Thursday, July 31, 2008

Elk Grove's "Phantom Houses"

From the Sacramento Bee:

If you're seeking ground zero of the real estate collapse, go no farther than Laguna Ridge. Four years ago, this 1,900-acre swath – characterized as Elk Grove's "crown jewel" – was master-planned for 7,767 homes. Roads, utilities, parks, and a new high school are all in place. But the downturn hit so hard and so fast that only 310 houses have been sold so far. Thousands of phantom houses lend a surreal air to Laguna Ridge, a vast quadrant of the busy intersection of Elk Grove Boulevard and Bruceville Road.
...
"It breaks my heart," said Kathryn Boyce, a Northern California real estate analyst for Hanley Wood Market Intelligence. "Laguna Ridge would be perfect – a shining star. But the market crashed so quickly and deeply that it didn't happen." Still, Boyce is a believer in real estate cycles..."The housing market will come back with a roar. At Laguna Ridge, all the infrastructure is in place and you'll see a ton of houses all opening at once. It's poised to come back like wildfire."

So check back in a couple years. Laguna Ridge may be ground zero of the great real estate explosion of 2010.
From Bloomberg:

California led the U.S. into the worst housing recession since the 1930s. Now the most populous state may be the first to find the bottom. In Stockton, the U.S. metro area with the highest foreclosure rate, home sales more than doubled in the second quarter after prices fell by an average 37 percent, said PMZ Real Estate Corp., the area's largest broker...Foreclosed homes are now getting multiple bids and the supply of homes for sale in San Joaquin and Stanislaus counties shrank to 4.9 months in June from 18.2 months a year earlier, he [PMZ's Michael Zagaris] said. "We've found the bottom,'' Zagaris said.
...
It may take until 2010 for foreclosure sales to work their way out of the system in areas where defaults have soared, said [Chris] Thornberg of Beacon Economics. "Those sales are going to have a very large impact on prices for the next year or so until those homes get absorbed by the market," he said. "Housing markets don't bounce, they splat. They hit bottom and they stay there."

From TheStreet.com:
Jim Cramer
Cheap Housing Markets Will Sow the Seeds of a Rebound

Home prices in Stockton, CA are down 40%. In Daytona, FL, houses are priced at 30% discounts with amenities. The Inland Empire of California -- you name your price. That's how the madness ends: with huge price cuts....It is all coming together, just when no one sees it coming. Because you have to look at the hard-hit regions to know what's going on.
From the Stockton Record:
The union representing the Stockton Police Department's rank and file has filed a claim against the city, saying a 9.5 percent raise budgeted by the city is not enough under the terms of a 2005 agreement.
...
The pay increase the police union says it is owed could trouble a city budget already beleaguered by the collapse of the housing market and the inability of flattening sales and property tax revenue to offset rising costs.
From the Sacramento Bee:
Gov. Arnold Schwarzenegger signed an executive order today eliminating jobs for as many as 22,000 temporary state employees and reducing pay for about 200,000 state workers to the federal minimum wage of $6.55 per hour, portraying it as a stopgap measure to ensure the state can pay its bills without a state budget.

The Republican governor intends to reverse those moves once lawmakers reach a budget compromise, meaning the state would rehire temporary workers and give employees their entire back pay. The governor's order also imposes a strict hiring freeze and eliminates overtime but exempts workers in health and safety fields.

15 comments:

Jacob said...

counties shrank to 4.9 months in June from 18.2 months a year earlier

Not including all the shadow inventory the banks have.

If Jim Cramer is calling a bottom, we still have a ways to go.

As for cutting the state workers salaries, how about we cut the legistrators salary to $0 until they pass a budget, and make it non refundable, so they can drag it along all they want at their own loss.

James said...

With banks finally re-writing loans, I am not sure this mysterious shadow inventory lurking in the dark is going to come to fruition.

James said...

How about them GDP numbers today. No recession yet. Could we be in the clear?

sacramentia said...

As much as I wish we were in the clear I don't think we are yet. The refund checks will wear off by this fall and I think reality will set in.

sacramentia said...

Arnold probably can't do it legally, but I would be much happier to see entitlement payments suspended rather than payments going to people who are actually working.

Jacob said...

As for the shadow inventory, the banks have been foreclosing on more homes than they are selling. They still have a certain amount that they already own.

But what is that amount?

Are we in a recession? Starbucks posted it first ever quarterly loss. Mervyn's in bankrupt. Stores and malls and airports are vacant at times when a few years ago they were packed non stop.

If you factor in real inflation and the the governements bs inflation, I think we have been in a recession for some time. At least since the second half of 07.

Diggin Deeper said...

"How about them GDP numbers today. No recession yet. Could we be in the clear?"

Drill down a bit to find that past GDP's are now revised to show negative growth...Not out of the woods by any stretch... today's number was pretty pathetic given it's the govt handout that's affecting the results...it's the jobless claims number that's disturbing...haven't been this high since 2003...second month in a row over 400K....

Let's see how the Christmas season pans out...that ought to set the tone for 2009.

James said...

Yea, I was kinda joking about the numbers. Whitehouse says we avoided a recession though. Greenspan does not think we are in one either, though a global recession could push us over the edge.

Evin said...

I'm a state worker who just got my pay dropped to $6.55. I noticed that I now qualify for food stamps.

Bring on the free cheese!

BottomFeeder said...

Is there a blog somewhere that keeps track of how many experts are calling the bottom? Might be fun to look at a year or two hence.

Patient Renter said...

Still, Boyce is a believer in real estate cycles..."The housing market will come back with a roar

Sure, she believes in real estate cycles, but apparently she doesn't understand how they work. There will be no roar. Consult a chart lady.

It may take until 2010 for foreclosure sales to work their way out of the system

Peak Alt-A resets don't even occur till 2011. I know a lot of people like Thornberg, but I recall perfectly when he was in UCLA singing along with everyone else about the soft landing... so I have no problem saying he's wrong again.

Patient Renter said...

Whitehouse says we avoided a recession though.

What do you expect them to say? They do nothing but lie.

Is there a blog somewhere that keeps track of how many experts are calling the bottom?

Keeping track of all the bottom calling over the last few years would be a full time job. I don't think any blogger is up to that kind of work :)

Todd said...

Sacramento

norcaljeff said...

I know a lot of people like Thornberg, but I recall perfectly when he was in UCLA singing along with everyone else about the soft landing

Actually that's not true. Not sure why you'd diss Chris but he's been predicting a splat in RE for a while now.

Patient Renter said...

Not sure why you'd diss Chris but he's been predicting a splat in RE for a while now.

For a while, yes, but not always. Like I mentioned, the Anderson forecasts that he helped produce at UCLA were, in hindsight, much to conservative about the outcome of the housing bust. It wasn't until he left UCLA that he seemed to change his tune.

At any rate, implying that the foreclosure problem will be gone after 2010 is just wrong.