Thursday, January 15, 2009

"Serious Trouble" Ahead

From News10:

A big presence in the Northern California home-building industry says it could be shutting down some projects. John Laing Homes spokeswoman Linda Mamet confirmed to News10 Wednesday the homebuilder is "reviewing operations based on market conditions and will determine whether sales will continue. Some offices may be closed. It is not clear on whether all or part of the Sacramento area operations will be closed."
...
Sacramento real estate consultant Jake Allen says the company appears to be in serious trouble. "I think it's a very sobering sign of the times, when we see a large, national builder like John Laing Homes that is essentially on the ropes at this point in time and looks like fighting for their life."
From the CVBT:
There’s a smidgen of good news for the Central Valley in the latest PMI Mortgage Insurance Co.’s “risk index.” The region, where the mortgage meltdown started more than a year ago, is surpassed by many Florida cities that PMI estimates will have the risk of lower house prices two years from now. Still, virtually every metropolitan area in the Central Valley is ranked at better than a 90 percent likelihood of further price declines.
...
Merced (High) 95.4
Modesto (High) 96.5
Sacramento (High) 96.3
Stockton (High) 96.6
From the CVBT
The Stockton metropolitan area in the Central Valley led the nation in 2008 in per capita foreclosures, according to a report from RealtyTrac Inc. of Irvine, a foreclosure information company. Stockton’s foreclosure rate last year was nearly double that of 2007, says RealtyTrac, up 99.16 percent. There were 21,127 homes in some level of foreclosure in Stockton last year, or 9.46 percent of all homes.
...
Sacramento was ninth, says RealtyTrac, with 39,876 homes foreclosed or 5.20 percent of all units.
From CNN Money:
[RealtyTrac's Rick] Sharga thinks that as many as 70% of the bank-owned homes listed on RealtyTrac's site have not yet been posted on multiple listings services (MLS), the industry databases of homes for sale. Those homes are less likely to be sold because most real estate agents won't know they're available. "Either banks are overwhelmed and can't get the houses on the MLS quickly, or they're deliberately slowing down so they don't have to take markdowns to actual home values on their books," Sharga said. Either way, it has the effect of underestimating the foreclosure inventory problem.
From the Sacramento Bee:
Facing a projected $8.6 million shortfall in the current fiscal year alone, the city of Folsom on Tuesday took the first step toward effectively throwing out the current budget and adopting a new 18-month spending plan that would take the city through June 30, 2010. The proposed plan calls for the elimination of 55 positions – including 39 layoffs – and service cuts. Folsom joins other area municipalities looking to cut because of the recession.
From the Sacramento Bee:
Faced with losing 43 jobs, including a dozen police and firefighter positions, Lincoln's remaining city workers also have been asked to take a two-year pay freeze.
From the Sacramento Bee:
Roseville city officials announced Monday a voluntary employee buyout program to close a nearly $4.5 million budget gap. The city has been freezing positions and cutting costs since March 2007, but another 40 to 50 positions must be eliminated, City Manager Craig Robinson said in a letter to employees.
From the Sacramento Bee:
The city of Sacramento is more than $11 million short of balancing its books, meaning more cutbacks are likely in the coming weeks. Mayor Kevin Johnson said Monday that "the outlook is not good" for a city that already made significant cuts in recent weeks.
...
Asked if it is likely city officials will need to make midyear cuts next month – either through layoffs or reductions in services and programs – Johnson said, "I think we will have to."

16 comments:

patient renter said...

viva Lander! :D

Husmanen said...

Ahhhhhh! Got my fix....

Buying Time said...

The addiction is acute. I am hoping it will cure with time.

norcaljeff said...

Jan. 15 (Bloomberg) -- ARG Enterprises Inc., the operator of 69 Black Angus Steakhouse restaurants in seven states in the western U.S., sought bankruptcy protection and said it is seeking a buyer.

Diggin Deeper said...

A reprieve? We'll take anything we can get Lander...thanks

Uh Oh....as if we didn't have our own troubles brewing in the valley, the Fed can't seem to attract foreign bond puchases for the month of November '08....TIC reports this morming that net foreign purchases of our bonds were -56 Billion...Let's see, we need a minimum of about +$60B, our friends sold $56B, someone had better load more paper into the printing press...cause this month's a tad short.

Diggin Deeper said...

I'm betting most of the price declines locally will fall in the outlying areas...Lincoln, Roseville, Folsom, EDH...and that locally, the higher end $400k+ homes will deliver the greatest percentage declines for the year...

Husmanen said...
This comment has been removed by the author.
Husmanen said...

DD, I agree. I specifically look at EDH and Folsom, focusing on specific neighborhoods. If there is a house that meets our criteria I present my bid and the logic/data behind it.

Since the new year, I have had one property where the agent said "it would never go that low" and "go down the hill" if you want those prices come back with "I will present your offer".

Then the next day the asking price dropped $50k, and less than 10% from my bid. In the end we decided not to proceed.

But... things are a changin'

Deflationary Jane said...

ummm you're now approving posts?

Rich said...

When we made our first offer on the property we're looking at right now, it was rejected with "Bank will not entertain any offers under list for three weeks"

Two weeks later the priced dropped by 9K to less than what we had offered.

Diggin Deeper said...

Rich

Was that on a "short sale"? I know some banks will impose time limit restrictions in order to get a bidding effort going in hopes of driving a very low starting price higher. But if it's a market price based on 30-60day old data, I'm not surprized they'd get a lower offer.

Probably glad you didn't get that one?

Deflationary Jane said...

Just sent out:
http://www.dateline.ucdavis.edu/dl_detail.lasso?id=11055&fu=011609

Davis to see 400 fewer freshmen
'The state’s budget crisis is hitting home in new ways:
• Construction has been suspended on the School of Law expansion project. (See separate story.)
• UC Davis will reduce its fall admission target for new freshmen by nearly 400 students. Altogether, the UC system will admit 2,300 fewer freshmen, as proposed by President Mark G. Yudof and approved by the Board of Regents at a special meeting Jan. 4'
I'd post in the water cooler but Lander has it on lockdown.

Anyone know why they were picketting over by etomology the other day?

Lander said...

DJ- Sorry about that. Should be fixed now.

Deflationary Jane said...

No worries... just things are getting a little exciting around here. Glad you're still with us

Cow_tipping said...

Yes Jon Laing is a worthless builder on their last legs. I also expect to see several others with significant CA exposure to die. In fact these deaths IMHO are probably indicative of a bottom. A bottom, false bottom, time will tell. But crappy builders like these have to die. A few of the big builders dying is almost needed to be even close to a bottom.
Cool.
Cow_tipping

alba said...

Thanks for your service to us all Lander.