Forbes Ranks Sacramento Worst City For Homeowner Debt, #2 For Projected Price Decline

From Forbes (hat tip Patient Renter):

It's no secret that homeowners with subprime mortgages have taken a beating. Next up: those who have combined their mortgages with home equity loans, second loans or both. These combinations spell especially bad news for homeowners in Sacramento, Calif., San Diego, Washington, D.C., and Colorado Springs, Colo., markets with some of the nation's highest concentrations of homeowner debt. In these spots, prices are dropping, making it very difficult for homeowners to refinance as lenders are reluctant to take on risk.
~~~
1. Sacramento, Calif.
Percent change [in median price] from 2007: -18.5%
Total outstanding mortgages: 480,881
Second mortgage or home equity loan: 129,736 (27%)
Both second mortgage and home equity loan: 7,288 (1.5%)

Compare to other cities here.

From Forbes:

[M]any of the markets that experienced steep 2007 price drops are still a long way from recovery. That's based on a Moody's Economy.com report prepared for Forbes.com. It predicts that 2008 isn't going to be any gentler than last year on slumping markets like Los Angeles, Sacramento, Calif., Las Vegas and Tampa, Fla., where market weakness is expected to cause 10% to 25% drops over the next year.
~~~
2. Sacramento
Expected year-end median home price: $261,590
Percent drop: 23%

From the Modesto Bee:

Even during the boom years, when the housing industry was roaring and employment was growing, Northern San Joaquin Valley incomes were falling further behind the rest of California...That's surprising considering that the valley's economy appeared to soar during those years. For example, Stanislaus County's unemployment rate fell from 10.6 percent in 1999 to 8 percent in 2006. The population grew by more than 225,000 and more than 83,000 new homes were built in the three counties during those eight years.

But high-paying jobs apparently didn't follow...The income statistics demonstrate that creating more jobs doesn't necessarily generate wealth, said Carol Whiteside, president emeritus of the Great Valley Center. She said many of the valley's new jobs were low-paying, entry-level or service positions, rather than a healthy mix of jobs from diverse employment sectors.
...
[E]nrollment at CSU, Stanislaus, is growing, especially in its master's in business administration programs for executives. "People come here when they can't find jobs out there," [professor Edward] Hernandez said. "The job market is so bad for many people right now that they're going to college or moving someplace better." The region's economy started declining in late 2006 when the housing market turned..."The income (statistics) are going to look a lot worse the next time they release them," Hernandez predicted. "The boom has turned into a bust for many."

From the Central Valley Business Times:

The Central Valley city of Stockton had the highest foreclosure rate in the nation in the first quarter, according to figures compiled by RealtyTrac Inc., an Irvine-based foreclosure information company. One in every 30 Stockton households received a foreclosure filing during the quarter -- 6.6 times the national average, RealtyTrac says. Riverside-San Bernardino in Southern California ranks second with one in 38 homes going into foreclosure. Other California metro areas in the top 20 include Bakersfield at No. 4, Sacramento at No. 5, San Diego at No. 9, Oakland at No. 10, Fresno at No. 12, Los Angeles at No. 17 and Orange County at No. 19.

From the Associated Press (via KCRA):

Banks and mortgage companies face fines of $1,000 a day if they allow foreclosed homes to become run down and a source of neighborhood blight under a bill that passed the state Senate on Monday...Many communities, particularly in the Central Valley, are riddled with homes that have been abandoned by buyers who could not afford their mortgage payments when they reset to higher rates.
...
"Certainly we've seen the number of these calls (about neglected homes) come up, but we've so far been able to deal with it effectively," said Stockton Police Officer Pete Smith, a department spokesman. "But the feeling here is we need to have something more in place." Stockton is one of the hardest-hit communities and is developing an ordinance that would require property owners to provide a local contact and pay a minimal fee for each vacant home.

From the California Progress Report:

Before the Senate floor vote, [Senate President pro Tem Don] Perata opened the debate, saying: “California now leads the nation in foreclosures. It started in the Central Valley and Inland Empire. It’s now spread almost evenly, although some areas are being hit harder than others."

'Consumers and Lenders Got Caught Up in Something Artificial'

From the Sacramento Business Journal:

Add one more casualty from the housing downturn: homeowners associations. They need a steady flow of monthly dues, which can slow down when a member loses a house or condominium to foreclosure, or even when family budgets get tight.
...
Some associations are no longer getting dues from 30 percent or even half of their units...The Wild Wings Homeowners Association has seen a 30 percent drop in the amount of dues being paid, said board member Jordan Durbin. The development has 337 freestanding homes about five miles west of Woodland. Far less than 30 percent of the homes are in foreclosure, but even some residents who aren't facing foreclosure don't send in the checks. "Money is pretty tight for a lot of families," Durbin said.
...
"I've been doing this now for 21 years, and I've never seen delinquencies to this magnitude," said Jay Michael Jr., president of Michael and Sons, a property management company that manages units in the Sacramento area on behalf of homeowners associations.

From the Sacramento Business Journal:

With Sacramento's gloomy distinction of having one of the highest foreclosure rates in the country, it's no surprise that many of the new housing developments that were started last year have stalled. Visually jarring sites such as Elk Grove's Laguna Ridge development, which was to encompass 8,000 homes crowned by an ultra-modern civic center, have seen construction slow to a crawl with only a handful of homes completed.
...
[I]t's not simply a sluggish economy and too much inventory that's keeping the new-home market slow. Complicated legal twists and turns along with horror stories of mechanics' liens and bankrupt developers have many potential homeowners watching their backs and thinking twice before buying.

From the Sacramento Bee:

In greater Sacramento, housing starts in March fell 66 percent from a year ago, the California Building Industry said...[Association economist Alan] Nevin said the construction slump is being worsened by the flood of repossessed homes that lenders are unloading at steep discounts. About half the home sales in the Sacramento area this year are repossessed properties, and the median sale price in Sacramento County of all homes has fallen 36 percent since the 2005 peak. Nevin said inland California is experiencing the worst of the construction downturn...[H]e visited Sacramento recently and found the relative absence of construction activity appalling. "Placer's still chugging along a little bit. But you look at Natomas and some of the other areas, it's brutal," he said.

From the Sacramento Business Journal:

A Sacramento couple is in the market for a three-bedroom, two-bathroom home that they could move into soon. They set their price limit at $300,000 for about 1,500 square feet and rule out fixer-uppers. They view houses over the next few months, make offers on several and enter a contract on one. Meanwhile, they continue to look at other houses to try to find a better deal.

Why would they keep looking after they were already in contract? Because the Sacramento real estate market is putting buyers in the driver's seat, and they know it. They have hundreds of homes to choose from, and they are taking their time looking, making sure they find the right home at the right price. And they have no problem breaking their contract if they find a better deal, said Tracey Saizan of Keller Williams Realty in Elk Grove.

"Buyers are pretty darn particular today; they really are wanting the moon and the stars. They know it's a buyer's market, and they're milking it," she said.

From the Modesto Bee:

Court clerk Richard Heltzel said the Eastern District had 2,501 [bankruptcy] filings in March, putting it on pace for more than 30,000 filings in 2008...Under worst-case projections, filings could top 40,000, which would be the highest ever.
...
[Attorney Ann Marie] Friend said that she's seeing 10 to 12 new clients a day who plan to file for bankruptcy. "And we're just one office," she added. She and other attorneys said that many clients were hit both ways by the housing meltdown, because they worked in jobs tied to real estate, such as electricians and mortgage lenders.

But other professions also are affected, said attorneys Scott Mitchell and Tamie Cummins, who opened an office in Modesto 2½ years ago. Mitchell said he's seen small-business owners, fitness trainers and other non-real estate-related workers filing for bankruptcies, with incomes and backgrounds of all kinds.
...
Mitchell said housing is driving his busy schedule, with some clients showing him figures for loans that are staggering. "These people made $50,000 to $60,000 a year, and they borrowed $500,000 with an adjustable rate, at the top of the market," he said. "I think both consumers and lenders got caught up in something artificial."

The Business Journal interviews the new president of the Sacramento Association of Realtors. Some excerpts:

...it's a good time to buy....

...it's a good time to buy.

More...

Sacramento Real Estate Market - April 2008 Water Cooler

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

Some weekend reading:

• Foreclosure Trends in Sacramento and Recommended Policy Options [pdf]
• The Great Housing Bubble
  
• Numbers Racket: Why the economy is worse than we know (Harper's via The Big Picture)
  
• Want to Know When Housing Has Bottomed? Here's How

"A common hope...is that...these waters will start to calm"

From the Sacramento Bee:

Calling the bottom of a real estate cycle is more than difficult these days. It's perilous, an invitation for news sources who answer the question to be ripped by critics. There are so many points of view and so much passion. And there are so many who have offered false sightings in the past two years.
...
What many agree upon is that we're in the worst of it right now, shooting the river rapids and hanging on for dear life. A common hope, now that the first quarter is history, is that sometime in the third or fourth quarter of this year these waters will start to calm.

From the Sacramento Business Journal:

The median price of an existing, single-family detached home in California during March 2008 was $413,980, a 29 percent decrease from the revised $582,930 median for March 2007, C.A.R. reported...In the Sacramento area, the median price for a single-family home sold in March was $258,460, 28.8 percent below the sales price of a year ago....

From Sacramento State News:

Only 49 percent of area residents believe things in the Sacramento region are going in the right direction—the first time since 2002 that less than half of residents surveyed are happy with the direction in which the region is heading....

From the Wall Street Journal:

Local television stations across the country are suffering a decline in advertising revenue in the tough economy, despite a blockbuster political season. Buffeted by the faltering real-estate market and shrinking auto sales, total ad revenue for local stations nationwide fell 2.3% in the first quarter compared with the year-earlier period, according to the Television Bureau of Advertising, a trade group for local stations. And the second quarter is on pace for a 3% to 5% decline, according to Chris Rohrs, the group's president...Media companies have also been blaming slowdowns around Sacramento, Calif., and Las Vegas for lower ad revenue.

The Porta-Potty Index

From the Sacramento News & Review:

I was searching for signs of the coming economic apocalypse along the stressed seams of Sacramento’s suburban neighborhoods, and honey buckets [aka porta-potties] seemed like a perfectly reasonable place to start...It seems reasonable to expect, given rising unemployment in the construction industry, to find stacks of honey buckets piling up all over the country. We might point to this excess as an indicator of reduced economic activity, a honey-bucket index, if you will.
...
After the real-estate bubble popped 18 months ago, the porta-potties began stacking up at the rental place [my Dad] drives by on the way into town [Redding]. Nowadays, so many honey buckets have been returned, they’re stacking them outside the fence. Surely, my father speculated, the same phenomenon must exist in Sacramento.

Indeed it does. At J & J Sanitation in south Sacramento, the excess toilets were stacked four-deep next to an adjacent vacant warehouse. The sweet stink of what seemed like 1,000 honey buckets wafted over the razor wire at Waste Management’s compound off Elder Creek Road. At United Site Services in north Sacramento, the porta-loos, hundreds of them, were stacked high and deep behind the security fence.

From the Chicago Tribune:

Rolling Meadows-based homebuilder Kimball Hill Homes, citing the "challenges faced by the homebuilding industry" in the housing sector's meltdown, said it filed for Chapter 11 bankruptcy protection but will maintain normal operations while it restructures. "Our issues are financial, not operational," said President and Chief Executive Ken Love.

Kimball Hill has developments in Sacramento, Rancho Cordova, Galt, Stockton, Ceres, and Merced.

From the Sacramento Bee:

After months of wrangling with lenders over huge debts accumulated during the housing boom, prominent Sacramento-area home builder John D. Reynen filed Wednesday for personal bankruptcy protection. Reynen, co-founder of Reynen & Bardis Communities, took the action to prevent San Francisco-based Bank of the West from seizing his house and other personal assets for a $26 million debt owed by his company, said Michele McCormick, spokeswoman for the builder. She said the filing will not affect the operations of Reynen & Bardis Communities.
...
Kathryn Boyce, a Sacramento-based Hanley Wood analyst, said the firm's massive land holdings are still a source of strength. "There's still land they're sitting on they haven't done anything with," she said. "They're going to be OK."

From the Stockton Record:

Real estate was bubbling in 2004 when Regent announced its [Stockton Sheraton Hotel] plans. That year, you practically couldn't build residential developments - including condos - fast enough. Condos atop a pristine downtown development overlooking the city's redeveloped waterfront core seemed like a sure winner. In hindsight, 42 high-end condos seems a bit aggressive for the still-coming-back-from-the-dead downtown market. But back then, four whole years ago, the lines on the chart seemed to run only one direction: upward.
...
Then along came 2005. The hotel was two years from being finished, and there were disturbing signs the housing bubble had expanded about as far as it could. Nobody expected a burst, at least not of the explosive magnitude that occurred.

From the Stockton Record:

[T]he prices being charged for those new homes have been way overpriced relative to the incomes of most county residents, [director of Pacific's Business Forecasting Center Jeff] Michael said. "Despite a dramatic drop of house prices (40 percent in the past 30 months), it's still expensive to live here. It's still 4.5 times the median family income compared to the U.S. average of 3.25 times median family income," Michael said.

He went so far as to say that San Joaquin County has been in its own recession since last fall, triggered by the housing meltdown and confirmed by unemployment figures that have topped 10 percent in two of the past three months. While the housing boom that started in the early part of the decade added 7,000 jobs in construction in the county, 3,000 jobs have already been lost in the downturn.

'Basically We're in Uncharted Territory'

From the Sacramento Bee:

California's severe housing downturn claimed another fixture of the Sacramento-area homebuilding industry Wednesday when John D. Reynen, co-founder of Reynen & Bardis Communities, filed for personal bankruptcy protection...It's the second major bankruptcy-protection filing involving a privately owned land developer and builder in the capital region.
...
The company, formed more than 30 years ago, has largely shut down homebuilding and recently laid off about half of its 180 employees.

Press release available via Home Front.

From the Sacramento Bee:

During the first three months of the year, banks repossessed a record-shattering 5,278 homes in the Sacramento region, La Jolla-based DataQuick Information Systems said Tuesday. Put another way: The area's first-quarter foreclosures already are half of last year's entire total.
...
The latest foreclosure count shows that for all the initiatives by government and nonprofit and private sectors to keep people in their houses, the telling trend remains a sustained, dramatic rise in home losses and loan defaults. The forecast is for more of the same in the months ahead.
...
"We expect foreclosure rates in Sacramento to rise as long as house prices are declining," said Mark Fleming, chief economist of Santa Ana-based First American CoreLogic. Fleming said 6.1 percent of mortgages in El Dorado, Placer, Sacramento and Yolo counties are 90 days late. A year ago it was 2.1 percent.

Here's a look at notice of default filings for Sacramento County.



2008 Q1: 6,898 (up 113.3% YoY)
1997 Q1: 2,441 (1990s Peak)

From the Appeal Democrat:

Yuba County saw the highest total number of the three counties with 357 notices recorded, an increase of 136.4 percent...Colusa default notices quadrupled to 81. Sutter County defaults zoomed by 195.6 percent to reach 337 notices.

Kory Hamman, a broker who handles foreclosure sales for Hamman Real Estate, of Gridley, said the trend is toward more foreclosures. And it shows no signs of easing soon. "We're seeing more foreclosure activity, and we don't see it slowing down," said Hamman.

From the Stockton Record:

In San Joaquin County, lenders sent out 4,657 notices of default - the first step in the foreclosure process - to homeowners in January through March, up from 3,746 in the final three months of last year. That's a 170 percent first-quarter jump from 1,721 default notices in the first three months of 2007...[T]he number of homes actually repossessed during the first quarter in San Joaquin County nearly topped 2,500, more than a fivefold increase from 440 a year ago.
...
Cameron Pannabecker, owner of Cal-Pro Mortgage Inc. in Stockton and a member of the board of directors of the California Association of Mortgage Brokers, said...he doesn't know any experts not projecting that the number of default notices will continue to double or triple last year's numbers quarter over quarter.

From the Sacramento Bee:

Like the hundreds of others in this Cal Expo exhibition hall, this young Yuba City couple were looking for a home at a bargain price for their three children at a two-day auction of foreclosed homes in Sacramento.

Some bargain hunters are like [Francisco] Cervantes, novices grasping at their chance for the house they've always wanted in a market they have been priced out of for years. Countless other shoppers are investors looking to one day realize a tidy profit in a capitalist economy that rewards good timing.
...
Armand Sarcomo and his wife, Rachel, were eyeing a ranch-style home on five acres listed in the Yuba County community of Browns Valley..."We're looking for a second home," said the 28-year-old union sheet metal worker. "It's a good investment. We're a young family trying to move up and take advantage of the market."

From the Modesto Bee:

Home prices in most Northern San Joaquin Valley cities have dropped significantly more than those elsewhere in California. Newman has suffered one of the state's largest declines in home values: The median March sales price was $177,250, down nearly 54 percent from last year...Stanislaus County homes sold for a median $232,163 last month, which was 33.5 percent less than March 2007....San Joaquin County homes sold for a median $265,000 last month, which was 36.1 percent less than March 2007....

From the Associated Press:

An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression....Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.
...
"Basically we're in uncharted territory," Shiller said. "It seems we have developed a speculative culture about housing that never existed on a national basis before."

Sacramento Area Foreclosures Hit New Highs

From the Sacramento Bee:

Banks repossessed nearly 5,300 homes in the capital region during the first three months of 2008, setting a record and pushing the region's foreclosure tally to more than 15,300 since the beginning of 2007....The number of home loan defaults also neared 10,000 during the quarter in Amador, Nevada, El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to La Jolla-based DataQuick Information Systems.

Those defaults...hint at thousand more foreclosures in months to come. Altogether, the region has now seen about 34,000 home loan defaults since January 2007, according to DataQuick.

From DQNews:

Last quarter's default numbers were a record in almost all of the state's 58 counties.
...
Foreclosure resales have emerged as a significant market factor, accounting for 33.1 percent of all California resale activity last quarter. A year ago it was 3.2 percent. Foreclosure resales vary significantly by area, from 5.1 percent in San Francisco County to 66.7 percent in San Joaquin County.
...
Of the homeowners in default, an estimated 32 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 52 percent.
...
"The main factor behind this foreclosure surge remains the decline in home values. Additionally, a lot of the 'loans-gone-wild' activity happened in late 2005 and 2006 and that's working its way through the system. The big 'if' right now is whether or not the economy is in recession. If it is, the foreclosure problem could spread beyond the current categories of dicey mortgages, and into mainstream home loans," said Marshall Prentice, DataQuick's president.

From Downey Financial:

Downey Financial Corp. reported a net loss for first quarter 2008 of $247.7 million or $8.89 per share on a diluted basis, compared to net income of $42.9 million or $1.54 per share in the year-ago first quarter...At March 31, 2008, the allowance for credit losses was $547.7 million....The allowance increased $198.4 million this quarter....The balance of the increase to the allowance reflects further declines in the value of underlying home collateral as well as further increases in delinquent loans. This has been particularly true in certain geographic areas such as the greater Sacramento, Stockton, Modesto and Contra Costa areas of Northern California, the Inland Empire and San Diego County.

From the Stoctkon Record:

Greg Paquin, president of the Gregory Group, said that although sales and prices have basically bottomed out in the Sacramento metropolitan area, San Joaquin County might not be there quite yet. Foreclosures need to be cleared out of the home sales market first, he said.
...
In the first quarter of this year, 364 new houses were sold, 56.6 percent from the first quarter of 2007...according to the Gregory Group....

Sacramento Home Price Per Square Foot Plunges Past -30% YoY

According to TrendGraphix's March report, Sacramento County's average price per square foot fell to $156, a 31.3% drop from one year ago.




Since peaking in September 2005, prices have dropped 38.6%.

Stop the Presses! Million Dollar Condos in Stockton Not Selling

I linked to this Stockton Record article back in January 2007.

Peggy Massey director of economic development for the Downtown Stockton Alliance...points to a good start for the Sheraton Hotel project, with its condos on the top floors. Jeroen Gerrese, vice president of the Sheraton Stockton at Regent Pointe, said that since marketing began in October, there have been purchase deposits put down on 28 out of the 42 condos that will occupy the top three floors of the seven-story hotel.

Prices range from about $250,000 for a 663-square-foot, one-bedroom condo to $1.2 million for a 2,275-square-foot, three-bedroom condo.

Here's an update from the Stockton Record:

At a Dec. 13 gala to celebrate the opening of downtown's Sheraton Hotel, a crowd sipped scotch and applauded the largest private investment downtown since American Savings Bank built its Main Street headquarters in 1989. Yet even in December there was trouble at the hotel. San Joaquin County's housing market - as elsewhere - was collapsing, and hotel owner Regent Hotel LLC had failed to sell any of 42 condominiums atop the hotel.
...
Regent obtained financing for the hotel's construction, based in part on its expectation of an infusion of revenue from the sale of condominiums at the hotel. And then the housing market fell. "The condos, that's what's killing us," [Sacramento's Regent Development Inc. CEO Rick] Oshinski said. "The condo market has gone totally into the toilet."...The number of people who have committed to buy one has fluctuated between eight and 14, he said. None has sold yet.

From Home Front:

Reality kind of surprised us. I expected that 15,000 foreclosures since Jan. 2007 would have to tighten supply and thus push rents up. Instead largely the opposite has proved true. Rents have remained flat and supply remains ample, even expanded.

From the Sacramento Bee:

Unlike much of California, which has generally seen a steady increase in monthly rents, the Sacramento area is an exception, with rents barely rising much over the past four years. There are several reasons. Because the region dramatically overbuilt during the housing boom, there are plenty of apartments – about 111,000, according to some estimates – to go around. And a curious "shadow market" of new dwellings for rent – units that have come on the market principally because of foreclosure and the housing downturn – has kept monthly payments flat, they say. Such a market is also discouraging investment activity....

Only a year or two ago analysts were predicting that Sacramento's traditionally dependable job and population growth would soon trim supply and create an atmosphere to raise rents. But the housing bust has proved unexpectedly severe and led to reassessments...Robert Machado, who manages 2,000 area home rentals as president of Sacramento-based HomePointe Property Management, says he believes a recovery might not come until 2010. "If that's the case, it means people cannot sell their properties. That means they'll rent them out. Supply will stay up, and that means rents won't go up," he said.

From the Modesto Bee:

"Sales activities have exploded. We're seeing it all the way from Lodi to Los Banos," said Mike Zagaris, president of PMZ Real Estate, based in Modesto. "Home prices have dropped substantially. As a result, there's a flood of buying interest by families and investors." Zagaris estimated that 70 percent of buyers are people who plan to live in the homes, with the rest going to investors snapping up rental property.
...
Tom Nelson of Modesto...has been busy buying bargain-priced property in Modesto and Oakdale. He and a partner bought houses in October, February and again last week. Those three homes will be rentals for at least several years until the market recovers..."We'll probably end up buying 10 rental homes before it's over."
...
Some rental property investors are from outside the region, [broker Cindy] Yoder said, "and they'll buy without ever seeing the property."

From the Sacramento Bee:

Their debts are substantial and their reputations have been dinged. Their main business is gone. They are caught up in an intergenerational soap opera that threatens the family legacy. But Sidney B. Dunmore and his sons Jeremy and Sidney D. Dunmore, heirs to a Sacramento-area home-building dynasty that has unraveled in the past year, insist they aren't finished.
...
Dunmore said he, like others, got blindsided. "I expanded the business because things were doing fabulous," he said. "We borrowed to do that and all of a sudden the market turned down, and it turned down in a way that nobody foresaw."
...
Dunmore could lose his $11 million home in Granite Bay and a $4 million home in Palm Desert to Travelers Casualty and Surety Co. of America, which issued bonds guaranteeing completion of Dunmore projects. Travelers, facing millions in claims from Dunmore subcontractors, is exercising its right to go after Sid for reimbursement. The insurer obtained writs of attachment on his homes, which means it could seize the properties if it wins in court.

More on Jim Wasserman's Home Front blog.

Sacramento Price Slashing

From Business Week:

BusinessWeek.com, with the help of Mountain View (Calif.)-based Altos Research, a real-time housing research firm, ranked 14 of the country's largest cities based on how much sellers have slashed listing prices. At the top of the list is Sacramento, where the median asking price on Apr. 11 was $226,978—a 41% drop from a year earlier, according to Altos.

From News10:

Just a few years ago it seemed impossible: a home in Sacramento County for under $100,000. But a condominium developer is ready to sell some units at auction Sunday for as little as $85,000...One-bedroom condos were initially listed for $150,000 with three-bedroom units listed at $230,000.

From the Appeal-Democrat:

Median home sales prices in Yuba County dipped to $199,000 in March on nearly a third fewer home sales than a year ago, DataQuick Information Systems said....The sales price has declined $90,000, or 31 percent, from March 2007.

From the Sacramento Bee:

Layoffs are spreading to many segments of the area economy. Michael's Furniture, a Sacramento manufacturer owned by struggling retailer Restoration Hardware, eliminated 108 jobs in March, according to state records...National Distribution Centers, a West Sacramento warehouse, expects to lay off 175 workers at the end of April.

Sacramento Unemployment Rate Highest Since 1997

From the LA Times:

California's unemployment rate rose by a whopping half a percentage point in March, reaching 6.2% as a weakening economy shed jobs in the ailing construction and financial activities sectors...California's unemployment rate is the third highest in the country, trailing Michigan with 7.2% and Alaska with 6.7%. California is doing worse than Pennsylvania and Ohio...the two Rust Belt states that have figured prominently in the presidential primary elections because of their lost manufacturing jobs.

From the Sacramento Bee:

Sacramento-area unemployment rose three-tenths of a percent to 6.5 percent in March. That was the highest rate since it was 6.6 percent in January 1997, in the aftermath of the '90s recession.

From the Sacramento Business Journal:

Sacramento's latest office leasing reports could rival a poorly written term paper in the amount of red ink -- the color used by some commercial brokerages to denote when leasing has gone "negative." Region-wide leasing was in the red by 247,000 square feet in the first three months of the year, according to Cornish & Carey Commercial, meaning tenants vacated that much more space than they filled. It's the largest negative quarterly margin since 2001, the brokerage said.
...
[I]t's the third-straight quarter of flat or negative leasing activity in Sacramento and a sign of the slumping economy. Brokers said the figures are a reflection of real estate-related companies continuing to vacate or downsize and state offices no longer picking up the slack.

Bakersfield Bubble posted a nice summary of the state of Central Valley banking.

From the Sacramento Bee:

After more than 15,000 foreclosures since January of last year in the capital region, bank repossessions have become the house of choice for investors and first-time buyers...[B]ank-owned bargains have siphoned business from home builders. DataQuick reported year-over-year sales of new homes in March were down 35.6 percent in Sacramento County, down 42 percent in Placer County and down more than 70 percent in Sutter and Yuba counties.
...
The eight-county region was home to 6,652 closed escrows and nearly 5,600 foreclosures during the first three months of 2008, according to DataQuick and Foreclosures.com, a Fair Oaks-based Web site for real estate investors. That means banks will have plenty more homes to put on the market. DataQuick's LePage said the banks have sold only about 40 percent of the homes they repossessed in the region from July to December 2007.

Home sales by county
Home sales by zip

From the San Jose Mercury News:

The median price paid for a Bay Area home was $536,000 last month,...down 16.1 percent from $639,000 in March 2007. Last month's median was 19.4 percent lower than the peak median of $665,000 reached last June and July.
...
Economist Christopher Thornberg, founder and principal of Los Angeles- and San Rafael-based Beacon Economics, said that prices falling across the coastal Bay Area is the last part of the housing bubble bursting...Thornberg said that the first signs of the housing bubble started in inland areas and are slowly moving outwards to the Pacific. "You can't have plummeting prices in San Joaquin and East Contra Costa counties that don't affect Western Contra Costa and Alameda counties," he said. "And you can't have plummeting prices in Alameda and Contra Costa counties that don't affect San Mateo and Marin."

From the Modesto Bee:

Rents remained largely flat in the Northern San Joaquin Valley over the first three months of 2008, compared with a year earlier, according to data from property research firm RealFacts. The average monthly rent in Stanislaus for the period was $816, up by 1.2 percent. Merced County's average was $706, down 0.4 percent from a year earlier, and San Joaquin County's average was $881, unchanged.
...
"I think the owners realize the market is tenuous at best," [apartment manager Daphne] Hunter said, noting that not only are there lots of rental options on the market, but the soft economy makes it harder for many renters to absorb rate hikes.

From the Modesto Bee:

For sale! One golf resort. Includes two 18-hole championship courses, clubhouse, restaurant, winery and other swanky items. Price slashed! Was $150 million. Snap it up for $85 million. Diablo Grande resort, a victim of the sluggish housing market, has taken a page from beleaguered homeowners and dramatically reduced its price, looking for a quick sale.

"Tidal Surge" in Bankruptcy Filings; Sacramento Median Falls Below $250,000

From the Sacramento Bee:

Despite strict regulations to discourage bankruptcy, the number of filings last year in Sacramento nearly doubled in a tidal surge that outpaced growth around the nation and left court officials expressing astonishment. In total, 17,397 people and businesses sought bankruptcy protection in a district that largely encompasses the Central Valley...While filings leaped by 100 percent in this region, they grew by 38 percent nationally...The figures provide a grim epilogue to a period that saw Stockton and other cities in the Central Valley report foreclosure rates that ranked among the highest in the nation.

Yet the housing downturn and the ensuing credit crunch have not loosened their grip in 2008. The number of cases filed in the first quarter is up 82 percent from the same period last year...If the year unfolds as it has begun, the district could rank among the nation's busiest bankruptcy courts.

From the Sacramento Bee:

Sacramento County's 1,501 March closings on new and existing homes combined were the fewest since March 1997, according to DataQuick. The tally was down 14 percent from the same time last year. Median sales prices also dipped to $247,000, a level not seen in the county since May 2003. Median prices are now 36 percent below August 2005 highs of $387,000.

From the Central Valley Business Times:

In the Central Valley, the increase in average asking [apartment] rent is even more moderate – up 1.3 percent in the first quarter compared to a year earlier, says RealFacts
...
"Analysts of the troubled single family home market, with its sub-prime loans and increasing number of foreclosures, have asked what happens to the people who have lost their houses. Some have speculated that they would move into apartments, but the evidence from the RealFacts survey suggests that this is not happening," [RealFact CEO Caroline] Latham says. There has been no increase in demand for apartments, as would be the case if former homeowners were turning into apartment renters, she says.

"In fact, in MSAs that lead the nation in foreclosures, there has also been a decrease in demand for apartments. So where did these people go? One answer may be that they are renting houses rather than apartments, and are thus part of a shadow market that is not currently being measured," says Ms. Latham.

From the Stockton Record:

The longtime Angelica industrial laundry plant at 1145 S. Sierra Nevada St. is expected to close for good June 7, leaving 123 employees without a job...The announced closure comes on the heels of a major layoff of 159 workers at competitor Sodexo's Metro Park Laundry in Stockton.
~~~
More than 200 employees at TeleTech in Stockton were told last week their jobs will be eliminated after one of the Colorado-based outsourcing company's corporate clients reduced its customer service needs.

"Things Can’t Get Much Worse"

From the Central Valley Business Times:

The Central Valley leads the state when it comes to foreclosed homes going to auction on a per capita basis. Merced County had 335 sales in March or one for every 737 people in the county, according to ForeclosureRadar, the highest rate in the state. San Joaquin County is ranked second with 880 sales in March or one for every 757 residents. Stanislaus County is third, with 653 sales, one for every 788 people. Sacramento County is fourth, 1,381 sales or one per 1,003 residents.

From the Tracy Press:

Stephanie, 32, and Brian MacDonald, 30, never thought they’d own a home so soon. The couple had rented a $900-per-month duplex for three years before they looked to buy. And a few weeks ago, they bought their "dream home" for $187,000 below its asking price. Late last year, the four-bedroom tract home in western Tracy was listed at $525,000. The MacDonalds made an offer in February for $338,000. To their surprise, the bank accepted. Like several hundred prospective buyers in Tracy, the MacDonalds sensed the market had bottomed out.
...
[T]he near future still looks bleak for sellers, [Tracy lender Alex] Alvarez stressed. But with the average home price falling by a couple hundred-thousand dollars within a few short months, he said, people have begun to realize that things can’t get much worse. Sellers are settling, and buyers who saved up are taking advantage of the dramatic downturn.
...
The housing situation may get worse for a while, but it can’t for much longer, Alvarez and [real estate agent Karl] Enzmann agreed..."In three to five years, their home [the MacDonalds] will be worth so much more," he [Alvarez] said.

From the Stockton Record:

Lawrence Livermore National Laboratory announced Tuesday that it will lay off 535 full-time employees over the next few weeks as part of its work force restructuring plan...The nuclear research facility employs about 7,200 workers - including about 1,350 from San Joaquin County.

From the Sacramento Business Journal:

The Sacramento Bee's sister newspaper, The Modesto Bee, has offered voluntary buyouts to more than 100 employees -- or a little more than 20 percent of its staff of 455. The offers came a month after The Sacramento Bee offered similar voluntary buyouts to less than 2 percent of its work force. Like Sacramento, The Modesto Bee cited challenges in the industry...The Bee newspapers' ad revenue has also been hit hard by the downturn in the housing market.

'No Sign' of a Foreclosure Peak

From the Modesto Bee:

No matter how you crunch the numbers, March was a brutal month for foreclosures throughout the Northern San Joaquin Valley...San Joaquin had the highest foreclosure rate in the nation during March, followed closely by Stanislaus and Merced, according to RealtyTrac.

"There's definitely no sign of a peak in any of these foreclosure numbers," warned Sean O'Toole, owner of ForeclosureRadar.

From the Stockton Record:

Four months after CBS' "60 Minutes" broadcast a segment dubbing Stockton as this nation's "ground zero" of the foreclosure crisis, a TV crew from Australia's version of "60 Minutes," titled, well, "60 Minutes," was on a repo homes bus tour, making the rounds of bank-owned houses in Spanos Park and Brookside...Reporter Peter Overton bounded off the charter bus in choreographed exits not once but several times to get just the right take, to announce to the camera that there he was, touring foreclosure homes with "vultures ... here to pick the bones of the subprime crisis."
...
Reporter Overton said the "60 Minutes" crew was visiting the Central Valley to get a look ahead at the type of mortgage crisis into which Australia already is stepping.

From Slate:

California is to mortgage lending what Chicago is to pork bellies. For years, that meant it was a place with soaring house values; today, the foreclosure rate across the state is twice the national average and going up fast...And housing prices are in freefall.
...
Unfortunately, when it comes to the California crash, these striking numbers are not the end. They are the beginning...Which brings us to the other scary part of the California story: a coming wave of interest-rate resets in prime loans given to people with good credit that are just as bad, or worse, than we've seen in subprime.
...
Just two banks, Washington Mutual and Countrywide, wrote more than $300 billion worth of option ARMs in the three years from 2005 to 2007, concentrated in California...The really amazing thing is that the meltdown in California is already happening and virtually none of these loans have yet reset.

Canary in the Global Coal Mine?

From the Associated Press:

A growing majority say they won't buy a home anytime soon, the latest sign of increasing pessimism about the nation's housing crisis, a poll showed Monday...Sixty percent said they definitely won't buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006. At the same time, just 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.
...
The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling....Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.
...
Daniel Gallego, a warehouse worker in Stockton, Calif., said he may have to sell his home at a big loss. He said rising gasoline and other costs have made his adjustable rate mortgage unaffordable. Because he doesn't expect his home's value to recover soon, he said he may be better off moving now, before his rates rise. "We may have to move in with my wife's parents or my parents," said Gallego, 30, who has two young children. "I could pay off some debt, then we could rent, and maybe buy another house in a few years."

From the International Herald Tribune (hat tip smf):

The collapse of the housing bubble in the United States is mutating into a global phenomenon, with real estate prices down from the Irish countryside and the Spanish coast to Baltic seaports and even in parts of India. This synchronized global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes, but also jobs.

In Ireland, Spain, Britain and elsewhere, housing markets that soared over the past decade are falling back to earth. Experts predict that some countries, like Ireland, will face an even more wrenching adjustment than the United States, with the possibility that the downturn could turn into wholesale collapse.

To some extent, the world's problems are a result of American contagion. As home financing and credit tighten in response to the crisis that began in the U.S. subprime market, analysts worry that other countries could suffer the mortgage defaults and foreclosures that have afflicted California, Florida and other states.

Flashback: California's New Canary in the Coal Mine
Flashback: "Loans to Sacramento Trailer-Home Buyers...Trigger a Global Credit Crisis"

From the Sacramento Bee:

Folsom home builder consultant Greg Paquin reported last week that area builders opened 2008 with their fewest sales since possibly the early 1990s. That's nothing to sing about in a region that has seen sales and prices slide for the better part of 33 months. But here's the bright spot: Paquin sees in the new numbers some signals of a market approaching bottom.

Throughout the housing downturn, his predictions about the number of homes that will be built in a given year in the region have tracked pretty close to reality.

Maybe next time Wasserman can ask Paquin about how his sales predictions have held up.

Sacramento Real Estate Market Statistics - March 2008 - SAR

The Sacramento Association of Realtors (SAR) has published real estate market statistics for March 2008. The full report is here.

The median price of single-family homes in Sacramento County/West Sacramento fell 27.2% from last year.



Sacramento's median home price is now 35.1% off its August 2005 peak.



Here's a look at the median price since 2001.





March marked the second month in which sales exceeded prior year levels. Sales were up 4.6% versus March 2007.



The following graphs show the number of sales since 2001.

Trouble in Yuba City

From the Appeal Democrat:

Yuba-Sutter's unemployment rate weighed in at 12.2 percent — the third highest among U.S. metro areas...Sierra Cedar Products LLC, a Yuba County sawmill, shut down March 28, leaving 70 people out of work. Owners of a number of small retail stores also have given up.
...
[Erma] Olivio was laid off Nov. 29 after the patio-cover maker she worked for in Sacramento saw several months of plummeting sales. She has been unable to find another job that pays enough to keep up with her mortgage payments...Olivio says she is coming to terms with the fact that she could soon lose at least one of her two homes. The value of the house she lives in has decreased by roughly a third since she bought it two years ago. And she recently had to lower the rent on another property she owns in order to keep it occupied.

From the Appeal Democrat:

[The] retail community in Wheatland...is growing like a patch of wildflowers. The town of 3,000 has seen six new restaurants open in as many months. Also new: a bank branch, a Curves fitness center for women, a drive-through coffee kiosk, and Rodriguez's flower shop....

Cory Bartholomew, publisher of the town's community newspaper, the Wheatland Citizen, is a bit less optimistic. "We suddenly added all these businesses, and at the same time," he says, "the economy has slowed down." "I'm concerned," he says. Especially unrealistic, he says, is the number of restaurants now competing for the small community's dollars.

"It's difficult without a commensurate growth in population," Bartholomew says. Wheatland currently has a few thousand residential parcels that have seen little or no construction activity for the past two years. Owners are waiting for the housing market and construction industry to turn around.

From Bloomberg:

The proportion of U.S. borrowers at least 30 days late on their payments rose to 4.5 percent in March, compared with about 2.9 percent in the same period a year ago, according to data collected by credit reporting bureau Equifax Inc. and analyzed by Moody's Economy.com. Mark Zandi, chief economist at the Moody's unit, yesterday called the report "astonishingly bad.''

California's Central Valley and Inland Empire regions and Florida's southwest and panhandle areas were particularly weak, [Wachovia Chief Risk Officer Donald] Truslow said on March 12.

From the Modesto Bee:

Property taxes are due Thursday, but Stanislaus County auditors predict a startling spike in unpaid taxes. If trends hold, about 8 percent of what's owed won't be paid. That's about triple what is normal. "Eight percent is ridiculously high," said Todd Filgas, the county's property tax accountant. "We're having quite the excitement over here about it."
...
Last year, 6.42 percent of Stanislaus County property taxes weren't paid, and that was bad enough. "Since I came here in the late '70s, it had never been that high," said Ray Rassmusen, who manages the auditor's property tax division.

Greg Paquin on New Home Prices: Another 3-5% Till Bottom

From the Sacramento Business Journal:

New-home prices fell for the eighth consecutive quarter to the lowest level since 2003....The Sacramento area's median new-home price declined to $359,000 during the first quarter, a 7.5 percent drop compared to $388,000 in fourth-quarter 2007 -- and $107,000 less than the peak two years ago.
...
First-quarter home sales are about half the number for the same period a year ago, and 1,820 fewer than second-quarter 2006, according to The Gregory Group. "If we're not at the bottom, we're pretty darn close," said Greg Paquin, principal of The Gregory Group.
...
Industry consultant Mike Winn...said the current conditions feel like the bottom of the market. "People are latching onto any indicator they can," said Winn, board chairman of the North State Building Industry Association.

From the Sacramento Bee:

The first of several reports on first-quarter home sales is in, showing the number of new homes sold in the eight-county Sacramento region has fallen to the lowest level since possibly the early 1990s. But amid the dreary statistics there appears to be the suggestion of a market in the beginning stages of stabilizing. Greg Paquin...says the 1,304 new homes sold in January, February and March were almost equal with those sold during the previous quarter...That's not much on which to build a case for recovery. But Paquin and other analysts...say that while the numbers remain discouraging, they can see what looks like a market bottom forming before year's end.
...
Gregory Group statistics showed prices are still falling for new homes. The average $404,144 first-quarter price was off 5.3 percent from the previous quarter and down 13.1 percent from the same time last year. The silver lining: Paquin believes prices probably have just another 3 percent to 5 percent to fall.
...
Doug Pautsch, Sacramento division president of Dallas-based Centex Homes, maintains that buyers believe the market has bottomed and is bouncing back.
...
DataQuick's LePage said banks have sold only about 40 percent of the homes they foreclosed on in the region during the second half of 2007. The thousands more slated for sale will put a downward pressure on prices.

Q1 2008 New Home Sales Chart

For some of Paquin's previous predictions see here.

From the Sacramento Bee:

Folsom-based Elliott Homes Inc. appears well-poised for the long haul after paying $10 million this week for 400 acres of GenCorp Inc.'s unused real estate off Highway 50 in Rancho Cordova. That comes to $25,000 an acre, a lot less than the $100,000-an acre figures some builders were paying for land during the housing boom.

From the Sun Post:

Facing a nasty drop in home sales and prices, one builder has turned to the Internet to find buyers for its new subdivision. San Ramon-based Pacific Mountain Partners has listed 18 new homes in its Lathrop subdivision on an online auction Web site, Freedom Realty Exchange, which allows people to place electronic bids on the homes over a month-long auction period. Though it’s not the first time someone sold a home on the Web, the auction is likely the first time a developer in California has used the technique to get people to move into a subdivision.

From the Sacramento Business Journal:

Department-store chain Gottschalks Inc. reported same-store sales plummeted 15.4 percent in March compared to a year ago, as the retailer -- like many others -- battled a difficult economy, largely because of the hard-hit housing market and higher gas prices.

A report from the Center of Economic and Policy Research compares the ownership and rental costs in 20 major U.S. metropolitan areas, including Sacramento (hat tip Seattle Bubble). Read the report here.

Sacramento Rated 8th Riskiest Housing Market by PMI

From a PMI press release:

PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc., today released its Spring 2008 U.S. Market Risk Index [pdf], which ranks the nation's 50 largest metropolitan statistical areas according to the likelihood that home prices will be lower in two years.

1. Riverside-San Bernardino-Ontario, CA: 93.2%
2. Las Vegas-Paradise, NV: 91.9%
3. Orlando-Kissimee, FL: 85.2%
4. Fort Lauderdale-Pompano Beach-Deerfield Beach, FL: 84.1%
5. Phoenix-Mesa-Scottsdale, AZ 1 84.0%
6. Santa Ana-Anaheim-Irvine, CA: 80.6%
7. West Palm Beach-Boca Raton-Boynton Beach, FL: 79.6%
8. Sacramento-Arden-Arcade-Roseville, CA: 77.7%
9. Tampa-St. Petersburg-Clearwater, FL: 77.6%
10. Los Angeles-Long Beach-Glendale, CA: 77.2%

From the Central Valley Business Times:

According to Default Research, the hardest hit areas currently are San Joaquin and Sacramento counties with over 5.5 percent of homes entering foreclosure, in terms of Notices of Default and Notices of Trustee Sales, which the company tracks. There were 3,495 homes in the foreclosure process in March in Sacramento County, according to the report. That’s triple the number in March 2007 and 5.56 percent more than in February.

From the Stockton Record:

Washington Mutual announced Tuesday a $1.1 billion loss for the first quarter and said it will close all its free-standing home loan centers and lay off about 3,000 workers nationally. This will mean five employees in San Joaquin County will lose their jobs with the April 30 shutdown of the Stockton Home Loan Center....

From the Stockton Record:

Crossing illegally into California for work, then coming to Stockton during this recession seems like ducking ocean liner fare by stowing away on the Titanic.

Sacramento Home Builders Go Begging For Fee Deferrals

From the Sacramento Bee:

Several Sacramento-area cities stung by the real estate downturn are considering deferring developer fees as a way to stimulate the local economy. Deferrals on fees charged to builders to help pay for major roads and sewers and address other impacts of development aren't likely to reduce the cost of commercial construction. And they likely won't affect home prices. But they are being tailored to encourage more residential and business construction.
...
The North State Building Industry Association, some of whose members are reeling from the real estate downturn, is leading the charge for fee deferrals. The trade group has made its case in Roseville and Elk Grove in addition to Folsom, said Dennis M. Rogers, senior vice president for the North State BIA..."We're basically going to be going to everyone with the same proposals," Rogers said.

From the Stockton Record:

The housing boom made construction one of San Joaquin County's fastest-growing industries from 2002 to 2005....It's a different story now. The residential building halt and mounting foreclosure crisis, the latter of which has displaced many San Joaquin County families, also have left a shortage of work for...laborers who once built and landscaped those homes.

A number of those workers - mainly the undocumented portion - head every day to Stockton's Gateway Plaza to solicit jobs...As many as 100 men wait for work every day in front of the plaza's Unocal 76 gas station....For every employer that pulls up, five to 10 men rush to the vehicle, but only a few are chosen. By the end of the day, most are left behind.
...
Marselo Martin used to have a regular construction job and an apartment. That was awhile ago. Now homeless, he does side jobs - anything to send money to his family..."Right now, there's no work here. It's almost as bad as Mexico," he said.

From Rubio’s Restaurants, Inc. Q4 2007 Earnings Call via Seeking Alpha:

Lawrence A. Rusinko [Senior Vice President of Marketing & Product Development]:

Starting in the third and fourth weeks of November and continuing through the year-end, we experienced a general softening in our business, the result of a weakened economy being pressured by higher gasoline prices and the subprime problems in housing.

All of our markets experienced downward pressure on sales during this time. However, three markets in particular, Phoenix, Sacramento, and the Inland Empire region of Los Angeles, all on the front end of the subprime loan problems were primarily responsible for our weakening fourth quarter comps. Worsening economic conditions simply caused consumers to pullback on discretionary spending. In turn, comp sales turned negative in these markets for November and December weighing heavily on our overall results despite continued positive fourth quarter comps in all other markets.

Sacramento Foreclosure Statistics - March 2008

Sacramento County Foreclosure Statistics, March 2008

Pre-Foreclosures: 2,871
v. 2007: Up 113.1%

REOs: 1,679
v. 2007: Up 249.8%

More at Foreclosures.com.

Sacramento Median Asking Price Statistics - March 2008

According to Housing Tracker, March's median asking price fell nearly 30% year-over-year.




Since August 2005, the median has declined 37.5%.



More price measurements: Sacramento Price Watch

Cocktail Party Talk: How Many Bank-Owned Properties Are on Your Block?

From CNBC's Funny Business with Jane Weils:

[T]wo doors down [in West Sacramento] lives Karnial Saini, a realtor (the irony!) who says he put down 20 percent on his home when he bought it in '04, but got an adjustable rate mortgage he can no longer afford. "Yesterday I tried to refinance," he says, but his mortgage is for more than a half million dollars, "and the house appraises at $450,000." He says he is probably going to lose his home either through a short sale or by "just giving the bank the key."
...
[W]hen I asked him if it's fair to bail him out, Saini admits not everyone deserves it. However, he didn't do a zero percent down loan, his home is just now less than his mortgage and he desperately needs a new mortgage. What he finds hard to understand is that the bank will agree to a short sale, but it refuses to lower the principal.

From the Tracy Press:

Chestene Dean, who moved from Minnesota to Tracy three years ago, called the state’s housing market a scam. She and her husband, Dennis, sold their stocks and borrowed from their retirement plan to buy a $600,000 home. Now they’re doing everything to keep the home, which now markets at about $390,000...The Deans wouldn’t say how many months they have been late on their mortgage payment, which is $4,700 a month. “There are other people hurting like us,” said Dennis Dean, glancing at the roomful of people. “Like them, we’re going to fight for our home.”

From Marketplace:

Seth and Joanna Goslin paid a final visit to their former home a few weeks ago...They haven't paid their mortgage since last summer. Now they're in bankruptcy and foreclosure proceedings...We sat on the living room floor of their 1,200 square foot condo in Elk Grove, California...Seth is 33 and worked for a mortgage broker until he was laid off early last year...
...
The Goslins bought their home with what's known as a 2/28 ARM -- the interest rate is fixed for only the first two years, then adjusts up. They also did 100 percent financing -- no down payment -- but later, they refinanced into an even riskier mortgage called an option ARM. It allows borrowers to make payments that don't even cover the interest on the loan. That's how they ended up owing even more than their purchase price.
...
Seth: I think because it's happening to so many, it doesn't really feel like a stigma. It sort of feels like... there seems to be a lot of sympathy.

Joanna: It seems like a couple of years ago, everybody at cocktail parties talked about how much their home value had increased and now it's, you know, how many bank-owned properties there are on their block.

From Marketplace:

[Realtor Alan] Waggoner and I do a little experiment. He checks the regular listings in Elk Grove. The average price is $447,000. Then he does the same search, but includes bank-owned homes and short sales -- those are the ones in pre-foreclosure. The total inventory more than doubles and it knocks the average price down to $370,000. The bank-owned homes have pushed the average price $80,000 lower.
...
[Real restate agent Michael] Freeman: We have bank REO properties that are coming on... they're trashed and they are artificially driving the price down, because it's not really what the market would be bearing, but the buyer is going to take advantage of that.

From the Sacramento Bee:

Lenders took back the keys for 1,224 Elk Grove homes from October 2006, the earliest month for which figures are available, through the end of 2007, according to a Bee analysis of Federal Home Mortgage Disclosure Act data.

From the Sacramento Business Journal:

The Sacramento County Association of Realtors expected thinner ranks this year with the housing downturn, and the prediction has held true...The association listed 5,577 Realtors as members this year, compared with 6,337 last year...The Placer County Association of Realtors also reported a 12 percent decline from last year, with about 2,300 active members this year, 320 fewer than in 2007.

From Investment News:

Speculation is growing among analysts and home-building executives that the battered housing industry finally may be approaching a bottom, at least in terms of inventory of both new and existing homes. It could be the first sign that the hemorrhaging in the housing sector could be approaching an end. But if history is any indication, home prices may not start to bounce back for at least two years, and at least one analyst thinks it could take as long as four years.

In the past, new-home sales typically started increasing about a year after supply and demand fundamentals stabilized, while home prices took at least two years to tick up, according to James F. Wilson, director of research and senior analyst with JMP Securities LLC of San Francisco...Mr. Wilson said that he has seen early signs of inventory stabilizing in certain markets such as Sacramento, Calif., and San Diego.

From the Sacramento Bee:

A fancy new campus rising in East Natomas has become the latest flash point in the toxic relationship between the Grant Joint Union High School District and the new school system that soon will absorb Grant. The new district, Twin Rivers Unified, will take over Grant and three other elementary districts on July 1 in a merger.
...
Twin Rivers officials...are deeply worried about the current housing downturn, as well as a building moratorium in the Natomas basin while levees are improved. "Two and a half years ago, when they planned this and there was a housing boom, it made sense. Today it doesn't," said Rob Ball, Twin Rivers' associate superintendent. "We're going to have a brand new building and no students to put in it."

From the Sacramento Bee:

The economic downturn hasn't bypassed Loomis, population 6,529. The sales tax portion of its $3.5 million budget is down about 20 percent, largely from the struggles of construction- related businesses. But since Loomis' city government relies lightly on development fees, the town avoided the worst effects of the downturn.

From the Sacramento Bee:

Sacramento, where unemployment has risen to 6.2 percent, is particularly vulnerable as the economy softens. Foreclosures have run into the thousands, and housing prices have fallen more than 25 percent in two years, making it among the hardest-hit markets in the country.
...
[J]ob losses are spreading beyond the housing sector...The past few months in the Sacramento area have seen layoffs at employers as diverse as Intel Corp. in Folsom (112 jobs) and Sutter Medical Center's two main hospitals (54 jobs), although Sutter said all but 20 employees found jobs elsewhere in the organization. The general downturn loops back to housing: Consumers who have lost equity are less wealthy and less likely to spend.

From the Stockton Record:

You own a winery worth about $850,000, you've built up $1 million in real estate equity between the winery building and a couple of homes and, as a married couple, have a combined income well into six figures. So what have you got to worry about?

With the housing market collapse, a big new mortgage, uncertainty on Wall Street, a wife who is retiring this year partly for health reasons, looking to his own retirement in three years and a recent, sudden slump in wine sales, there was plenty to concern Rod Ruthel. "It was too many things happening at once. I was a little freaked out about it," said the owner of French Hill Winery in Mokelumne Hill.

He was particularly concerned when sales at the winery, normally a recession-proof business, had suddenly fallen by nearly half. Also worrying was a switch from credit card charges, usually nearly 100 percent of the trade, to one-third in cash - a sign customers were watching their spending more closely.

"It is what happens with the overall economy that is important right now"

From the Sacramento Business Journal:

More than 300 individual lenders, some who risked their retirement accounts, are expected to auction 338 acres in the Placer Vineyards development Wednesday in hopes of recouping some of the $51 million they're owed by a now-defunct company that bought the property in a complex deal. It's one of the largest foreclosures in the region so far -- an offshoot of a Las Vegas company's bankruptcy and a symptom of the hard-hit housing market.

The property is owned by the defunct Placer County Land Investors LLC, which raised $31 million to buy the land in 2004 through individual lenders who signed on for a minimum of $50,000 each. As a group of individual investors they are allowed to foreclose on the property and auction the land. Those primary lenders had hoped to earn double-digit returns but find themselves trying to wring whatever value they can from the property. More than 100 secondary lenders who agreed to take a subordinate position when they loaned a total of $6.2 million for the land purchase would receive nothing from a foreclosure, said Gerald Gordon, a Las Vegas attorney.

From the Sacramento Bee:

New statistics show regional home building off to a slow start in 2008, with 798 new-home sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. That's 57.7 percent fewer sales than in the same months of 2007, according to Hanley Wood.

From CNN Money (hat tip Housing Chronicles):

Demand for new homes may not return to normal levels until next decade, according to the latest outlook from the National Association of Home Builders. "Traditionally when housing has been in a recession, it recovers very quickly. We don't see that happening this time," said Jerry Howard, CEO of the builders' trade group. "It could be 2010 before we see sustainable, long-term stability in the home building sector."

From Wachovia Economics Group [pdf] (via FxStreet.com):

Home prices will bottom out about the same time foreclosures top out, which we believe will be in the first half of 2009. Efforts by Congress to stem the tide of foreclosures are likely to be modestly successful at best. A very large proportion of foreclosures, which we estimate to be around 40 percent, are on homes purchased by investors and speculators. There is little Congress or the lending community can do to prevent these borrowers from going under, which will result in sharply higher foreclosures and price declines in investor-laden markets, such as Florida, Arizona, Nevada and California’s Central Valley.

From the Associated Press:

Driving around depressed developments ringed by almond orchards, John Pedrozo, a Merced County supervisor who represents Planada, could not contain his distress. "I've lived here 50 years and I've never seen anything like it," said Pedrozo, who grew up on a dairy farm. "Businesses are closing, people going bankrupt. And the empty houses are vandalized." A common problem, he said, is that on weekends, vacant, foreclosed houses are crashed for wild parties and trashed.
...
Merced County, population 246,000, underwent a housing boom over the past few years that saw developments spring up on what used to be farmland, said Rep. Dennis Cardoza, a Democrat from Merced. Now, in towns like Atwater, housing values have dropped as much as 50 percent, the congressman said. "The impact on these small towns and cities is huge," Cardoza said. "In my district, I believe we are already in a recession."

Realtor Julie Jalone in Roseville & Rocklin Today:

It is true we are starting to see some subtle shifts in the Sacramento real estate market. But the only thing dramatic is the anecdotal comments of other Realtors who are saying there is increased activity.
...
What I remain concerned about is the rate of foreclosures we are seeing in the Sacramento area...I don’t see any solutions to this trend and suspect our rate of foreclosure to continue to outpace the rest of the country through 2008.
...
Watching the housing market is interesting but it is what happens with the overall economy that is important right now. Our Sacramento economy is tied to construction and government and neither is a strong driving force right now.
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I learned my lesson with some previous overly optimistic predictions for our local real estate market. Right now I am being cautious and want to see the foreclosure numbers come down before I start to smile.

From Sacramento State [pdf] (hat tip Home Front):

Sacramento area residents are very pessimistic about the region's current housing market. Only three percent of area residents think the housing market will take six months to recover, and 17 percent say it will take a year. The majority (51%), however, believe it will take two to three years for the market to recover, and 24 percent even claim the housing slump will last at least four years of more. Close examination indicates that regardless of county of residence, homeownership status, race, age, political party affiliation, the overwhelming majority think it will take at least two years before the regional housing market recovers.
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Currently, sixty-three percent of area residents believe 2008 is a good time to buy a house in the Sacramento region; 47 percent say now is a good time and 16 percent claim six months from now would also be a good time. Only 30 percent of residents think that the best time to buy a house in Sacramento is at least a year from now....

From Calculated Risk - Housing Bust Duration:

It might be reasonable to expect that the dynamics of the current bust will be similar to the previous bust. After another year (or two) of rapidly falling prices, it's very likely that real prices will continue to fall - but at a slower pace. During the last few years of the bust, real prices will be flat or decline slowly - and the conventional wisdom will be that homes are a poor investment.

The Los Angeles bust took 86 months in real terms from peak to trough (about 7 years) using the Case-Shiller index. If the Composite 20 bust takes a similar amount of time, the real price bottom will happen in early 2013 or so. (But prices would be close in 2010).

From the Federal Reserve Bank of SF (hat tip Calculated Risk):

To the extent that the subprime meltdown is tied to declining house prices rather than interest rate resets, other borrowers, including prime borrowers, also could be affected. Indeed, while default rates for the latter loans are lower than for subprime loans, delinquency rates among all categories are highly correlated with house price declines across regions of the country. More formal statistical analysis confirms that differences in house-price change account for most of the regional differences in delinquency rates, whether borrowers are prime or nonprime, or whether loans have fixed or variable rates.

This analysis underscores the importance of house-price movements both to future developments in the housing sector and also to the ultimate magnitude of credit losses that are likely to be realized by leveraged financial institutions on their holdings of mortgage-backed securities and other housing-related loans. Looking ahead, it seems likely that the period of house price declines will not be over very soon, since some models of the fundamental value of houses suggest that prices are still too high, and futures markets for house prices indicate further declines this year.

Radar Logic: Sacramento Home Prices Fall 28%

From Bloomberg:

Home prices declined in 21 U.S. cities in January, led by Sacramento and Las Vegas, as banks sold foreclosed homes at bargain prices. The price per square foot in Sacramento, the capital of California, dropped 28 percent to $166 from a year earlier, according to a report [pdf] released today by New York-based Radar Logic Inc., a real estate data company.

From the Central Valley Business Times:

One of the Central Valley’s largest community banks, Merced-based Capital Corp of the West, which operates as County Bank, saw its bottom line plunge along with housing values and foreclosed borrowers in 2007. The company says it had a net loss of $3.6 million for the year, compared to a profit of $22.6 million in 2006. It’s the first annual loss in the company’s 30-year history.
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"The largest factor contributing to the increased provision was the rapid decline in real estate values in California's Central Valley in fourth quarter 2007...." the company says..."The scope and rate of the decline of the real estate market were completely unexpected," says Donald Briggs, Jr., a director of the bank. "No economic forecast predicted its rapid collapse during the fourth quarter of 2007."

From the LA Times:

Wachovia Corp. signaled that it may no longer offer some Californians the controversial "option ARM" mortgages that give borrowers the choice of paying so little that their balances actually rise. In a memo Monday, Wachovia's top California managers told employees that the loans would no longer be offered in 17 California counties where property values have declined the most, including Riverside, San Bernardino and San Diego, plus the Central Valley.
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If Wachovia cuts back, it could further disrupt distressed housing markets where the recent tightening of credit has compounded the problems caused by easy-money lending earlier this decade. "This product was the last remaining hope for the sub-prime borrower," said broker John Diamond of Bancorp Funding in Chino.

From the Stockton Record:

Five Chinese real estate officials on a three-week, coast-to-coast tour of the United States spent nearly a week visiting Stockton, which they know is the top foreclosure area in this country...The Chinese officials said they were mostly curious about the subprime meltdown in the United States...More than anything else, he said, "they sounded like they wanted to buy some of these foreclosure homes. They thought they were good deals."

CNBC on Stockton's new home market here and here. (hat tip Jeff)