, RadarLogic said; in Sacramento, that number soared to nearly 50 percent.
From the Sacramento Bee:
At the current sales pace, real estate experts say, it will take 13 years to develop and sell all the new homes planned in Yuba County and its neighbor, Sutter County. "That is horrifying. That's like seeing a mouse under the table," says Dean Wehrli, a Sacramento-based home-building industry consultant, addressing a home-builders meeting last week. "My take is that marketplace is going to be hurting for a while."
From the LA Times:
It wasn't long ago that Andy Krotik was selling houses to out-of-town investors who would sometimes buy two at a time. Now, Krotik spends his days warily entering abandoned houses, checking for angry holdouts or startled squatters. He wants to make sure the properties are empty and secure so he can sell them for the banks that have repossessed them. "We're experiencing a tsunami of bank-owned properties," said Krotik, who has been selling real estate in this Central Valley town since 1989.

Few places in California flew as high in the real estate boom and crashed as hard as Merced.
From the Associated Press:
Robert Lindsey was not surprised by new data last week that showed new home sales have fallen more than 40 percent from their peak almost three years ago. He can tell from his company's bank account. "We're literally losing money every month," said Lindsey, general manager of Signature Drywall Inc., in Sacramento, which installs drywall in new homes and apartments in the Sacramento and San Francisco areas. In 2005, the firm raked in some $30 million in sales. Last year, sales were less than half that, and this year Lindsey hopes he can make $8 million. "It's kind of like bleeding to death," he said.
...
In California alone, subcontractors have laid off, on average, up to 80 percent of their staff, according to the California Professional Association of Specialty Contractors in Sacramento, which mostly represents firms engaged in new home construction projects...Head hunters say workers have fled California for Utah, Texas and other states where there's a better chance to get work in homebuilding.
From the Sacramento Bee:
Democrat Vicki Cabrera, 47, of Sacramento, who also plans to vote, directly feels the effects of a lagging economy. She lost her job as an administrative assistant for a real estate firm due to the weak Sacramento housing market. "I've never in my life gone without a job. Never," said Cabrera, who had to let go three of her family's five prized Sacramento Kings season tickets and is contemplating selling her sports memorabilia collection.
From the Modesto Bee:
Katina Hearn has been a waitress for almost 20 years, the past two at Skewers Kabob House in Modesto. She's seeing the same trend now that servers experienced during the recession of the early 2000s: people are eating less-expensive dishes and leaving smaller tips. "It really does affect us," Hearn said about the economic downturn. Servers must claim 8 percent in tips for their taxes at the end of each night. But on some nights, that isn't balancing out because people may tip only 5 percent, Hearn said.
From the Sacramento Bee:
Private schools are also seeing some changes with the downturn in the economy. Several in the Sacramento region reported a slight drop in the number of applicants for next year and a small increase in the number of requests for financial aid. "We know that some of our parents who are in development or home construction or sales, we know they've experienced significant downturns in their income," said Stephen Repsher, headmaster of Sacramento Country Day School, where tuition is around $16,000 a year.
From the Lodi News:
Two weeks after Galt City Council members urged the public to help keep up abandoned homes, one of them has been fined $100 for doing just that. Barbara Payne received a citation from the city's Public Works department last week for watering the lawn of an abandoned home next door — a violation of the city's code.

11 comments:

Tyrone said...

Brutal stories today.

The Sacramento Realtards have truly been discredited beyond belief. And they still won't admit it, and they still won't shut up.

Jacob said...

The band on the titanic played till the very end. Gotta give realtor's credit for their commitment...

Lots of businesses closing. Lots of people losing their jobs. Foreclosures still on the rise along with food, gas, and every other thing we buy.

bubblemachine said...

Barbara Payne received a citation from the city's Public Works department last week for watering the lawn of an abandoned home next door — a violation of the city's code.

Who are the biggest morons - government bureaucrats or RE agents?

David said...

"Who are the biggest morons - government bureaucrats or RE agents?"

Probably the voters for voting in these idiots into office who propose such ridiculous laws.

Diggin Deeper said...

"Lots of businesses closing. Lots of people losing their jobs. Foreclosures still on the rise along with food, gas, and every other thing we buy."

If California is in a recession, can the rest of the country avoid it? This economy is too big not to weigh heavy on the entire US economy.

I just love the spin we keep getting from the media, govt reports, experts, etc. We're still growing according to the last GDP revision (.9%). We have yet to have two quarters of negative growth which would be the "official" start of a recession. Inflation is contained and only running at a 3.5 to 4% rate. .9% GDP growth with a 4% inflation bite doesn't sound like growth to me. And the best one of all, the credit crisis is abating...(watch the Lehman numbers confirm this mid June unless they fail to acquire the $6Billion in time to keep their doors open).

Got to love the press and the numbers we get each month. It just makes getting to the truth that much tougher.

If we'd gotten the straight story, half the time, I'd wager many people would have had fair warning and could have made better decisions on whether or not to buy, sell, or invest.

watchingthebubble said...

Diggin,

I agree. However, I think people need to be more wary, to expect that they aren't getting the straight story from the government or the media, to question everything they read and hear. And to definitely question anything anyone tells you if they have a financial interest in the outcome, e.g., realtors, mortgage brokers.

David said...

An uncle of mine who is a PR consultant and former journalist always told me that the number one question to always ask about anything is "who benefits from this story." I guess that could be modified to who profits from this story. Good advice for anyone to take.

Diggin Deeper said...

Wtb...To the point exactly! We've become so complacent and dependent on data that when it's consistantly wrong and decisions get made based on what's reported, people get hurt. There are "apparent" truths that we all should think about.

1. Inflation is growing and could possibly get out of control if the Fed does nothing for too long. It will dampen home affordability.

2. Regardless of what the Fed does, bond market rates are more likely to rise in this environment negatively affecting mortgage rates.

3. The days of cheap energy are gone.

4. We're in the middle of a credit cycle change retreating from free flowing money to tighter money and tighter credit controls.

5. The US financial crisis is far from over. Expect another major casualty or two like Bear Stearns. The Fed has about $800 Billion to play with. They're lending greenbacks to banks in return for toxic notes that are being used for useless collateral. Let's hope they don't run out of money before the last bank needs it.

RE is going no where for quite some time.

Jennifer said...

Hey Agentbubble!

Where do you think Silver Springs is headed-Pricewise as well as safety? Do you think it will be shielded or will south sac keep heading east?

Jennifer said...

I asked my realtor how business was and if any of her buddies had done the swan dive off of any tall buildings. She said business was great. I am so glad I did not buy a house last year or this year!!!!!!!!!!!!!!

Patient Renter said...

She said business was great

Of course she did. She has to say that business is great otherwise people will think twice before buying, which effects her income, etc.

It's like asking a stock broker how business is in the midst of a market collapse. It's great!