Sacramento Real Estate Market: First or Last to Rebound?

From InvestmentNews.com:

As economists and housing experts desperately look for signs of a bottom in the crumbling housing market, some investors are starting to make plans based on which major markets are predicted to rebound first.
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Markets that didn't see a huge run-up in home prices and a glut of new construction over the past five years, and those that are enjoying good job growth, will likely lead the rebound, said [UBS analyst] Mr. Goldberg....
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Markets that will take more than three years to rebound include Miami, Jacksonville, Orlando, Palm Beach and Tampa, Fla., Las Vegas, Phoenix, and Riverside and Sacramento, Calif., according to the report.

From the Los Angeles Daily News:

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said that...[the recovery] phase depends on whether there was a building bubble where you live. Not too much of one in the Los Angeles area but certainly in the Inland Empire and Central Valley.

"It was almost like a heart attack," he said of the market collapse. "But after the heart attack, you have a long period of convalescence." The recovery, he said, will likely show up in some areas early next year. Some building-bubble areas will have to wait until 2010.

Here's what economist Chris Thornberg is predicting for the Bay Area and Southern California:

Christopher Thornberg, principal at Los Angeles consulting firm Beacon Economics, said last week that the market isn't likely to reach bottom until at least the middle of next year. The overall Bay Area price will decline between 35 and 40 percent, about double the amount it has come down so far, he said. When you do find bottom, you will not see prices immediately start to rise again," he said. "Housing markets don't bounce, they splat." [SF Chronicle]

Economist Chris Thornberg said Southern California home prices likely will continue falling until mid-to-late 2009...Thornberg...said home prices would have to fall about 40% from peak to trough to return to the historical norm. But add in the impact of rising gasoline prices, the subprime mortgage meltdown and rising foreclosures, and it’s likely prices will fall 50% peak to trough. The S&P/Case-Shiller index shows that prices for the L.A./O.C. area are down 24% from the peak, so the region is about halfway to the bottom, Thornberg said. [OC Register]

From Portfolio.com:

There is still no joy in Mudville. To understand why the housing slump has been so deep and so prolonged, one could visit this California city, once called Mudville. A fast-growing bedroom community for San Francisco Bay area workers during the housing boom, Stockton stumbled badly when the mortgage market imploded. Prices tumbled and the number foreclosures rose. The city became a national symbol of boom and bust. 60 Minutes profiled a bus tour of repossessed homes in Stockton—what the Los Angeles Times called the "magical misery tour."

More than two years into the slump, there is no sign of a recovery. "Everybody wants to wait until the market hits the bottom, but nobody can assure them that the bottom is here yet," says Oliver Torlai, a local real estate agent in business for 40 years.

For those following the Sacramento economy, the Sacramento Regional Research Institute (SRRI) has a breakdown of the Sacramento region's employment numbers as well as some graphs. From SRRI.net [pdf]:

The six-county Sacramento Region posted negative job growth for the first time in 15 years due to slowdowns in nearly every major sector, according to May 2008 preliminary data. Despite showing some positive signs in recent months, continued losses in the housing-related sectors, rising prices, and the strain on consumer spending weakened economic conditions. The drop from stagnant to negative growth places the Region below both the statewide and national averages. The Region’s -0.7 percent growth rate translates to a loss of 6,500 jobs in the past 12 months.

Here's what SRRI predicted back in November 2007:

A first-time business forecast for Greater Sacramento predicts the region's job growth will improve slightly over the coming year, with an average growth rate of 2 percent...New research by the institute projects year-over-year employment growth rates between 1.7 percent and 2.2 percent from October 2007 to September 2008. [Sacramento Business Journal]

And here's what SRRI said in its revised forecast [pdf] from April 2008:

Job growth in the six-county Sacramento Region will slow during the next 12 months, but will not drop into negative growth. The average job growth in the coming 12 months is expected to be 0.2 percent, slightly lower than the last 12 months, which showed fairly low growth of 0.5 percent. The forecast estimates year-over-year employment growth rates between 0 and 0.6 percent during the April 2008 to March 2009 period.

From the Sacramento Business Journal:

Truxel Properties LLC, which owns the Truxel Business Center at 4090 Truxel Road in North Natomas and two residential development sites in the region, has filed for bankruptcy liquidation, listing $17 million in assets and $19.4 million in liabilities.
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The center is about 40 percent leased, said Walter Dahl, the bankruptcy attorney who filed the Chapter 7 case....The company, he said, was a victim of the depressed real estate market for both small-user office space and residential development sites.

From the Manteca Bulletin:

According to the final draft of the report that was distributed to each member of the [Manteca] Board of Education, the district lost 811 students last year. It is a number some have attributed to the housing market crash and the foreclosure crisis that left some families sleeping in their cars.

From Jim Wasserman's Home Front blog:

"Over the last six-seven months or so, we’ve been doing a lot more foreclosure evictions for banks in Sacramento County. I would say we used to do maybe one a month in my division and now we’re doing anywhere between 30 to 100 a month in our division."

From the Terk Smirk blog:

My husband was telling me that Foreclosure Rage was becoming common. One house had poo smeared on one bedroom wall. How should I feel about people who intentionally vandalized their home just before moving out? On one hand I do feel sorry that they lost their home. On the other hand, I know that many people who got loans in the past 3-4 years should have never been given a loan for a home they really couldn't afford. Either the lender didn't care or the borrower lied on his/her loan application. It sucks all around.

From MSNBC:

Some houses have been damaged by angry, frustrated homeowners who lose their homes to foreclosure, according to Mark in Stockton, Calif., where the foreclosure rate is among the highest in the country. "This city has so many foreclosed homes that are trashed there is an ad on local TV offering up to $1,000 to people not to trash their home before they are kicked out of it,” he wrote. “The problem here is grave.”