Friday, November 21, 2008

Over 10,000 Jobs Lost in Sacramento Region, Unemployment Jumps to 7.9%

From the Sacramento Business Journal:

California and the Sacramento region’s jobless rates both increased a half-percentage point, reaching the highest levels since 1994....The Sacramento area’s jobless rate increased to 7.9 percent, from 7.4 perent in September and 5.5 percent a year ago, according to the state report.
From the Sacramento Bee:
[T]he Sacramento region has lost 10,200 jobs in a year, a 1.1 percent decline. The state has lost 101,300 jobs in a year, a 0.7 percent drop.
Interactive Map: Unemployment by County

From News10:
Stacy Brown of Sacramento hasn't missed any [house] payments, but said she's worried about the months ahead. "Our hours are being cut due to the budget, so I see my salary decreasing so I just want to try to keep ahead of the game," she said. She was among dozens waiting up to three hours to meet with their lenders.
From News10:
Mike Lyon of TrendGraphix said to get ready for another 10 percent price drop over the next four months. It could very well dip to 2001 pricing, he said.
Lyon predicted the median home price will bounce above $200,000 in the coming months but says that won't be because home prices are increasing. Instead, he expects foreclosures on larger move-up homes to increase, especially in newer subdivisions in the foothills. He believes those homes will have foreclosure pricing in the $300,000 range and up, thereby increasing the median price of homes in the area.
From the News-Review:
Ray Davis won’t ever refute a moniker bestowed upon him — “the eternal optimist” — because the chief executive officer of Umpqua Bank sees signs of financial recovery, even in these troubled economic times. Take the housing market in Sacramento, Calif., for example, where the average selling time for a home went from 18 months in September 2007 to now less than five months, Davis said...“People are bidding on foreclosures which says we’re hitting bottom in Sacramento,” he said....
From the Sacramento Bee:
Bank repossessions again accounted for the majority of home purchases, especially in Sacramento County, the largest sector of the region's real estate market. DataQuick said two-thirds of the county's sales involved bank repos. "The bad news is there's a lot of foreclosures in the market. The good news is they're selling," said Pat Shea, Sacramento regional manager for Prudential California Realty. "Teachers, policemen, nurses – they can all buy houses now."
Interactive Map: Sacramento Home Price Trends By Community

From the Appeal Democrat:
Yuba County's $175,000 median price in October was 34.5 percent below a year ago, MDA DataQuick reported Thursday...Median prices in the county have fallen 50.2 percent since their November 2005 high of $351,500...Sutter County's October median price was $183,000, down 29.7 percent from the same time last year....Median home prices are now 46 percent below their December 2005 peak of $339,000.
From the Modesto Bee:
Stanislaus County homes sold for a median $161,500 last month....Home prices have dropped a staggering 59.2 percent below the $396,000 peak hit in December 2005...Merced County is even worse. Median-priced homes there sold for $136,750 last month....Merced prices have plunged 64.3 percent since peaking at $382,750 in December 2005...San Joaquin County home values...are 55.7 percent below their November 2005 peak of $451,500.

"It's impossible to say when the bottom will hit," said John Knight, professor of finance and real estate at the University of the Pacific. "I never anticipated such a huge drop in housing prices so quickly."
[F]or "prudent consumers who waited to buy," [basically ignoring everything the UOP folks have said for the last three years] Knight said, "there are some tremendous opportunities now. Prices really cannot go much lower ... because it's becoming less expensive to own than to rent. That provides kind of a floor to housing prices."


Jacob said...

Prices really cannot go much lower

Says the people who didn't see the bubble for what it was and who have been wrongly calling a bottom every week for the past 3 years...

Sure foreclosures are selling quicker, but banks are taking in more than they sell each month. So no progress is being made on the inventory side of the equation.

And it may be cheaper to buy than rent in some places, but you still need to qualify for a mortgage in order to buy. And then you get to pay taxes and maintenance.

Plus I wonder how long until CA decides to drop the 1% cap on property taxes in order to "fix" the budget. That probably won't happen but you never know.

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

"Instead, he expects foreclosures on larger move-up homes to increase, especially in newer subdivisions in the foothills. He believes those homes will have foreclosure pricing in the $300,000 range and up, thereby increasing the median price of homes in the area."

Mike Lyon has been pretty straight forward through all this and I believe he's probably right on here...

On earlier blog we discussed whether prices would revert to the mean. While that does appear where we're headed, at the time no one knew how serious the economic situation would get. To the credit of many on this blog...we did know that it would be much worse than what the "experts" were saying.

In light of where we are, has the mean reversion number changed?...the highest numbers were upwards of $225K which we've broken at this point..Some felt like $180-190K, others said more in $170-180K range...others below $150K

Anybody have a thought here? I still believe that $170-180K is a good guess.

Jacob said...

What was the median in 99-2000? It is likely we will revert to that (not inflation adjusted) and whipe out all the gains from the bubble.

But this time truly is different, tho not in a good way. Other busts were caused by something like massive job losses. So in those cases if you get more jobs or come up with fancy loan programs like sub prime you can get the market moving again.

This time around, prices should have leveled off in 2003 but instead all the fancy loan products were used to keep the part going while rates were rising. And housing collapsed from its own weight.

Now what can we do. Housing prices were heading down and now they are taking jobs with them, which will create more downward pressure. So that negative feedback loop continues.

And add to that all the overbuilding.

Wages cannot inflate because companies are hiring off shore.

And credit is not there like it was a few years ago. Gone are the days of a $500k loan on a $50k income.

I think worst case, the median might hit 75% off peak. We are already over 50% now. And the bad areas will probably end up 90%-95% off.

Now I don't know how long it will take to get there. I don't think anything the governement will do will stop anything. They can try and create jobs, but that will take time.

And just when things start to stabalize in 2011-2012 the boomers start retiring and will add a lot of homes to the market.

wimpyVO2max said...

Amid all the doom and gloom we need to remember something: as foreclosure and repo sales increase, it represents something very important. Those sales represent debt destruction. The Fed reported that total US household debt has peaked and is falling.

Debt destruction is the key to healing this economy and starting a new growth cycle. We're in for a couple of painful years but the important thing is, debt is decreasing, and so the healing process is underway.

wimpyVO2max said...

Jacob>> "And just when things start to stabalize in 2011-2012 the boomers start retiring and will add a lot of homes to the market."

And the retired boomers will live where? Whatever they put on the market will be offset by whatever they buy. Boomers will add inventory to the market when the keel over.

Jacob said...

Well all I care about is CA housing. So the boomers retiring that live in CA are likely not to retire here. They will move to Florida or Arizona or some place other than CA, mainly for tax relief.

So sure they will absorb the condo inventory in florida (assuming they buy at all), but that doesn't help CA or Sac one bit.

RV6Flyer said...

Jacob, you really seem to be set on this boomer busting retirement bit. Just because you retire doesn't mean you are going to bolt and move to the sunbelt. My dad retired here in Ca so he can be close to his kids and grandkids. Prices have gotten cheap enough to where he can choose pretty much any town and get a nice house. His current home is paid off and he just started drawing SS, so that is another $1600 per month for a mortgage should he decide to have one. Not all retirees live pay check to pay check and need to downsize and flee for the hills.