"The Naysayers Have Been Silenced"

From the Sacramento Bee:

Jose Espinosa worked his way out of the strawberry fields of Central California in the early 1990s, determined to learn a profitable trade. He did, and as a craftsman in stucco and walls, he enjoyed 12 straight years of handsomely rewarded construction work. Six months ago he was laid off and now may lose the house he and his wife bought a couple of years ago in Stockton. They had saved $30,000 for a down payment. "That was my life savings," said the 38-year-old legal Mexican immigrant.
...
His mortgage is $2,700 a month, he said. When he bought the house, he was earning at least $1,000 a week building houses....It was enough to make him feel secure. "Everybody said it was a good idea to buy a house. So we got excited and did it," Espinosa said. "My problem now is not a subprime loan. My problem is there is no work."

From News 10 (video):

Due in large part to the mortgage crisis, the demand for new homes -- and new lumber -- is down. The [84 Lumber] Florin Road store became expendable, and [Auggie] Aleman, along with about 20 co-workers, were told without warning that they were out of a job.
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For Aleman, his wife and two kids, it means they join the ever-growing group of people who are suffering from the slow housing market. "I had a big home," said the 27-year-old husband and father of two. "Now, I gotta find a small home, because I can't afford to live in my home anymore."

Forbes: America's Riskiest Real Estate Markets

7. Sacramento, Calif.

With a 3% foreclosure rate, the country's fifth worst, Sacramento is still a long way from working out its lending difficulties. More problematic? Construction was one of the city's biggest drivers of job growth, and jobs have slumped in line with stalled building. The good news, according to Radar Logic, is that transaction volumes are up, something that could have a lot to do with the city having the nation's highest rate of homeowners reducing prices, based on data from ZipRealty. Sacto's biggest risk is whether or not it can add enough jobs to bring money and buyers into the city.

From the Sacramento Business Journal:

[B]uyers hesitate to commit for fear the market is still falling. Carmen Micsa, a broker associate with Re/Max Gold in Fair Oaks who specializes in condos, helps persuade prospects with an offer of a seven-day cruise. "I started doing this two years ago when the market turned," said Micsa, who offers the deal to both buyers and sellers. "You do anything possible so that you can motivate people to become homeowners."
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Such tactics get mixed reviews, however. "We used to do a lot of that wacky stuff," said Cohee at Pacific West. "Nobody is going to buy a home based on that. Maybe it will get them out to talk to you."

From the Sacramento Bee:

Most folks agree that times are tough in the real estate business. But don't say that out loud if you work at the local brokerage offices of Cornish & Carey Commercial. Annoyed by the negative comments of co-workers, one employee suggested a $1 fine be collected from anyone uttering a discouraging word about the current real estate market.

"He was tired of it," C&C boss John Frisch says of the semi-serious proposal. "It doesn't help your (work) attitude to be around negativity." The idea was first adopted in the firm's Roseville office. Then it spread to Sacramento. Since then, Frisch says, the naysayers have been silenced. Not a single dollar has gone into the C&C kitty.

Has all that positive thinking helped boost sales? "It hasn't trickled down to the market yet," Frisch says.

Sacramento Real Estate Market - March 2008 Water Cooler (2)

Post off-topic links, observations, and stories about the Sacramento real estate market here. Please read the comment policy before posting.

Membership in Central Valley Realtors Association Plunges 59% in 1 Year

From the Stockton Record:

The Central Valley Association of Realtors, a trade group covering Stanislaus County and much of San Joaquin County, was expecting a huge membership loss this year as more and more agents dropped out of the sales market. But instead of an expected drop from 2,900 to 1,700 year to year, the association...has seen membership shrivel to about 1,200...Cliff Coler, the group's interim chief executive officer, said declining membership and revenue have meant a cutback in staff from 13 to four.
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Karl Enzmann,...Realtors group president-elect, said there was some surprise at the depth of the membership decline...."Some of the numbers hit us in the face like a cold bucket of ice water," he said, and belt-tightening has meant a 50 percent cutback in the CVAR budget.

From the Sacramento Bee:

Sacramento-area home builders are being extraordinarily cautious this year about starting new homes. That's evident in the newest count of building permits taken out at area city halls. Home builders in El Dorado, Placer, Sacramento and Yolo counties are pulling back at more than double the statewide average rate, seeking only 589 building permits to start new houses, condominiums and apartments in January and February. That compares with 1,833 permits the same time last year, the Burbank-based Construction Industry Research Board reports.
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When builders slow down like this, it means fewer jobs all down the line, from subcontractors to materials suppliers. It's also partly why the state Employment Development Department is reporting that jobless numbers in the capital region are up nearly one percentage point over February 2007.

From the Stockton Record:

Home starts in San Joaquin County slowed to 46, the lowest monthly level in years, based on building permits pulled in February, the Research Board reported last week. That was an 82 percent drop from 249 in February 2007.

From the Stockton Record:

It appears other county residents also are short on funds to pay essential expenses like property taxes. In 2004 and 2005, about 3.5 percent of those who owed property taxes were delinquent on their payments, according to the San Joaquin County Treasurer-Tax Collector's Office. That number rose a percentage point in 2006 and passed 7 percent last year. Homeowners get two tax bills each year, one in November and one in February. This tax year, nearly 10 percent of payers missed the first payment....

From the Sacramento Bee:

A host of real estate scams popular during the 1990s housing downturn are back this year and snaring unsuspecting homeowners and renters, say law enforcement and real estate officials. "The ones that know how to do it are remembering how to do it and doing it again," says Elk Grove real estate agent Alan Wagner, president of the Sacramento Association of Realtors.
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One is the fake landlord scam. Sacramento real estate agent Carey Covey says a would-be renter at one of his listings lost $2,000 after handing a security deposit and first month's rent to someone pretending to rent him the house. The house had been foreclosed on and was owned by the bank – not by the person posing as the landlord...Covey says con artists "track homes that have been on the market for a while, have them re-keyed and put an ad in the paper or Craigslist and offer it for rent."

From the Sacramento Bee:

Undaunted by the recent failure of two high-rise condominium projects planned for downtown Sacramento, a Los Angeles-based developer proposes to transform a leafy, four-block area south of the Capitol with five new residential towers. The Bond Cos., an experienced developer of infill housing and retail projects nationwide, filed an application with the city of Sacramento Thursday to replace 206 low-rise apartment units in the Capitol Towers neighborhood with five towers ranging from 15 to 33 stories....In total, Bond Cos. is proposing to build 1,646 new housing units.
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Mark Bachli, a principal in the Bond Cos., said the "market will determine what is actually built" on the Capitol Towers property, bounded by Fifth, Seventh, N and P streets.
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Jim Pachl, an environmental lawyer...is watching the latest idea for Capitol Towers with a wary eye...Pachl said he's troubled by the recent failure of the Aura and the Towers condominium projects. The Towers was under construction when it melted down financially, leaving a huge hole in the ground on the Capitol Mall. "I'm sitting here saying, 'How realistic is this?' " Pachl said.

Curbside Home Auctions

Rocklin - Special, Ergo Not So Special

From the Placer Herald:

Although Rocklin has earned a reputation as a desirable, upscale family friendly place to live, the current mortgage crisis has left its mark on the real estate market here. According to the Foreclosure Data Bank, there are currently 79 foreclosure properties in Rocklin, 32 more will be auctioned and 19 are bankruptcies.
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The bank-owned, or “REO” (real estate owned) properties that have resulted from foreclosures are driving the entire market down in Rocklin as it has in many other areas in the state and the nation, according to local Realtor Billy Radakovitz with Primera Realty.

Radakovitz said that Rocklin’s desirability was a contributing factor in bringing the fallout to the real estate market here. "We’ve been hit as hard as anywhere else," he said. "Rocklin is such a desirable location that it was the destination of choice, people would do anything to get here."
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"From the realtors standpoint, at around 2004 there were some of us who knew the end was near," Radakovitz said.

Foreclosure Pets Phenomenon Intensifies

From News 10:

The Sacramento SPCA...is seeing a dramatic jump the number of animals being surrendered by owners who are going through foreclosure...During the last four months of 2007, the Sacramento SPCA took in 176 dogs and cats from people who said they were surrendering them due to "moving," said [Director Rick] Johnson. That is 100 more than the same four months in 2006. Johnson doesn't see the situation getting better any time soon.

From the Sacramento Bee:

The Sacramento City Council approved the $130 million sale Tuesday of its Sheraton Grand Hotel and garage on J Street – along with an unusual agreement to return about $23 million of the city's profits to the buyers as subsidies for additional downtown projects. Council members voted 8-1 in favor of the sale despite a public admonition by interim city Treasurer Tom Berke that more review is needed, particularly given the depressed state of the real estate market. He suggested the city might hold on to the hotel longer and wait for prices to rise.
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Other council members called the price fair, and expressed fear that market conditions would deteriorate further and the deal would evaporate...Councilman Steve Cohn, addressing Berke, said, "If you're correct about how severe this recession is, now is exactly the time to sell.
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In a brief appearance at Tuesday's council meeting, [David] Taylor said the Sheraton deal provides a way to keep downtown redevelopment alive during a bad economic cycle. "We were frankly seeing so many projects die downtown over the past 18 months that we were concerned about our ability to perform on some of the downtown projects we've been working on," he said.

From the El Dorado Hills Telegraph:

More than 70 people packed the main room of the senior center to ask questions and listen to updates about area road issues from a guest panel consisting of Richard Shepard, Department of Transportation director, Russ Nygaard, DOT deputy director, supervisors Rusty Dupray and Helen Baumann, and Captain Bill Donovan, of the California Highway Patrol.
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Shepard and Nygaard were unable to give specific timetables for the completion of many DOT projects because of lack of funding, which Shepard said is directly tied to the housing market. "We’re facing a housing slowdown at the moment," Shepard said. "And 50 percent of our Capital Improvement Program revenue comes from housing development fees."

From the Associated Press via the Washington Post (hat tip Housing Wire):

Anticipating a surge in troubled financial institutions, federal regulators aim to increase by 60 percent the number of workers who handle bank failures. The Federal Deposit Insurance Corp. wants to add 140 workers in the division that handles bank failures, bringing the total to 360, said John Bovenzi, the agency's chief operating officer.
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Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years, with the highest concentration coming from states such as California and Florida where an overheated real estate market is in a fast freeze.

CAR: Sacramento Median Price Decline Breaks 30% YoY, Sales Rebound

From the Sacramento Business Journal:

The median price for homes that sold in Greater Sacramento in February was $258,680, a 30 percent decrease from a year ago, according to the California Association of Realtors...Home sales in the region...were up 10.7 percent compared to February 2007.

From the Appeal-Democrat:

Yuba-Sutter existing home sales also picked up last month. February saw 94 sales, up from 62 sales during February 2007, according to figures provided by Lloyd Leighton, a Yuba City-based real estate agent...Area sales prices were down to a median price of $231,000, dropping 17.5 percent from February 2007's price of nearly $280,000.

Leighton said it was too early to say whether the home market has hit bottom in Yuba-Sutter but the rise in sales was good to see...Leighton said he thinks the increase in activity is real. After several months of falling home prices and slumping sales, the local real estate market could be coming back — barring a dramatic increase in interest rates or a recession.

From Roseville & Rocklin Today:

According to HousingTracker, the number of homes on the market in their defined Sacramento area was 15,100 as of March 24. Surprisingly this is down from a week earlier and 0.8 percent below a month ago. Rather than seeing inventory grow, it appears to have stayed relatively flat for the past 12 weeks.

The level of inventory is still high when compared to the level of sales. Although holding right now it is still 6.6 percent above where we were a year ago. We would have to hold the current inventory level through April to be at the same level as we were at the end of April last year. With foreclosures and short sales still increasing that is a tall order. The good news is that spring inventory is not growing at a rate that it did in the last two years.

From the Sacramento Business Journal:

84 Lumber Co. said it has closed nine stores, including its outlet on Florin Road in Sacramento, as a result of consolidation. The privately held company said the closings are partly because of the slowing housing market.

From the Sacramento Bee:

Federal prosecutors in Sacramento announced Monday that 19 people have been indicted in a massive mortgage fraud case that preyed on people close to foreclosure and stripped homeowners in two dozen states of millions of dollars in equity. McGregor Scott, U.S. attorney for the Eastern District of California, unsealed the contents of two indictments Monday that detail a conspiracy to strip 115 people of $12.6 million in equity and their homes in cases that stretch from California to New York.
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The case – the largest equity-skimming scam in the country – affected about a half-dozen Sacramento-area residents and came to an FBI agent's attention when a North Highlands victim reached an FBI economic crimes agent who was taking calls from the complaint line.

From the Stockton Record:

In 2002, as interest rates fell following the Sept. 11, 2001, terrorist attacks, Lodi officials refinanced about $47 million worth of bonds issued three years earlier to pay for electric utility infrastructure projects. The bonds were refinanced from a fixed rate to a variable interest rate that resets every week. But the insurer of those bonds, MBIA, was one that succumbed to the housing downturn, and the fallout has trickled down. Earlier this month, investors pulled out $2.5 million worth of their bonds, which now are being held by a French bank at a higher interest rate until the city can resell them. More investors have followed suit, with more than $5 million in additional requests so far, but those bonds were resold much quicker, city officials said.

'The home-building industry is not in a recession. It's in a depression.'

From the Sacramento Bee:

Rancho Cordova-based home builder Reynen & Bardis Communities Inc. and a dozen related entities owe more than $1.9 million in late property taxes and penalties, Sacramento County property tax records show. The taxes, which were due in December, are the latest fallout from the real estate downturn and one that has sent a ripple through the city of Elk Grove, where the unpaid taxes and penalties exceed $1.3 million.
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Observers blamed the economy for the plight of the cash-strapped company, as well as that of other builders in similar fiscal straits. "People are talking about whether we're in a recession," said John Hodgson, project manager for Elk Grove's 1,900-acre Laguna Ridge planning area, where Reynen & Bardis entities have large holdings. "The home-building industry is not in a recession. It's in a depression."
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"It's a perfect storm of very unfortunate economic events that no one could have possibly predicted," she [Michele McCormick, spokeswoman for Reynen & Bardis Communities] said.

From the Sacramento Bee:

For thousands of people shut out of the housing market as prices doubled between 2001 and 2006, bank-owned homes are real estate's new gold rush. With more than 10,000 foreclosures last year in the eight-county capital region, the plentiful inventory of bank-owned homes has fueled a mini-boom in buying...In the last two months, buyers in the Sacramento region have scooped up more than 2,000 foreclosed homes, a 10-fold increase from the same period a year ago, according to DataQuick Information Systems in La Jolla.

From USA Today (hat tip TMTGM):

Taking shelter with parents isn't uncommon for young people in their 20s, especially when the job market is poor. But now the slumping economy and the credit crunch are forcing some children to do so later in life — even in middle age.
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Kim Foss Erickson, a financial planner in Roseville, Calif., north of Sacramento, said she has never seen older children, even those in their 50s, depending so much on their parents as in the last six months. "This is not like, 'OK, my son just graduated from college and needs to move back in' type of thing," she said. "These are 40- and 50-year-old children of my clients that they're helping out."

From the Stockton Record:

San Joaquin County is taking a breather. The county's dizzying population growth, much of it fueled by Bay Area transplants looking for more-affordable housing, has slowed considerably in the past two years.

New census figures show that in the first seven years of the decade, the county population ballooned by just over 19 percent, adding more than 107,000 residents. But interestingly, most of that growth occurred from 2000 to 2005. In the past two years, the net increase was only about 13,300 people.

Flashback: Central Valley Housing 'Soufflé'

From the Wall Street Journal:

Cities and counties with some of the worst fallout from the nation's housing slump also are seeing a sharp upswing in vacant homes, a trend economists say might set up further declines in home prices. The national homeowner vacancy rate, which gauges the number of vacant homes on the market, rose to 2.8% in the fourth quarter, according to Census Bureau data.
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Vacancies...jumped in some once-booming Western cities. Between 2005 and 2007, homeowner vacancies more than tripled to 3.8% from 1.2% in the Riverside-San Bernardino area, part of California's Inland Empire, east of Los Angeles. In the Sacramento area, vacancies jumped to 4.2% from 1.2%.

Interactive Map - We beat Detroit!

From the Modesto Bee:

Monica Granados regularly encounters people who aren't even trying to fight foreclosure in San Joaquin County. Granados is a process server who delivers eviction notices to houses repossessed by lenders.
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Granados said lenders these days seem much more willing to help borrowers save their homes, but that wasn't the case last fall when her Salida house was foreclosed on. Now Granados is trying to prevent foreclosure on another house she owns in Stockton, and she's optimistic about getting her lender to compromise.

From the Fresno Bee:

The Merced-based holding company for County Bank anticipates a big loss for 2007 -- caused by falling real estate values in the central San Joaquin Valley...County Bank's troubles come amid widespread problems for financial institutions across the country as they cope with the bursting of the nation's real estate bubble. While much of the attention has been on larger players on Wall Street -- most notably investment bank Bear Stearns -- the Federal Deposit Insurance Corp. reported last month that more community banks also are reporting problems.

"I think we're starting to see this issue across the state," said Joe Morford, banking analyst with RBC Capital Markets in San Francisco. "Banks in the Central Valley and in the Inland Empire, in particular, are feeling this sort of pain right now, given that those were two of the most overbuilt housing markets in the state."
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While the bank's most recently reported problems have arisen mainly in the last quarter of 2007, the August foreclosure on an $11.7 million loan for a failed condominium construction project in the Sacramento suburb of Rocklin was an early sign of problems, Morford said. "Through 2007, management indicated that was an isolated issue," he said. "Now we see there's much more deterioration across the portfolio."

From the Merced Sun-Star:

In February 2007, Capital Corp's chief consulting economist Tapan Munroe predicted that the Central Valley wasn't facing a housing bust. Instead, he termed the slowdown as a "souffle with the air slowly leaking out." Munroe and co-consultant Lon Hatamiya projected then that Merced's home prices would drop 8.9 percent. Instead, prices in Merced plummeted 16.8 percent between December 2006 and December 2007, according to DataQuick Information Systems.

From the Stockton Record:

It might not be a trend, but at least some homes are starting to move in what has been a stagnant real estate market...On its face, that would seem to be good news. Actually, that would be extraordinary news if taken out of context.

The context is this: Most of the sales are of foreclosure homes. The number of sales has been so low for so many months that any increase produces a large percentage change. And more waves of foreclosure homes will wash across this market as adjustable rate mortgages reset to higher rates and families buckle under the weight. Until those homes are sold - and nobody really knows how many more will flood onto the market - things will not settle down. We don't even know if the term "flood" is an overstatement or an understatement.

'What's Happening in the Real Estate Market is Really, Really Grim'

From Bloomberg:

Sacramento may eliminate up to 600 jobs in the city's first staff reductions in half a century, and the police and fire departments in the California capital may have their budgets cut by 20 percent. The culprit is the collapse of the U.S. housing market..."The depth and magnitude of what's happening in the real estate market is really, really grim," said Russell Fehr, Sacramento's finance director, in an interview.
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In Sacramento, half of the city's current home sales involve bank-owned property, helping explain why the increase in property tax revenue will slow to 2 percent in fiscal 2008-2009 and may fall in 2010 and 2011, said Fehr, the finance director.
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The resulting reduction in department budgets by 20 percent will cut library-branch hours to 35 a week from 44 and will decrease maintenance in Sacramento's public parks. To cut as many as 600 jobs, the city will first offer buyouts. "We've got 200 to 300 employees who are nervous, and with good reason," said Fehr, who met with bondholders and investment banks last week in San Francisco to assure them that the city will honor its commitments. "This downturn is so sudden and so severe, we've got to take extraordinary measures."

From the Stockton Record:

The San Joaquin County economy will see a longer and tougher recessionary downturn than California, according to a regional economic forecast released Wednesday by University of the Pacific's Business Forecasting Center. "The inland areas aren't faring as well, primarily because of the housing sector," forecasting center director Jeff Michael said.
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With the economies being hard-hit by the realestate scene, the outlook for that sector in coming months doesn't look promising, said a commercial realestate broker who has seen his business freeze up in the past month. "This is bad," said Randy Thomas, a Sperry Van Ness commercial real estate broker in Stockton who specializes in the Northern California apartments market. "Commercial investment has come to a standstill. The reason is fear in the marketplace that started in the subprime area with residential real estate and has now carried over to commercial paper."

From Bloomberg (hat tip LA Land):

The U.S. housing recession has arrived literally on the doorstep of Federal Reserve Chairman Ben S. Bernanke. Bernanke lives in Washington's Capitol Hill area in a four- bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000. Almost four years later, it may not be worth any more, according to real estate records and local agents.

Bernanke's timing wasn't the best -- values in the area peaked a year later -- and he is hardly alone among Americans living in an investment that's turned cold. His situation shows that the slump that began with distress in the subprime market is now engulfing wealthier neighborhoods, including some in the nation's capital.

"He Believed Then That He Had a Steal"

From the Stockton Record:

Home-sales auctions have popped in the Central Valley since last summer, but the latest twist is an online auction for new homes with a bidding process similar to that used by eBay.
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Some residents there aren't happy about the impending auction. Richard Provencio lives at the north end of Crescent Park Circle, a lane that has 14 of the 18 houses to be auctioned off - the remaining four are model homes a block south. "I feel very robbed," he said. "These are the same houses I paid $620,000 for, and now they could be selling for $300,000 to $400,000."...Recently, he counted 15 houses for sale down the long street from his house, and many sit empty because of foreclosure. "Our ghost town," he said. "It's just sad, man."

Many of the homes in the development were bought initially by investors and then filled with renters, he said...The auction likely will draw only more investors, who then will put renters into the houses, he said.
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Another development resident, Matt Mettler, wasn't happy, either...He bought his house for $472,000 in January 2006 — a house originally listed at $585,000 with $80,000 in upgrades thrown in. He believed then that he had a steal — the model of the month. He found out later that a neighbor down the street bought his same-style house eight months later for nearly $100,000 less.

From the Modesto Bee:

Northern San Joaquin Valley home sale prices plunged again in February, dropping to levels not seen since early 2004. But for the first time in many months, Modesto real estate brokers are practically giddy with enthusiasm over jumps in pending sales and prospective buyers.
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Median home sale prices fell to $250,250 last month in Stanislaus County. That was $104,750 below February 2007....San Joaquin County saw an even bigger price drop. The median-priced home there went for $275,000 in February, which was $130,750 less than the year before....Home prices dropped most in south and west Modesto (down 54.7 percent in one year), Patterson (down 37.3 percent), Turlock (down more than 38 percent), Waterford (down 40.9 percent), Denair (down 47 percent), Atwater (down 35.1 percent) and Los Banos (down 35.6 percent).
....
After two years of falling home prices,...Mike Zagaris, president of PMZ Real Estate...said the increase in sales volume signals that price stabilization is near. "I believe we've reached the bottom of the market," said Zagaris, who thinks prices will "bounce along the bottom" for a while as the excess inventory of homes for sale clears out.

From the Central Valley Business Times:

Five of the state’s “top ten” counties for foreclosure sales in February are in the Central Valley. San Joaquin County leads the state in a per capita basis with one auction sale for every 709 residents. That’s 6 percent less than January, but 431 percent higher than in February 2007. Merced County is second at one sale for every 781 residents. Yuba County is third in the state with an auction sale for every 831 residents. Stanislaus County is ranked fourth by ForeclosureRadar, with 842 residents per sale. Sacramento County is sixth in the state with one home hitting the auction block for every 995 residents.

"No Homeowner Left Behind"

From Time:

The peach-colored house in a modest subdivision near downtown Modesto, Calif, used to be someone's dream home. But it stands out in a row of similarly hued homes where many have a "for sale" sign planted in their front yards. The two-story appears battered: its address has been scratched on a front panel and weeds choke what may once have been a manicured lawn. And then there is the overwhelming stench of human waste and stale beer. There has been no electricity and no running water since the bank repossessed it months ago. Still, at least three young men have been squatting here since January...Scratched in the entrance hall is a fitting salutation: "Welcome to Hell."...The dream home has become a nightmare.

This horror is not an uncommon sight in the Northern San Joaquin Valley, where foreclosure rates are among the highest in the nation, and vacant properties — so tempting to vagrants — flourish. From a fire-gutted shell across from a pretty park on the north side of town to a mangy wreck near the airport where a collection of cats and dogs were found chained together in the yard, abandoned residences are putting a blight on all types of neighborhoods. "We get about six to ten calls a day on vacant homes," says police officer John McGill, who stresses that this isn't just a problem in the poorer parts of town.
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[L]ess than a mile away from the peach-colored home, close to 1,000 people recently gathered for the city's first free No Homeowner Left Behind seminar....

From Home Front:

Word is there is a deluge of bank-owned properties coming onto the market soon. That might be because banks repossessed another 3,495 houses in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties in January and February.

From the Stockton Record:

The sales of existing homes in San Joaquin County jumped by 65 percent last month [up 133% YoY] as the median sales price continued to sink....[Per Grupe-TrendGraphix, the median sales price dropped 34.2% YoY and 38.8% from peak.]

Stockton-area brokers and agents said that after two painful years of a real estate market downturn, the flurry of foreclosure almost feels as if a drought is ending. "There's a tremendous amount of activity in the low price range of under $250,000," said Jerry Abbott, president and co-owner of Coldwell Banker Grupe. "I'm in a much better mood now. I can see the light at the end of the tunnel - and it's not a train."
...
Broker Bob Riggs, of Riggs & Associates GMAC Real Estate in Stockton, said there's a long way to go before getting back to a normal market, but foreclosure asset managers finally are pricing the properties low enough to move them.

"Approaching Bottom in Sacramento" or More "Wishful Thinking"?

From the Sacramento Bee:

[T]here's no doubt the steep drop in home values – median prices in Sacramento County are almost 28 percent below last year's figures – and relatively low interest rates have sparked interest. [DataQuick's Andrew] LePage said investor buys accounted for 18.6 percent of February closings in Sacramento County. That's up significantly from 12.7 percent in November and December. [The high for investor buys was May 2004 when they accounted for 25 percent of sales.]
...
Overall, sales remained weak, though real estate broker Tom Zipp of Citrus Heights said Thursday that rising investor activity "traditionally signals the bottom part of the market."

DQ stats by county (All Homes & Existing SFH/Condos/New Homes)
DQ stats by zip code

From the SacBee's Home Front blog:

I heard 17 months ago at a local builders conference that the eyes of the nation were on Sacramento and Washington D.C., seeking signs that the first markets into the tank would be the first to lead the way out. That turned out to be wishful thinking. Nine months ago again I heard Sacramento-area home builders say we were already scraping along the bottom. That, too, was a little premature. Now again there is a lot of buzz in the real estate industry that we're approaching bottom in Sacramento. Maybe we are.

From the Sacramento Bee:

If you see a stretch limousine cruising your Placer County neighborhood Saturday, it won't be for prom night. It will be one of the first limo foreclosure tours in the United States, prowling Rocklin, Roseville and Lincoln.

From the Sacramento Business Journal:

Two of Sacramento's top builders have unloaded 250 acres approved for new homes in Rancho Cordova for 16 cents on the dollar -- the first major land sell-off in the capital area since housing sales collapsed last year. The buyers are Ron Alvarado and Charles Somers, land developers themselves and partners in a large janitorial and building maintenance company. They bought the property last month from Pulte Homes and Centex Homes at a steeply discounted price of $8 million, according to multiple real estate sources who spoke about the deal on condition of anonymity.
...
At the height of the local housing boom, $8 million would have fetched less than 20 acres of land approved for new homes as prices had escalated to $600,000 an acre in some areas. Builders and developers are still waiting for a new benchmark on what land is worth in today's economy. The buyers in this deal, Alvarado and Somers, paid $32,000 an acre.

From the Sacramento Business Journal:

SAFE Credit Union has "assumed the worst" after enduring a horrible fourth quarter, moving a hefty $21 million to its reserves for loan losses this year with the dismal economy and the hard-hit housing market. The aggressive additions to reserves pushed the area's second-largest locally based credit union to a $5 million loss for 2007. And the credit union plans to add $1 million to its reserves every month of this year. The credit union experienced a rapid deterioration of consumer loans in the fourth quarter, said Henry Wirz, chief executive officer of SAFE. "It was a very sudden change."
...
What was surprising was how many of the borrowers had excellent credit when they applied for credit, he said. "They are prime borrowers, yet in our portfolio they are becoming a higher portion of delinquencies."

DataQuick: Sacramento's Median Falls 27.7%; Sales Down 7.7%

From the Sacramento Bee:

It's only one month's data, and it came from a winter month that's considered unreliable for trend spotting. But February sales of new and existing homes in Sacramento County -- the largest sector of the region's real estate market -- were just 7.7 percent fewer than in February 2007.
...
Sacramento County had a median sales price of $257,000 in February. That was down 27.7 percent from a year ago.

From the Sacramento Bee:

Attorneys Wendy Dezzani and Anthony Asebedo have noticed the number of inquiries rise. The two bankruptcy lawyers, who practice at Sacramento's Meegan, Hanschu & Kassenbrock, said real estate and construction-related small businesses are among the hardest hit. "We're seeing the ripple effect from the (housing) downturn, but I think it's broader than that," said Dezzani, a past bankruptcy section president at the Sacramento County Bar Association. "With discretionary income down, you're seeing business decline."

From the Central Valley Business Times:

The Stockton metro area in the Central Valley has the second highest metro foreclosure rate in the nation, with one in every 87 households receiving a foreclosure filing in February. Other California metro areas in the top 10 are Modesto at No. 3, Merced at No. 4, Riverside-San Bernardino at No. 5, Bakersfield at No. 7, Vallejo-Fairfield at No. 8 and Sacramento at No. 9.

Sacramento Bee Launches Home Front Real Estate Blog

SL welcomes the Sacramento Bee to the Sacramento real estate blogosphere. What took so long?

Sacramento Real Estate Market - March 2008 Water Cooler

Sacramento Land(ing) will experience a short hiatus as I travel over the next week and a half. Please help your fellow readers by posting links to news articles about the Sacramento real estate market in the comments below. Please read the comment policy before posting.

You can also follow the Sacramento real estate market on The Housing Bubble blog's California thread. For commentary and statistics on Sacramento's real estate market, try the Sacramento Real Estate Statistics blog and the Average Buyer blog. To be notified when posting resumes, subscribe to Sacramento Land(ing)'s site feed here.

I wanted to thank you all for the numerous links, tips, and photos that I regularly receive. Although I don't always get the chance to respond, I do appreciate your contributions. Speaking of which, here's a photo sent in by reader LL. Thanks!

Sacramento Real Estate Market - February 2008 Statistics

Change in median asking price (year-over-year): -27.9%



Change in median asking price (since August 2005): -35.2%
Source: Housing Tracker

AgentBubble has posted some numbers for February over at the Sacramento Real Estate Statistics blog. Year-over-year change:

• Sales: -14.7%
• Median $: -26.3%
• Median $/SF: -29.5%
• Average $/SF: -28.9%
• Average $: -29.2%

From Reuters:

"Price declines are spreading and accelerating," Radar Logic, a data and analytics business based in New York, said in a news release. "December 2007 brought to a close a year in which the housing bubble burst."
...
The nine markets with double-digit losses compares with six such markets in November...Sacramento had the biggest drop, at 23.7 percent, followed by 21 percent for Las Vegas.

More from Radar Logic's press release [pdf]:

Five cities show recent increases in volume that could foreshadow a closing of the bid-ask spread and possibly the beginning of the recovery. These five cities are Boston, Cleveland, Detroit, Sacramento, and San Diego.

Sacramento and San Diego…are prime examples of speculative markets that rode the housing bubble to great heights. They are also two of the markets that have fallen the furthest, ranking 22 and 25 on this month’s chart of year-over-year appreciation, and having been in the bottom half since April 2005. The increase in volume that these five cities are experiencing could indicate that a correction may have occurred and the bottom may be in sight.

More from Business Week's Hot Property blog:

If you’re selling a home in any of these markets, don’t get too excited. [Radar Logic's Jonathan] Miller says that if he’s right, home prices in these cities would only start stabilizing in about 15 months.

From the Modesto Bee:

Two Stanislaus County irrigation districts are caught in the same national credit crisis that's driving up interest rates on Modesto bonds. Rates doubled in the past month on some Modesto Irrigation District and Turlock Irrigation District bonds, costing the agencies hundreds of thousands of dollars...The districts and the city issued the bonds through auction-rate securities that until the past month offered government agencies lower interest rates than traditional, fixed-rate bonds. But as the market for auction-rate bonds has softened, the interest rates have skyrocketed.
...
"This is not a reflection on the MID's financial health or the MID's creditworthiness," [MID spokeswoman Kate Hora]...said. "It's just a reflection of the crazy conditions in the housing market and the mortgage market.

"Were all these people stupid?"

From the Sacramento Bee:

Take $2 billion away from Sacramento's homeowners – money they could be spending on cars or plasma TVs or kitchen cabinets – and you begin to understand what the housing slump is doing to the region's economy. The impact of the real estate downturn goes far beyond the thousands of construction and mortgage- industry layoffs, or the epidemic of foreclosures. The 25 percent drop in housing prices since 2005 means fewer homeowners are able to borrow against their equity.
...
In the four-county Sacramento area, equity "extractions" – through refinancing, home-equity loans or outright home sales – fell by 34 percent last year, according to market research firm DataQuick Information Systems. That erased $2.11 billion's worth of wealth from the region....The $2.11 billion reduction in equity extractions represents a little more than 2 percent of the region's overall economy. Coupled with the other effects of the housing slump, including layoffs and foreclosures, it's no wonder many analysts are predicting a recession.

Chart: The diminishing 'wealth effect'

From the Sacramento Business Journal:

Swelling inventories of homes on the market. A record number of foreclosures. Laid-off construction workers. It's all too familiar to people who lived, and worked, in the Sacramento region in the early 1990s. The real estate market always cycles up and down. But this time the pain has been spread more widely because many more people bought homes when times were flush and credit flowed freely. "This is not new," said Frank Cook, president of Cook Realty in Sacramento. "It's just the size of it that's new."

From the Sacramento Bee:

A year ago, the local head honcho for Beazer Homes figured the housing market had hit bottom and was ready to take off again. He was wrong. Sales "went off a cliff" in March, says Alan Newman.

But the Beazer division chief is getting good vibes again, following a one-week sale....Every home sold at a loss, Newman says. But, the company was able to reduce its inventory. And, Newman says, the sales blitz proved that buyers – especially the first-time homeowners that Beazer targets – are willing to get back into the market. "They're ready to buy," he says of prospective customers, " … at the right price."

From the Sacramento Bee:

"It's been a very cold winter," said Jason de Lemos of IM Construction, a building contractor in south Placer County. The firm has cut about 280 jobs since 2006....

From the Sacramento Business Journal:

Surrounded by green fields and the occasional derelict barn, two state-of-the-art public schools sit empty on the outskirts of Elk Grove. Cosumnes Oaks High School and Elizabeth Pinkerton Middle School were not meant to stand alone in this bucolic setting. If things had gone as planned, these schools would be in the midst of spanking-new suburbia.
...
It's not just Elk Grove coping with vacant schools and plots land where homes were expected to be. With Sacramento-area housing woes in full swing, the reverberations are now colliding with regional school construction. Finding that neither the money nor the students are pouring in as they did before, school officials now must slam on the brakes after building at a breakneck pace for the past several years. And that slowdown will likely hit the construction industry the hardest.

From the Sacramento Business Journal:

Fewer loans and thinner margins made a problem for many of the locally based banks in the fourth quarter...[E]arnings fell 18 percent during the past year from a year ago -- and plummeted 47 percent in the fourth quarter, compared to the same three-month period in 2006.
...
The Central Valley housing market, which had been among the nation's fastest-rising in recent years, is now losing value and suffering one of the highest loan-default rates. Hard-hit developers and homebuilders face dramatically lower prices for their homes and a slow-moving market. In addition, land values are plummeting. The real estate downturn has turned into problems for local banks. "Everybody got hit by some of the problems all these defaults caused," bank consultant Dave Alford said. "What is really surprising is how fast it all hit."

Price guarantees: Phase 6 of the crashing new home market? From the Stockton Record:

In the early days of the housing downturn, home builders tried to pump up sales by offering various buyer incentives, from a wide variety of upgrades at no additional cost to free televisions, from trips to Hawaii to $5,000 gift cards. That segued to cutting the base costs to try to attract buyers who were focusing more and more on the price tags. The newest trend is a price guarantee to try to relieve a would-be buyer concerned that the house bought today might sell for less in the future as housing prices ease nationwide.

Now if only the builders could guarantee they wouldn't go out of business before you could collect on the difference...

Ryland Homes...spokeswoman Marya Barlow...said the price guarantee reflects builder confidence that prices are about as low as they are going to get. "Everybody has already cut prices, and I don't see any more price declines," she said...Florsheim's Anfuso said he doesn't expect to be cutting too many checks at year's end, if any at all, because he's betting prices will begin rising again in the second half of the year and finish at least even with current prices.

From the Stockton Record:

Juan Martinez has little need for hearing about San Joaquin County's growing unemployment rate, which hit 10 percent in January. He's living proof that the situation is getting grimmer, since he only cares about one thing: finding work. "We need jobs: painting, construction, anything. It's been two weeks for me, three weeks for my friend. For some people, it's been a month since we worked," said Martinez, 48, waiting in vain Friday afternoon at an unofficial day-labor pickup spot....

It's the first time in nearly four years the county has seen joblessness in double digits, state officials reported Friday.

From the Stockton Record:

Stockton-based All-Star Maytag, a five-store appliance sales and service dealer, will shut down this weekend, another victim of a slowing economy dragged down by the region's severe housing woes. Twenty-four workers will lose their jobs, eight of them in Stockton....[I]n his four Sacramento-area stores - in Citrus Heights, Elk Grove, North Highlands and Rocklin - sales in 2006 were down 35 percent from the prior year and decreased another 35 percent at the close of 2007.

From the Stockton Record:

Barker's Music, the only place in Stockton to buy a new grand piano, will be closing in three months...Barker said that nationally, traditional piano sales are down 30 percent during the past 18 months, while his own experience has been even worse. "I was living large in 2005. We sold 30 grand pianos over $22,000 that year. In 2007, we sold three grand pianos over $20,000," he said..."The home industry has just quit on us...."

From the Tracy Press:

Marilyn Nunes has accumulated $65,000 in credit card debt since last year to stay ahead of her monthly mortgage payments. A single mother of one, the Tracy homeowner went to City Hall this morning looking for a little guidance, hoping to find someone who could steer her away from impending foreclosure.

From the New York Times:

ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming...The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks.

Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble.
...
The fundamental problem is that the information obtained by any individual — even one as well-placed as the chairman of the Federal Reserve — is bound to be incomplete. If people could somehow hold a national town meeting and share their independent information, they would have the opportunity to see the full weight of the evidence. Any individual errors would be averaged out, and the participants would collectively reach the correct decision.