Saturday, July 26, 2008

CAR: Median Home Price Down 37% in Sacramento, Sales Nearly Double

From the Sacramento Business Journal:

In the Sacramento region, the median price [per the California Association of Realtors] was $220,630 in June, compared to $351,620 a year ago, a reduction of 37.3 percent. Sales were up 95.5 percent year over year.
From CNNMoney:
California's Central Valley remains ground zero for foreclosure filings. Stockton, which is just east of San Francisco, had the highest rate of foreclosure filings of any metro area [in the second quarter], one for every 25 homes. That's seven times the national average. Riverside/San Bernardino, which is east of Los Angeles, had the second highest rate in the nation with one filing for every 32 households. Las Vegas, Bakersfield and Sacramento rounded out the top five.
From the Stockton Record:
Repossessions alone are up more than eightfold in San Joaquin County in the first half of this year, compared with the same period last year, RealtyTrac reported. A total of 5,643 were repossessed in the first half of this year, up from 683 in the first six months of last year.
From the Stockton Record:
The bank has foreclosed on the owners of Stockton's Sheraton Hotel, preventing Regent Hotel LLC from scoring the big success it sought on Stockton's waterfront.
...
Regent's venture also was sabotaged by the collapse of the housing market. None of the 42 condos atop the hotel, priced as much as $750,000 [and originally as high as $1.2 million], has sold. Eight buyers put down payments on condos, but the luxury units remain as yet unfinished. Another consequence of Regent's cash flow problems.
From the California Aggie:
Sue Greenwald expressed her disapproval of the additional growth and questioned the logic behind building these new sites during a time of declining housing prices. Greenwald cited data from the Sacramento Bee showing that between the first quarter of 2006 and the first quarter of 2008, Davis has seen a 26 percent decrease in home prices. She also pointed out that Bay Area home prices fell 27 percent in the last year. "That's pretty dramatic," she said. "These are areas just like Davis that are considered higher end and immune to decrease."
From the Sacramento Bee:
In Sacramento, Coldwell Banker real estate agent Viki Benbow...telling clients, "There's a much higher probability that interest rates will climb rather than go down." Benbow said this is why people shouldn't wait. But it's hard to tell. Others preach that higher rates will drive prices lower.
From the Sacramento Bee:
For all its efforts to become a technology center with a fully diversified economy, Sacramento remains a government town. Gov. Arnold Schwarzenegger's plan to reduce most state employees to minimum wage on Monday will make that painfully clear. State employees – all 112,500 of them in Sacramento, including education workers – account for 11 percent of the area's work force. Schwarzenegger's plan could remove $15 million each workday from the area economy, said Jim Zamora, a spokesman for Local 1000 of the Service Employees International Union.
...
"Government jobs are considered steady paychecks – dependable, right? This could shake that somewhat," [UOP's Jeff] Michael said. That could translate into reduced spending at restaurants, clothing stores and the like, putting even more downward pressure on the region's troubled economy.
From the Sacramento Bee:
Overall, though, Sacramento housing-market officials liked the bill, including the provision that would allow at least 400,000 families nationwide to refinance their subprime mortgages with FHA programs. "It will help a segment of people, it is positive, it is a good thing for people who are struggling," said Pam Canada, executive director at the Sacramento office of Neighborworks Homeownership Center, a nonprofit group that assists troubled borrowers.

But John Arvanitis, president of Sunrise Vista Mortgage Corp. in Citrus Heights, said the provision won't help many who owe more than their homes are worth. "It's the proverbial rubber bone to the starving dog," he said.
From Wachovia's Q2 2008 Earnings Call (via Seeking Alpha):
...[T]he Central Valley and Inland Empire have both represented our biggest challenges, and actually have represented a little under 50% of all losses we've taken to date and that's where we are focusing on, much of our retention and activity.
From WAMU's Q2 2008 Earnings Call (via Seeking Alpha):
MSAs in the southeastern US such as those in Florida and Georgia and MSAs in the inland empire and central valley of California have recently experienced some of the worse housing market conditions and price declines in the country. While these MSAs make up only 20% of our option ARM exposure, they have contributed 39% of our total option ARM delinquency growth for the year.
From the Sacramento Bee:
Citing false advertising and other violations, the state of Washington has moved to revoke the business license of Roseville-based Paramount Equity Mortgage Inc.
...
The documents name Hayden D. "Hayes" Barnard as president, co-founder and one-third owner of Paramount, and other company officials. Barnard's voice was frequently heard on Sacramento-area radio stations, touting Paramount Equity Mortgages.
From the Long Beach Press-Tribune:
The broker who bought Rep. Laura Richardson's Sacramento house at a foreclosure auction two months ago has dropped his lawsuit against her and her bank, allowing Richardson to reclaim the home. In a statement, Richardson's lender, Washington Mutual, said the litigation had been "resolved," but that the terms are confidential.

The broker, James York, also declined to discuss the matter. "I'm not supposed to say anything," he said. "I think you guys can figure out what happened. I only make business decisions and nothing else."
From the Long Beach Press-Tribune:
Rep. Laura Richardson, D-Long Beach, joined the House majority this week in voting for the American Housing Rescue and Foreclosure Prevention Act.

18 comments:

siflsockpuppet said...

The way I've read some stories about the new federal foreclosure law, the lender will have to reduce the balance to 85% of current appraised value, AND any second mortgages must be satisfied. What percentage of buyers used second mortgages, and what constitutes "satisfied"? Can they just default on them? Will the second mortgage holders prevent the owner from refinancing using the new government handout program?

PeonInChief said...

In California the second mortgage holder is in a very weak position. If the first forecloses, the second is wiped out unless the building sells to a buyer who pays enough to pay off both mortgages. Some astute homeowners in trouble have quit paying on their second mortgages, knowing that the second can't file foreclosure as the first would take the house for the amount of the first mortgage, leaving the holder of the second nothing.

It works differently in other states, of course, particularly those where foreclosure requires a court proceeding.

norcaljeff said...

Sac Co median home price in June 2006, a mere two years ago, was $380K. If you listened to Sippin and the realtor "experts" and bought at that time, you would be down a staggering 58%.

According to the SAR President in a 6/06 press release "...it's a mistake to say that Sacramento housing is ripe for a fall." Should this person still be employed with a miscalculation this large and by giving false hope to new home buyers?

siflsockpuppet said...

peoninchief - I don't think stopping payment on a second will qualify as "satisfying" the debt under the new Foreclosure Prevention Act. If a homeowner owes $50,000 on a second, I believe they'll have to pay that off, leaving only the first to use this program. My point is that I doubt many homeowners in trouble in the Sacramento area will benefit from this program.

Jacob said...
This comment has been removed by the author.
sacramentia said...

387k - 220k = 167k decline, or 43% decline (167/387). Using your math we already blew past 75%.

sacramentia said...

If the bank can write down the principal value of the loan to an amount that encourages the homeowner to stay and eliminates the cost and time of foreclosure, wouldn't that just be good business?

Jacob said...

Oops, I used the current value instead of the reduction in my calc. My bad. 43% is correct, thanks.

Keeping people in their homes is good business for banks. Since they get 50% of the value, if that, at foreclosure right now. If it will even sell.

If you can keep them in for a 10% loss or 20%, seems like a smart move.

Patient Renter said...

"I'm not supposed to say anything," he said. "I think you guys can figure out what happened. I only make business decisions and nothing else."

LOL! This is so classic. I wonder who bit the bullet and paid him off. Obviously Laura is dead broke. Why would WAMU care to help her out? Let me think....

Rep. Laura Richardson, D-Long Beach, joined the House majority this week in voting for the American Housing Rescue and Foreclosure Prevention Act.

Ah! I knew it would come to me. Thanks Lander!

James said...

I've been scratchn' my head for a year wondering why banks were not doing loan modifications instead of foreclosures. The normal course of path has made no sense. Bank A pays loan officer crap load of money to go get new loans for people who are about to walk away from a home. Bank B spends a crap load of money to process and unload a foreclosure (a non revenue generating expense). Bank B then tries to get new lenders from Bank A and the process continues. If they would just cut the value of the loans down and modify the terms, they could keep the revenue generating client on the books without the acquisition cost and write down less than the foreclosure process would have cost.

July 25 (Bloomberg) -- Bank of America Corp. and Wells Fargo & Co., the top mortgage lenders, told Congress they have accelerated the pace of loan modifications to avoid foreclosures amid criticism they are slow to help keep people in their homes.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPSvhHzsqaxo&refer=home

Patient Renter said...

James - I think that the banks (at least until recently) really had no clue how far prices would drop, and were drinking the kool-aid along with everyone else thinking that the bottom was soon to be in. That being the case, they weren't likely to pursue workouts. I'd think they'd be more likely nowadays.

PeonInChief said...

siflsockpuppet--

To get the mortgage modification, the holder of the second has to agree to the modification and the total of both the first (after modification) and the second have to be affordable.

HousingRealist said...

Anyone know what this home sold for?

1022 44th St
95819

James said...

1022 44th St

DataQuick still not showing on any public records. Jamie Lee last transaction Feb 2007 at $1.7MM.

What is your guess? The neighborhood chatter is $1.5MM.

HousingRealist said...

House one block over on 43rd is asking $1.08mil. It may have gone for 1.3.

S said...

So, I read frequently but never comment because frankly I don't know enough to make an educated comment. But I do have a question - the new law that passed - it really does nothing to help those of us who are paying our mortgages on time like good soldiers, but find ourselves 6 figures upside down in our mortgages? Correct? The only way for me (and everyone else who has been responsible about paying the mortgage) to get any help here is to stop paying the mortgage? I don't live in a fancy house in a nice neighborhood - I didn't refi cash out and go on fancy vacations or buy cars. But it seems like if I had, the government would be here to bail me out....instead, I've lived on a budget, made my payments on time, skipped vacations, made sacrifices...and there's no help for me. If I understand this correctly, it really pisses me off that if I had made poor decisions and acted irresponsibly, there would be people ready to bail me out. But since I've been responsible and paid my bills, I can't get any assistance. Do I understand this correctly?

Jacob said...

Don't feel left out. This bill does nothing to help homeowners.

Nothing at all.

It does help wall street and banks, and coincidentally what is best for the bank is to keep people in their homes, so it is spun like that, to make it seem like their are specifically trying to help people stay in their homes.

If you are that far underwater you have a couple options.

1) If you plan to stay there for another 10 or 20 years, just keep paying your mortgage and be happy you have a nice home. Keep saving and feed good about having less debt.

2) Stop paying. Save the money you would spend on the home. You will probably get 6 months to a year of free rent before you are kicked out. Then rent and in a few years when we reach a bottom have your 20% saved up.

I think you wont even get a 1099 for the debt foregiveness anymore.

Patient Renter said...

S - you might want to research the bill more to learn exactly how one qualifies for benefits, but yes, it does nothing to help owners in good standing who have made all their payments.