Sacramento Mortgage Delinquency Rate Approaches 7%

From the Sacramento Bee:

6.8 percent...of residential mortgages in El Dorado, Placer, Sacramento and Yolo counties were three months or more behind on payments in October, First American CoreLogic reported Tuesday...That compared with 4.3 percent in October 2007.

From the Sacramento Bee:

Times are hard all over, and it's making things easier for crooks. Lean budgets have prompted Sacramento city officials to cut the Police Department budget by 8 percent, and the county has made cuts in probation and other programs aimed at keeping offenders off the streets. Some neighborhoods aren't willing to sit back and hope for the best.
...
To stem crime, the homeowners association for the sprawling, 8-year-old Natomas Park development hired Paladin Security. The community has endured robberies, shootings and home invasions..."Providing safety is at the top of the list for us," said [HOA president Robert] Thompson. "The basic tenet of the homeowners association is to preserve the property values. Nothing affects property value like crime."

From newswithviews.com:

Back in 2005, I told my husband we have to sell our home in Sacramento and get out because the housing market was going to crash. While I was planning to get packed up and put the house on the market, John was diagnosed with cancer so we had to push back our plans a bit. We purchased this house in West Texas in April, 2006 and sold our house in Natomas Park, Sacramento, California, several months later. We were one of the lucky ones who got out.

While we had no debt on our home except the original mortgage, I knew the hurricane was building steam and sure as the sun shines, it has hit Natomas Park hard. The house across the street from ours, same floor plan except flipped, sold for $405,000 in June 2005. Today that house is appraised at $274,000. The house we sold is worth $150,000 less today than the day we signed the final escrow papers. Those buyers are saddled with huge mortgages that far exceed the value of the homes in that foreclosure capital and it will never turn around for them. The property will continue to age and eventually new houses in the area will be built commanding higher selling prices than the used ones.

From the Sacramento Bee:

Another car dealer has folded in the region, and it's becoming increasingly clear that a government bailout for the U.S. automakers would translate into even fewer dealerships in places like Sacramento. Auburn Buick Pontiac GMC on Monday became the 14th dealer in the greater Sacramento region to close this year, and the third in Auburn.
...
Steve Snyder, who owns Gold Rush Chevrolet Subaru in Auburn, said fewer dealers probably makes sense. "I think a flushing-out is necessary," said Snyder, a regional vice president with the California New Car Dealers Association. But he added, "It would make me uncomfortable if I'm the one who's going to go out." His sales volume has dropped 60 percent this year.

From Reuters:

The chief executive of American Express Co said on Wednesday that the current financial downturn is strongly affecting the spending of people in high income levels, a departure from prior economic slowdowns. "It's very different from the last two downturns," Kenneth Chenault said during the Fortune 500 Forum. "The impact on spending has been very strong ... across a range of income levels and high income levels."

Sacramento's Population Boom

From Home Front:

Three years after Sacramento became one of the first cities in America to see its real estate market sliding back down the hill, one of the first metros to tell the investment world that all had gone way, way too far this time, the Wall Street fallout is worsening...Did the Wall Street crowd get this housing boom all wrong or what?

From the Sacramento Bee:

The economy's downturn hits home with Paul Petrovich, one of the Sacramento region's most prolific retail developers. Consumers aren't spending as they once did, construction credit has tightened and retailers right now don't have much appetite for opening new stores.
...
Q: How is the credit crunch affecting your business?

No one is immune. The banks are coming to us and saying, "Look, this isn't 2005 or 2006 anymore. We want you to pay down our loan by $2 million, $4 million. In fact, I've had to do that on three projects recently. Developers with sound fundamentals who didn't go buy a jet or live a lavish lifestyle, who have experienced downturns and knew the good times wouldn't last forever, they have the capacity to deal with this. But I don't care how good you are, if things don't eventually get better, there won't be many people left standing.

From the Sacramento Business Journal:

C.C. Myers’ dream of building a luxury golf community north of Auburn has sunk the contractor an estimated $109 million into debt and could cost him his ownership in the renowned company that bears his name. Counting potential liability for construction projects, his liabilities total $309 million, according to documents filed this week in his bankruptcy case. The Chapter 7 bankruptcy liquidation could wipe out a lifetime’s worth of assets for Myers, whose efforts to rebuild roads and bridges have earned him national acclaim. At stake is $45 million in personal property, including his 45 percent ownership of C.C. Myers Inc., valued at $13.5 million, his $5 million Fair Oaks home, a $10 million Lake Tahoe vacation home and land holdings.

From Bloomberg:

U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, RealtyTrac Inc. said.
...
California had eight of the 10 metropolitan areas with the highest foreclosure rates, led by Stockton at one in 50 households. Merced, Modesto, Vallejo-Fairfield and Riverside-San Bernardino ranked second through fifth. Bakersfield, Salinas- Monterey and Sacramento, the state capital, ranked eighth through 10th.

From the Sacramento Bee:

"For Sale" signs sprout on suburban lawns, brown and neglected, signaling foreclosures. The bulletin board at the One-Stop county job center features such opportunities as cashier, carwash attendant, karaoke jockey, secret shopper. Empty storefronts are like missing teeth along Marysville's historic downtown district, and a line forms by 10 a.m. at the Olivehurst Recycling Center – cash for cans.
...
From once prosperous new housing developments south of Marysville to stubborn pockets of poverty in nearby Olivehurst, the county of 72,000 is hurting more than almost any other place in California. On the index of human suffering, Yuba County ranks abysmally high. Unemployment: second-highest in California. Foreclosures per capita: No. 10 in the state. Poverty rate: third among the state's 40 largest counties.

From KCRA:

The continuing housing and foreclosure crisis in Northern California has caused a bunny bonanza. The number of rabbits currently arriving at the Sacramento SPCA is double what it normally is at this point in the year, officials said.

'There are only so many houses I can buy in cash'

From the Sacramento Bee (hat tip SMF):

C.C. Myers, the legendary Sacramento-area building contractor, has filed for personal bankruptcy because of losses stemming from his personal investment in an Auburn residential development [Winchester Country Club]..."The market conditions are the worst we've ever seen and we were unable to convince our lenders to work with us to restructure the financing, so I was left with no other options," Myers said in his press release.

From the Sacramento Business Journal:

A St. Louis bank is foreclosing on part of the Sunset Whitney Country Club in Rocklin, creating uncertainty for the 45-year-old private club. Developer John Thomas, founder of Regent Asset Management Group LLC in Sacramento, is being sued by First Banks Inc., which says Thomas is delinquent on a $4 million loan on the golf course he bought in 2004. The club and golf course continue to operate. The bank has already taken the Sheraton Hotel on Stockton’s waterfront from Regent Asset Management.

From the Sacramento Real Estate Blog:

Up until recently, this fairly pricey community seemed immune to the price erosion in the rest of the area. In the last few months, however, we’ve sometimes had to report price drops for East Sac. In July, for example, the average sold price per square foot in East Sac was $324.61, down 12.5% from last July’s average of $370.84...With homes in East Sacramento selling for more than twice the price of homes in surrounding communities, demand for homes in East Sac has slackened from last year, with unit volume down 33.3%.

From the Sacramento Business Journal:

KB Home, the Sacramento region’s third-largest homebuilder in 2008, has merged its Sacramento and Bay Area divisions into a single Northern California division based in Pleasanton. Layoffs, which KB Home would not discuss in detail, included Sacramento division president Barry Grant. The Sacramento office remains open to support several projects still selling in the region.
...
KB Home had been among the builders who were most confident about the Sacramento market during the peak of housing production, in 2004.

From the Sacramento Business Journal:

The Sacramento Bee on Monday offered the cash-strapped newspaper's first broad-based buyouts in its history, inviting a majority of the paper's full-time work force to take a voluntary severance. The Bee continues to experience big declines in advertising revenue brought on by downturns in the economy and housing market, and competition from the Internet and other media.

From the Sacramento Bee:

Bee Publisher and President Cheryl Dell...said another round of layoffs is possible if there aren't enough voluntary buyouts.
...
One ray of hope at The Bee, Dell said, is that the Sacramento area entered the downturn earlier than most markets "and there's a general belief that we'll come out of this earlier."

From the Real Deal:

Margaret Ketwig, for example, is typical of many in Sacramento's middle class. Ketwig, 48, bought her four-bedroom home in 2006 for $590,000. Yet recently she lost her job. She hasn't been able to afford a payment since January. While Ketwig would like to sell, she acknowledges that she may just have to walk away. "There are so many homes on my block that are owned by the bank, that I can't compete with the prices," she said. "I can't even come close to making the house payments. I think I'll be moving in with family and starting from scratch."
...
"I think the hard days are almost over," said Bob Bronswick, president and CEO of Coldwell Banker Sacramento/Tahoe. "Right now I think we've hit bottom, and we're looking at a bounce … I think things are starting to look up."

From the Sacramento Bee:

Millions of dollars in late special property taxes are forcing some cities and districts to threaten delinquent taxpayers with foreclosure...[T]his year the pace of delinquencies is increasing, particularly in California's inland areas, said Tim Seufert, managing director of the San Francisco office of NBS, a firm that does consulting work for special financing districts. "Compared to two years ago, it's up exponentially. There's no question," he said.
...
Delinquency rates also were high during the last real estate downturn in the mid-1990s, but this time individual homeowners are being hit hard. "It is what in the past was considered could never happen," said Oakland attorney Susan Feller, who represents issuers of land-secured bonds. "It was always considered that once property was built and owner-occupied, you would not have delinquencies (in large volume)," she said. "You wouldn't get to these kinds of levels."

From the San Jose Mercury News:

Few if any lenders these days will make loans to those who already have four or more mortgages...Banks' new restrictions on the number of mortgages available to borrowers won't bother typical home buyers. But it's hobbling people...who invest in rental properties, and could even prolong California's housing slump, some observers say. That's because investors are among the most likely buyers for many of the bank-owned foreclosures now lingering on the market in the state's inland valleys.

"If we can't participate, we can't burn through these inventories and help the market correct," said Geraldine Barry, president of the San Jose Real Estate Investment Association....More often lately, she said, "What I'm hearing from our members now is, "I have a deal; I can't get money'.''

Barry and her husband recently bought a foreclosed house in Sacramento for $114,000; the previous owner owed about $250,000 on the property when the bank repossessed it. Even with a 25 percent down payment, they were unable to find a loan because they have more than four outstanding mortgages, so they paid in cash...Geraldine Barry said she wants to buy more bank-owned California properties in coming months, but has yet to figure out exactly how she will finance deals, if lender restrictions remain in place. "There are only so many houses I can buy in cash," she said.

New York Times: In the Central Valley, the Ruins of the Housing Bust
Forbes: Sacramento Second Most "Distressed" Housing Market
CAR: California's Median Home Price Decline Breaches -40% YoY

Last Resort

From the Sacramento Business Journal:

Members of a Placer County country club stand to lose an estimated $11 million in initiation fees because of the club’s foreclosure. Winchester Country Club members will be allowed to play golf there for a nominal fee while the course’s fate hangs in limbo. They’re hoping a buyer will honor those memberships when the course, clubhouse and remaining land are sold by the foreclosing companies, led by Wachovia Bank. If not, they would lose $25,000 to $85,000 each, depending on when they joined and the type of membership.
...
Winchester was the most expensive country club for members in the Sacramento region, said golf appraiser and consultant Ron Carciere of Auburn..."Not a lot of people around Auburn can afford a $1 million or $2 million home, so you’re relying on attracting people from L.A. or the Bay Area to relocate outside of Sacramento," he said. "It’s a market that won’t support the values they were looking to get. It struggled from the beginning."..."There are a lot of sophisticated people here who didn’t realize what we could lose," [a resident] said.

From the Modesto Bee:

The Western Hills Water District that serves the Diablo Grande resort development in western Stanislaus County has been cited by the California Department of Public Health for failure to clean up problems with the water supply in the development.
...
Residents of Diablo Grande are frightened and frustrated with the problem, said Kristina Ross-Ortiz, who with her husband owns two homes in Diablo Grande, an investment property and their residence. "We have to use bottled water for drinking and cooking," she said. "There's no way around showering. We are just stuck. We are terrified of getting cancer or having children with birth defects," Ross-Ortiz said.
...
Home prices at Diablo Grande have shrunk to half of what she and her husband paid, Ross-Ortiz said, making it difficult to move. "It makes you think we should just walk away. It comes down to the health of yourself and your family," she said.

From the Sacramento Bee:

It would have been easier for Rick Zibull to take it if his restaurant was closing because the competition beat him. But Z's Wine Bar and Bistro in El Dorado Hills is shutting down Saturday night for reasons beyond its owner's control: Gas at $4.50 a gallon. Soaring food costs. And that rotten housing market. "People having to make a choice: 'Do I spend a hundred bucks to put gas in my tank, or do I spend a hundred bucks on a night out?'" Zibull said. "You can guess which way that decision goes."
...
The number of customers visiting Z's to dine from a menu that includes $7 onion soup, rack of lamb for $19, and $25 for filet mignon and the trimming has fallen 50 percent from last year, Zibull said.

From Bloomberg:

Rising mortgage rates are driving up the cost of buying a house even as prices fall, making property more expensive across the U.S., according to a new study by Zillow.com, an online provider of home valuations.
...
The trend holds true in California metro areas including Sacramento, San Francisco, Los Angeles, San Jose and San Diego, where mortgage payments on median priced homes range from 7 percent to 10 percent more now than in April.

From the Sacramento Bee:

Tom Kunz has been president and chief executive officer of Century 21 Real Estate LLC since June 2004.
...
Q: Year-over-year sales are up in the Sacramento area for the first time in three years. What might that signify?

A: A lot of that is because you have seen some decline in pricing. That has opened the marketplace to more buyers, both first-time buyers and move-up buyers. I think that's a good sign. I don't declare victory in any way, shape or form yet. I think we're not going to see an absolute V in the market. We're going to see somewhat of an elongated U. We're going to bounce around there for awhile.

From socialistworker.org:

It wasn't only an influx of outsiders that created the housing bubble. The root of the problem in Stockton is the same as everywhere else--people were convinced to buy homes at inflated prices, reassured by a whole cast of unscrupulous characters that everything would work out. The realtors, lenders and banks--and the corporate boards that oversaw the whole process and orchestrated massive profit margins out of it--are responsible for this debacle.
...
The former escrow manager told me that when realtors or lenders were called on to explain the full implications of the contracts, they always found a way of convincing buyers that it would work out in their best interest. As she explained, "They would say, 'Interest rates are going down, the price on your home is going up, your salary is going to increase, so this will all work out. You can trust me.'"

Commercial Real Estate - 'Everything Has Gone Quiet'

From the Sacramento Bee:

Thelma Pugh of North Highlands came to rely on home equity as a cushion. She and her husband took out a $25,000 line of credit a year and a half ago from Countrywide Financial Corp. They've used about $9,000, mostly to pay for home repairs and – when her husband was hospitalized recently – to pay some bills. "It was like a lifeline," she said. "If I couldn't make ends meet, I had this."

That lifeline was just cut off. The Pughs were among 122,000 Countrywide customers recently notified that, because of vanishing equity, they no longer can tap into their lines of credit.

From the Auburn Journal:

The average sales prices of Auburn and Newcastle homes decreased from $502,510 last year to $476,493 this year, according to a January homes sales report from the Placer County Association of Realtors. That figure means the market is beginning to balance, according to Joe Newton, president of the Placer County Association of Realtors. “Prices are starting to level out,” Newton said. “Houses are a little more affordable. Couple that with the lending side and interest rates being down makes it for a very good time to consider buying.”

From USA Today:

David Brown, manager of the Sacramento and Yolo County, Calif., mosquito-control office, says growing concern over the mosquito-borne West Nile virus is prompting expanded efforts to identify problem pools...Sacramento's mosquito-control operation has asked the Sacramento Association of Realtors for a list of vacant homes with swimming pools. Since May, 400 pools have been reported.

From the Sacramento Business Journal:

Steep reductions in demand for lumber used for residential construction has caused a dramatic decline in price. In February 2005, one thousand board feet of Douglas fir sold for $880, according to a spokesperson at Pacific Coast Building Products in Rancho Cordova. One year later, those prices had dipped to $337 per thousand board feet. This month, the price stood at $170.
...
While economic factors are bound to shift, Terry Street, president of Roebbelen Contracting, estimated wood prices are likely to stay low in the near future. "I think it's going to be down there for a while," he said. Street's company specializes in wood-intensive projects such as schools in the Sacramento area. "I'm not expecting the housing market to quite jump back overnight."

From the Stockton Record:

Some of Stockton's commercial office corridors look grim these days as small financial and real estate services firms fall prey to the housing-industry meltdown and vacate the premises...[D]ozens of those smaller, under-the-radar real estate and financial companies have gone under, quietly left town or substantially downsized, adding to the ranks of the unemployed, vacating numerous office buildings and leaving some commercial landlords begging for tenants.

"The commercial tenants are not there to attract any longer. Everything has gone quiet, the phone has stopped ringing," said Chuck Lantznester, owner of American Commercial Brokerage in Stockton who has spent 35 years as a commercial property manager leasing office space..."A year ago and beyond, things were really fabulous. Even when the residential market was going down, the commercial market was holding up. The downturn is going across the board now," Lantznester said.

Industry 'Laying Off Long-Time Employees Right and Left'

From pacificunionhomes.com (hat tip reader HS):

As I am sure you are aware, we all are experiencing a major downturn in our industry. These adverse conditions in the market have forced us to re-evaluate the Company’s future as a homebuilder. Accordingly, Pacific Union Homes has made the decision to cease further homebuilding operations. We will continue to build-out and sell those homes currently in production, including the model homes.

Pacific Union Homes is a diversified real estate company, with homebuilding being only one of its many operations. Although, the Company has decided to no longer operate as a production homebuilder, we will continue to focus on land development and our other real estate-related businesses. [Read more]

From the Lodi News Sentinel:

Real estate, lending, appraisal and title company offices have laid off employees and closed offices during the housing slump. "They're laying off long-time employees right and left," said Lodi Realtor Rose Mendonca.
...
Earlier this year, Chicago Title Co. closed its Lodi office and consolidated with the Fidelity National Title Co., and four employees have lost their jobs, according to Renee Primasing, a marketing representative at the Fidelity office on Kettleman Lane. That leaves four in Lodi's Fidelity office. And in Galt, Alliance Title Co. will close its doors in the near future, with two employees being transferred to the Greenhaven office off Interstate 5 in south Sacramento. Alliance's Elk Grove office has already closed, according to employees in the Galt and Sacramento offices who asked to not be identified.
...
Stockton-based Grupe Co. has suffered with their new-home market, said CEO Kevin Huber...[who] estimates that 20 Grupe employees have been laid off in the past year....

From the Associated Press:

Plenty of locally owned stores are facing a struggle. In California's San Joaquin Valley, Christina Perret said the foundering housing market has caused sales to sag at her three high-end women's fashion clothing shops and forced her to reconsider her stock. Perret's gotten rid of racks of flashy tops with plunging necklines that were favorites with real estate agents, substituting a line of conservative sweaters popular with farmers' wives. "We're going after the wives of dairymen and women in agriculture because their economy is so much more stable," said Perret, 25. "Even moms who come in shopping with their daughters for prom aren't wanting to spend as much now. They want to buy dresses for $200 max and know their daughters can wear it at graduation next year."

From the Stockton Record:

A decline in money transfers and increased reverse migration is expected due to the troubled housing market and the lack of construction jobs, said Jose Rodriguez, director of El Concilio (Counsel for the Spanish Speaking).

"The construction industry has taken a hit. It's a ripple effect for them," Rodriguez. Also, he said, homeowners are cutting back expenses such as landscaping and other services. That's a problem since a vast number of immigrants work in the service industry.

From the Stockton Record:

The auction of 61 foreclosure homes in San Joaquin County last month resulted in the sale of two out of three of the homes offered in no-minimum bidding in Stockton...Typically, more than 90 percent of top auction bids are accepted by highly motivated banks...."Banks may not have a complete understanding of the Stockton market yet, so expectations may be above what's happening in the market," she [a spokeswoman for Hudson & Marshall] said.
...
Another agent with a half-dozen listings in the auction, Cindy Mello of Home Buyers Realty, Stockton, said not one of the bids for her listings was accepted or negotiated to a sale. "It says the auction doesn't work, that it's a marketing ploy," she said. "I don't think the banks are ready to negotiate yet."

From the Sacramento Bee:

C.C. Myers, the contractor whose road-building exploits have become the stuff of California legend, said Friday he is working to stave off foreclosure on his Auburn area country club development. Wachovia Bank, in a 23-page complaint filed Wednesday in U.S. District Court in Sacramento, alleged that Myers has defaulted on more than $61 million in loans and is seeking to foreclose on the 1,100-acre Winchester Country Club.

From KCRA:

From News10:

As recently as last spring, Myers told a construction trade magazine that despite the housing slowdown in other areas, Winchester continued to see "solid demand" for high-end homes.

From the Sun-Post:

Two Manteca housing developers that purchased the right to build homes in town in 2005 persuaded the City Council this week to let them hold on to that right until 2010, hoping that the housing market will turn around by then. Developers Marvin Brochinni and Atherton Woodward Partners had originally promised the city they would give up reservations for any homes they failed to build within two years. However, plummeting property values and a glut of unsold homes in the city have upended both developers’ subdivision plans, and they now hope that waiting a couple of years will help get their projects back on track.

From the Redding Record Searchlight:

In September, I reported that the worst might be over for real estate in Redding -- cautious optimism stemming from a second-quarter federal housing index.

Maybe not.

In its latest index, the Office of Federal Housing Enterprise Oversight (OFHEO) says home prices in Redding in the third quarter of 2007 were 3.66 percent lower than in the same quarter a year ago and 2.54 percent lower than the second quarter of this year.

"A grim, telltale mark"

From the Sacramento Bee:

The onslaught of foreclosures in Sacramento's housing market has left a grim,
telltale mark: hundreds of vacant and boarded homes throughout the city.'

'Fueled by riskier adjustable-rate mortgages and falling property
values, foreclosures have escalated at an astonishing pace in Sacramento: 73 in
2005, 667 in 2006 and 1,066 through the first five months of 2007, according to
DataQuick statistics in a city report.

Skyrocketing vacant-building
cases have followed suit. Since 2004, the number rose 68 percent, to 300 from
178, said Max Fernandez, director of the city's code enforcement department.

"This is just chump change to them," McCarty said. "We need to take a
hard look at what policies we have for corporately-owned homes."

Sacramento Housing Market Underwater: 1 in 5 Homes is a Short Sale

From USA Today:

Here's an alarming fact about Sacramento's housing market: About one of every five existing homes on the market is a "short sale." That means the home is worth less than the value of the mortgage, and the lender is willing to accept less than full repayment of the loan to avoid foreclosure, says Tracey Saizan, president of the Sacramento Association of Realtors.

That, in turn, puts pressure on the remaining 80% of sellers, who have equity in their homes, to cut prices. The median price in the state capital, one of the most overheated metro areas during the real estate boom, fell 4.3% in December compared with December 2005.
...
"There is a sense that we are going through the tunnel, and the light at the other end is sunshine, not another train heading at us," says Greg Paquin of The Gregory Group.

From the Auburn Journal:

Citing shifting economic factors, Auburn Harley-Davidson owner Bob Holmes has scrapped plans to move his North Auburn dealership to a Bowman parcel. The plan would have seen construction of a 30,000-square-foot store and service facility at the corner of Luther and Bowman roads.
...
Holmes withdrew his application last month but stated that once the project makes economic sense again, he would re-apply...Citing the recent financial difficulties on a 55-story condominium and commercial project in downtown Sacramento as an example, Holmes said that it's a difficult time for a development to move forward because of the slowing housing market and economic conditions in northern California.

Businesses like boat, auto and motorcycle dealerships depend on discretionary income to remain high and with the housing market continuing to soften, the Auburn Harley-Davidson focus will be on the Locksley Lane location.

From the Sacramento Bee:

Holding back: The builder of one of two planned downtown condo towers hasn't sold a single unit in months. But that's strictly by design, says Craig Nassi, the Denver developer behind the long-awaited Aura project at 601 Capitol Mall.

He says he reached the sales threshold he needed for a construction loan last fall. Since then, he's held off sales in the expectation he can get higher prices for the remaining units after construction begins. "We do that on every project," Nassi says. "You get a lot more money (for condo units) later in the game."

Nearly 200 of the project's 268 units have been sold, according to Hanley Wood Market Intelligence....Nassi says he expects to finalize his main construction loan from Corus Bank of Chicago by mid-March. When will construction start? "The next day" after the loan is finalized, he says.

From the Sacramento Business Journal:

Centex, the region's eighth-largest builder last year, is one of at least 10 homebuilders in Sacramento that have had a change at the top ranks, a turnover rate that's been pushed by the market.

"The builders are shuffling," said Angel Ahumada, founder of Integrity Recruiting of Roseville, which specializes in placing executives and mid-level managers in construction industry positions nationwide.
...
Most of the turnover occurred during a stretch that saw new-home sales in the region drop from 14,095 in 2005 to 9,588 last year...New division presidents have taken the helm in the past year at KB Home, Meritage Corp., Morrison Homes and Pardee Homes.
...
Some of the first moves by the new leaders have been to trim the work force. Construction-related jobs fell by 1,500 between December 2005 and December 2006.
...
Richmond American Homes reduced its Sacramento staff, including division president Jim Gillette, who was hired in December 2005 and then departed about nine months later, said Mark Butler, Northern California president at Richmond American. Gillette is now working as a real estate consultant.

Butler, based in Richmond American's Pleasanton office, said the company hasn't pulled up stakes in Sacramento but has reduced its land holdings. "Our goal is to keep buying land," Butler said, adding that the company has not closed a deal since early 2006. "(But) the next deal we do has to reflect today's sale price and incentives."

From the Stockton Record:

The coming layoffs of about 100 Stockton-based workers at Washington Mutual should surprise nobody. A good number of those people work in WaMu's sub-prime lending arm, Long Beach Mortgage, one of the nation's biggest sub-prime mortgage lenders.

Sub-prime loans are not your traditional 30-year, fixed-rate mortgages. Anything but. They are loans aimed at higher risk borrowers, people with little to put down, and people who, to be honest, might be buying more home than they can afford.
...
But funny-money loans? It probably will be a while before we see what we saw at the height of the boom. In the first quarter of 2005, 42 percent of all mortgages in San Joaquin County were interest-only loans.

The heady times started heading south by the end of that year. Regulators have become more and more outspoken about the dangers of the sub-prime, put-'em-in-a-house-at-any-cost industry. Financial institutions loan money. They should not be in the real estate business and that's what might happen if a bucket of mortgages go south, regulators warn. And they might. Foreclosures are climbing. In the fourth quarter of 2006, foreclosure notices in San Joaquin County reached their highest level in at least 10 years.

Also from The Record:

The rising number of foreclosures in San Joaquin County isn't helping home sellers, because that pumps up the competition, makes it tougher to sell and depresses prices. Still, builders, brokers and industry experts said that even with defaults climbing, the impact may not be significant because homes-for-sale numbers have plummeted in recent months anyway.
...
David DiDio, mortgage broker with Greene Dream Homes and Loans in Stockton, said the foreclosures downturn should end soon, adding that the last foreclosures upswing a decade ago lasted about a year and a half. The housing market has picked up noticeably recently, he said, "so by spring, we'll be out of this, because most of these homes will be able to sell."

House of Dreams or Nightmares?

From the Auburn Journal:

There you are, living in the house of your dreams. It cost you $500,000, but you're only paying $1,100 a month after you 100-percent financed your home with an interest-only pay-option adjustable rate mortgage, known as an ARM. Then the market changes. Your completely financed home, after the market has cooled, is now going to cost you almost $4,000 a month for your mortgage. Welcome to the world of some of Placer County's residents.

According to DataQuick Information Systems' latest report, default notices, the first step in the foreclosure process, have risen 262.4 percent in the fourth quarter of 2006 in the county, exploding from 149 notices in the fourth quarter of 2005 to 540 in 2006. Placer's rise is the second highest increase in the state, according to the La Jolla-based real estate statistics research firm.

To combine with the default notices, median home prices in the region continued a downward trend according to the latest figures released at the end of the year by the Placer County Association of Realtors. The median home price for the county in December 2006 was $439,700 with 302 homes sold in the month. The median sales dropped 9.3 percent from 2005 when the median price was $485,000 with 315 homes sold for the same month.

"I see a decline for Placer County. One of the things lenders are doing, because Placer County was one of the fastest-growing markets appreciation wise, is they put a review on the appraisals," said Mark Champlin, owner of MAC Real Estate Services in Auburn. "Almost every lender is putting a second review on the appraisals because Placer County went up so fast and it's subject to change fast."
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"Mortgage defaults have definitely increased. I used to look at the paper and see one every once in a while, now I look in the Journal and I see three or four," said Kathy King, a mortgage broker with California Mortgage Advisors Inc. in Auburn. "It's kind of scary because Auburn hasn't historically been a big area for foreclosures."

The reason for the increase is because interest rates were low for a long period of time and consumers were getting loans that normally would be out of their reach, King said. Consumers who got 100 percent financing on negative amortization loans and other adjustable-rate mortgages are starting to feel some discomfort, and more could be on the way.

"1.5 trillion in loans will be adjusting this year (nationwide). They're going to adjust a lot, some will adjust two percent," King said. "It's going to be an interesting year to see what happens with foreclosures, that's for sure."
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"I feel sorry for those people who got into a house that was priced high and got interest-only loans and are now upside down on the mortgage," [former Auburn mayor and city councilwoman Cheryl] Maki said. "Because they're first-time buyers, a lot of them, and they're trying to buy a home and it's a fortune."
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"Anybody who bought a home in the last two years cannot refinance, they have to ride that storm out," said Champlin, a licensed real estate and mortgage broker since 1979. "I can't refinance anybody, I get calls all the time. They are coming out of a 4.75 (interest rate), it had a three-year window on it, and the reality is they're looking at a 6.5 (rate)."