Friday, January 23, 2009

Sacramento Unemployment Hits 8.7%; Rental Occupancy Drops

From the Sacramento Bee:

Greater Sacramento unemployment jumped to 8.7 percent, up from 8.1 percent a month earlier...The region has now lost 22,400 jobs in the past year, or 2.4 percent of its employment base.
From the Sacramento Business Journal:
The highest local jobless rate was in Yolo County, at 9.8 percent. The county has a labor force of 99,900 with 9,800 unemployed last month. The county had a 9 percent unemployment rate in November.
From the Sacramento Bee:
Unaccounted for [in the employment numbers is]...the growing numbers of workers who have had to settle for less of a job than they wanted. "The pain in the economy is much greater than the jobless numbers would indicate," said economist Sung Won Sohn of California State University, Channel Islands...Jenny Beard, owner of the Express Employment Professionals office in Roseville, said the number of former full-time workers seeking part-time work is undeniably up. "I'm positive of that," she said. "We're seeing many candidates who just want to keep themselves employed."
From the Sacramento Bee:
Sacramento-area rental occupancy dropped nearly a percentage point – 0.7 percent – in the fourth quarter of 2008 compared with the year-previous quarter, according to a survey released Wednesday by Novato-based rental industry analyst RealFacts...About 93 percent of area rental properties were occupied, one of the lowest occupancy rates in the state....
...
One local analyst cited a "cacophony" of factors contributing to the drop, from overbuilding, to single-family homes turning to rentals in a disastrous housing market, to a struggling economy.
From Home Front:
Here at The Bee, we do a ton of stories on the housing market, but don't often enough explore the world of apartments that house an estimated 35 percent of the region's population...The bottom line right now: the apartment industry is slumping, too. Sales prices are falling, a few have fallen into foreclosure and buyers are waiting on the sidelines to see if prices fall more, the two said. There's still more supply than demand, which has lessened investor interest, too, in apartments.
From the Placer Herald:
Placer County’s foreclosure rate continued to gain steam in 2008, according to a year-end analysis of government records. And experts say to expect more of the same in 2009. The number of foreclosures in the just-ended period was up more than 110 percent from a year ago, with 2,552 residential properties being taken over, compared to 1,193.
...
Homes in all segments of the market – from “starter” homes to area mansions – showed up on county default rolls last year en masse, experts say. “It’s pretty much going after all of them,” said Ben Herb, president of the Placer County Association of Realtors. “Even the houses that are a million-plus have been going into foreclosure.”
From CBS13:
Loan consultant, Robert Turrietta, say that one particular foreclosed home in Sacramento's Oak Park neighborhood lost almost 75 percent of its value. "This particular home transferred a couple of years ago for around $200,000 and just recently sold and closed escrow for $39,000," Turrietta explains. Turrietta says while home prices fall, nearly half of the buyers applying for a loan are getting denied.
Related Post: Housing Bubble Casualties: Professionals 'Suckered' into Oak Park

From the Sacramento Bee:
Most of Sacramento's local banks bet small on the real-estate boom and, as a rule, they haven't been badly hurt by the bust. But according to federal filings, most local lenders have a larger stake in the commercial real estate market, where vacancies – and loan defaults – are expected to soar this year as more businesses fold.
...
[Colliers International's Garrick] Brown anticipates 5 percent to 6 percent of the region's commercial real estate properties will go into foreclosure in the next two years. That's similar to the rate of home foreclosures locally in 2007-8, according to data from foreclosures.com.
Merced breaks the -50% YoY mark. From the Modesto Bee:
Stanislaus County's median sale price was $157,500 in December,...44 percent below the $281,250 in December 2007 and 60 percent off the $396,000 in December 2005, when the bubble was at its biggest...[YoY price declines:] 51.8 percent in Merced [and] 47.5 percent in San Joaquin.
...
Richard Green, director of the University of Southern California's Lusk Center for Real Estate, said the market is being hammered by tight credit, expectations of further price declines and job losses. "If you see the unemployment rate turn around, that's when you'll start to see housing prices bottom and start turning in the other direction," Green said. "Until that happens, I'm pretty gloomy."
From the Sacramento Bee:
Sacramento County is about to announce a mid-year budget shortfall of $42.3 million....As a result the county at the Feb. 10 Board of supervisors meeting will propose getting rid of almost 200 positions on top of almost $30 million in cuts, according to an official, not authorized to speak on the budget, who had been briefed on the situation.
From CBS13:
With a skyrocketing foreclosure rate and plummeting sales taxes, Stockton has to cut $30 million from their $180 million general fund...[O]fficials say layoffs are inevitable.
From CBS13:
The recession is leaving some doctor's offices empty. More women are putting motherhood on hold and recent reports show contraceptive sales are through the roof. The data runs about two years behind, we won't know for sure until 2011, but it appears that with the economic slowdown has come something of a pregnant pause.

22 comments:

patient renter said...

one particular foreclosed home in Sacramento's Oak Park neighborhood lost almost 75 percent of its value

There's your skewed median.

Regarding the problems with state and local budgets everywhere, is this normal for economic downturns? I don't exactly recall this being such a broad problem in the past.

Deflationary Jane said...
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Deflationary Jane said...

PR,

I helped a friend who was looking there. She gave up when she saw what was going on. The good parts of Oakpark are 75% off. It's the bad parts that are 85% off or better.

But they slap some paint on them, fix the toilet and stick them back on the rental market for midtown prices. The market is flooded with these gems.

Oh and who was it that said rental rates and occupancy couldn't possibly be down? phffftp! >; )

PeonInChief said...

Only with respect to tenants can a reporter state that, although he writes on the housing market, he does very little on the part of it in which 35% of the population resides.

norcaljeff said...

California's is even higher, per Beason Economics:
California’s unemployment rate rose a staggering nine-tenths of a percentage point reaching 9.3% in December of 2008 – the largest month-over increase since before 1990. The last time unemployment in the state reached 9.3% was during the recession of the early 1990s. This increase outpaces that expected by Beacon Economics. While startling, it is important to note that the statistical model used to calculate the rate can produce anomalies, and we may find the number significantly revised when EDD releases labor force data again next month. California’s unadjusted rate was 9.1%.

norcaljeff said...

* that should read "Beacon Economics."

sacramentia said...

"The good parts of Oakpark"Is there such a thing?

Average Buyer had a great post on the medians in Sac by zip < http://averagebuyer.blogspot.com/2009/01/give-or-take-peak.html>. Oak Park is 95820, and her graph shows -74% for both price and sq ft median change from peak. That says to me the median isn't skewed, it is just that bad.

There seems to be a lower bound to rent prices, but not to tenant quality or the doubling up that DJ talks about. (4 adults, 7 kids, and 2 pit-bulls)

evlunclbud said...

Actually, 95820 is South Oak Park, and 95817 is North Oak Park.

anon1137 said...

One local analyst cited a "cacophony" of factors contributing to the drop, from overbuilding, to single-family homes turning to rentals in a disastrous housing market, to a struggling economy.

Does anyone do a periodic report on the inventory of rental units by area? I'd be curious. I suspect that they're on the rise everywhere. I've looked for MLS listings that have disappeared with no sale and a few times they showed up on rental web sites. Might be yet another stash of shadow inventory, another factor that will maintain downward pressure on prices for years to come.

patient renter said...

That says to me the median isn't skewed, it is just that bad

I meant the median for the county is skewed because of locations like oak park.

sold2soon said...

I have read that there is a rent bubble. I have heard that anything under 200k is being fought over by investors making cash offers & turned into rentals. 200k is suposedly the cutoff where the payment can be covered by the rent. So investors are flooding the rental market & rents should drop because many displaced homeowners aren't staying to rent, they are leaving the state or returning to the bay area.

norcaljeff said...

layoff tracker: http://tinyurl.com/5hqdbf
almost 300,000 since 11/1/08

norcaljeff said...

good points sold2soon. if that's true them i'm calling all those $200k rentals that will go vacant for a while, will need to go back on the market, so that's just another example of shadow inventory in the future.

sold2soon said...

I should probably introduce myself, I have been reading this blog every chance I get for over a year.
I sold in 02 figuring, since prices had doubled, another crash was imminent. People laughed at me & some were downright hostile, but I knew the market would crash eventually. I was completely ignorant about "creative financing". I have beaten myself up for years for selling to soon, but my old home is finally worth less than when I sold it. I am trying not to jump back in too soon, but I see sales rising, inventory dropping & low interest rates & I get tempted. This blog is my reality check. It is time I said thanks to Lander & all of you for your input.

Bonji said...

I'm a longtime lurker, but am finally feeling compelled to respond regarding Oak Park.

Yea, there is a good part of Oak Park.

I bought in OP in late '05 - and overpaid. The market all over Sac was overpriced at that time and to be honest most of the houses were generic - so my husband and I made the best choice for us. My newly constructed home is 1750 sq ft and sits on 1/4 acre. We've added about $60K in improvements (pool, fencing & such). There are two other brand new homes on the street (also on 1/4 acre lots). We couldn't be happier. Our street is populated with families, retirees and students. We maintain "good neighbor" relationships and I feel this is the best Sac neighborhood for our family. My commute to work is less than 2 miles and I never have to hit the freeway.

DJ obviously lives in the People's Republic of Davis. I could never live there (even short term), some of the other posters want to buy in EDH - I wouldn't want to live there, either.

I guess my point is - to each his own.

BTW - most of my neighbors are white or latino. It pains me to point out that there are only two AA families on our street (both of us homeowners rather than renters)

Bonji

Deflationary Jane said...
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Deflationary Jane said...

Bonji, you think I like Davis? You must not read this blog much >; )

norcaljeff said...

Bonji must be thinking of Oak Park, IL.

Deflationary Jane said...

Actually Bonji is right, there are decent parts of Oak Park, about 2 to 3 streets that are ok. The crime pressure from the surrounding areas is still bad though. You are still very much a pioneer there.

I drove by one of these listings in the marginal area- about 2 blocks away from the 'good' stuff but several blocks closer to the bad. They wanted $299k. I about laughed myself hoarse. Make that 60k and I'd be tempted enough to risk the inevitable home invasion and arson. Well maybe not.

If Tahoe Park, Talac Village and Colonial Heights (east of stockton) can't hold it together, you know OP isn't doing well.

Bonji said...

That's the point of my post. :-)

Within any subdivision or home development, there are more desirable streets and/or "pockets". Just because some fool puts their house in OP on the market for 299K doesn't mean that a) someone will purchase it for that price or b) that it has ever been worth 299K (in today's market or at the height of the bubble).

I think your perception of crime (violent) in OP is what is kind of skewed. Crime occurs in all neighborhoods irrespective of the area . . . Davis had a run on bike thefts last year (!)

But,don't get it twisted - I live in OP and deal with reality . . . I've got security cameras, a Rottie and a Pit and an 8 ft wrought iron fence with spikes! It's yours to steal if you can get to it . . . and leave in one piece.

BTW - Oak Park, IL is way too cold for me. I've lived all over the world and CA has the best weather any day, any year, any lifetime.

Deflationary Jane said...

Bonji,

Forget the bike theft, Davis has had it's share of violent crime including mugging at gun point and violent home invasions. Don't forget prostitution too. Davis is no oasis **makes the nasty face**.

Bonji said...

Yea, and the sad truth is, I think crime all around Sac is going to increase. Recession/too broke to care kind of crime - shoplifting, check fraud, prostitution, etc.

Things are tough and are going to get tougher . . . glad I have a relatively stable job.

Having said that - I really want to remove the word "ghetto" from the Sac housing lexicon.

Sac don't know ghetto . . . blighted, maybe. Ghetto, not so much.

Plus I find it to be a code word for "minority population", much like "urban" is code for "black".

But, I digress . . . I've been reading your posts for awhile now, DJ, and I enjoy your pithy comments and insight!