"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.
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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.
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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.

"This year is playing out like one of Aesop’s fables"

From the Sacramento Bee:

In a vivid example of the Wall Street financial crisis hitting home, development plans for a Placer County golf course community called Bickford Ranch crashed Friday in federal bankruptcy court. Bickford Ranch, a 1,942-acre residential project in the Sierra foothills between Penryn and Lincoln, collapsed after its sole source of cash – Wall Street investment bank Lehman Brothers – imploded in September, developers said.

From the Sacramento Business Journal:

New Faze Development Inc. had ambitious plans to build housing in Sacramento’s struggling neighborhoods, from hip, urban projects to those aimed at fixed-­income seniors, but lately the company has had struggles of its own. Three New Faze subsidiaries have filed for bankruptcy protection, actions the company says were necessary to avoid foreclosure by lenders that were unwilling to rework loans and, in some cases, unwilling to even return phone calls.

The latest New Faze company to seek protection was Alchemy at R LLC, which built a signature project of the same name on the 2600 block of R Street aimed at the trendy set looking to live in midtown. It filed a Chapter 11 petition to reorganize on Oct. 31 after lender PFF Bank & Trust sought a foreclosure sale of the eight condos and 15 apartment units. The project now sits empty even though the company found willing buyers for some of the condo units, said Terence Kilpatrick, in-house counsel for New Faze.

From the Appeal Democrat:

Yuba City may use a pot of redevelopment money to get into the real estate game by buying foreclosed homes...The City Council briefly talked about the idea at Tuesday's meeting and directed the city administration to look into it. Council members all said they favored the idea. [Kash] Gill said the city could use money to take distressed homes off the market, helping the housing market and increasing the city's stock of low-income housing. And because its a buyer's market for homes right now, the price would be right. "Right now is a perfect time, it's definitely a buyer's market," Gill said at the council meeting.

From the Manteca Bulletin:

Dori Beck [a mortgage planner with Guild Mortgage Co.] was singing the praises of the City of Manteca's first-time homebuyers program...."For some families who are lower income and working, this could be the last time they can ever afford to own their own home in Manteca," Beck said of home prices that have dropped off as much as 50 percent in some segments of the local market.

From the Sacramento Business Journal:

Beth Harrington, president of Benefit Resources Inc. in Sacramento, also has seen an increase in 401(k) hardship withdrawals. “I have two on my desk right now,” she said, referring to hardship distribution requests. “Some are people who got home equity loans, maybe three years ago, and now they have no equity in their home. Unfortunately, these people are moving their stock out into cash at the bottom of the market. This will have a tremendous impact on their retirement goals, so it’s disappointing.”

From the Sacramento Business Journal:

When times get tough, the tough go to thrift shops...“We’re just overwhelmed,” said Judy deCesare, manager of All Things Right & Relevant in Davis. “We’re taking in so much merchandise, and better quality merchandise. Things that people might have held onto, they’re giving up.”...People have been bringing in so much stuff to sell, deCesare said, that she has had to cut down the hours the store will accept merchandise.
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People buying “Tuscan-style, cookie-cutter homes” during the housing bubble, especially people in their 20s and 30s, seemed to have an appetite for new furniture, [Scott] Schneider said...[W]ith the impacts of recession hitting home, more people are walking into...Taber Furniture...to sell pieces they bought brand-new, Schneider said. Frequently, those people are trying to recoup the price they paid when the furniture was new, and the prices they demand are too high. Schneider said he’ll advise people to try selling their wares on eBay or craigslist.org, and they’ll tell him they’ve already tried.

From the Sacramento Business Journal:

For some of Sacramento’s local banks, this year is playing out like one of Aesop’s fables. The banks that didn’t lower their standards were laughed at during the subprime lending spree. Today they are feeling perky while their party-going competitors are nursing financial hangovers.

From the Sacramento Bee:

The Sacramento City Unified School District has arrived at a threshold that other urban, slow-growth districts have crossed recently: closing schools, consolidating campuses and renting out district property. The budget crisis, built-out neighborhoods and stagnant enrollment have pushed the district to explore how to cut costs and get more out of hundreds of millions of dollars' worth of property.
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In the past six years, San Juan Unified School District's declining enrollment has led it to close nine schools. Don Myers, San Juan's director of facilities and planning, said the suburban district is now discussing additional closures. Enrollment dropped another 1,000 students this year and Myers said the decline hasn't hit bottom.

'Fore!'closure

From CBS13:

The sounds of 'fore' on a local golf course may soon be silenced due to a foreclosure of sorts. Like many homeowners facing foreclosure, the owners of Wild Wings Golf Course near Woodland say they can't pay their bills and plan to walk away from the property. The closure would mean homeowners who bought homes with a golf course view may soon be seeing brown instead of lush green fairways.
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With a backyard view of course the D'Amico family is wondering what will happen to there property value. When the development started in 2005, homes were going for $750,000 plus. Now, residents fear Wild Wings will turn into weeds.

From News10:

Brandenburg Development of San Jose is behind in it's property tax payments and water bills and says the golf course loses money every month. "Brandenburg has offered the property to the County for a one-dollar donation," says homeowner Stephanie Young-Birkle.
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But Yolo County is balking so far. The County faces a continuing budget deficit and has been laying off workers.

From the Sacramento Bee:

A financial dispute involving one of Sacramento's signature condo complexes apparently is turning nasty. As we hear it, officials with project investor Resmark Equity Partners LLC of Los Angeles entered the L Street Lofts building early Friday with the intention of changing locks and assuming control. Representatives of developer Sotiris Kolokotronis then arrived at 1818 L St. and tensions escalated, resulting in police being summoned.
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What's behind the financial dispute between Resmark and Kolokotronis? It could be Resmark's concern that fewer than half of the 92 units – priced between $389,000 and $1.2 million – have been sold since L Street Lofts opened last year.

From Hovnanian earnings call via Seeking Alpha:

Ivy Zelman – Zelman & Associates

Ara, you point out some positives that referring to markets, Northern Cal and Augusta and Stockton and other areas where the market’s seen an improvement in existing home sales, you know ironically the increase in existing home sales is coming from foreclosures and dominating markets as much as 50% to as high as 75% of those existing home sale increases, and we know that through title companies and work we’ve done that half of those and maybe even more, many are being purchased by investors.

The good news is that it’s moving inventory. The bad news is that there’s for every house that’s taken off, there’s more in the pipeline to come. The other bad news is it’s taking share from your new home market and your prices, although in many cases you may not be making money now, are likely to go lower because appraisals are coming in lower because the comparables are foreclosures. So I’m really having a hard time seeing the light at the end of the tunnel that you seem to see.

From the Sacramento Bee:

Sacramento-area homebuyers flocked to mortgage offices Monday to lock in some of the year's lowest interest rates following a weekend federal takeover of mortgage giants Freddie Mac and Fannie Mae. But inside one of the nation's hardest-hit housing markets, which has seen billions of dollars in home equity erased the past two years, it was still tough to gauge the longer impact. The early consensus among local mortgage brokers, home builders and economists was that the government takeover can't hurt and might be good for Sacramento's real estate market. At the very least, some said, it averts the possible disaster of a credit meltdown and means things won't get worse.
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Brian Jacobosky, a Folsom house hunter, said he's pleased to see rates fall after the federal takeover. But he said, "That's not going to change our game plan." His family is browsing for a home after selling a house in Arizona and moving to Sacramento. Jacobosky thinks he'll get more financial mileage from declining sales prices than fluctuating interest rates.

DataQuick on Sacramento: Price Declines Exceed 45% Off Peak

From the Sacramento Bee:

Median sales prices of existing and new homes combined in Sacramento County fell to $210,000, the lowest since June 2002. The number of sales in the county was up 73 percent from last year and was highest since October 2005. Prices have now fallen 45.7 percent from their August 2005 high of $387,000.
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Bank repos accounted for as much as 80 to 90 percent of July sales in some parts of hard-hit Sacramento County, according to the Sacramento Association of Realtors.

One thing missing from my chart of Sacramento home prices as well as The Bee's interactive chart is a perspective on sales figures. Although not about Sacramento, Peter Viles of the LA Times provides an interesting look at the relationship between sales bottoms and price bottoms.

From the Sacramento Business Journal:

Granite Community Bank is profitable, but its real estate-heavy loan portfolio has bank regulators looking for reassurance. The bank has entered a “formal agreement” with the Office of the Comptroller of the Currency, the regulator of nationally chartered banks, that requires it to create detailed plans as it faces the potential of continued deterioration of real estate loans. The 2002 startup in Granite Bay is well-capitalized and profitable. But the federal regulators want the bank to detail how it will stay that way.
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Granite Community was started with a real estate focus, and the Sacramento region “is high on the list of areas where regulators have concerns about real estate,” [David] Kaiser [Granite Community's chief executive] said.

From the Sacramento Business Journal:

In a downtown Sacramento market with new office buildings under construction and little demand from tenants for space, AKT Investments Inc. has temporarily suspended its application to build a 24-story tower on K and 15th streets and will consider modifying the project.
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Office vacancy has been on the rise for the past year, up by as much as 2 percentage points, according to several brokerages, reflecting a downturn in the housing market and the economy in general. There have been fewer company expansions and little growth with firms relocating to Sacramento.

From the Sacramento Business Journal:

Hefty paychecks and higher-valued homes helped Roseville and Elk Grove become two of the nation’s 50 wealthiest communities with at least 100,000 residents, at least before the free fall of the real estate market. Sacramento — which boasts deep pockets in areas such as East Sacramento, the Fabulous 40s and Land Park — finished at No. 88, between Inglewood and Reno, Nev.

Of course, California’s once-booming housing market created some of the wealth factor, with five of the Top 10 cities and 17 of the Top 20, according to a just-released Bizjournals report based on 2006 data, the latest available.

From the Sacramento Bee:

[T]he Sacramento area's unemployment rate jumped last month to 7.3 percent from 6.8 percent in June, the department reported. The half-percentage-point bounce was the highest single-month increase for the region since the state started keeping regional statistics in 1990.
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"The story behind the job numbers is that the state's economic weakness is spilling outside of real estate," said economist Jeff Michael, director of business forecasting at the University of the Pacific in Stockton. "It's the same theme for Sacramento."..."Some people are still debating whether the nation is in a recession," Michael said. "For California, I think the debate is over."

From the Sacramento Business Journal:

Attorneys say conflicts and lawsuits are up, many from the difficulty in financing deals or carrying land when the economy dips, land prices fall and commercial tenants stop looking for larger offices.
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“Our construction practice has been very busy,” he [Ed Quinn, managing shareholder of McDonough Holland & Allen PC] said. “Developers are finding it difficult to pay for infrastructure improvements. There’s no question that subdivision and other types of developments are underwater and have come to a grinding halt. Disputes arise as to who ought to be responsible for costs.” He said contractors’ liens are on the rise, as are claims against title insurance policies.

From the Manteca Bulletin:

What is the best flippant way to describe the Manteca housing market in four words? The vultures are feasting. A stratospheric 52 homes went pending in the week ending Aug. 11 for an annual pace - if it holds - of 2,704 homes.

The accelerated sales pace doesn't surprise Florsheim Homes' chief executive officer Joseph Anfuso. "Those who expect homes to fall another 30 percent in value aren't being realistic," Anfuso said Friday at his company's Valley Park neighborhood in southwest Manteca. "Home (values) can not fall below rental value."
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"Foreclosures are driving everything now," Anfuso said. He had originally expected the foreclosure wave to start subsidizing by the end of the year but now expects it to extend into the first quarter. "The amount of foreclosures has surprised me," Anfuso said.

From Of Two Minds:

"Prices likely won't increase if supply vastly surpasses demand, but they will only fall so far before hitting a natural bottom, he said. California's growth rate, rental rates, construction costs and income levels help determine that level, and O'Toole said he thinks some communities, such as Stockton, which leads the nation in foreclosures, might already be near the bottom."

This is like saying that your injury will stop hurting when the pain goes away. The mantra many others and I have been repeating is that home prices will fall until they are in line with income. But I realized that is, perhaps, a gross miscalculation which I must address. I have new hypothesis: Prices will fall below the level of median income support; they will overshoot to the downside and bottom at "market clearing" prices. The reasons are high inventory, high unemployment, scarcity of credit, scarcity of qualified buyers and poor sentiment.
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[P]rices will fall to market clearing levels and that level is not singularly tied to incomes. Even in normal markets prices oscillate around the mean. After such a great distortion (bubble) it is somewhat unrealistic to think that prices will fall right back to the mean.

RadarLogic: Sacramento Leads Nation with 31.7% Price Drop

From Inman News:

The Sacramento, Calif., area topped the list for price decline with a 31.7 percent year-over-year drop in the price per square foot in April, according to the RPX Monthly Housing Market Report [pdf], which is based on values of a daily price-per-square-foot index during a 28-day period in April.

From the Sacramento Bee:

In Antelope, Randy Fatius, 55, has had it. He says he's walking away from the 1,200-square-foot house he bought in October 2005. Fatius made his last payment in March. Until April, he had never missed a payment.
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Walking away is embarrassing, Fatius, a pipefitter and welder, admits. But staying is "stupid," he says..."I crunched the numbers and it floored me," he says. He figures he's lost around $200,000 in less than three years and that "it would take me 17 years to get back the value I've lost."
...
This was the first home Fatius bought. "I don't think I'll ever buy a house again," he says...He expects he can stay in it two or three more months. Afterward, he says, he'll move to the Pacific Northwest...Looking back almost three years after buying, Fatius says, "I had a gut feeling from the beginning I shouldn't have done it. I've felt it the whole time."

From the Sacramento Bee:

Downtown isn't immune to market forces. Projects opening now were mostly started during the real estate boom – and were too far along to stop when the bottom fell out. Housing has been particularly hard hit. Downtown developers say they've had to heavily discount their product to move it, and they're making little, if any, profit these days. "This is a depression in real estate; everybody who was really flying high isn't anymore," said developer Mark Friedman, who has sold 12 of his 26 Sutter Brownstones in midtown.

From the Manteca Bulletin:

It is without the doubt the largest housing-related foreclosure yet in the Manteca-Lathrop market. Hundreds of lots in Beck Properties' highly-touted Oakwood Lake Shores and two sister developments in Mossdale Landing are now in the foreclosure process. It marks the first, major development to start the foreclosure process and is a clear sign that a significant up tick in home sales since March may not be enough to rescue large segments of the collapsing real estate economy.

From the St. Helena Star:

No place has been more affected than San Joaquin County, said [Stan] Brody [of Burlingame-based U.S. Mortgage Corporation], where 1,600 homes have been foreclosed upon and 22,000 are in one stage or another of default. “In Stockton, which is ‘ground-zero’ for California, we closed escrow for $197,000 on a property that sold previously for $550,000,” he added.

Membership in Central Valley Realtors Association Plunges 59% in 1 Year

From the Stockton Record:

The Central Valley Association of Realtors, a trade group covering Stanislaus County and much of San Joaquin County, was expecting a huge membership loss this year as more and more agents dropped out of the sales market. But instead of an expected drop from 2,900 to 1,700 year to year, the association...has seen membership shrivel to about 1,200...Cliff Coler, the group's interim chief executive officer, said declining membership and revenue have meant a cutback in staff from 13 to four.
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Karl Enzmann,...Realtors group president-elect, said there was some surprise at the depth of the membership decline...."Some of the numbers hit us in the face like a cold bucket of ice water," he said, and belt-tightening has meant a 50 percent cutback in the CVAR budget.

From the Sacramento Bee:

Sacramento-area home builders are being extraordinarily cautious this year about starting new homes. That's evident in the newest count of building permits taken out at area city halls. Home builders in El Dorado, Placer, Sacramento and Yolo counties are pulling back at more than double the statewide average rate, seeking only 589 building permits to start new houses, condominiums and apartments in January and February. That compares with 1,833 permits the same time last year, the Burbank-based Construction Industry Research Board reports.
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When builders slow down like this, it means fewer jobs all down the line, from subcontractors to materials suppliers. It's also partly why the state Employment Development Department is reporting that jobless numbers in the capital region are up nearly one percentage point over February 2007.

From the Stockton Record:

Home starts in San Joaquin County slowed to 46, the lowest monthly level in years, based on building permits pulled in February, the Research Board reported last week. That was an 82 percent drop from 249 in February 2007.

From the Stockton Record:

It appears other county residents also are short on funds to pay essential expenses like property taxes. In 2004 and 2005, about 3.5 percent of those who owed property taxes were delinquent on their payments, according to the San Joaquin County Treasurer-Tax Collector's Office. That number rose a percentage point in 2006 and passed 7 percent last year. Homeowners get two tax bills each year, one in November and one in February. This tax year, nearly 10 percent of payers missed the first payment....

From the Sacramento Bee:

A host of real estate scams popular during the 1990s housing downturn are back this year and snaring unsuspecting homeowners and renters, say law enforcement and real estate officials. "The ones that know how to do it are remembering how to do it and doing it again," says Elk Grove real estate agent Alan Wagner, president of the Sacramento Association of Realtors.
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One is the fake landlord scam. Sacramento real estate agent Carey Covey says a would-be renter at one of his listings lost $2,000 after handing a security deposit and first month's rent to someone pretending to rent him the house. The house had been foreclosed on and was owned by the bank – not by the person posing as the landlord...Covey says con artists "track homes that have been on the market for a while, have them re-keyed and put an ad in the paper or Craigslist and offer it for rent."

From the Sacramento Bee:

Undaunted by the recent failure of two high-rise condominium projects planned for downtown Sacramento, a Los Angeles-based developer proposes to transform a leafy, four-block area south of the Capitol with five new residential towers. The Bond Cos., an experienced developer of infill housing and retail projects nationwide, filed an application with the city of Sacramento Thursday to replace 206 low-rise apartment units in the Capitol Towers neighborhood with five towers ranging from 15 to 33 stories....In total, Bond Cos. is proposing to build 1,646 new housing units.
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Mark Bachli, a principal in the Bond Cos., said the "market will determine what is actually built" on the Capitol Towers property, bounded by Fifth, Seventh, N and P streets.
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Jim Pachl, an environmental lawyer...is watching the latest idea for Capitol Towers with a wary eye...Pachl said he's troubled by the recent failure of the Aura and the Towers condominium projects. The Towers was under construction when it melted down financially, leaving a huge hole in the ground on the Capitol Mall. "I'm sitting here saying, 'How realistic is this?' " Pachl said.

Foreclosure Pets Phenomenon Intensifies

From News 10:

The Sacramento SPCA...is seeing a dramatic jump the number of animals being surrendered by owners who are going through foreclosure...During the last four months of 2007, the Sacramento SPCA took in 176 dogs and cats from people who said they were surrendering them due to "moving," said [Director Rick] Johnson. That is 100 more than the same four months in 2006. Johnson doesn't see the situation getting better any time soon.

From the Sacramento Bee:

The Sacramento City Council approved the $130 million sale Tuesday of its Sheraton Grand Hotel and garage on J Street – along with an unusual agreement to return about $23 million of the city's profits to the buyers as subsidies for additional downtown projects. Council members voted 8-1 in favor of the sale despite a public admonition by interim city Treasurer Tom Berke that more review is needed, particularly given the depressed state of the real estate market. He suggested the city might hold on to the hotel longer and wait for prices to rise.
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Other council members called the price fair, and expressed fear that market conditions would deteriorate further and the deal would evaporate...Councilman Steve Cohn, addressing Berke, said, "If you're correct about how severe this recession is, now is exactly the time to sell.
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In a brief appearance at Tuesday's council meeting, [David] Taylor said the Sheraton deal provides a way to keep downtown redevelopment alive during a bad economic cycle. "We were frankly seeing so many projects die downtown over the past 18 months that we were concerned about our ability to perform on some of the downtown projects we've been working on," he said.

From the El Dorado Hills Telegraph:

More than 70 people packed the main room of the senior center to ask questions and listen to updates about area road issues from a guest panel consisting of Richard Shepard, Department of Transportation director, Russ Nygaard, DOT deputy director, supervisors Rusty Dupray and Helen Baumann, and Captain Bill Donovan, of the California Highway Patrol.
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Shepard and Nygaard were unable to give specific timetables for the completion of many DOT projects because of lack of funding, which Shepard said is directly tied to the housing market. "We’re facing a housing slowdown at the moment," Shepard said. "And 50 percent of our Capital Improvement Program revenue comes from housing development fees."

From the Associated Press via the Washington Post (hat tip Housing Wire):

Anticipating a surge in troubled financial institutions, federal regulators aim to increase by 60 percent the number of workers who handle bank failures. The Federal Deposit Insurance Corp. wants to add 140 workers in the division that handles bank failures, bringing the total to 360, said John Bovenzi, the agency's chief operating officer.
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Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years, with the highest concentration coming from states such as California and Florida where an overheated real estate market is in a fast freeze.

Foreclosures.com: Sacramento County REOs Top 1,000 in December

December 2006 REOs: 283
December 2007 REOs: 1,155
Change: 308.1%

Total 2006 REOs: 1,326
Total 2007 REOs: 8,155
Change: 515.0%

December 2006 Pre-foreclosures: 1,052
December 2007 Pre-foreclosures: 2,380
Change: 126.2%

Total 2006 Pre-foreclosures: 10,505
Total 2007 Pre-foreclosures: 19,453
Change: 85.2%

More statistics at Foreclosures.com

From the Modesto Bee (video):

Monday was a record-breaking day for foreclosures in California. A staggering 5,238 properties were scheduled to be sold in auctions on courthouse steps across the state, including 145 in Stanislaus County. "This is the single largest day ever for foreclosures," said Sean O'Toole, owner of ForeclosureRadar, which tracks mortgage defaults throughout the state. By comparison, 400 to 500 auctions a day were scheduled statewide a year ago, O'Toole said. That average rose to about 2,500 per day by the end of 2007, but he said there's never been nearly as many auctions as happened Monday.
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In Stanislaus County, for instance, about twice as many properties were scheduled for auction as normal, said David Absher, president of Dual Arch International, which does most of the foreclosure auctions in the county. Absher said that during the past six months, typically 60 to 80 auctions were scheduled a day, but "the volume is mounting."
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Although an abundance of homes in all price ranges are facing foreclosure in the Northern San Joaquin Valley, fewer and fewer bids are being made at foreclosure auctions, Absher said. "No one wants to buy this stuff because they don't know where the housing market's going," Absher said. "When the prices are continuing to slide down, how do you know you're getting a good deal?"

From the Sacramento Bee:

Lots of developers are putting up "loft" housing in the downtown-midtown area. But Jeff Kraft says his 42-unit condo project at 1600 H St. is the real deal...Now, even though the building looks far from finished, Kraft expects the first units to be ready for occupancy next month. Prices range from $213,000 for a 395-square-foot studio to $699,000 for a two-bedroom, two-bath, 1,249-square-foot unit.

Can Habitat unload them when home sales are tanking and larger high-rise condo projects have flopped? Despite troubles elsewhere, Kraft says midtown is still a residential hot spot. He expects the comparatively low prices for his modest-sized units will bring in buyers. In fact, the project originally was envisioned as a "rent-to-own" complex. Now the emphasis is straight sales. "We just think there's a pent-up demand from people who want to buy," Kraft says.

From the AP via sacbee.com:

Treasury Secretary Henry Paulson said Tuesday the administration was exploring what would be a significant expansion of the program to help at-risk mortgage holders. Paulson, in an interview on CNBC, said the administration was involved in discussions with the mortgage industry to expand a current program to freeze adjustable rate mortgages for five years to include borrowers of loans at prime rates. Currently, the rate freeze only covers a much smaller segment of adjustable rate loans, those made to subprime borrowers. Those are borrowers with weak credit histories. "One thing we will consider with the HOPE NOW alliance is ... maybe expanding this beyond subprime borrowers to other borrowers," Paulson said in the CNBC interview.

From the Federal Reserve Bank of Boston [pdf] (hat tip Paper Economy):

In 2007, residential investment was the laggard among the components of Gross Domestic Product (GDP). Residential investment began declining in the first quarter of 2006, and has continued to decline in each quarter since. It seems all but certain that residential investment also declined in the fourth quarter of 2007 – and many economic forecasts expect residential investment to continue to decline at least through the first half of 2008...Should the forecasts prove to be right, we will have experienced a longer string of back-to-back quarters of declining residential investment than at any other time in the past 50 years...Previous periods where residential investment declined for a year or more were either accompanied by, or closely followed by, an economic downturn.
...
The sharp declines experienced in many regions of the country have occurred despite low real interest rates and, until December, an unemployment rate below 5 percent. This highlights a risk to the housing sector going forward: Since prices have declined substantially even in a relatively benign economic environment, one cannot discount the possibility that they could fall more rapidly should economic performance not remain strong in 2008.

Condo "Scrapheap" Grows

From the Sacramento Bee:

Billboards featuring the bemused face of star architect Daniel Libeskind have disappeared from downtown street corners, and so have plans by Denver developer Craig Nassi to build two Libeskind buildings here. First, Nassi's Aura condominium project on the Capitol Mall ran into trouble. Now the head of BCN Development says he can't find financing for the 50-story Epic condo and hotel tower he planned for 12th and I streets, either.

Last week, a lawyer representing Libeskind and the local office of architecture firm Stantec Inc. sent a letter to Nassi terminating their relationship for nonpayment. "Design professionals do not have the ability to continue working for free," said the letter from lawyer John Condrey, a copy of which was provided to the city. In an e-mail Thursday, Nassi characterized the letter as a "routine" part of shutting down the city approval process for Epic for lack of funding.
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"Sacramento's economy is so depressed at the moment, we can't get lenders to consider any projects at this time," he said.
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The scrapheap of high-rises planned for Sacramento before the real estate market collapsed is starting to pile up. Libeskind's creations join the twin 53-story hotel and condominium towers formerly planned for the Capitol Mall by local developer John Saca.

From DQNews.com:

Lenders started formal foreclosure proceedings on a record number of California homeowners last quarter, the result of declining home prices, sluggish sales and subprime mortgage distress, a real estate information service reported. A total of 72,571 Notices of Default (NoDs) were filed during the July-to-September period, up 34.5 percent from 53,943 during the previous quarter, and up 166.6 percent from 27,218 in third-quarter 2006, according to DataQuick Information Systems of La Jolla. Last quarter's default level passed the previous peak of 61,541 reached in first-quarter 1996. A low of 12,417 was reached in third-quarter 2004. An average of 34,781 NoDs have been filed quarterly since 1992, when DataQuick's NoD statistics begin.
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Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 24,209 during the third quarter. That is the highest number in DataQuick's statistics, which go back to 1988. Last quarter was up 38.7 percent from 17,458 for the previous quarter, and up 604.8 percent from 3,435 for last year's third quarter. The peak of the prior foreclosure cycle was 15,418 in third-quarter 1996....
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Half the state's default activity is concentrated in 293 zip codes, almost all of which are in the Inland Empire and Central Valley...While numbers at the zip code level can fluctuate severely, among the zips with the biggest foreclosure problem are 95330 Lathrop in San Joaquin County, 92571 Perris in Riverside County and 95832 Sacramento.

From the Sacramento Bee:

At least 6,638 homeowners in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba received formal notices of default -- the first step in the foreclosure process -- from their lenders during the three-month period....That's up 27.6 percent from April, May and June defaults in the six counties...Sacramento County's defaults were up 180 percent from July, August and September 2006.
...
In the six-county region, 2,731 home owners lost their houses to banks during July, August and September. That's up from 2,203 foreclosures in those counties in April, May and June.
...
DataQuick says about 46 percent of homeowners who go into default are able to work out financial arrangements to either keep their houses or sell them and pay off their debts.

From the Sacramento Bee:

We know. We know. The real estate news these days is always about home sales hitting a new low and values falling. As 2007 nears an end, everyone who owns a house is longing for something better – a recovery or at least some stability for the Sacramento region. Most local experts counsel it's still a little early to be talking about either.

But for the sake of all anxious homeowners standing around the wishing well, let's look at local history. If it has anything to tell us, it's that real estate recoveries – and that dependable upward trajectory for California home values over the long run – usually come pretty fast once they start.

Consider 1997 across much of the Sacramento region. After several lean years of recession, job losses and military base closings, homeowners in El Dorado, Placer, Sacramento and Yolo counties saw their values start to climb again. Here's a look at [DataQuick] September median sales prices for new and existing homes combined in the region after recovery began and until the next boom took off.
...
Sacramento County: September 1997 delivered a $119,000 median price – still below the $138,000 median from September 1991. But the median climbed to $140,000 in 1999 and $154,000 in 2000. In September 2001 it hit $180,000 and then soared away. The September 2007 median: $307,000.

From the Sacramento Business Journal:

Bank of America Corp. will exit its consumer wholesale-mortgage business, a move that will eliminate 700 jobs, including "less than 100" in Rancho Cordova...The Rancho Cordova operation has a centralized processing operation for wholesale mortgages, and that will be ended.

From the Modesto Bee:

Condo conversions were all the rage a couple of years ago, as seven Modesto apartment complexes decided to sell about 500 rentals as owner-occupied units. The first couple of projects sold like hotcakes, filling a niche for lower- priced housing. Then the real estate market cooled, and sales slowed dramatically. Now after two years of trying, one of those multifamily projects is giving up on traditional sales methods. Instead, the Villas at Creekside is going to auction off its final 29 units Nov. 18, with bids starting at $100,000 to $130,000. That's less than half what those town houses sold for in 2005.
...
At first, only those who planned to live there were allowed to buy. Now investors are being invited to bid, and the auction is being promoted in the Bay Area....

Stockton's Repo Bus

From the Stockton Record:

It's not a magic bus, just a vividly marked one - REPO HOME TOUR.COM - that real estate agent Cesar Dias hopes will work some magic for him in a bleak home-sales market. Dias, an agent and loan officer at Approved Financial & Real Estate Center, 1140 N. El Dorado St., has launched a weekly Saturday bus tour to try to get buyers interested in looking at some of the area's growing number of foreclosure properties.

The bus absolutely is just a marketing ploy, he said, because anybody can go look at foreclosures with any agent. But between a dozen and 20 people a week have taken the tour of 10 to 12 bank-repossessed homes the past few weeks, Dias said, and a few deals have been made. Not bad in a market where home sales in September dipped to the lowest level so far this decade.
...
[T]he latest Coldwell Banker Grupe-TrendGraphix monthly sales report, based on Multiple Listing Service data,...indicates that sales and selling prices of existing homes in San Joaquin County have continued to drop as the market moves into its third consecutive year of decline. The 228 sales countywide in September were the fewest this decade, as were the 289 pending sales last month. That compares with 796 sales and 716 pending sales in September 2005, just before the downturn hit. And median selling prices have fallen sharply, from $370,000 in July to $325,000 last month, a 12.2 percent drop in two months.

From CBS 13 (video):

A sleek-looking high rise in downtown Sacramento, called Epic Tower looks similar to the proposed Aura Project. It's an aggressive proposal considering the real estate market's current downturn. High rise condos like the Towers on Capitol Mall prove investors can get in over their heads. The Aura proposal is another example...Craig Nassi's BCN Development is behind both Epic Tower and Aura projects. Nassi hopes to break ground next year probably after city planners make a decision in January.

From the Sacramento Bee:

Jose Olagues knew the bad news. Like so many area residents, he's seen his Tahoe Park home decline in value. The good news: He's among 50,000 Sacramento County property owners who can expect to receive a shrinking tax bill. "That is sweet," said Olagues, who may be in line for a rebate from his mortgage company, which rolls his taxes into his monthly bill. "If they want to give me money back, that is cool."

Most property owners – in Sacramento County and elsewhere – will still see an increase in their property tax bills, which started arriving last week. Sacramento County taxes 446,000 properties. But the county's move to reduce the taxes on 50,000 properties – just over 10 percent of county properties – is perhaps the most sweeping in the state.
...
The silver lining for some recent Sacramento County homebuyers is nothing but bad news for schools, the seven cities within the county, the county government and special districts that rely on property taxes. The Sacramento County assessor's recalculation of property taxes wipes away $15 million in tax revenue.

From the Associated Press:

Wells Fargo & Co.'s earnings grew at its slowest pace in more than six years during the third quarter, dragged down by deteriorating home loans likely to cause more trouble in the months ahead.
...
Like many other lenders, Wells Fargo is being hurt by a combination of crumbling home values and overextended borrowers who can't afford to make their monthly mortgage payments as their once-low adjustable interest rates reset to higher levels. "The housing sector is weak and we are not immune to that," Atkins said.
...
Atkins said the bank is having the toughest time collecting from homeowners in parts of the Midwest and California's Central Valley, where many borrowers now owe more money than their properties are worth.

From the MarketWatch:

U.S. home builders grew even more pessimistic in October, hit by a triple whammy of tight credit, abundant supply of homes for sale and falling prices. The seasonally adjusted housing market index fell to a record low of 18 in October from 20 in September, the National Association of Home Builders reported Tuesday. It's the lowest reading in the index since its inception in 1985. "The market for new homes is dead for all practical purposes," wrote Patrick McPherron, an economist for Moody's Economy.com.
...
All three components of the home builders' index notched record lows in October. Sentiment fell in three of four regions, with builders in the West the least optimistic.

'I Just Thought Things Would Work Out'

From the Sacramento Bee:

Driving around Sacramento's urban core, you'd never guess there was a housing market slump. New lofts, three-story row houses and condominiums conceived during the housing boom are nearing completion in neighborhoods ringing downtown...At least eight housing developments with about 500 units are either under construction or just completed in the central city. Across the Tower Bridge on the West Sacramento waterfront, another roughly 250 units either have hit the market or soon will.
...
For years, city leaders pushed unsuccessfully for more homeownership downtown. But the finances didn't make sense for developers until the housing market boom pushed prices high enough to cover the extra expense of building on small, inner-city lots. When sales prices topped $300 a square foot a few years ago, developers rushed to get into the urban housing business. Projects started in those heady days are now ready to open.

The builders hope that their products -- and locations -- are interesting enough to sell in tough times. "It's a scary market," said developer Mark Friedman, a partner in Loftworks, which is building 32 brownstone-style row houses in midtown at N and 26th streets.

From CNBC (videos here and here):

These days people here are losing money, as Stockton has become infamous as "The Foreclosure Capital."...Over the weekend several foreclosed properties held open houses. We were there. And so were the flippers! After all that's happened, a new wave of speculators has descended, hoping to take advantage of the 10%-15% below market values these homes are selling for. Their plans? Fix 'em up and sell 'em at a profit! To whom, I haven't a clue.
...
[T]hen there's the dental assistant, a single mother of three, who doesn't want us to reveal her name, but who has to be out of her repossessed home in 14 days. She has nowhere to go and no creditworthiness to qualify as a renter. What happened? Her $2,000 mortgage payment (which she had to work two jobs to cover) reset after two years, and it shot up to $3,800. I asked her how she thought she could take on the loan, knowing the rate would rise. "I just thought things would work out."...Her three kids want to know why notices keep getting posted on the door.

Should we feel sorry for her? I sure did. Should she be bailed out? Not if it keeps her in a house she can't possibly afford over the long run. That's not fair to the people who did stay within their budgets, people who have seen their home values plummet as their neighbors go into foreclosure.

From the Stockton Record:

The sea of foreclosed homes in San Joaquin County and its flotsam of tall weeds, partying teens and green pools are testing neighbors' patience and code enforcers' limits..."It's a real sticky situation in making sure our code enforcers aren't overworked. It's very difficult for our staff to track down the folks who are taking off," Tracy Spokesman Matt Robinson said. "They're just walking away from their homes."
...
One burning question these days is: Why have foreclosures sledgehammered the Stockton metro area more heavily than about any place in the country?
...
Locals and many Bay Area people began to get priced out of the market. In order to buy, households often went after low introductory teaser rates on loans for which lenders asked little or no employment/income documentation, said Leslie Appleton-Young, chief economist for the California Association of Realtors. Lenders routinely reported that for the first time, adjustable-rate mortgages and exotic loans were more common than fixed-rate loans.

Meanwhile, investors added to the price spiral by competing for homes, sometimes buying sight unseen via the Internet and looking to "flip" them for tidy profits within a year or two. Real-estate agents and brokers reported that up to 30 percent of home buyers were investors. "And then when prices quit going up, it was like musical chairs, and there was no place to sit down," said John Knight, professor of finance and real estate at UOP's Eberhardt School of Business.

Aura or Parking Lot?

From CBS 13:

...[T]here's been some action around the Aura. That's right, from the look of things here, they are putting in a parking lot right where the Aura was supposed to stand. The Aura hasn't officially announced it's doomed, but take it from me - it's in the tank, at least for the time being.

Current Sacramento Housing 'Recession is the Worst One Ever'

UPDATE - From Inman News:

Wendy Shapiro, a resident in Roseville, Calif., said she purchased multiple investment properties after selling her home in San Francisco and moving out to the Sacramento area. "I bought a fourplex in Red Bluff; I had $500,000 in the bank and a 700-plus credit score," she said. But her real estate investments have become a money pit. "Unfortunately, I put all my eggs in one basket. Now my daughter is going to college and I don't know if I'll be able to keep her there."

Shapiro, a nurse, said she had planned to gradually sell off the properties for a profit, but now she is faced with a decision on which properties to "walk away from," she said. "I am a single mom here working my butt off, and I thought I was doing the right thing."

Rental prices have dropped substantially in areas where she owns property, Shapiro said, as many investment properties are competing for rental income. "Rents have dropped everywhere because people who couldn't sell houses are now trying to rent them. I can't even sell one house," she said. Buyers are on the fence these days, she said, and the credit crunch isn't helping out with sales.

"It's just hell. Will I be able to sleep at night knowing I just walked away from $400,000 to $500,000 ... and all my time?" she said.

From the Sacramento Bee:

About a year ago, Susan McDonald began to see dead lawns, weeds and vacant houses in her new Elk Grove neighborhood built nearly overnight during the housing boom. The blighted scenes seemed an ominous indicator, a housing downturn tightening its grip on her suburban surroundings. Months later, as that downturn continues to deepen across the Sacramento region, thousands more empty homes and their unkempt lawns have become the ugly face of rising foreclosures and bank repossessions.
...
Many real estate agents estimate that about 40 percent of the 10,000 single-family houses for sale in Sacramento County are empty. In the short run, that poses aesthetic problems for many neighborhoods. In the long run, so many empty houses are also likely to prolong the housing recovery, analysts say.
...
Thousands more owners will face difficulty in coming months as their adjustable-rate loans reset to higher payments. At the same time, many investors, who represented one in every four sales in Sacramento County at the peak of the boom in 2004, are still trying to sell their empty properties..."There are so many new homes here and so many investors from the Bay Area," McDonald says. "When we pull up the owner's names, nine times out of 10 they live in the Bay Area..."From 2001 to 2005 we had just a flood of people from the Bay Area. That was when the market was really hot," she says. "Now everybody is losing their shirts and renting or walking away."

From the Sacramento Business Journal:

On the list of big-city status symbols that Sacramento can't quite seem to land, add the condominium tower. The most ambitious project to date, John Saca's 53-story twin Towers on Capitol Mall, died in June when the California Public Employees' Retirement System bought out Saca's interests...BCN Development's 38-story Aura project at 6th Street and Capitol Mall is technically still alive, but stalled.
...
Don't feel too bad, though. In cities where condo towers have been a hot trend, the condo markets are becoming glutted thanks to overbuilding. Sacramento may have dodged a bullet.

From the Stockton Record:

Soon after the City Council celebrated its adoption last month of a plan to build homes downtown - City Manager Gordon Palmer said it "set a vision" for the city core - it became clear even strident civic action could not match the force of the housing market's collapse.

Following the plan's adoption, Grupe Investment Co. Inc. President Kevin Huber confirmed the postponement of downtown's most-ballyhooed housing project, the construction of more than 150 condominiums and townhouses on the south bank of the Stockton Deep Water Channel.

It was a significant setback for City Hall. Since announcing the project last year and predicting that homes could be built this year or next - or, later, in 2009 - civic boosters have pointed to it as proof developers could build and people would live in the city core.

Not in this market, Huber said. "It's hard to say when we would start at this point," he said. Before the council adopted its housing plan, it came out last month that Stockton's foreclosure rate is among the highest in the nation. Houses sit vacant, and home sales have slumped. The market is "as difficult as I've seen it," Huber said. To start a housing project here at the moment would be unwise, he said.

From the Sacramento Business Journal:

Eva Garcia has been selling real estate in Sacramento for 44 years...."I think this recession is the worst one ever, worse than the one in the '90s, because of the fraud on the part of too many lenders. But we're OK. We have a steady flow of customers. Some of our customers are the children of people we sold homes to a generation ago. We advise people not to sell now unless they absolutely have to. "

From the Chico Enterprise Record:

People are asking "When is the housing market going to recover?" What they usually mean is, "When are prices going to start going up again?" This is the wrong way to look at the trend. The current period of stagnant sales and dropping prices is the recovery. It's the last few years that have been unhealthy. Things got so bad that the market contracted that dread malady, the bubble.

At the height of the bubble, ordinary, everyday Chico houses were selling for $300,000. That's just plain madness in a community where $50,000 a year incomes are the norm.
...
The deflating of the bubble ought to teach us that what goes up what must come down. But we will never learn. It won't be long before we've embarked on a mad dash after another supposed source of riches.

Builder's Boom Recipe: Loose Lending + Bailout + Media Silence

From the Lodi News Sentinel:

Three years ago, builder Tom Doucette was "moving at 100 miles per hour" trying to keep up with the demand for new homes at his project sites. Potential buyers were "camping out" at his FCB Homes subdivisions, hoping to snatch up a piece of real estate at the peak of the housing boom.

Business is no longer a blur for Doucette...[A]ctual construction has slowed dramatically. In Lodi, for example, the number of building permits issued for detached single family homes has plummeted from 396 for all of 2005 to just 18 so far this year, according to city records.
...
The shaky housing market has led Lodi builder Dennis Bennett to build only pre-sold homes...Overall, Bennett said his company has reduced new home construction by 50 percent compared to just a couple years ago.
...
Bennett, who started his company in 1977, said there are a number of reasons for the building slowdown. The media should take some blame for continuing to highlight the trend, he said. Large, corporate home builders are also part of the problem. They've flooded regional markets with new homes creating "huge inventories." That, in turn, lowers sale prices for smaller builders.
...
Bennet said new construction won't boom again until the "huge inventories" of homes for sale are bought up. Easing some of the recent mortgage restrictions and offering federal relief to those with expanding subprime mortgages might be two ways to bring buyers back, he added. "If we get a little relief from the lending side of the business, hopefully that will help the inventory out there," Bennett said.

CBS 13 (also video): Developer Says Real Estate Buyers Are Too Worried

From the Sacramento Bee:

Sacramento city leaders have pulled back their offer to loan $10 million to fund construction of a downtown condominium high-rise. Craig Nassi, the Denver-based developer behind the 39-story Aura tower proposed for 601 Capitol Mall, lost the city's commitment after he failed to secure all of his private financing by the end of last month.
...
Nassi insists that Aura is alive. But besides having the city withdraw its money, he hasn't yet bought the land for it from local developer David Taylor...In June, Nassi said that he would have his lenders lined up within 45 days. This week, he said financing was on the horizon for the $177 million project. "We hope to have the loan ready to fund soon," Nassi said in an e-mail. He blamed the delay on "capital markets (that) have been paralyzed by the subprime fallout and the unknown of secondary market pricing."

An Address With Altitude?

West Coast's Tallest Condo Towers or Christmas Tree Farm?

From the Sacramento Bee:

What if...you have a hole in the ground about a square block in area and oh, several dozen feet deep and -- theoretically speaking -- about large enough to host twin 53-story towers that could potentially house a luxury hotel, high-end retail space and 804 upscale condo units? What could you do with a hole like that?

Well, you could replace the conjectural twin tower condo idea with a much-scaled back condo idea, say, after the twin tower idea proved too ambitious and an imaginary state employee pension fund pulled its invested money out and an L.A.-based company stepped in to fill the proverbial and actual hole at Third Street and Capitol Mall.

You could do that.

But [Old Sacramento Manager Ed] Astone's got a better idea.

"Christmas tree farm," he says with certainty.
...
On second thought, he's got an even better idea."How about a monument park for all of the fired Kings coaches?" he suggests.
...
Mike Testa, vice president for communications at the Sacramento Convention & Visitors Bureau, believes the city could use something that keeps visitors coming back. Perhaps, he offers, a Gold Rush theme park? Family-oriented, and with roller-coaster cars shaped like mining cars, of course.
...
But why not, ponders local development consultant Al Gianini, take something Sacramento is already known for and put that in the hole? Gianini envisions a giant saltwater tank built solely to house the next wayward whales to wander our way. "It would be the Sea World of Sac," he said.

John Saca Back For More, Blames Plunging Real Estate Market For Failure

From the Sacramento Business Journal:

Developer John Saca says he's still in the high-rise business.

While a little bruised from the unsuccessful effort to save The Towers on Capitol Mall, Saca is forging ahead with another downtown Sacramento project -- a 39-story condo tower at 10th and J streets.

The Metropolitan, which if built at its projected 420 feet, would be taller than any building in the capital today, is on the agenda of the city of Sacramento's Design Commission for Wednesday.
...
In an interview this week, Saca sounded a little disheartened about the fate of his pet project, but said he expects to find success the second time around. He blamed the plunging real estate market for The Towers' failure, deflecting claims that he overreached or lacked enough experience.

Despite a housing downturn, developers such as [Shepard] Johnson are still building in Sacramento's central city, attempting to capitalize on demand for homes in the downtown and midtown areas. The projects have concepts and plans that differentiate them from suburban housing. But the verdict is still out on whether they can draw buyers who will pay a premium to live there.

According to the city of Sacramento's Development Services Department, there are 580 units, in 17 projects, under construction in the central city....[T]he construction doesn't mean that sales have been brisk. Loft projects in the central city and West Sacramento are selling at an average of about 1.8 units per month, slower than the 2.88 average rate of sale for all types of housing this year, according to data from Hanley Wood Market Intelligence.

And more housing could be built, but isn't because of a lack of funding and a soft housing market. Developers are sitting on about 900 units that have been approved by the city but not built, ranging from small projects to the 262-condo Aura tower.

'It's a Tough Cycle Right Now'

From the Sacramento Bee:

On Tuesday, the California Public Employees' Retirement System, an early investor in developer [John] Saca's dream, said it had bought out his interest in the struggling project. The announcement ends a proposal that was at once hailed as visionary and dismissed as oversized.
...
Sales of the condos, which ranged from $368,000 to more than a $1 million, began in 2005, with Saca eventually taking deposits of 10 percent down on 402 of the Towers' 804 units.
...
Condo market experts say Saca's failure to build the Towers symbolizes the rough waters builders face. "The big markets -- Miami, San Diego, places like that -- have units in foreclosure and projects in the pipeline going away," said Bruce Slaton, president of sacramentocondos.com, which tracks the local condo market. "It's a tough cycle right now."

Flashback to January 2006:

Recent turns in the local real estate market could pose another problem to condo builders charging $500 per square foot and more for a chance to buy a piece of the sky.

Inventory of the most expensive homes in the Sacramento region has ballooned, sales have slowed and prices are flat at best. Meanwhile, high-end homebuilders are offering incentives such as free swimming pools and landscaping worth tens of thousands of dollars.

Saca says he and other condo tower builders won't be hurt by those trends. His wealthy buyers are drawn by the lifestyle promised by downtown living.

He says he has 19,000 names on a buyer-interest list, 5,000 people who have prequalified to buy in The Towers and more than 500 potential tenants who have put down refundable deposits.

"Right now I honestly believe that we could sell out two or three times over," Saca said. "We're not trying to sell a condo. We're selling a lifestyle."

"Towering Fiasco" Pronounced "Dead"

From KCRA (also video):

It appears the Towers at Capitol Mall will not be part of the Sacramento skyline. Several people who have deposits on the towers project tell KCRA 3 they've recently been contacted by John Saca informing them they will have their deposits back by Friday and that the project is dead.

Tuesday Updates:

From News10:

Saca sent a letter [pdf] to condo buyers telling them their deposits are being refunded. "It is with great humility and disappointment that I write this letter," Saca said.

From the Sacramento Bee:

The California Public Employees' Retirement System has announced [doc, News10] it is taking over the debt-ridden Towers high-rise project on Capitol Mall. That means the 53-story luxury condo and hotel that Towers developer John Saca envisioned for the site near the Tower Bridge is dead.
...
Saca broke ground last summer, but the project was $70 million to $80 million over budget by the fall and condo sales slowed to a trickle as the region's housing market went soft. The site now is little more than a hole in the ground the size of a city block.

More video from KCRA:
John Saca Addresses Tower Project
CalPERS Buys Out Towers Developer

Stung by the Sacramento Real Estate Market

From the Santa Cruz Sentinel:

When Howard Little got a call last year about refinancing, he decided the time was right to pull money out of his home in Boulder Creek to invest in real estate. He bought a house in Sacramento and figured he'd have steady rental payments to supplement his disability income.

Instead, he lost the property in Sacramento to foreclosure, and fell behind on payments for his own home. His credit rating dropped and he couldn't refinance. To avert the lender from foreclosing on his home in Boulder Creek, he put his five-bedroom, two-bath Boulder Creek home on the market, but with listings at all-time highs he hasn't found a buyer. He's dropped the price from $680,000 to $650,000 and now $630,000.

At 58, he doesn't want to give up the place his parents owned, the place where he and his wife raised their two children. He wishes he could go up to Sacramento to track down what went wrong there. He doesn't drive because of epileptic seizures, so he's been trying to get information via phone without much success.

"Where I'm going from here I don't know," he said.

From News10 (also video):

The numbers are startling.

Nearly 20 percent of Sacramento homes are worth less than the value of their mortgage. Some 3,400 Sacramento County property owners faced foreclosure in the first quarter of 2007, up nearly 200 percent from 2006. Sacramento County ranks in the top ten nationally in the number of foreclosures.
...
Real estate investor Tony Sedillo said while he can make money if the foreclosure trend continues, watching families leave their homes under the financial strain is excruciating to see.

"This one woman was paying $2,000 a month and is now paying $5,000 a month after a year," Sedillo said. "Who wants to profit when a little girl is looking out the window and the parents are packing up?"

From the Sacramento Business Journal:

While residential towers have seemingly stalled in downtown Sacramento, a San Diego developer with pension fund backing is seeking approval for a 24-story condominium tower on the West Sacramento riverfront.

Fairfield Residential LLC is looking to build a 150-unit development on about 1 acre between the pyramid-shaped Ziggurat building and the California State Teachers' Retirement System's new headquarters under construction.
...
Fairfield bought the property last year, but the developer said it's likely to wait until conditions are more favorable before building. "We're not going to rush into a bad market," said Dan Milich, development manager with Fairfield. "We're in a position to wait it out. If you're wondering about a groundbreaking, it's too early for that."

Fairfield would need to seek a construction loan to build the project, Milich said. Financing of pricey residential projects is scarce these days, judging from the delays and problems with Sacramento's other condo towers. A resurgent housing market, however, might lead to looser lending.
...
Large condo projects have not fared well in the past year. In Sacramento, there has been no word yet from the partners in The Towers on Capitol Mall project -- John Saca and the California Public Employees' Retirement System -- on what will happen with their plans to build twin 53-story condo towers. Saca has failed to come up with enough financing to satisfy the agreement with CalPERS, essentially putting the project on hold.

Craig Nassi, the developer of Aura, another high-rise condo tower in downtown Sacramento, has struggled to secure financing for the project since last fall.