'One more sad cry in a horrible storm'
From the Sacramento Bee:
Sacramento's economy stands to lose around $1 billion over the next 18 months because of layoffs and unpaid furloughs imposed on state workers by Gov. Arnold Schwarzenegger..."The purchasing power of the state worker in Sacramento is huge," said Teresa Halleck, president of the Golden 1 Credit Union. "The last thing any one of us wants to see is further impact to the local economy."From Bloomberg:
...
"It seems like one more sad cry in a horrible storm," said Mike Lyon of Lyon Real Estate in Sacramento. Although it won't devastate the housing market, the cut in payroll will make a dent, he said. Some homebuyers probably will have deals fall through or won't qualify for a mortgage, he said.
If you were searching for pockets of optimism in the U.S. housing market, where would you look? Easy guesses would be to avoid Detroit, Cleveland or any cities with domestic automobile plants or troubled manufacturers. Then there are the foreclosure gulches of Central and Southern California, which include the Modesto, Stockton, Bakersfield, Riverside and Sacramento areas. Those cities will take a long time to recover. Too many homes there were sold at bubble prices to people with dodgy finances.From the Sacramento Bee:
In the wake of a prolonged California housing slump, nearly one-third of the state's homeowners with a mortgage will find it impossible to refinance, according to Irvine-based First American CoreLogic. In Rancho Cordova's Sunrise-Douglas area, almost nine in 10 homeowners of ZIP code 95742 fit into that category, said the firm. That's because the ZIP code consists almost entirely of new homes sold and financed at near-market highs. Falling values have erased their equity.From the Sacramento Bee:
Elsewhere, thousands spent part of their home equity gains during the boom. All are now "under water," industry shorthand for owing too much to refinance. Analysts call the condition a major contributor to the state's foreclosure crisis.
The city of Sacramento is poised to approve a huge new shopping center just a few miles from the Elk Grove shopping center where construction has stalled. City Council members are scheduled to vote Tuesday on Delta Shores, a new community with about 5,000 housing units and 1.3 million square feet of retail – the equivalent of an Arden Fair mall.In December, Sacramento median home price dropped to $180,000 according to SAR [pdf], a decline of 55% since peak.
...
[A]t least one retail expert suggested the city could be making a mistake. "If they were starting to build it today, it would be foolhardy, and in 2010 it could be foolhardy," said George Whalin, head of Retail Management Consultants in San Marcos. "I don't know anybody who is looking to build anything new," Whalin added. "The mall guys, the shopping center guys, all the discussions now are how do we pull back, how do we stop projects that are on the drawing boards."
Average Buyer has a handy chart of equity destruction by zip code. Price declines from peak range from 18% to 76%.
Sacramento Real Estate Statistics notices that so far in 2009, Sacramento home inventory is on the rise à la 2007.
25 comments:
You forgot this article:
The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates.
http://news.yahoo.com/s/ap/20090112/ap_on_re_us/fleeing_california
Oops!!
I saw that, posted the sacbee link in the last thread.
We knew it was happening, saw it expressed in data but buried and now the MSM is finally admitting it. Kinda nice isn't it?
Kinda like the depressed vacancy and rental rates are finally being expressed in data >; )
We knew it was happening, saw it expressed in data but buried and now the MSM is finally admitting it. Kinda nice isn't it?
I remember you and your SO leaving California happily during the summer with the claim of pulling other family members (specifically your mother) out of the state as well.
What I've never seen you post (I may have missed it) is why you returned to this state of Hell.
For months you derided California (specifically Davis) and extolled the virtues of the mid-west and its superiority in all things over the west coast, yet you are back after a very short experiment, without having faced a mid-western winter. My question is, why?
My sis and BIL moved to Washington state with the same arrogance and retreated to Cali after their second winter up there, but I've never read your reasons for your hasty retreat less than three months after you left on your expensive high heels.
My sis and BIL at least admitted that they were wrong to think they could export their California values, culture, and weather with them. >: )
As always, I am Curious.
..."The purchasing power of the state worker in Sacramento is huge," said Teresa Halleck, president of the Golden 1 Credit Union. "
It's a shame that lack of planning, vision, and creativity by former city officials now weigh heavy on our government-dependent city.
The collateral damage of a smaller state government, falling revenues, etc. not only affects everyday businesses around town, the collateral fallout of those companies that provide services under government contracts are probably most vulnerable. If you're serving the government under long term lucrative contracts, I'd expect some tough negotiations or cancellations that would force the private sector into heavy job losses. It's one thing to have a contract, it's quite another when your serving an entity that's bordering on bankruptcy. I don't know what the ratio is of private sector jobs that serve the state, but I'd bet it's a multiple that gets reduced as the state continues to falter.
"My sis and BIL at least admitted that they were wrong to think they could export their California values, culture, and weather with them. >: )"
I guess with all the problems we face in this state, I'd rather be in an area that gives me many lifestyle options not available in other areas, including the midwest (however I'd take their family and business values anyday!!!).
If things really turn south, it spares no one and those that have climate to their advantage, a massive ag base to draw from, and one of the world's most diverse economies... they are probably better off under those conditions. Losing hundreds of thousands of people that don't want or cannot afford to live here, isn't all that bad. Consider how vital this economy is to the US, if not the world. If the govt. is handing out cash, you can bet California will be at the front of the line. Without her, the US goes into the tank and stays there until she gets back on her feet.
What - no one called bottom in that post. Must be a mistake.
Cool.
Cow_tipping.
OK, I'll do it.
We are definitely on our way to the bottom. How's that?
On the CA In vs. Out debate. I've lived at all four corners of the country and grew up in Missouri. Everywhere has something desirable to offer as well as some downsides (I have a very hard time remembering anything good about Florida). What has happened in the past and I am willing to bet will happen again is that when the bottom is reached somewhere, it will be here first. Once things have reached that low, it is that earlier mentioned climate, massive ag base, and one of the world's most diverse economies that will pull CA from the hole sooner and faster than just about any other region.
Economic waves from this current crisis started here and in FL and are still spreading. Much of the country only realized there was a problem sometime this summer. Areas like the midwest are going to suffer just as much as here but they are lagging by a great deal (at least a year in most places). When recovery finally happens here, my hometown of Kansas City will probably still have another year or more of downturn ahead of it.
People who area leaving now are actually following the wave of the economic downturn into areas that still have much more downturn ahead of them.
I'm not usually one for general optimism about the economy but, if the herd is heading out of here that may be one of the first signs that the bottom really is approaching.
-CD
CA is not the massive ag base it used to be. Ask anyone familiar with water rights, especially if they have a background in environmental cleanup.
on campus, lot of people are in a scramble to see how they are going to cover expenses, including salaries. Researchers working on water projects have had their funds halted as of 12-17-08. I'm not sure how other campuses are doing but it's a very big deal here. Buying a house is the last thing on anyone's mind in Davis.
Don't forget about the bubble in government budgets.
That bubble is now also bursting with the decrease in revenues.
You cannot double a budget in 10 years and expect to maintain it in the long term.
And in the long term, there is a problem that few are discussing.
There are simply not enough people being born.
"CA is not the massive ag base it used to be."
That might be true, but on a stand alone basis, California's San Joaquin, Central Valley, and Coachella Valleys are world class ag centers, and far outstrip any combination of states (or countries) in the way of varied production capability.
If I have to depend on the basics, I'm satisfied this state can produce all that it's citizens can consume...and have enough left over to parcel out to the rest of US. What concerns me is that we're in the midst of drought conditions. While that could hamper production, I'm banking that the people in this state will be just fine. Half the production still feeds all of the state's population.
As for campus problems, from what I'm hearing enrollments are falling because of spiraling costs. When people pull back on the retail side, a high priced education gives way to state schools and JC's, if not until the uncertainty subsides. It used to be a good place to hide during any situation, now all the fat comes off the pork, and I'm not so sure that's the case any longer.
"CA is not the massive ag base it used to be."
On a gross dollar basis, CA still crushes the rest of the country. We grow expensive commodities and are very important in the world of ag.
DD, the folks scrambling are faculty, not staff. It's the hard vs. soft money issue. Freezing those accounts also means no money flowing out to biotech firms.
What a difference a few weeks makes. I saw this on CL, first one that jumped out at me: '2BR/1.5BA Nice duplex in south Davis. Available NOW. Rent:$950.00/mo'
Didn't someone on this blog just sign paper on a Davis complex where 1200 per 2 Brs were a sure thing?
DJ...soft or hard, it's donated money is it not? That's where the problem begins....
Want to solve the real estate problem here? It's a little late Sacto...and I've said this before.
I lived in Oceanside for 5 years before moving here. I wouldn't move back and find Sacramento charming, cultural, and a city with a pulse. What was once a low end military town with a run down pier and a beach, Oceanside transformed itself, during the boom, by cutting deals with major corporations, giving them free land, assisting them with building costs, tax breaks, and incentives, in return for thousands of well paying jobs in up and coming industries. They didn't escape the real estate meltdown, and overbuilt like most California communities, but they at least built a base of diversified industries that were dependent upon their own successes for future growth.
Not here...our base industries are a basically welfare dependent, and for lack of anything better, self consuming or more graphic, flesh eating.
Sacramento has basically three dominant industries. It depends on Davis. It depends on state government and it depends on it's healthcare industry...all of them at the mercy of outside, distant, and/or charitable funding. These industries have a fair amount of waste, inefficiencies, "free" services to the needy, union labor rules, etc. They are not expected to profit, and rarely do. Wile we do have supporting industries that do pay well, and do profit, they are predominantly in support of the big three.
10,000 well paying jobs in industries geared to profit from their own profit, innovation and success, would put our real estate problems behind us.
Late? Yup, but if we don't do something now, history says we'll forget about it when things do turn around.
Actually, UC applications are up 9%. 15% at Davis (over '07/'08)
http://www.ucop.edu/news/factsheets/2008/fall+2008+app_table+3.pdf
Where someone lives is a pretty personal choice. There are a lot of reasons that my wife and I have chosen where we are, including economics, politics, climate and inertia. What I don't do is think anyone else is 'wrong' for choosing any diferently. It would be pretty silly for all those other states (and the rest of th world for that matter) to be empty and everyone move to California.
Rich
That's interesting...why all the funding problems on the Davis campus then?
Must be program specific where state funds are being stripped away?
"That's interesting...why all the funding problems on the Davis campus then?"
Because student tuition is only part (about 29%) of the overall budget of any UC.
http://www.universityofcalifornia.edu/news/budget/
No wonder...70c on every dollar is subsidized and dependent on someone elses good fortune paying for another's well being.
or put another way
Margaret Thatcher once said, "The problem with socialism is that you eventually run out of other people’s money."
Maybe the UC system has finally caught up to Thatcher's remarks...
That's not really a fair statement given that the UC system does get money for it's sports programs etc...
I'm here, he isn't. I'd much rather still be in STL. Happy now?
Not really. The midwest is a big place and your response didn't address my questions.
Cheers.
You are sounding a little bit dense and more than a little bit insensitive. DJ's reasons for being back here are personal and obviously not in a happy way. Morbid curiosity is just bad manners.
-CD
Thanks CD...you beat me to it!
Thanks CD & DD for thinking of me and sparing me my very very colorful response.
If either one of you make it to BT's housewarming, I promise some hair-rising stories on ag funding in ca and the us, usda data, and uc 'stuff' >: )
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