"California's Central Valley Cities Are Faring the Worst"
From the AP:
Speculators, who swooped up between 30 and 40 percent of the homes sold [in Mountain House], have bailed in droves, leaving empty houses selling for half of what they cost two years ago.From the Sacramento Bee:
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The latest report from Zillow.com, a housing valuation website, found that out of 163 metropolitan areas, foreclosure-plagued Stockton, Mountain Houses's next door neighbor to the east, had the highest percentage of homes with negative equity. In Stockton, 70.5 percent of all homes bought within the last five years and 45.9 percent of all homes in the city cost more than there are worth.
Amy Bohutinsky, a spokeswoman for Zillow.com, said by whatever measure firms use, California's Central Valley cities are faring the worst, followed by southwest Florida. "I don't know what the future holds for these towns," she said. "It's a very bleak situation when you're looking at your home value having to double just to break even.
"I don't think there's anyone in the world that's been going through what we're going through now," San Diego home building industry consultant Tim Sullivan told struggling Sacramento-area home builders Tuesday. Many builders are focused on their survival in a capital-area market where bank repos rule.From the Sacramento Bee:
The developer of the oft-delayed Elk Grove Promenade shopping mall says it's in danger of going out of business, raising fresh doubts about the Promenade. General Growth Properties Inc.'s worsening financial condition was outlined in a filing Monday with the Securities and Exchange Commission. Retail experts said they're convinced the Elk Grove mall will be opened, either by General Growth or a successor. But the opening, set for fall 2010, could well slip.From the Sacramento Bee:
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Though the exterior to the 1.1 million-square-foot mall is done, the opening was delayed in July by a year, to the fourth quarter of 2010, because of the weak economy. Elk Grove has been especially hard hit by the downturn in the housing market.
CalPERS disclosed a $3.2 billion decline in its housing portfolio Wednesday, the latest major setback for the big pension fund. The California Public Employees' Retirement System said an exhaustive appraisal of CalPERS-owned homes and lots across the United States revealed a 35 percent drop in value in a few short years, testament to the horrific collapse in the nation's housing market.
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CalPERS has been investing in housing since the 1990s, the bulk of its funding came between 2004 and 2006, consultant Le Plastrier said...CalPERS' investments include the site of developer John Saca's ill-fated twin tower condominium project in downtown Sacramento. CalPERS, after spending $25 million, took over the property when the project faltered last year.
9 comments:
"The developer of the oft-delayed Elk Grove Promenade shopping mall says it's in danger of going out of business, raising fresh doubts about the Promenade."
Overbuilt retail infrastructure, centered on misguided growth plans, coupled with dwindling demand, won't hold the commercial segment of the market together much longer. I've got friends who've bought into shopping center developments that continue to believe they're high return investments are safe...nothing that has anything to do with retail or real estate is safe at this point...The consumer is dead and that takes about 70-75% of the economy with it. As reported this morning retail sales down 2.8%:
Retail sales fall by record 2.8 percent in October
http://news.yahoo.com/s/nm/20081114/bs_nm/us_usa_economy_retail_4
The only thing saving an all out rout of the retail sector is the falling price of oil. While most believe we've destroyed demand to create lower energy prices, the International Energy Agency reported this week that oil supplies across hundereds of the world's major oil fields are falling over 9% per year. That's cumulative and it's problem that we'd better race to fix...
I was at the new shopping center on Latrobe/White Rock in EDH yesterday, marveling at its vaguely Italianate beauty against the evening sky, and noting that it remains about 75% empty. Ditto the smaller shops near the new EDH Target.
Everywhere I go, what I notice now are the new, empty commercial sites.
Folsom, EDH, Rancho in that business park area near Zinfandel/Data Dr., Fair Oaks at Madison/Kenneth.
Home equity spending is gone, jobs are gone, investment accounts are gone. What is going to happen to these places??
What a nightmare.
As for the price of oil: we blew one chance to prepare for the future during Carter's administration. I sincerely hope that we do not blow this one, because I believe it is our last chance and that even if we work like crazy to develop alternative renewable energy sources it will be a close call. Like everyone else, I'm happy that gas is affordable again. And it is amusing to see how well basic demand/supply formulae work. But we have to continue to focus on the future of energy resources, and fossil fuels are not the future. Even if you want to put short-term comfort ahead of the environment and our long-term survival, you have to realize that these non-renewable energy sources will be depleted and probably within most of our lifetimes. Every drop of oil can't be wrung from the reserves. At a certain point, it takes more energy to pump the oil out than we can obtain from the oil. This is what always amuses me about the claims of the vast amount of oil that remains in the ground. And when the petroleum industry has been given the OK to drill and they still aren't building more facilities or improving their current infrastructure, that says a lot about their belief in the future of oil as an energy source, too.
"This is what always amuses me about the claims of the vast amount of oil that remains in the ground."
You get it Cmyst...We've been so conditioned to excess that we blindly assume there's an endless supply of the things we take for granted...energy, clean water, food products, etc. I guess it proves a point as energy prices continue to fall. It does if those assumptions are correct...but if not, it will set this era apart from all others preceding it...
Real estate has become a minor issue at this point...basically a catalyst that set the first domino falling. But whether or not someone can buy a home for 50-70% off the high in our area, really means nothing. That's been replaced by... Is my job safe and will I be able to support my family? Will my small business survive? Will the school my kids go to remain open? Will my retirement account be sufficient? Is my home and neighborhood safe? Will I lose my home?
It has taken just a few short months to completely change the entire makeup of the American consumer... We knew we were tapped out, we just didn't know how long it would take us to quit buying all the things we couldn't afford and didn't need... and looking forward that's probably a good thing...
In Stockton, 70.5 percent of all homes bought within the last five years and 45.9 percent of all homes in the city cost more than there are worth.
Those figures are different than reported in the WSJ on 10/22, "California Home Sales Revive, But Not Without Intense Pain". In that article there was a table than showed 79.5% of Stockton homeowners with negative equity.
It has taken just a few short months to completely change the entire makeup of the American consumer
I am interested in the xmas season, no doubt a few stores will close for good. Circuit City is hanging by a thread.
MEW dropping to basically 0 and that "free" money has been driving spending for years.
I drive around Roseville and just wonder how all these restaurants, retail stores, etc., can all stay open. And the answer is, they can't.
And with ever job lossed, that is more money taken out from potential retail spending and also taxes. So companies and governments lose more money and the cycle continues.
Eventually we will hit bottom. It won't be next year. But I hope it is close to 2010 than 2025. But it seems more and more like we are in for a Japanese style recession, except we don't save money (in general) and will be much more screwed.
"except we don't save money (in general) and will be much more screwed."
Jacob, I would hope the saving part changes fairly quickly as people begin to understand that, with so much uncertainty, they begin to plan ahead and prepare for the unforseen.
The real problem to me is the trade imbalance...We just don't have enough product to sell the rest of the world in order to make up our monthly negative trade figure. Japan was always able to sell more than they bought and they generated positive cashflow in their accounts.
I could be wrong, but I don't see us retooling our manufacturing base to combat that problem...
We just don't have enough product to sell the rest of the world in order to make up our monthly negative trade figure.
But the rest of the world got 'rich' by selling their stuff to us.
The bubble here allowed the US to buy from China, and Europe sold more to China and other countries as a result.
Nasty circle.
But I rather live here than 'there' during this unwinding.
Too many countries dependend on selling to the US for their well-being.
That equation has to change.
"But the rest of the world got 'rich' by selling their stuff to us."
Yup, toys for Treasuries...and that, it appears, has ended...
I look for the day when huge developing middle classes (four or five times our size) pick up the slack...When that happens, we'd be smart to address their needs, retool our factories, and reverse our trade imbalance...Rice, beef, and soybeans for rupees and yuans.
We're in transition and there's a lot of people that would like the kind of lifestyle we have....who better to give it to them than the US.
DD -
We think alike.
Hopefully these governments decide to serve their own people, and we can set up new businesses catering to their needs, and viceversa.
We need true trade balance, instead of the inbalance of the last decades.
Hell, can you imagine Vegas when other people in the world can afford to visit it?
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