'Who would have thought?'

From the Sacramento Bee:

Gov. Arnold Schwarzenegger will send layoff warnings to at least 20,000 state workers Friday unless he reaches a budget agreement with legislative leaders that precludes the need for such cuts, his office announced Tuesday. The Republican governor intends to eliminate 10,000 full-time positions from the state's general fund, either by job cuts, attrition or transfer to positions funded by special revenue streams, according to Schwarzenegger spokesman Aaron McLear.
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Jason Dickerson, a budget analyst at the nonpartisan Legislative Analyst's Office, said the state has never laid off 10,000 workers before. "It might be possible to lay off 1,000 to 2,000 people, but laying off 10,000 or more employees would be next to impossible without gutting core services," Dickerson said.

From the Sacramento Bee:

Executives at the two local banks that have received shots of federal capital say the money isn't likely to spur much new lending, at least until the economy begins to recover. "It's that old economic spiral thing. … It's really difficult in this environment to find loans that we can underwrite," said Mark Lund, president and chief executive at Auburn-based Community 1st Bank. Last month, the bank received a $2.55 million investment as part of the government's Troubled Asset Relief Program.

From the Sacramento Bee:

Andrea Hawkins, 31, said she was doing well financially, running a mortgage business out of her Elk Grove home until the housing downturn. Now she's struggling to pay her own mortgage each month. "It's scary trying to make ends meet," she said...Now the single mother of four has joined the ranks of those needing assistance.
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Blake Young, director of Sacramento Food Bank & Family Services,...said his organization served 25 percent more people in 2008 than 2007. Many are larger family groups from the same address. "People are finding it necessary to combine households to make ends meet," he said.

From LA Land:

[L]ooking ahead, the Zillow survey found a surprisingly sunny outlook. Fully 25% of homeowners in the West thought their home will increase in value within six months. That's up from 14% in the third quarter who had such high hopes for their home.

An update on the squatlord story. From News10:

The neighbors were suspicious but the tenants showed police a lease to prove they belonged. But now, the case of mystery tenants moving into a vacant upscale Natomas house in the Westlake subdivision last week has brought arrest warrants for those tenants and their real estate broker.

More here.

From the Tracy Press:

The sinking housing market has taken down an 18-year-old Tracy business that once employed more than 300 people. Piedmont Lumber and Truss...will issue its last paychecks to its 25 or so employees Thursday....

From the OC Register:

National Association of Realtors’ chief economist Lawrence Yun told an Orange County crowd today that he failed to foresee the depth of the housing crash....“What I found out was there was a credit market bubble that led to a housing market bubble. There was not check and balance in the system,” he said.
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When the bubbles burst, home prices fell by as much as 45% in Stockton, he said...“Who would have thought a tangible asset would fall 45% in one year?” Yun asked.

Certainly not the NAR!

From the CVBT:

Home prices have plunged three and a half times more in San Joaquin County than the nation as a whole, according to a report Tuesday from Integrated Asset Services LLC....San Joaquin County leads the nation with a 51 percent drop in home values compared to the height of the housing bubble – more than any county in the nation, the report says.

From the Stockton Record:

Stockton resident Jorge A. Aragon is shocked at the ever-sinking house prices, hammered down by a predominantly foreclosures market over the past 21/2 years, but he's not looking to buy. He bought a house in 2002 for $220,000 and another in 2007 for $344,000, and now he's working with two banks to try to get loan modifications that will keep them out of foreclosure. Meanwhile, he can only be amazed as people move into his neighborhood into homes such as his at prices running below $100,000.
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Jerry Abbott, president and co-owner of Grupe Real Estate of Stockton...thinks prices won't sag further. "We're dragging along the bottom."
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In Stockton, the median sales price of $125,000 last month is a level not seen since 2001, said John Knight, professor of finance and real estate at University of the Pacific's Eberhardt School of Business. "I cannot envision that prices are going to continue to go down," he said. "I think we're either at or near the bottom for selling prices." Now the rents that investors can get for foreclosure homes covers mortgage payments for these lower-priced houses and then some, he said, and that's why the market is clearing out the listings.

From Seeking Alpha:

Having just returned from Sacramento/Stockton to look at defaulted condominium projects, I can tell you it's a solid mess out there. Investors from all over the Bay Area, and indeed the entire country, are making the same drive across Interstate 80 and descending on more or less the same spots. Unfortunately, the smartest investors will tell you they have no idea when it will end or what their exit strategy is, so not much is getting done on any scale.

The unemployment rate in Sacramento/Stockton is now in double digits (and climbing), and most people will have no choice but to relocate in order to find work. Consequently, there are some projects that will simply need to be bulldozed and plowed under.
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[F]oreclosures not only create additional supply of "shadow" rentals, but home prices in these hard hit areas will eventually drop (if they haven't already) to levels where it will be much cheaper to buy than to rent.