Sacramento Home Buyers "Still Face An Elevated Risk of Being 'Upside Down'" in 2012

From Inman News:

Purchase a home in 67 of the nation's 100 largest metropolitan areas and you should be able to build positive equity by 2012, according to a new study comparing ownership and rental costs. The report from the Center for Economic and Policy Research concluded that prospects for building equity by 2012 have improved somewhat in 36 cities, compared with an analysis performed in the spring. In many markets, declines in house prices and modest increases in rents are helping return rent-to-price ratios closer to historical levels, the report found.

But the report identified 33 bubble markets areas where home buyers still face an elevated risk of being "upside down," or owing more than their home is worth, four years from now. One-third of those markets were in California, including San Jose, San Francisco, Los Angeles, Sacramento, San Diego, Fresno, Stockton, Bakersfield, Modesto and Riverside.

From the CEPR report [pdf]:

Given the remaining mismatch between home prices and rent levels in most bubble markets, we argue it is still unwise for policy makers to attempt to directly intervene in housing markets to maintain what are historically unprecedented high home prices. Policies that encourage occupancy, discourage vacancy, and maintain employment to stabilize hard hit communities are likely to be the best approach to assuring prices do not fall any further than is necessary to reestablish a stable housing market.

From the Wall Street Journal:

Lower home prices are luring some buyers back into the U.S. housing market, but foreclosures and a weakening economy are likely to keep downward pressure on prices for at least another year, economists say. A quarterly Wall Street Journal survey of housing data in 28 major metro areas shows that the glut of unsold homes listed for sale is shrinking in most of them. In many cases, sales have been stimulated by investors who are grabbing what they see as bargains on homes that can be turned into rentals. Metro areas with the biggest drops in for-sale signs include Sacramento and Orange County in California and the Virginia suburbs of Washington, D.C.
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Housing analysts caution that many homes that aren't currently listed for sale may hit the market in the next year or two. This looming supply includes pending foreclosures and homes temporarily taken off the market while their owners await stronger demand. With banks chopping prices on foreclosed homes, other sellers "are giving up and taking their homes off of the market," says Michael Lyon, president of Trendgraphix Inc., a research firm in Sacramento.

From the Sacramento Bee:

[A]s auto sales erode, local governments are feeling the squeeze. "Car sales are certainly our biggest contributor to the general fund," said Roseville Treasurer Russ Branson. "Sales taxes overall are down. Property taxes are flat. So all we can do is control expenses." Roseville, home to one of the region's big auto malls, depended on car and truck sales for about 7 percent of its general fund money last year, Branson said. Local vehicle sales dropped 15 percent for the fiscal year that ended in June, according to city statistics. That ripped $1.4 million from the city's coffers and represented a $146.5 million drain on the economy, Branson said.
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Employment at car dealers in the four-county Sacramento region has fallen by 8 percent in the last year to 12,700, according to the state Employment Development Department.
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There are a few reasons to hope a rebound is coming, experts said. The housing market may be close to a bottom – sales over the past few months are up, even though prices continue to fall.

From the Modesto Bee:

With declining home prices, tightening credit and the collapse of several major financial institutions, experts say now may not be the best time to think about leaving your job, even if it's one you hate.
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Suck it up and recommit yourself, said Lee Merchant, a psychology professor at Modesto Junior College. You can do that by assessing where you are in dealing with the fact that quitting will hurt you more than help you in this economy. "Are you in denial? Ask yourself if you have job options or not, because the job market is really bad," Merchant said.

From News10:

Usually you can spot the foreclosure homes through abandoned yards and newspapers in the driveway. One home in Lathrop is identifiable by its missing garage door...The garage door has been torn from the foundation, as has a regular door leading from the garage to the side yard.