Squatlord Republic?

From the Sacramento Bee:

California saw a 42.5 percent drop in home sales at $1 million or above last year, according to a report Tuesday by market researcher MDA DataQuick...The dropoff was slightly worse in the Sacramento area: 50 percent in Sacramento County and 45 percent in Placer...The high end was battered by the downward price pressure at all levels of the market and was hit by a severe shortage of financing, said DataQuick analyst Andrew LePage.

From the Sacramento Bee:

The nation's foreclosure crisis has sparked scams nationwide, emboldened squatters and homeless advocates and led to numerous federal indictments. But this?

Sacramento police were in one of the city's most affluent neighborhoods Tuesday investigating a scheme with a twist: claims that the house involved is under the protection of a sovereign republic and that trespass could be met with "self defense" and "justifiable homicide." The bizarre case unfolded Tuesday in a gated West Natomas neighborhood that boasts million-dollar homes and some of the city's most prominent residents – think members of the Maloof family.

From News10:

The mortgage industry insider who admitted on his company Web site that he had been involved in massive mortgage fraud was charged Thursday with multiple felonies. The complaint was sworn by an IRS agent who said Christopher Warren, 27, fled the country on a private jet on Monday, the same day he replaced the home page of the Triduanum Financial Web site with a seven-page essay outlining his crimes and asking for forgiveness.

From the Sacramento Bee:

As soon as they default on a mortgage – or before – the calls begin. Often, the firms seek $1,500 to $4,000 upfront to help them out of jams with housing-boom loans...."It's similar to after a hurricane hits," said Tom Pool, spokesman for the California Department of Real Estate. "The bogus contractors come and collect money for repairs and don't do anything. These people are on their last dollar, anyway, and these loan-modification companies are having them draw on their credit cards with false promises."
...
Pool said DRE has shifted staffers to investigate 250 cases of loan-modification offenses. Many involve former real estate agents.

From News10:

John Laing Homes has shut down construction on its northern California projects according to company insiders...At the height of the housing boom, the company employed 165 people in the Sacramento area according to insiders. By the time the final layoffs came, the staff numbered 31.

Another report from CBS 13.

From the Stockton Record:

Kevin Huber, president of Stockton-based Grupe Co., said foreclosures have significantly affected development and home building in both the short and medium term, because foreclosures are selling well below what it costs to develop and build new homes. "Nobody's going to start a new home knowing you're going to lose money," he said. There's probably 18 months to two years more of foreclosures dominating the marketplace before home builders can compete again in a "normal" market, he said.

From the Sacramento Business Journal:

Sacramento ranks No. 9 on a list released Thursday of the metropolitan markets with the largest potential for distressed retail real estate assets. Madison Marquette, which owns 20 million square feet of retail and mixed-use properties across the country, compiled the list with its own research along with that of CoStar, a commercial real estate information company.

From the Sacramento Bee:

The city of Sacramento sent layoff notices Thursday morning to 24 employees within its development services department. Four supervisors - including the city's chief building official - were among those to receive layoff notices.

"The [Stockton] Man Who Started the Global Recession"

From Time:

Some communicable diseases can be traced back to what medical researchers call "patient zero", the first carrier of an illness and often someone who has no symptoms...The global recession has a "patient zero", a single person who set off the series of events which may lead the economy into its greatest downturn since The Great Depression and, by some estimates, push 50 million people around the world out of jobs this year, according to The International Labour Organisation. "Patient zero" bought a house in Stockton, California, in 2003 after getting a subprime mortgage. He defaulted on that mortgage 39 months later.

From the Stockton Record:

Tonight Stockton will get another dose of national attention as a foreclosure hot spot in yet another round in the TV spotlight. This time, though, say the producers of the "Deals on the Bus" series by Discovery's TLC channel,...will show a new real estate trend: People riding in tour buses in the quest to buy nice yet affordable homes in communities hard hit by the housing downturn. "It's kind of like speed dating for homes," said executive producer Carlos Ortiz of Actual Reality Pictures, an independent Los Angeles-based film company that has filmed such reality-genre programming as "Flip That House" for TLC.

From News10:

The managing broker behind a failed mortgage operation posted a rambling essay on the company's Web site describing his years of fraudulent activity and asking for forgiveness. The seven-page essay by Christopher Warren, 27, replaced the home page of Triduanum Financial which abruptly closed its doors last month.
...
Warren said WTL Financial faked credit scores and W-2s to peddle loans to investors who failed to scrutinize the files. "I made over $2.25 million, all of which was spent on 24 cars, five houses and drugs," he wrote.

From the Sacramento Business Journal:

A custom homebuilder that had been among the region’s top in revenue before the housing downturn is preparing to file for bankruptcy as it’s being investigated for fraud and other complaints. The Contractors State License Board has referred two complaint violations against Ultimate Development Inc. of El Dorado Hills to law enforcement agencies for investigation.
...
“The recession has essentially shut down residential construction and there are virtually no credit opportunities available anymore,” he [owner Kevin Javaheri] said.

From Home Front:

The Construction Industry Research Board and California Building Industry Association now reports 65,380 construction starts in 2008. It's the lowest since CIRB began keeping records in 1954 in the Eisenhower Administration.
...
It's so low that even in the lowest point of the 1990s recession - 1993 - with Southern California base closings, a defense industry imploding in the wake of the cold war ending, with job losses from San Diego to Eureka, builders still planted 84,656 houses on California soil. That's 19,276 houses more than last year.

From the Sacramento Business Journal:

The worst period in the construction industry was in 1990 and ’91, and we’re fast approaching that now. The only reason we’re not already as bad now as then is that voters approved some infrastructure bonds and that money is still available and working. As a consequence, our picture is not as bleak as, say, homebuilders. But if the state doesn’t come up with a plan by Feb. 1 and it runs out of money, our industry, and the state, could be worse off than it was in 1990 and ’91.

From the Sacramento Bee:

Fighting to avoid a bankruptcy filing and apparently unable to finish the job, the developer of the long-delayed Elk Grove Promenade shopping mall is seeking investors to bring the project across the finish line...The mall has become something of a poster boy for the Sacramento area's hard-hit commercial real estate market...The mall's opening has been postponed three times, the victim of a poor economy and Elk Grove's disastrous housing market.

From the Sacramento Business Journal:

For Ike’s Landscaping, business started spiraling downward halfway through 2008...Although Ike’s had a strong first half in 2008, [president Eric] Aichwalder said, “We’ll be down to 20 employees in the next few months.” Ike’s employed 133 last year.

The bottom line for commercial landscapers is the market’s getting tougher. “Owners are watching all their dollars because tenants are coming to them for reduced rents,” said Ken Reiff, managing partner in the Sacramento office of brokerage NAI BT Commercial.

From Inman News:

[According to Radar Logic] San Francisco had the highest [price] decline, at 36.8 percent year-over-year during the November period, followed by Phoenix (down 34.6 percent) and Sacramento, Calif. (down 32.4 percent).

From the Modesto Bee:

Rental home rents also have become a bargain throughout in the region. "The economy is driving the rental prices down," said Kris Marin, who manages about 250 rental properties in the Northern San Joaquin Valley for Tri-Tal Realty. "There are a lot of vacancies. It's hard to find good, qualified tenants if the rent is too high." So to get homes occupied, Marin said, monthly rents have fallen about $100 for three-bedroom homes and about $200 for four-bedroom homes.
...
Al Nazmi said his family members have purchased more than 20 foreclosed houses during the past 18 months..."Most Modesto investors have run out of cash to buy homes the last three months," said Nazmi, noting how few people attend the daily foreclosure auctions on the county courthouse steps. But out-of-town investors are filling the void: "I have friends in neighboring states who are buying homes in Modesto now." All those investors are turning former owner-occupied houses into rentals. Those homes now compete with apartment complexes for tenants.

From the Press Democrat:

Exchange Bank reported an $18.5 million year-end loss Friday, its first annual loss in at least five decades....The problem loans are concentrated in construction lending, largely among loans made to home builders in the Sacramento region. The bank expanded into the Sacramento area earlier this decade near the peak of the housing market. Now, with housing mired in a deep downturn, many builders are struggling to stay in business and pay off their loans.

From the Appeal Democrat:

Plummeting revenues due to the construction slowdown will lead to layoff notices for eight Yuba County employees and the deletion of 12 vacant positions.
...
[Supervisor Mary Jane] Griego noted the development boom that preceded current conditions and that she said was spurred in part by dramatic increases in housing prices in Placer and Sacramento counties. Those increases helped push development into Yuba County, she said. "We'll never see that again," Griego said of the extraordinary rise in home values in this region and the rest of California. "It was like the stars came together for Yuba County."

From the Sacramento Bee:

The economy is in such wretched shape – finishing 2008 with its worst performance in a quarter century – that some forecasters have begun writing off 2009 as well...Some analysts are rethinking predictions that the recovery would start in late 2009; now they're talking 2010...Two weeks ago, [CSU Sacramento economist] Suzanne O'Keefe said job growth could resume in Sacramento by September. Now she says it probably won't happen until 2010.

Bay Area SOS

From the Sacramento Bee:

The recession has finally caught up with Silicon Valley and much of the Bay Area...The economy here escaped the worst of the housing market crash – but not the more recent slump in consumer spending. That's hitting the tech sector hard.
...
Sacramento is hurting because it's being starved of the eastward migration – of people, jobs and wealth – that occurs when the Bay Area is healthy.
...
State records show Intel Corp. laid off 200 workers at its 6,000-employee Folsom research park last year, and it continues to struggle...Hewlett-Packard Co...let 70 workers go at its Roseville campus last year, bringing employment to less than 3,500. As it integrates its acquisition of EDS Corp., it plans to lay off 24,600 workers worldwide over three years, which could affect Roseville and EDS operations in Sacramento, Rancho Cordova and Folsom.

From the Sacramento Business Journal:

Sacramento’s office market went backwards in 2008. The vacancy rate for Sacramento’s office buildings rose for the seventh straight quarter to end the year. And for the first time in two decades, tenants used less space at the end of the year than they occupied at the beginning, according to the region’s top brokerages.
...
Even traditionally stable areas have seen a drop-off. Nico Coulouras, vice president at Lowe Enterprises Real Estate Group, which controls about 700,000 square feet in the Highway 50 submarket, one of the best-performing areas in recent years, said leasing activity in that area was steady until November. “Then, it got quiet,” he said.

From the KCRA:

Home Depot Inc. said it is cutting 7,000 jobs and closing its smaller Expo chain, including a store in Roseville, as the recession continues to batter the nation's housing market.

From the Stockton Record:

...[San Joaquin] County's unemployment rate hit 13 percent in December, up 1.1 percent from November, according to data released Friday by California's Employment Development Department. It is the highest rate in the county in 12 years.
...
In recent months, [UOP economist Jeff] Michael had been saying that San Joaquin County employment numbers weren't as bleak as the national numbers and wondering whether that was a short-lived phenomenon. "Pretty clearly it was a blip," he said. "My reaction to (the new employment report) was, 'Wow!'"

From Business Week (hat tip RV6Flyer):

We asked AXIOMetrics, a Dallas-based apartment data company, to assemble a list of the 25 large metros where the rate of rent declines accelerated most in the fourth quarter.
...
Sacramento/Arden-Arcade/Roseville, Calif.
Rank: 24
Rent drop: -1.9%
Q4 2008 rent change: -3.9%
Q4 2007 rent change: -2.0%

From The Housing Bubble blog's Ben Jones:

We had...[a serious recession] in Texas when I was young. At first, lots of people hoped oil and real estate would bounce back and save our necks, but economics don’t work that way. We had a bubble and it didn’t come back.

What is frustrating to me is that the ongoing debate is headed by the fools that got us in this situation. Housing isn’t going to lead us anywhere. The fact is we’ve had the largest financial mania in history. It’s not going to return, and we better start working on how we will work and live in the future. Nobody can turn the clock back, and hoping that housing will lead a recovery is just as futile wishing oil would rebound in the 80’s.

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.

'Nothing Left To Trim'

From the Sacramento Business Journal:

Angel Ahumada, founder of recruiting firm Integrity International Partners of Rancho Cordova that recruits professionals for the building industry, said homebuilding companies have pared down staffs and combined offices as much as possible. “I think that 2009 will be a survival year for everyone in the housing market,” he said. “Layoffs are finished and office consolidations are over with — there is nothing left to trim. I heard from one of my senior executive contacts that he sees ‘large storm clouds ahead’ for them.”
...
[Gregory Group's Greg] Paquin admitted he hasn’t been able to accurately call the bottom of the housing market, as housing sales appeared to bottom out at various points during the past two years. “I was joking with some people this morning that it was probably the lowest since there’s been a capital in Sacramento,” he said of the fourth-quarter figures. “That’s probably not true, but the reality is no one’s buying.”

From the Sacramento Bee:

GreenFiber LLC, a manufacturer of natural fiber insulation, on Tuesday closed its plant in Sacramento, citing the decline in the local housing market and decreased demand for its products. The company said the 26 employees working at the plant...received severance pay.

From the Sacramento Bee:

It's approaching crunch time for Circuit City Stores Inc. and Fresno's Gottschalks Inc., two troubled retail chains whose possible demise would add to the miseries of Sacramento's commercial real estate market..."We're going to see more of this," said George Whalin of Retail Management Consultants in San Marcos. "We're just getting started."
...
The region's shopping center vacancy rate, pegged at 8.8 percent in the third quarter of 2008, will probably peak at around 11 percent sometime this fall, said research director Garrick Brown of broker Colliers International's Sacramento office...Rents have fallen by a third in some areas of Sacramento.

From the Sacramento Bee:

J.C. Penney's decision to close its Carmichael call center on March 20 will cost 260 local jobs and put a dent in the Sacramento area's recent reputation as a call-center magnet...At the dawn of the decade, Sacramento was being hailed as a call-center mecca. From 1996 through mid-2001, about 40 centers set up shop in the Sacramento area, according to the Sacramento Area Commerce and Trade Organization.
...
Layne Holley, managing editor of publications with the Colorado Springs, Colo.-based International Customer Management Institute (ICMC), said Monday that call centers are a likely cutting point for retailers amid the recession.

From the Stockton Record:

The median sales price fell to $133,000 in Stockton and $165,000 countywide...In Stockton, that has meant a 47 percent drop in prices in 12 months alone, from $250,000 in December 2007 to $133,000 last month, according to figures from the Grupe Real Estate-TrendGraphix monthly sales report....Foreclosures continue to dominate the existing home market, accounting for 84 percent of all December sales.
...
"Median sales prices may go lower, but they can't go much lower," he [Mike Collins of Collins Realty in Stockton] said. "Some people pay that much for a high-end luxury car."

From the Associated Press (hat tip DJ/SMF)

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.
...
Financial adviser Barry Hartz lived in California for 60 years and once ran for state Assembly before relocating with his wife last year to Colorado Springs, Colo., where his son's family had moved. "The saddest thing I saw was the escalation of home prices to the point our kids, when they got married, could not live in the community where they lived and grew up," Hartz says. "Some people call that progress."

From News10:

"It's getting too expensive for us to live here. We just can't afford it," said Cathy Hawkins of Sacramento. The Hawkins are moving from California for an area that's more affordable to live..."We just lost our house to foreclosure and I recently lost my job," said Daniel Hawkins.

'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."
...
"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.

From Bloomberg:

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.

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.

From the Sacramento Bee:

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.
...
[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."

In December, Sacramento median home price dropped to $180,000 according to SAR [pdf], a decline of 55% since peak.

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.

"An MSM Confession"

From the Sacramento Bee:

Sacramento-area real estate market befuddled the experts

Home Front spent time in the electronic library this week, looking at how experts misjudged the extent of this decline as the housing market began to wobble and shift in 2005 and 2006, even 2007. We aren't trying to pick on analysts who were then swimming in uncharted waters after a long, euphoric boom. The Bee's real estate coverage, too, had its overly sunny moments.
~~~
We feature a lot of real estate experts who misjudged the extent of the downturn - and note that our own coverage was sometimes overly rosy, too, as a result.
...
It had occurred to me a couple times as I researched today's column that there were early people saying we were going over a cliff with this housing boom. They were mostly bloggers and not mainstream "experts," predicting this was a disaster soon to unfold. Therefore, in the process that often leads to these kind of business stories, they seemed to have less weight than someone who sold houses for a living or financed them. (There's an MSM confession for you).

But many of these seers proved correct.

From the Sacramento Bee:

"One bright note is that the (housing) sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out," said Scott Anderson, senior economist at Wells Fargo & Co.

It's still too early to declare real estate's revival...But 2008 could also be seen as the year Sacramento-area real estate began to show signs of stabilizing, and the idea that housing might help establish a foundation for the economy here is something experts are starting to debate. Prices and inventory are down and sales are up, even as foreclosures continue. Mortgage rates have fallen to their lowest levels in at least 37 years. The correction has been enormously painful, but there are believers who contend Sacramento will be among the first U.S. markets to recover.

From the Sacramento Bee's Bob Shallit:

We anticipate the capital region will endure higher unemployment (perhaps hitting 10 percent), more hard times in housing, a grim market for commercial real estate and perhaps a bank failure or two...Builders and buyers will continue struggling in 2009, but by midyear we see home prices bottoming out, foreclosures dropping and sales picking up, spurred by declining interest rates.

From Rocklin & Roseville Today:

I believe we will start to see some stability in the Sacramento housing market. I am not suggesting that we don’t still have some downward pressure on prices but I think we will see, in some areas and in some price ranges, price stability and even some upward movement. I believe we will see buyer’s who took a wait and see posture in 2008 return to the market. At the same time, if we learned anything from our experiences in 2008, we must be mindful that there are likely to be some additional surprises along the way.

From Home Front:

[In 2008] Dunmore Homes went out of business. Then John Reynen of Reynen & Bardis Communities filed for personal bankruptcy protection. So did C.C. Meyers, owner of Winchester Country Club. And then so did Christo Bardis of R&B. I doubt ever in their wildest imaginings did they imagine it would all some day come to this...Crossing familiar names off my list of real estate industry sources as they disappeared into unemployment. Sacramento County's median price falling back below $200,000. (On the other hand I talked with a lot of happy new homeowners this year. That was the really cool side of the free-falling home prices).

From the Modesto Bee:

The housing slump will enter its fourth year in January, but Chad Costa sees reason for hope. The Modesto real estate agent said plenty of people will benefit from the reduced prices and mortgage rates. "I think what has to be identified here is that the affordability is back," said Costa, who specializes in selling property that has gone through foreclosure. "That's the upside of this, and you don't hear a lot about that."

From the Appeal Democrat:

A huge tide of home foreclosures rippled through the nation in 2008, and few communities were battered as badly as the Mid-Valley. Defaults left hundreds of houses from Yuba City to Linda to Wheatland — built and bought in anticipation of profiting from a decade of soaring real estate prices — empty as owners seduced by adjustable-rate mortgages were caught between suddenly higher payments and plunging values for their homes.

From the Sacramento Business Journal:

Sacramento on Monday announced it has laid off eight workers in the city’s development services department due to falling revenue.

From the Appeal Democrat:

About 70 workers at Kbi Norcal on Rancho Road in south Yuba County are slated to lose their jobs in the next few months, according to an announcement Monday from the lumber and wall panel plant’s parent company, Building Materials Holding Corporation. BMHC executives...have said they will shut down the Rancho Road plant some time during the first quarter of 2009.

From the Sacramento Business Journal:

Grubb & Ellis Co. on Monday released its 2009 global forecast that predicts a troublesome year for commercial real estate in the U.S., including Greater Sacramento. “Several forces contributed to the decrease in Sacramento’s investment market in 2008, primarily the unavailability of credit, and this will linger through the coming year,” said Robert Dean, executive vice president and managing director of Grubb & Ellis’ Sacramento office...“The depth and duration of the local residential recession has virtually assured retail’s struggle,” Dean added.

From the Wall Street Journal:

The commercial market "is going to be ugly for the next 12 to 24 months," said Michael Restuccia, chairman of the San Joaquin County (Calif.) Employees' Retirement Association. "Not just bad, but ugly."

From the Sacramento Bee:

Commercial real estate is in trouble...Brokers such as [Boyd] Cahill are suffering along with their clients. For a while, they were uneasily holding ground while colleagues in residential real estate were seeing their livelihoods melt away as home sales plummeted. Then the bad economy got drastically worse and the commercial business crashed
...
As "the toughest year" of his career closes, Cahill said the first half of 2009 doesn't look much better. He thinks more retailers will file for bankruptcy protection, adding to vacancies and making it even more competitive to land the few tenants looking for space. The shakeout will strike commercial brokerage firms, too, Cahill said. His company just closed its Sacramento office and pulled staff to Roseville.

From the Stockton Record:

Foreclosures continue to dominate the existing home-sales market, making up nearly nine out of 10 purchases...[M]edian home selling prices in the city [of Stockton] dropped as low as $130,000 for November - down more than half from $265,000 the previous November.

Lela Nelson of Lela Nelson Realty said December business was hopping as more first-time buyers and investors jumped into the market as ever-dropping prices combined with historically low mortgage rates. In more than 30 years in the real estate business, she said, she has never seen a better combination of low prices and interest rates for buyers.

From the Stockton Record:

Community Bank of San Joaquin has become only the second locally based bank during the current economic downdraft to receive a warning from state and federal regulators.
...
[P]roblem loans were made before 2007 to builders. In other words, they were made to exactly the kind of borrowers you would expect to be doing business with such a bank, and they were seeking loans when business, especially real estate, was booming...In fairness, no one saw this coming, certainly not the kind of downdraft we've experienced. And with San Joaquin County being the nation's foreclosure capital, the real estate market collapsed here with unprecedented speed and severity.

From the New York Times:

[T]he ultimate symbol of suburban success has become one more reminder of the economic meltdown, with builders going under, pools going to seed and skaters finding a surplus of deserted pools in which to perfect their acrobatic aerials. In these boom times for skaters, Mr. Peacock travels with a gas-powered pump, five-gallon buckets, shovels and a push broom, risking trespassing charges in the pursuit of emptying forlorn pools and turning them into de facto skate parks.
...
California officials estimate that there are tens of thousands of abandoned pools in the state, with as many as 5,000 in places like Sacramento County, where a building boom in the capital’s suburbs has gone bust.

"All the Arrows Were Pointing Down"

From Forbes:

Drive along Interstate 80, just outside the city of Sacramento, Calif., and scores of gated and planned communities await. Only they're not what developers envisioned. Sidewalks are empty; homes are unoccupied. Blame the heady days of the real estate boom. Easy-to-acquire mortgages, plenty of open land and generous zoning provided new homes to scores of buyers. Between 2000 and 2005, Sacramento-area builders doubled production.

But as prices dropped and demand dried up, builders cut back. This year, there are expected to be 6,140 new constructions in the Sacramento metro area. That's down from 20,370 in 2005, according to the National Association of Home Builders (NAHB). Median prices are now $212,000, down from $375,000 in 2005. For many residents, this is old news. Sacramento home builders and buyers engaged in the same behavior leading up to, and following, the Savings & Loan crisis. That's when construction doubled and then quartered once prices fell. Indeed, it's a market prone to booms and busts, which not a good sign for long-term investment.

From the Sacramento Business Journal:

CB [Richard Ellis], Greater Sacramento’s largest commercial real estate brokerage, wanted the market outlook this year to be more of a low-key panel discussion with fewer numbers bandied about. Office chief David Brennan joked that all the arrows were pointing down anyway.
...
CB’s land group...declared that prices for residential land hit bottom late this year — a bottom they weren’t ready to call in 2007 as land buyers and sellers executed very few deals.

The pressure to unload land has become too great as homebuilders sold at deep discounts, at about 25 to 30 cents on the dollar, CB senior vice president Randy Grimsman said. That trend will increase next year, said senior vice president Peter Nixon....About 70 percent of the land deals will be lender repossessions, he predicted.

From the Sacramento Bee:

San Francisco-based regional brokerage TRI Commercial is closing its Sacramento office as of Friday and consolidating local operations in Roseville...In response to our questions, TRI issued a press release calling the closure a "strategic move" based on prospects for diminished revenue next year. The release states that the 12 agents in the Sacramento office will be invited to meet with managers in Roseville, but it doesn't say how many – if any – will be offered jobs.

From the Sacramento Business Journal:

Stunned by a dramatic decline in loan applications and a frozen secondary market for small-business lending, Comerica Bank trimmed its operations, including a processing and sales center in Sacramento. The banking giant eliminated 64 jobs nationwide, including 10 in the Sacramento region.
...
Comerica handled 15 loans for a total of $9.1 million for the first nine months of the year in the Sacramento district, a 56 percent decline from the 34 loans for a total of $19.4 million for the same period in 2007. Lenders in the Sacramento SBA district saw loans decline almost 38 percent. Nationally, SBA loan approvals were down 29 percent.

From Business Week:

[Thomas] Lawler [economist and founder, Lawler Economic & Housing Consulting in Vienna, Va.] says he's seen prices begin to stabilize in some places—Sacramento, for one, and even some areas outside hard-hit Las Vegas. He believes that if Congress and President-elect Obama launch a big economic stimulus plan on Day One and homebuilders bring no new inventory onto the market for six months or so, the national housing market could find its bottom by the third quarter of 2009.

From the Average Buyer blog:

Back in late 2006/early 2007 I couldn't find a RE agent (and we looked hard) that would tell me a home was overpriced, nor could I find a broker who would only give me a quote for a 30yr fixed loan (2 other quotes that lowered my monthly payment always seemed to come with it). So its interesting to see how history gets revised.

'It's sort of a Hail Mary pass'

From Inman News:

In Sacramento, Calif., the price per square foot fell 31.9 percent from September 2007 to September 2007, according to Radar Logic.

From the Sacramento Bee:

Is the foreclosure phenomenon at last beginning to peak in California? Home Front is hearing rumblings that October saw a "meaningful decline" in various foreclosure filings for the first time in two years. The familiar industry trackers – MDA DataQuick, ForeclosureRadar and Foreclosures.com – all acknowledge the change...What does it mean? It's still early to speculate whether this might be the beginning of the end.
...
"What we have seen over the last 60 days is a lot of announcements around foreclosure moratoriums and loan modification programs," said [Foreclosure Radar's Sean] O'Toole. He also cited Senate Bill 1137, which makes lenders try harder to talk with California borrowers before foreclosing. That legislation prompted a noticeable slowdown in notices of default as early as September.
...
[A]n abundance of new loan modifications could be pushing the foreclosure problem out three to five years. "It's sort of like, 'let's put these people all in teaser rates and hope it goes away.' It's sort of a Hail Mary pass," he said.

From the Sacramento Bee:

Property owners -- facing rough economic times and a prolonged housing slump -- have been flooding area assessors' offices with appeals in the hope of getting their tax bills lowered. Monday was the final day for property owners to appeal the assessed value used to calculate this year's property tax bills, and preliminary estimates project near-record numbers of appeals. Sacramento County officials are expecting twice as many appeals as last year.
...
Sacramento County reduced the assessed value on as many as 30 percent of residential units this year in the wake of the housing slump. The reductions translate to a loss of about $65 million in property tax revenue countywide, officials said.

From the Sacramento Business Journal:

[Roseville-based] real estate developer Kobra Properties — which owns more than 80 restaurants, corporate centers and other commercial properties mostly in Northern California — has filed for Chapter 11 bankruptcy reorganization in Sacramento, citing a worsening economic recession, depressed real estate market and a “tumultuous” credit industry.

From the Sacramento Bee:

These are terrible times for the auto industry, and the impact shows up at places such as the Elk Grove Auto Mall. Sales are down, staffing is down, and the loss of two dealerships hurts the survivors. "It doesn't help the image of the auto mall to have two tenants gone," said David Johnson, general sales manager at Elk Grove Buick Pontiac GMC. "It doesn't help with consumer confidence." Johnson has cut his sales staff in half, eliminating six jobs.
...
The numbers pay perverse tribute to Californians' other great love, real estate. Before the housing market crashed, 30 percent of California's new cars were bought with home-equity loans, according to CNW. That was triple the U.S. average. Now only 16 percent of California cars are purchased with home equity. "When the housing bubble burst … that just hammered car sales," [analyst Art] Spinella said.

From the Sacramento Bee:

[Howard] Roth [chief economist at the California Department of Finance] and economist Jeff Michael, of the University of the Pacific, said it's likely that California entered the recession sometime sooner than the rest of the country. It's possible that places like Sacramento, where the housing market seems to be stabilizing, could come out of it earlier, as well.

From the Sacramento Bee:

The family of Teresa Martinez, a preschool teacher in Stockton, is living proof of how the nation's economic storm is uprooting immigrants with family ties on both sides of the U.S.-Mexico border. While it's unclear if anecdotal evidence about Mexicans leaving the United States will eventually add up to a mass exodus, it is clear that those on the move aren't necessarily in this country illegally.

Martinez's two brothers are both legal U.S. residents who earned a good living, she said, working in trucking and construction during healthier economic times in California's Central Valley. About a year ago, when work dried up, both men decided to ride out the U.S. downturn south of the border, taking refuge in a cheaper, family-owned home in Mexico's northern Sonora state.

From the Stockton Record:

[Terry Hull Sr., Property Management Experts in Stockton]: Foreclosures have drastically impacted the economy of Stockton and the entire country. Sales prices have continued to go lower. However, shrewd investors are buying houses at these very low prices. Currently, there are too many rentals available, and it takes longer to find good tenants...I believe that we are beginning to see an overabundance of rental units, and eventually the vacancy factor will increase and rents may go lower.

From the Stockton Record:

Neighborhoods pummeled by the subprime mortgage debacle will start seeing a few new folks moving into foreclosed homes with help from federal funding on its way to San Joaquin County. On Tuesday, the Board of Supervisors approved a plan that would spread about $9 million in targeted areas across the county, primarily to snap up foreclosed properties, refurbish them and flip them to home buyers earning just about the median income.
...
"We think it will have a positive effect, (but) there are larger market forces at work," said Steve Baker, a project specialist at the city's Community Development Department.

From the Stockton Record:

A $10,000 tax credit would provide just enough incentive to push fence sitters to become home buyers, according to Hanley Wood Market Intelligence, a real estate data and consulting firm.
...
Yeah, but ... should we be building more new homes with so many existing homes on the market? Should we be handing out government tax credits for new-home buyers when thousands of California families are facing foreclosure? With virtually every segment of the economy struggling, how do we decide who gets help, who doesn't and how much?
...
Whatever the form and eventual cost of an economic stimulus plan, it cannot cover everything. Some segments will be left out. A higher priority should be given to keeping families in their homes and not on building and selling new homes.

"California's Central Valley Cities Are Faring the Worst"

From the AP:

Speculators, who swooped up between 30 and 40 percent of the homes sold [in Mountain House], have bailed in droves, leaving empty houses selling for half of what they cost two years ago.
...
The latest report from Zillow.com, a housing valuation website, found that out of 163 metropolitan areas, foreclosure-plagued Stockton, Mountain Houses's next door neighbor to the east, had the highest percentage of homes with negative equity. In Stockton, 70.5 percent of all homes bought within the last five years and 45.9 percent of all homes in the city cost more than there are worth.

Amy Bohutinsky, a spokeswoman for Zillow.com, said by whatever measure firms use, California's Central Valley cities are faring the worst, followed by southwest Florida. "I don't know what the future holds for these towns," she said. "It's a very bleak situation when you're looking at your home value having to double just to break even.

From the Sacramento Bee:

"I don't think there's anyone in the world that's been going through what we're going through now," San Diego home building industry consultant Tim Sullivan told struggling Sacramento-area home builders Tuesday. Many builders are focused on their survival in a capital-area market where bank repos rule.

From the Sacramento Bee:

The developer of the oft-delayed Elk Grove Promenade shopping mall says it's in danger of going out of business, raising fresh doubts about the Promenade. General Growth Properties Inc.'s worsening financial condition was outlined in a filing Monday with the Securities and Exchange Commission. Retail experts said they're convinced the Elk Grove mall will be opened, either by General Growth or a successor. But the opening, set for fall 2010, could well slip.
...
Though the exterior to the 1.1 million-square-foot mall is done, the opening was delayed in July by a year, to the fourth quarter of 2010, because of the weak economy. Elk Grove has been especially hard hit by the downturn in the housing market.

From the Sacramento Bee:

CalPERS disclosed a $3.2 billion decline in its housing portfolio Wednesday, the latest major setback for the big pension fund. The California Public Employees' Retirement System said an exhaustive appraisal of CalPERS-owned homes and lots across the United States revealed a 35 percent drop in value in a few short years, testament to the horrific collapse in the nation's housing market.
...
CalPERS has been investing in housing since the 1990s, the bulk of its funding came between 2004 and 2006, consultant Le Plastrier said...CalPERS' investments include the site of developer John Saca's ill-fated twin tower condominium project in downtown Sacramento. CalPERS, after spending $25 million, took over the property when the project faltered last year.

'In Survival Mode'

From the Sacramento Bee:

[Mike] Wood is the [Sacramento police] department's lead investigator of real estate fraud, a position created three years ago and partly funded by a county grant to deal with an influx of financial crimes that came with the boom in the real estate market. He is one of only a handful of real estate fraud detectives in Sacramento County.

With the economic downturn, new forms of fraud, scams and schemes in the real estate world have emerged, keeping Wood busy. As more homes go to foreclosure, for example, "professional squatters" move into vacated bank-owned homes, pretend to lease out the properties and abscond with renters' deposits.

From the Sacramento Bee:

Already struggling, Sacramento's commercial real estate market is getting hammered by a fresh wave of retailer bankruptcies, including Mervyns, Linens 'n Things and Shoe Pavilion...Garrick Brown, research director at commercial broker Colliers International's Sacramento division, said the vacancy rate in the region's major shopping centers rose to 8.8 percent in the third quarter, up from 7.6 percent in the second quarter. It was 6.7 percent in the first quarter. By the first quarter of 2009, when Mervyns closures and others take effect, the vacancy rate will top 10 percent, he said.
...
"Mervyns' demise quickens the shakeout in the Sacramento retail property market and, in the short term, creates a little panic for landlords and tenants," said Heath Kastner, a vice president with commercial broker CB Richard Ellis. "The Sacramento area right now is in a tough spot for retail. A lot more people are closing their doors compared to new businesses opening."

From the Sacramento Bee:

The meltdown finally finished off the Melting Pot in Rocklin. The 3-year-old fondue restaurant on Lonetree Boulevard in Rocklin opens at 4 p.m. today for the last time after more than a year of fighting declining sales and dwindling crowds. "I've done everything I could. I've looked at all the options," owner Mike Frampton said earlier this week. "But the last two months were just too much." His restaurant's demise is a window into how recent wild swings on Wall Street and the credit crunch have pinched retailers and restaurants: Nervous customers spend less. Nervous banks lend less.
...
[Frampton] open[ed] his restaurant in November 2005. The region was booming. In December of that year, the median price of an existing home peaked at about $505,000 in Rocklin's two ZIP codes, according to real estate researcher MDA DataQuick. Last month's median price: $325,000.
...
Frampton saw much of it coming, "although I didn't realize how bad things would be – I don't think anybody did," he said.

From the Sacramento Business Journal:

The local Small Business Administration district and nearly 100 lenders are still making loans, but fewer people are seeking them, said Jim O’Neal, district administrator of the Sacramento SBA office. After years of breaking records for the number of loans made, the Sacramento SBA office approved only 912 loans in the year ended Sept. 30 — a decrease of 37.5 percent from the record 1,460 loans made the previous year...“It is easy to say the bankers are not lending, but the businesses are not seeking money either. Their customer base has shrunk, and they are being cautious,” O’Neal said.

From the Sacramento Business Journal:

For years, Inter Flora kept so busy selling its artificial plants for homebuilders’ model homes that its owners had little time to cultivate other types of customers. Then came the housing bust, and nearly the bust of the two-decades-old wholesaler. The new owner of the now-leaner Rancho Cordova company is reinventing Inter Flora and himself, and vows never to depend on homebuilders or any other single type of customer.

From the Stockton Record:

"We've had more transactions through September this year than I've had in the prior 10 years," said Jerry Abbott, president and co-owner of Grupe Real Estate, Stockton. "We're having a boom year, but the prices are 60 percent or less what they were at the peak of the market" several years ago...San Joaquin County's median sales price slid...41%...declining from $325,000 a year ago to $192,000 last month, TrendGraphix reported.

From Reuters:

Last week, Wachovia Corp said borrowers with its "Pick-a-Pay" ARMs and living in or near Stockton and Merced, California, owed at least 55 percent more on their mortgages, on average, than their homes were worth.

From the Modesto Bee:

During the first nine months of this year, Stanislaus County issued 408 new home building permits. Compare that with the 3,670 permits issued during the first nine months of 2005, according to Construction Industry Research Board statistics. That's an 89 percent decline in new home construction. "There's so few of us builders left," said [Modesto home builder Mark] Wilbur, estimating that about five locally owned companies still build subdivisions in Stanislaus County. "We're just in survival mode now. We're not going to be profitable for another couple of years or so."

From the Press-Telegram:

Rep. Laura Richardson provided documentation Friday showing that she is up to date on the previously delinquent home loans that earned her national attention over the summer. "What I wanted to show you is everything is currently in order and has been resolved," Richardson said during a meeting with a reporter and editor at the Press-Telegram.
...
As for the Sacramento home, she said she plans to list it for sale or rent in December.

From CNBC:

[N]o matter how far we go in modifying, restructuring, writing down principal on loans in order to stop foreclosures, the bottom line is that most of the borrowers in trouble had no business being in the homes they bought in the first place. You can modify their loans for five years, but they will probably lose the home anyway.

Is that mean? It’s not meant to be. I just think that in order to set the market right we need to let prices fall to where they must and start over again with mortgages, buyers and homes that make sense. We’re all losing money here, but that’s because so many people took advantage of free money during the housing boom (and don’t get me started on how those who didn’t take advantage of that free money still get screwed). I understand the need to restore the credit markets and stop the crash in housing, but keeping folks in homes that are way beyond their means is just prolonging the pain of the inevitable.

From the Wall Street Journal:

Just as in the 1930s, there is no evidence that the policy makers have any understanding of what they are doing. They need to make way for the natural forces of repair. They need to let housing prices fall. They need to let firms go bankrupt. They need to let firms that are healthy thrive. They need to let healthy firms buy the sick firms. It is time to let the imprudent fail and the prudent pick up the bargains.

A recession is coming (or has already arrived) no matter what happens in Washington. The question is whether the attempt to forestall it is going to make it worse and turn it into another Great Depression. By acting without rhyme or reason, politicians have destroyed the rules of the game. There is no reason to invest, no reason to take risk, no reason to be prudent, no reason to look for buyers if your firm is failing. Everything is up in the air and as a result, the only prudent policy is to wait and see what the government will do next.

Bee: Sacramento Real Estate Market Bottoming Out?

From the Sacramento Bee:

Is Sacramento's woeful housing market bottoming out?..."We might be hitting that bottom … but we might be at that bottom for a while," said Dean Werhli, a vice president in the Elk Grove office of market researcher Sullivan Group Real Estate Advisors. "We could be skidding along this bottom for quite some time."...Even if the economy worsens, "it's going to be difficult for prices to go much lower," he said.
...
Consumer advocate Paul Leonard offered a bleaker prognosis: The foreclosure crisis could worsen over the next year, and the state's faltering economy won't help. "It's certainly good to see that there is new (sales) activity, but there are still a number of factors out there that suggest that this problem is going to be with us for a while statewide, particularly if you look at the Central Valley," said Leonard, director of the California office of the Center for Responsible Lending.
...
The region's economy has a lot riding on this. The bursting of the housing bubble caused considerable harm to the economy in Sacramento and across the state. As home values plunged, equity "extractions" – cash generated by refinancing, home equity loans or outright sales – fell by 34 percent last year in Sacramento, according to MDA DataQuick. That took $2.1 billion out of the region's economy.

From the Sacramento State Hornet:

As the effects of the housing crisis and the international economic crisis ripple through everyday life, students and faculty at Sacramento State are forced to change lifestyles. For some, this means driving less; for others, the changes are more severe. Many students are finding they have to spend less to survive these days. Matthew Harris, undeclared freshman, said his spending habits have changed recently. "I don't spend money at all anymore," Harris said. "The only things I spend money on are school and food, and only when necessary."...Harris said he feels it is likely the U.S. will enter into a depression in the near future. [Student Anthony] Gragg said he feels the country is not quite to the point of worrying about a depression, but it is getting close.
...
[Kristin] Van Gaasbeck [associate professor of economics] said many professors are likely being affected heavily by the burst of the housing bubble. "Many instructors were recently hired at Sac State, and many, myself included, probably bought homes in the area during the housing run-up," Van Gaasbeck said. "I suspect that some of them are in a better boat than others, but depending on how much they were gambling on property values increasing, they might get stuck."

From the Tracy Press:

What developers had hoped would be the first retail-office-industrial anchor in Mountain House has folded under the weight of a foreclosure-saturated housing market and the national credit crisis. Chapter 11 bankruptcy of Pegasus MH Ventures I LLC forced parent company Pegasus Development to cancel plans to build a business park on 140 acres of land along Interstate 580 and near the Alameda, Contra Costa and San Joaquin county lines.

From the Sacramento News & Review:

In Folsom, home of the prison, the factory outlets and the historic downtown, the local economy will be the incoming city council’s No. 1 priority. As the election approaches, evidence of the downturn is everywhere you go in this city of 70,000 people just east of Sacramento. Reality is setting in, and it’s looking grim.

The number of foreclosed homes is growing, and property-tax revenues are shrinking. Several commercial areas in town continue to thrive, but elsewhere businesses have disappeared, leaving gaping holes in silent strip malls. Vast swaths of new commercial development lie vacant. The housing bubble has burst, the boom is over, yet the ideal of perpetual growth lives on. An enormous new shopping center continues to rise north of Highway 50. Plans for residential and commercial development south of the highway are proceeding...The city faces its bleakest budget crisis in years, and the city council will have to figure out how to fill all those empty businesses and homes....

Flippers.gov

From the Sacramento Bee:

The federal government soon will send Sacramento city and county nearly $32 million to help fix up foreclosed properties -- a tool to prevent deterioration in neighborhoods hard hit by the housing crisis. Sacramento received one of the largest allocations in the nation....

City and county officials today detailed a plan that includes paying developers to buy foreclosed properties, restore them and either rent or sell them. In an effort to spend the money more quickly, the county and city also would become real estate flippers. About 40 percent of the money would be used by SHRA [Sacramento Housing and Redevelopment Agency] to buy and restore properties then sell them directly to buyers.

From the Sacramento Bee:

The supply of competing single-family house rentals is still growing, says Janet Regan, a broker with Citrus Heights-based Horizon Properties, who manages 450 rental homes for clients. Investors are buying bank repos and renting them out, she says. Homeowners who left the region but can't sell their homes are renting theirs, too. "They don't have them on the market because the market is horrendous," Regan says.

From the Modesto Bee:

Apartments, of course, aren't the only rental option for Modesto families these days. There are thousands of rental houses in the city, and their numbers are increasing daily as investors scoop up bargain-priced foreclosed properties. "We have a flood of investment homes on the rental market now," said [Debra] Clover, whose company manages more than 300 of them.
...
Many of the families who had been living in those [foreclosed] homes have left the county, Clover said. "When these people -- especially those who were commuting to the Bay Area -- lose their houses, they don't stay here to rent. They move closer to their jobs," Clover said.

From the Stockton Record:

Hank Klor, a Stockton-based tax and financial adviser, spoke to a 49-year-old single mother who owes nearly $250,000 on two mortgage loans, recently had her income drop by a third and can't make her paycheck stretch over all the necessities anymore. With her home worth only $140,000 to $150,000 because of falling prices, refinancing seems impossible. She might seek to have her loans modified, get the lender to agree take a loss on a short sale or, Klor said he told her, "You need to look at the possibility you may have to walk away from your home."

From the Sacramento Business Journal:

Year-over-year, the capital region lost an estimated 9,800 jobs, or 1.1 percent of the total. There were 3,700 fewer construction jobs; 3,700 fewer retail trade jobs; 2,900 fewer leisure and hospitality jobs; 2,200 fewer financial jobs; 1,300 fewer government jobs and 1,000 fewer manufacturing jobs than in September 2007, when the local jobless rate was 5.4 percent.

From the Stockton Record:

Hayward-based department store chain Mervyns LLC is expected to announce today that it is filing for Chapter 7 bankruptcy protection, a move that means shutting the doors of its 175 retail outlets, including two in San Joaquin County.
~~~
[N]ine are in the greater Sacramento area....

"It was inevitable that prices would start to drop"

From the Sacramento Bee:

Federal intervention in the financial system could wipe billions of dollars in bad mortgage debt off the books of Wall Street. But will it help end the housing crisis in Sacramento?

Not directly, analysts say. But eventually it could help curb the defaults and foreclosures at the root of economic problems locally and the nation as a whole...The Sacramento region – Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties – recorded more than 21,000 foreclosures from January 2007 through the first half of 2008, according to MDA DataQuick, a La Jolla property researcher.

From the Sacramento Business Journal:

In Greater Sacramento, non-residential private construction is down 26.7 percent [in the first seven months of the year YoY], including industrial buildings, offices and hotels...Companies such as HMH have been heading for the safety of public projects as the economy falters and financing for offices, shopping centers and condos has dried up.
...
There are signs, however, that taxpayer-funded construction is also starting to decline under the strain of the economy. And that means competition could escalate...“There’s not going to be a lot of state funding for education projects,” said Phil Nemeth, managing principal at HMC Architecture, an Ontario-based firm that concentrates on schools and health care facilities. That’s because a state pool of education bond funding is evaporating with no plans to replace it. “We’re expecting that in March of next year that bond money will run out,” Nemeth said. “A lot of districts are relying on locally funded bonds.”

From the Manteca Bulletin:

The average previously owned home closing escrow in Manteca is costing $180,000 less than it did at the market's peak in 2005. There were 705 homes that have closed escrow through Monday within the City of Manteca with an average sales price of $249,456. That compares to the peak average price in 2005 of $429,000.

From the Stockton Record:

[San Joaquin] county unemployment sits at 2.4 percent higher than the 7.8 percent jobless rate for August 2007, and that's a direct reflection of how the real estate downturn and resulting financial crisis has pounded employment in those sectors, EDD market analyst Liz Baker said. Year to year, construction is down by 2,100 jobs, and real estate and financial employment has declined by 1,000 jobs, the EDD's report indicated.

From The Moderate Voice:

Of course, as long as the housing prices continued to go up, then people would be able to refinance and get out of the bad loans. But nothing lasts forever and, as we saw, a once a housing glut started to develop, it was inevitable that prices would start to drop. But in the Central Valley, we had an additional problem.

Because most people had purchased new homes with no money down, they had no stake in the property. In addition, many of them were urban transplants who felt (and I’ve had people say this to my face) that living in the Central Valley was ‘beneath them’.. So you had huge numbers of people simply give up and not fight to save the house.

Again, I think that this is one area where some blame is to be assigned. People knew they were getting into risky loans and, in the case of the transplants, they didn’t make any effort to save the house. However I understand that money only goes so far and I wouldn’t fight to save a home in a place I didn’t like.

'You have a lot of sellers waiting for a healthier market'

From the Sacramento Bee (updated link):

Sacramento-area unemployment went up two-tenths of a point, to 7.4 percent, largely due to a massive decline in state government jobs. Unemployment hasn't been this high in Sacramento since January 1996.

From the Sacramento Business Journal:

The metro area lost more than 4,000 government jobs from the previous month, and others sectors lost jobs that typically grow during August, the latest data from the Employment Development Department showed Friday. The Sacramento region fell to an estimated 903,800 wage and salary jobs, down 4,500 in a month and 9,900 from August 2007.

From the Sacramento Bee:

"I've never seen anything as concerning as this," said George Hudak, a 74-year-old retiree in El Dorado Hills. "I don't know whether it's a self-fulfilling prophecy or what, and I think a good deal of the panic out there is a result of what's being publicized on TV and in print. "It just seems that since the housing market started going to hell, everything I read every day in the business section of the Sacramento Bee was bad stuff. And I don't know how much of that resulted in things getting worse."
...
Russ Fehr, Sacramento's city treasurer, said news is bad in just about every aspect of municipal finance -- from revenue generation to funding projects to investments. "I'm afraid, I truly am," Fehr said. "It wakes me up at four in the morning."

From the Sacramento Bee:

Today, there are almost 5,000 fewer homes for sale [on the MLS] than in August 2007. That's when the region set its newest inventory record of 16,262 for-sale signs. Analysts say it's not just sales that have done the trimming. It's the determination of sellers to wait out this market. "To me that speaks of the number of people who don't want to compete with foreclosures," said Andrew LePage, analyst with MDA DataQuick. "You have a lot of sellers waiting for a healthier market, hoping for one in the not-too-distant future," he said.

Last year, real estate agents feared inventory might reach a disastrous 25,000 this year. They got lucky so far instead.

Or maybe not.

From the Sacramento Bee:

Investors again made a big splash in the market. One in five escrows closing last month in Sacramento County were by investors, said Andrew LePage, an MDA DataQuick analyst.

Prices/Sales by County

From the Modesto Bee:

Merced County homes sold for a median $150,000 in August. That's down 47 percent in one year and 60.8 percent from the December 2005 peak...Stanislaus County median sales prices fell to $185,000 in August. That's a one-year drop of 41.3 percent. Even more depressing, it's 53.3 percent below what homes were selling for at the building boom's December 2005 peak...San Joaquin homes sold for a median $207,000 in August. That's down 44.1 percent in one year and 54.8 percent from the November 2005 peak.

From the Appeal Democrat:

Figures released Thursday by MDA DataQuick showed median price declines of more than 30 percent for homes in Yuba and Sutter counties for August compared with August 2007. Sutter County's home price dipped below $200,000 to a median $190,000 last month — well below the $275,000 figure reported for August 2007. MDA DataQuick figures showed homes in Yuba County dropped to $178,000 in August. That's down from $274,000 for August 2007.

From the Sacramento Bee:

The turmoil washing over Wall Street has created waves that reach all the way to Sacramento's locally owned banks and credit unions. Money flowing into conservative havens favored by smaller players has cheapened the value of investments such as government-backed securities. Commercial real estate loans are losing value. Credit remains tight. "All banks are struggling to some extent with credit issues," said Anker Christensen, chief financial officer of Sacramento-based River City Bank. "No one is untouched."

Still, bank executives and finance experts agree that smaller players are generally in better shape than big banks right now...[O]fficials with River City and El Dorado Savings said that they've seen an uptick in new accounts recently, although they wouldn't disclose details. Both attribute the business to disenchantment with their bigger rivals.

From the Sun Post:

A six-story office complex and bank headquarters that was supposed to dominate Manteca’s skyline has been set back at least two years due to troubles in the real estate market and financial industry. The Oak Valley Community Bank has decided to pause construction on its 96-foot-tall office building at 1455 Moffat Blvd. until the local real estate market picks up, the bank’s Executive Vice President Rick McCarty said this week.

From the New York Times:

Many Americans are discovering an unfortunate twist to the housing crisis: even after selling a home and moving away, they might have to keep paying on it for years, even decades.
...
[B]anks are agreeing to let some short sales go through. But instead of writing off the unpaid portion of the debt, they want homeowners to sign a note promising to pay some or all of the balance due. This was the situation confronting Mike and Linda Kelly, who needed to sell their house in the foreclosure-plagued Central Valley of California when Mr. Kelly got a new job 75 miles away.

The Kellys owe $300,000 on their house...but the best offer they could get gave the bank $220,000. CitiMortgage said it would approve a sale at that price, but at the last minute told the Kellys they needed to pay $166 a month for the next 20 years, a total of $40,000. “When you are ready to participate in the loss, feel free to call me,” a Citi loss mitigation specialist, April Easter, wrote to them in an e-mail message.

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.

'Rewarding Risky Behavior Will Only Perpetuate the Problem'

From the Sacramento Bee:

Nearly 7 percent of home loans in El Dorado, Placer, Sacramento and Yolo counties were 90 days or more delinquent during June...up from 2.8 percent the same time last year...First American CoreLogic reported today.

From the San Jose Business Journal:

Home builder Taylor Morrison Inc. has merged its Bay Area and Sacramento operations into a new Northern California division with its divisional office based in Sacramento. The company has cut its regional staff by about 33 percent, or roughly 35 people, said Steve Wethor, western region president for Taylor Morrison.

From the Sacramento Bee:

[T]he growing store closings and empty commercial spaces are an eerie echo of the housing downturn that has slammed the region...For the longest time, the retail sector and commercial real estate were relatively immune to the meltdown that spread through residential real estate. No more. An almost identical chain of events that took down housing in Sacramento is spreading into shopping and its vast network of building owners, leasing agents and national investment brokers.

"As the bottom was dropping out of the housing market, I hardly noticed a thing," said Scott Crowle, associate director of national retail for Encino-based brokerage firm Marcus & Millichap. "Then it trickled down to my business." Crowle works in the broker's Rose-ville office. It recently released a national index that ranked Sacramento's retail scene in the bottom quarter of 43 U.S. metro areas.
...
Like home builders in 2005 and 2006, commercial developers in the region overbuilt in 2007 and are still building as consumer spending slows...As with housing the past two years, there is too much supply in the commercial sector and too little demand. Building values are falling. Rents are, too.

From the Sacramento Bee:

The tough times have hit the RV industry hard. Three area dealers – La Mesa RV Center in Davis, Dan Gamel's Rocklin RV Center and Nu Star RV Center near Rancho Cordova – recently announced they're closing up shop...The reasons are all too familiar: Look to low consumer confidence, flat household incomes, high gas prices and tight credit for the decline.
...
Henry Myers of Sacramento isn't waiting for the economy to improve. He was shopping the RV lots in Davis – including La Mesa RV Center – looking for a large trailer. "I know you hear this everywhere, but it's true: Now is the best time to buy," Myers said. "If you have the money to buy a house, prices now are lower than they have been in years. The same thing is going on now with (RVs)."

From the Sacramento Bee:

First the banks took away C.C. Myers' pride and joy. Then they moved to take away nearly everything else. The result was bankruptcy. Stripped of his beloved Winchester Country Club housing development and facing the potential seizure of numerous personal assets, Myers filed for Chapter 7 personal bankruptcy protection last month.
...
"I think this was his baby," said Donna Lucas, a retired Winchester homeowner whose living room overlooks the Sierra. "I just can't imagine the pain of putting your heart and soul into something at his age and losing it all. It's just tragic; it really is."

From the Press Democrat:

The Santa Rosa bank has more bad loans than any other local financial institution, the result of a risky bet on builders in the Sacramento region near the peak of the housing boom...About three-fourths of Exchange Bank's problem construction loans were made to builders with projects in the Sacramento area, according to bank officials.
...
"They were proven developers with proven market success. They went to a market with very attractive performance. It was what we perceived as an intelligent risk," [bank president William] Schrader said. "If you look back now, you might call that an aggressive move. We certainly didn't see the full magnitude and I don't think any of the major players there saw a correction coming like this one."

What once was a promising region for Sonoma County builders has become a quagmire of homes that take months to sell.

From the Stockton Record:

For church Sunday, Pastor Kyle Hedwall had his congregation bring lawn mowers, form crews and spread throughout Mossdale Landing, a subdivision full of brown and weed-filled lawns in front of homes left vacant by foreclosure...Hedwall...mowed lawns on his street before calling for Sunday's mow. About 30 people mowed nearly 50 lawns, he said.

From the Stockton Record:

Dale Nichols, president and CEO of a real estate corporation that owns a Help-U-Sell realty franchise in Stockton and another in Lodi, said he expects the foreclosure market to have pretty much completed its run in San Joaquin County by next spring. Most adjustable-rate mortgages will have already reset by next year, he said, and the mortgage industry will be under growing pressure to work with struggling homeowners to keep them in their residences. "I'm looking for 2009 to have more stability in the market," he said.

Nichols said he's also seeing a lot of people looking at Stockton-area real estate via the Internet. "Basically, there's been a lot of bad press about the real estate meltdown in Stockton, and that has caused investors to come in and look at the market," he said. "They're absolutely buying."

From CNBC:

The federal rescue of Fannie and Freddie is just one sign we aren’t at the bottom of the housing mess yet. Other signs are all over Stockton, California. First dubbed “The Foreclosure Capital of America” a year ago, I came back this month, expecting to find some signs of a turnaround. I was disappointed.
...
[N]o one seems to think we’re through the worst of it. “If we have the bulk of defaults in the pipeline now, we could wash it out within 12 months,” realtor Kevin Moran told me. When I asked if he thinks the “bulk of defaults” is in the pipeline, he answers, “No.”
...
Realtor Kevin Moran is hanging on, hoping to ride it out. You could say Moran himself personifies all that’s happened in Stockton. Since we first met a year ago, his income has collapsed, and his own home went into foreclosure. Like a lot of other people around here, he’s trying to regroup. “My ego wants to say it happened to everybody,” he says. “And then my other side wants to say how foolish I was, and I think the truth is somewhere in between the two.”

From the Stockton Record:

The outer bands of a Category 5 mortgage hurricane began strafing San Joaquin County about 18 months ago, uprooting families, damaging homes, devaluing property, devastating whole neighborhoods and destroying lives. Yet the eye of this financial storm remains months away from passing over the Central Valley. The analogy to Hurricane Katrina that struck the nation's Gulf Coast three years ago was heard numerous times Saturday afternoon during a congressional field hearing on the foreclosure crisis that drew four members of Congress, nine key witnesses and about 100 interested onlookers to a meeting room at the Stockton Arena.

From CVBT:

[Rep. Dennis] Cardoza says 25 percent of his district has been, is now or will be in foreclosure. “We have some devastating consequences,” he says. There have been more 12,000 foreclosures in San Joaquin County since January 2007 and “there’s no relief in sight,” says Steve Guiterrez, who has been a county supervisor for 12 years.
...
Foreclosure nightmares are not confined to Stockton. Merced Mayor[/Realtor] Ellie Wooten detailed the statistics for the hearing. There have been 2,185 foreclosures in Merced County so far this year, equal to one home out of every 20, Ms. Wooten says. It will just get worse, she says. Fifteen percent of Merced County mortgages are now delinquent by 90 days or more, she says. One out of 12 property owners unable to pay property taxes, she says.

From the Modesto Bee:

"We risk creating a moral hazard with government intervention to step in and save those who would otherwise lose their homes," warned state Sen. Michael Machado, D-Linden. "Rewarding risky behavior will only perpetuate the problem."

Machado predicted "the hardest hit areas of the Central Valley are likely to take at least two years before they hit bottom, and even longer before they begin to recover." He said foreclosures likely will keep increasing because so many valley residents took out risky adjustable rate mortgages that soon will require much higher monthly payments. "Unable to refinance due to minimal equity and tight underwriting standards ... many of the borrowers with payment-option ARMs (adjustable rate mortgages) are likely to become the next wave of foreclosures," Machado said.