'Change or Die'

From the SF Chronicle:

[A] subdued, and noticeably smaller, throng of West Coast building professionals gathered at Moscone Center this week for the annual Pacific Coast Builders Conference and trade show. Only 18,000 to 20,000 people are in San Francisco for the event, which just two years ago drew about 35,000.
...
"We get (potential buyers) with the mind-set: I want to pay this price because I can buy a foreclosed home up the street," said Bill Misura, a sales associate with Tim Lewis Communities in Roseville (Placer County). He was among 30 attendees who paid an extra $395 for a daylong session called "Marketing boot camp for a new era: Competing for today's elusive buyers."

From the Mercury News:

Some of the week's conference sessions have titles such as "How to Sell Homes in a Down Market," "Leadership in the Face of Adversity," and "Change or Die."

From the Stockton Record:

California Building Industry Association...chief economist Alan Nevin...blamed the record number of foreclosures and short sales for depressing the market for new homes, but he also said rising high fuel prices have knocked commuters out of the inland housing market from Sacramento to Riverside/San Bernardino. "Folks are no longer willing to make that long drive, even though that house may be $100,000 less," Nevin said. "You can't justify it when the fuel (to commute) costs $1,000 a month." That will hamper recovery prospects, with future inland home construction growth being fed primarily by new jobs, he said.

From the Appeal Democrat:

In the market for a fuel-efficient car? How about a brand new Toyota Yaris with the purchase of a new home? That's the deal developers of the River's Edge community in Knight's Landing are offering potential buyers this weekend..."Our (home) prices are reduced too," said Mark Westphal, owner of Westphal Group. "We find a need and fill a need."
...
River's Edge is a 67-lot community that offers three home styles of up to five bedrooms in Knights Landing. Knights Landing is a tiny farming community of 846 on Highway 113 just across the Sacramento River from Sutter County.

From the Sacramento Business Journal:

The median price of an existing, single-family home in Greater Sacramento was $233,230 in May, a 34.5 percent fall from the price in May 2007....The region's home price drop was slightly better than the statewide average, where the median home price fell 35.3 percent in May compared to the previous year, the California Association of Realtors reported...In Sacramento, sales were up 76 percent from May 2007....

From the Sacramento Bee:

Statistics show that thousands of...[pay option ARM] loans were made in the capital region. In 2005, pay option ARMs were 18.7 percent of all purchase loans and refinancings in El Dorado, Placer, Sacramento and Yolo counties, according to data from First American Core Logic, LoanPerformance. That rose to 26.7 percent of all loans in the first nine months of 2006, according to the firm.

From Rocklin & Roseville Today:

The Sacramento real estate market appears to have lost some of the steam it had developed earlier this spring. There are still buyers out there but the rush to buy a house has slowed. It is hard to tell exactly what is happening but with consumer confidence in the economy running very low and gas prices headed toward $5 per gallon it is surprising anyone is buying anything right now.

From the Sacramento Bee:

California is in a mild recession and has been since the last few months of 2007, according to the latest report from the University of the Pacific...Jeff Michael, director of the university's Business Forecasting Center, said the recession figures to be fairly long-lived but not severe...Sacramento-area unemployment will average 6.6 percent through 2010, he said.

From the CVBT:

"A housing market that has seen historic price drops and foreclosures is certainly a short-term negative economic influence and has created some undesirable social disruptions and property damage. However, the economic damage has not spread much beyond construction and finance sectors with much of the losses being felt out-of-state by those who financed high-risk California mortgages," it says. Mr. Michael believes the rapid price correction will get the real estate sector moving forward again "much more quickly than in previous downturns, and increased affordability will result in a long-run improvement in the state’s quality of life and business climate."

"The Naysayers Have Been Silenced"

From the Sacramento Bee:

Jose Espinosa worked his way out of the strawberry fields of Central California in the early 1990s, determined to learn a profitable trade. He did, and as a craftsman in stucco and walls, he enjoyed 12 straight years of handsomely rewarded construction work. Six months ago he was laid off and now may lose the house he and his wife bought a couple of years ago in Stockton. They had saved $30,000 for a down payment. "That was my life savings," said the 38-year-old legal Mexican immigrant.
...
His mortgage is $2,700 a month, he said. When he bought the house, he was earning at least $1,000 a week building houses....It was enough to make him feel secure. "Everybody said it was a good idea to buy a house. So we got excited and did it," Espinosa said. "My problem now is not a subprime loan. My problem is there is no work."

From News 10 (video):

Due in large part to the mortgage crisis, the demand for new homes -- and new lumber -- is down. The [84 Lumber] Florin Road store became expendable, and [Auggie] Aleman, along with about 20 co-workers, were told without warning that they were out of a job.
...
For Aleman, his wife and two kids, it means they join the ever-growing group of people who are suffering from the slow housing market. "I had a big home," said the 27-year-old husband and father of two. "Now, I gotta find a small home, because I can't afford to live in my home anymore."

Forbes: America's Riskiest Real Estate Markets

7. Sacramento, Calif.

With a 3% foreclosure rate, the country's fifth worst, Sacramento is still a long way from working out its lending difficulties. More problematic? Construction was one of the city's biggest drivers of job growth, and jobs have slumped in line with stalled building. The good news, according to Radar Logic, is that transaction volumes are up, something that could have a lot to do with the city having the nation's highest rate of homeowners reducing prices, based on data from ZipRealty. Sacto's biggest risk is whether or not it can add enough jobs to bring money and buyers into the city.

From the Sacramento Business Journal:

[B]uyers hesitate to commit for fear the market is still falling. Carmen Micsa, a broker associate with Re/Max Gold in Fair Oaks who specializes in condos, helps persuade prospects with an offer of a seven-day cruise. "I started doing this two years ago when the market turned," said Micsa, who offers the deal to both buyers and sellers. "You do anything possible so that you can motivate people to become homeowners."
...
Such tactics get mixed reviews, however. "We used to do a lot of that wacky stuff," said Cohee at Pacific West. "Nobody is going to buy a home based on that. Maybe it will get them out to talk to you."

From the Sacramento Bee:

Most folks agree that times are tough in the real estate business. But don't say that out loud if you work at the local brokerage offices of Cornish & Carey Commercial. Annoyed by the negative comments of co-workers, one employee suggested a $1 fine be collected from anyone uttering a discouraging word about the current real estate market.

"He was tired of it," C&C boss John Frisch says of the semi-serious proposal. "It doesn't help your (work) attitude to be around negativity." The idea was first adopted in the firm's Roseville office. Then it spread to Sacramento. Since then, Frisch says, the naysayers have been silenced. Not a single dollar has gone into the C&C kitty.

Has all that positive thinking helped boost sales? "It hasn't trickled down to the market yet," Frisch says.

"Were all these people stupid?"

From the Sacramento Bee:

Take $2 billion away from Sacramento's homeowners – money they could be spending on cars or plasma TVs or kitchen cabinets – and you begin to understand what the housing slump is doing to the region's economy. The impact of the real estate downturn goes far beyond the thousands of construction and mortgage- industry layoffs, or the epidemic of foreclosures. The 25 percent drop in housing prices since 2005 means fewer homeowners are able to borrow against their equity.
...
In the four-county Sacramento area, equity "extractions" – through refinancing, home-equity loans or outright home sales – fell by 34 percent last year, according to market research firm DataQuick Information Systems. That erased $2.11 billion's worth of wealth from the region....The $2.11 billion reduction in equity extractions represents a little more than 2 percent of the region's overall economy. Coupled with the other effects of the housing slump, including layoffs and foreclosures, it's no wonder many analysts are predicting a recession.

Chart: The diminishing 'wealth effect'

From the Sacramento Business Journal:

Swelling inventories of homes on the market. A record number of foreclosures. Laid-off construction workers. It's all too familiar to people who lived, and worked, in the Sacramento region in the early 1990s. The real estate market always cycles up and down. But this time the pain has been spread more widely because many more people bought homes when times were flush and credit flowed freely. "This is not new," said Frank Cook, president of Cook Realty in Sacramento. "It's just the size of it that's new."

From the Sacramento Bee:

A year ago, the local head honcho for Beazer Homes figured the housing market had hit bottom and was ready to take off again. He was wrong. Sales "went off a cliff" in March, says Alan Newman.

But the Beazer division chief is getting good vibes again, following a one-week sale....Every home sold at a loss, Newman says. But, the company was able to reduce its inventory. And, Newman says, the sales blitz proved that buyers – especially the first-time homeowners that Beazer targets – are willing to get back into the market. "They're ready to buy," he says of prospective customers, " … at the right price."

From the Sacramento Bee:

"It's been a very cold winter," said Jason de Lemos of IM Construction, a building contractor in south Placer County. The firm has cut about 280 jobs since 2006....

From the Sacramento Business Journal:

Surrounded by green fields and the occasional derelict barn, two state-of-the-art public schools sit empty on the outskirts of Elk Grove. Cosumnes Oaks High School and Elizabeth Pinkerton Middle School were not meant to stand alone in this bucolic setting. If things had gone as planned, these schools would be in the midst of spanking-new suburbia.
...
It's not just Elk Grove coping with vacant schools and plots land where homes were expected to be. With Sacramento-area housing woes in full swing, the reverberations are now colliding with regional school construction. Finding that neither the money nor the students are pouring in as they did before, school officials now must slam on the brakes after building at a breakneck pace for the past several years. And that slowdown will likely hit the construction industry the hardest.

From the Sacramento Business Journal:

Fewer loans and thinner margins made a problem for many of the locally based banks in the fourth quarter...[E]arnings fell 18 percent during the past year from a year ago -- and plummeted 47 percent in the fourth quarter, compared to the same three-month period in 2006.
...
The Central Valley housing market, which had been among the nation's fastest-rising in recent years, is now losing value and suffering one of the highest loan-default rates. Hard-hit developers and homebuilders face dramatically lower prices for their homes and a slow-moving market. In addition, land values are plummeting. The real estate downturn has turned into problems for local banks. "Everybody got hit by some of the problems all these defaults caused," bank consultant Dave Alford said. "What is really surprising is how fast it all hit."

Price guarantees: Phase 6 of the crashing new home market? From the Stockton Record:

In the early days of the housing downturn, home builders tried to pump up sales by offering various buyer incentives, from a wide variety of upgrades at no additional cost to free televisions, from trips to Hawaii to $5,000 gift cards. That segued to cutting the base costs to try to attract buyers who were focusing more and more on the price tags. The newest trend is a price guarantee to try to relieve a would-be buyer concerned that the house bought today might sell for less in the future as housing prices ease nationwide.

Now if only the builders could guarantee they wouldn't go out of business before you could collect on the difference...

Ryland Homes...spokeswoman Marya Barlow...said the price guarantee reflects builder confidence that prices are about as low as they are going to get. "Everybody has already cut prices, and I don't see any more price declines," she said...Florsheim's Anfuso said he doesn't expect to be cutting too many checks at year's end, if any at all, because he's betting prices will begin rising again in the second half of the year and finish at least even with current prices.

From the Stockton Record:

Juan Martinez has little need for hearing about San Joaquin County's growing unemployment rate, which hit 10 percent in January. He's living proof that the situation is getting grimmer, since he only cares about one thing: finding work. "We need jobs: painting, construction, anything. It's been two weeks for me, three weeks for my friend. For some people, it's been a month since we worked," said Martinez, 48, waiting in vain Friday afternoon at an unofficial day-labor pickup spot....

It's the first time in nearly four years the county has seen joblessness in double digits, state officials reported Friday.

From the Stockton Record:

Stockton-based All-Star Maytag, a five-store appliance sales and service dealer, will shut down this weekend, another victim of a slowing economy dragged down by the region's severe housing woes. Twenty-four workers will lose their jobs, eight of them in Stockton....[I]n his four Sacramento-area stores - in Citrus Heights, Elk Grove, North Highlands and Rocklin - sales in 2006 were down 35 percent from the prior year and decreased another 35 percent at the close of 2007.

From the Stockton Record:

Barker's Music, the only place in Stockton to buy a new grand piano, will be closing in three months...Barker said that nationally, traditional piano sales are down 30 percent during the past 18 months, while his own experience has been even worse. "I was living large in 2005. We sold 30 grand pianos over $22,000 that year. In 2007, we sold three grand pianos over $20,000," he said..."The home industry has just quit on us...."

From the Tracy Press:

Marilyn Nunes has accumulated $65,000 in credit card debt since last year to stay ahead of her monthly mortgage payments. A single mother of one, the Tracy homeowner went to City Hall this morning looking for a little guidance, hoping to find someone who could steer her away from impending foreclosure.

From the New York Times:

ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming...The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks.

Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble.
...
The fundamental problem is that the information obtained by any individual — even one as well-placed as the chairman of the Federal Reserve — is bound to be incomplete. If people could somehow hold a national town meeting and share their independent information, they would have the opportunity to see the full weight of the evidence. Any individual errors would be averaged out, and the participants would collectively reach the correct decision.

Sacramento Real Estate Market - 'It's Never Been As Bad As It Is Today'

From the Sacramento Bee:

"We keep seeing more and more horror stories about the economy," said Michael McGee of Winchester McGee Financial, a Rancho Cordova mortgage brokerage firm. McGee said higher mortgage rates aren't helping a housing market that he believes is the worst of his 36-year career. "It's never been as bad as it is today," he said.
...
Consultant Steve Dutra said higher rates will blunt the impact of falling housing prices, which analysts had hoped would kick-start a new round of buying. "With prices coming down, we were hoping interest rates would stay low as well," said Dutra, a vice president in the Sacramento office of Irvine-based John Burns Real Estate Consulting. Higher rates means "a certain amount of people will be taken out of the market," he said.
...
Alan Wagner, president of the Sacramento Association of Realtors, said he's trying to persuade potential homebuyers to jump in now before rates get any higher. "Now's the time to buy your property," he said.

Yet other analysts weren't as hopeful. Dean Wehrli of consulting firm the Sullivan Group said higher rates aren't especially worrisome – but the economic trends are. "We have to be worried about jobs again – Sacramento's job growth has slowed down so much the last few months," he said.

From the Sacramento Bee:

The Sacramento region's slumping housing scene is affecting at least one dealer in high-end wine. Roseville wine merchant Marcus Graziano, customarily a big buyer at the Premiere Napa Valley barrel auction each winter, spent just $80,000 on unusual wines during this year's sale last weekend. "Our business is still growing, surprisingly, but a lot of my clients are in home building," said Graziano in explaining why he cut back his bidding this year. A year ago he spent about $250,000 at the sale and the year before he invested $174,000.

From the Sacramento Bee:

As fears of falling home values continue to grip the Sacramento-area market, more home builders are offering limited protections against losses to help worried buyers sleep at night..."I started hearing about it maybe three or four months ago," said Hanley Wood's Kathryn Boyce. "Builders know there are a lot of people who aren't buying because they think the market is going to go lower."
...
To woo anxious buyers, KB promises if it lowers prices during the three or four months between a signed sales contract and finished construction, the buyer will get the lower price.
...
One of the Sacramento region's leading town house and condominium builders, Reno-based Pacific West Cos., is going a step further. It's telling customers that if they buy today and the builder drops prices before the development is finished – even as far out as two years – they'll be reimbursed for the difference.

From CNN Money:

Many owners simply went too far amidst the mania, over-improving their homes beyond what the local market would bear, according to Darius Baker, a veteran Sacramento, Calif., contractor. In the past his clients were more likely to opt for expensive redos even if they were planning to move, since they knew they'd recoup most of their costs. "I definitely saw a lot of tract houses built in the 1970s, in developments with three basic floors plans, get expensive renovations," he said. "We did a lot of radical projects, moving walls around, installing granite counters instead of Formica and cherry wood cabinets instead of oak."

From the Stockton Record:

Cesar Dias, a real estate agent and mortgage loan officer in Stockton, became a media star in October after he launched a bus tour for people interested in buying foreclosed homes in the area. The catchy marketing concept not only has worked for Dias - he said his business is up fourfold - it's now being picked up by other real estate agents and brokers, with at least a half-dozen such repo bus tours being staged in the Sacramento metro area alone...TV news crews from France, Japan, Australia and Holland, and even "60 Minutes," among others, went along for one of the Saturday Repo Home Tour.com jaunts....

...Dias recently decided to franchise, in a manner, his concept by charging real estate agents and brokers a consultation fee for helping them start up their own tours. There already are a half-dozen "alliances" up and running, he said, and as many are about to launch. His goal is to have 50 in place during the next 60 to 90 days."I had no idea it would be that large," he said. "Every week, every month, it's just been growing and growing."

'Relying on Luck' in Folsom

From the Central Valley Business Times:

Five of the top ten [California] counties for foreclosures last month were in the Central Valley, led by San Joaquin County with 1,000 homes going on the auction block, a 700 percent increase over the number a year earlier. Stanislaus County is ranked third in the state on a per capita basis with Sacramento County fourth, Yolo County fifth and Merced County seventh, according to the computations by ForeclosureRadar.

From the Central Valley Business Times:

The Stockton metro area in the Central Valley had the nation’s second-highest home foreclosure rate last year among the nation's 100 largest metro areas, says a new report from RealtyTrac Inc. of Irvine, a foreclosure information company. With 4.866 percent of its households entering some stage of foreclosure during the year, Stockton saw a total of 22,184 foreclosure filings on 10,608 properties, up 271 percent from 2006, RealtyTrac says.
...
Other California metros with foreclosure rates in the top 20 are Riverside-San Bernardino at No. 4, Sacramento at No. 5, Bakersfield at No. 7, Fresno at No. 14 and Oakland at No. 16.

From the Sacramento Bee:

The city of Sacramento is sending out additional pink slips to 12 workers in its Development Services Department today, for a total of 28 full-time employees this month.
...
Development Services, which found itself in the red this year, has taken the first significant hits, said Director Bill Thomas. His department handles building permits, planning and inspections, among other tasks. "When you get a housing slump, we're the first to feel impacts," Thomas said.

From Bloomberg:

When Mary Kamanu paid $409,000 for a house in Folsom, California, she never imagined that three years later it would be worth about 20 percent less and she would have to pay the bank more than $80,000 just to sell the place. "I'm completely upside-down on my mortgage, like a lot of people,'' said Kamanu, who wants to move 12 miles away to live with her fiancé in a suburb of Sacramento. "I know I'm going to have to come up with a big chunk of change.''
...
Kamanu refinanced her house in May 2007 and owes $415,000 on her mortgage. Homes in her neighborhood now sell for about $330,000, she said...Kamanu said she doesn't want to put her life on hold until the housing market improves. She's planning a sunset wedding later this year on the beach at Folsom Lake, about half a mile from her property, even as she waits for a buyer.

She said she's willing to sell the three-bedroom, two-bath, 1,272-square foot house fully furnished and include two wide-screen televisions to entice a buyer. The home has a fireplace and a two-car garage. "I'm hearing it might be a year or two before the housing market comes back, and I can't wait that long," said Kamanu, 38. "I'm relying on luck, hoping that someone will come along and fall in love with the house, like I did.''

Sacramento Bee: "Bubble Bursts in Elk Grove"

From the Sacramento Bee:

Bubble bursts in Elk Grove

Elk Grove, already mired in an economic slump, may be at the forefront of what's coming to the entire Sacramento region. Already home foreclosures there are up fivefold. Unemployment has climbed. Vacancies at small strip malls are three times the regionwide average, and Laguna Ridge – a big new master-planned development – is largely a ghost town of unsold homes and vacant lots.
...
The downturn calls into question just how strong the boom really was. Rising prices enabled an untold number of residents to tap their home equity to buy sport-utility vehicles and other consumer goods. But others did well just to buy a house. They were wealthy on paper but chronically short of cash.

The Sacramento Natural Foods Co-op found this out the hard way. Preparing to expand, the Co-op looked at demographic studies of Elk Grove and saw nothing but high incomes. The Census Bureau pegged Elk Grove's median family income in 2006 at $81,771, or 25 percent higher than the state's median. But when the Co-op opened in the Elk Grove Marketplace on Bond Road, it found many residents weren't so rich after all. "A lot of these 70,000 new residents down there were young families with mortgages up to their eyeballs," said general manager Paul Cultrera. "The disposable income wasn't there. … It's tied up in mortgages and new furniture." The store closed in January 2007 and gave way to a discount food chain, Grocery Outlet.
...
Because of massive overbuilding and other issues, the vacancy rate at Elk Grove's smaller strip malls – those that frequently cater to independent merchants – has jumped to nearly 35 percent...Garrick Brown, regional research director at Colliers International real estate...said. That's three times the area average. In one stretch along Interstate 5, the vacancy rate is 68 percent, he added.

From the Stockton Record:

The lunch rush used to fill Campesino Café. That hasn't been the case for the past several months. A handful of south side businesses, such as Campesino Café, that cater mostly to Latino immigrant workers are not only seeing the effects of a sluggish economy, but they also say reverse migration has left their business nearly empty of customers, who are fleeing lackluster employment conditions.
...
The soft housing market has played a huge role in the economic slowdown in San Joaquin County. The housing market slowed job growth in the county from 1.3 percent in the fourth quarter of 2006 to 0.4 percent in the fourth quarter of 2007, according to University of the Pacific's Business Forecasting Center.

From the Sacramento Bee:

Sacramento home builders have tried practically everything to move product in a slow market: lower prices, auctions, luxurious upgrades and so on. Now they're offering cheap money. Working in tandem with lenders, two home builders are offering mortgage financing for new homes at below-market rates.
...
John Arvanitis, a Citrus Heights mortgage broker, said interest-rate buydowns are preferable to continued price reductions, which drive down market values for everyone in the community. "You don't want to perpetuate (or) assist in a market crash," said Arvanitis, president of Sunrise Vista Mortgage Co.

From the Sacramento Business Journal:

There are 9,310 bank-owned properties in Sacramento County, according to RealtyTrac Inc., and there are 8,337 more homes in pre-foreclosure, which means the owner is at least two months late making mortgage payments.

News10: Foreclosure Fears Pack Stockton Workshop (video)

Builders 'Getting Body-Slammed Right Now'

From the Sacramento Business Journal:

First things first: Sacramento's economy won't rebound to greatness next year. It should grow a little, economic forecasters say, but it will take until 2009 for the housing market to revive and fuel other sectors such as retail and construction. In the meantime, they say, there's no reason to panic.
...
"The main thing that will determine how fast Sacramento recovers is how fast the housing sales recover," said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. "I don't see any reason that the volume of housing activity needs to go down any further. It's already well below the equilibrium levels for long-term demand," he said. But while sales volume might have bottomed out, prices most likely haven't.
...
Sacramento was hit particularly hard this year, with the median price of a resale home falling 15.7 percent in the two years from its August 2005 peak to August 2007. That's the second-biggest drop of 15 regions across the state, and it was driven in part by rapid new-home construction that caused a supply glut when demand softened, the association said.

Sacramento had a steeper fall because it had a steeper climb. Even though the market remained cheaper than the Bay Area, the gap got too narrow, said Levy, and Sacramento doesn't pay the wages needed to sustain the prices Sacramento houses were fetching. His forecast calls for prices bottoming out in 2008, which should make sales volume pick up by the end of that year.
...
A lot depends on the public's perceptions next year. "The only danger to the overall economy is if consumers get spooked by what they see in housing prices and start cutting back on consumption," said Levy. "If people agree with me that the volume activity levels are about at the bottom, we've taken that hit."
~~~
Scott Anderson [vice president and senior economist, Wells Fargo]: The housing market declines have been a little more severe than we expected, given generally neutral mortgage rates. All this has been driven by overvalued housing and tighter lending restrictions. It's a significant adjustment for no real increase in mortgage rates.
...
People think of Sacramento as being a fairly affordable place to live, at least by California standards. I'm not sure that's anymore the case. From a national viewpoint, it's no longer a low-cost place of doing business.

Stephen Levy: The Sacramento region needs to provide for housing that's affordable to a broad range of people. That's an economic issue, not just a housing issue. The threat to the Sacramento economy right now is in unaffordable housing.

From the Sacramento Business Journal:

The Sacramento region remained mired in ninth place -- unchanged from a year ago -- in a comparison with its chief economic competitors in the West. The six-county region ranked low in a matchup with 10 communities plus the United States as a whole, according to the latest Prosperity Index report released today by the Sacramento Regional Research Institute..."In fact, the region received the lowest score among competitive regions in both the job growth and unemployment rate indicators," the report said.

From the Sacramento Bee:

The [Sacramento] region added 1,700 jobs in September, following two straight months of job losses. The region's unemployment rate was 5.4 percent, the same as the month before. But it was well above the 4.3 percent of a year ago because of job losses in construction and other housing-related industries. The region's construction and finance sectors lost 1,300 jobs in September.
...
[A]nalysts agree that retailing is a key industry to watch for signs of where the economy is heading. California retailers did minimal hiring in September; there were no net gains in retail jobs in Sacramento. September is usually a month when retailers expand their payrolls, to handle back-to-school sales and get a jump on the December holidays. "Retail is kind of flat," Lyons said. "Retailers are holding back."

From the Sacramento Bee:

Growing consumer debt, the subprime credit crunch and the housing market's steep slowdown have spurred real concerns that shoppers may curtail holiday spending this year. The housing slowdown and credit worries have whittled away at local retail leasing, a pillar of commercial real estate during the housing boom. According to broker CB Richard Ellis, retail vacancies jumped to 7.1 percent for the third quarter, up from 5.9 percent a year ago.

From the Sacramento Business Journal:

Bank deposits grew in the Sacramento area less than 1 percent in the past year, a far cry from the double-digit growth in deposits common earlier this decade...For the first five years of this decade, the region's fast deposit growth prompted banks from all over the country to open offices here. Now that the branches are here, the deposit growth is slowing overall.
...
The decline in growth could mean people have less money, that they are saving less or that they are shifting money from insured accounts to other investments such as stocks, bonds, real estate, or Treasury bills or municipal bonds. It could also point to more money going into credit union accounts.

From the Stockton Record:

Months have passed since the days when dozens of homes at a time were going up in any given subdivision in San Joaquin County. But these days, the typical new-home development looks as if it's nearly in hibernation as the housing market steps into the third straight year of decline.
...
Greg Paquin, president of the Gregory Group, said builders have responded to a very slow market not only by cutting prices further but also by either delaying or stopping projects or in a few cases by selling standing homes at auction. "They're getting body-slammed right now, frankly," he said.
...
"Valley new-home construction sites are ghost towns," said Shane Hart, vice president in charge of acquisitions, development planning and marketing for Stockton-based Grupe Co...Grupe has offered as much as $150,000 in incentives per home, yet sales have become so slow that construction was halted at three developments in Stockton, Waterford and Tulare.
...
Paquin said there's more bad news on the horizon for new-home builders, who in recent months offered such low prices and incentives that they even drew buyers from the existing-home market. The flood of foreclosures is attracting the attention of bargain hunters and forcing existing-home prices down so much that those homes are getting more attention from potential buyers, he said.

From the Sun Post:

Complaints from two developers that rising foreclosures and a large housing inventory have crippled sales led the [Manteca] City Council this week to postpone the fees developers owe for homebuilding reservations under the city’s growth cap. The council’s 3-2 vote to postpone millions of dollars in fee payments for two years was opposed by councilmen Jack Snyder and Steve DeBrum, who worried that it could damage the city’s budget.
...
Stockton attorney Mike Hakeem — lobbying on behalf of developers Raymus Homes and FCB Homes — countered that no one else would be willing to pay for the reservations this year because the housing market was so bad.
...
During their discussion, councilmen both for and against the extension focused on the need to keep home prices up. “These are significant factors when it comes to how we need to proceed as a local city government to protect the values of our homes,” said councilman Vince Hernandez, after alluding to an auction of 34 new homes at highly discounted prices last weekend.

From the Modesto Bee:

Unemployment rates in Stanislaus, San Joaquin and Merced counties swelled above last year's averages, the result of a shaky economy and deepening housing crisis. The three counties each gained at least a percentage point from the previous year, with Stanislaus County recording the biggest jump. The county went from an unemployment rate of 6.6 percent in September 2006 to 8 percent last month, according to state Employment Development figures released Friday.
...
The housing slowdown has taken an even larger toll on San Joaquin County. Its unemployment rate was 7.8 percent last month, up from 6.5 percent the previous year. The county saw huge declines in manufacturing, construction, professional business services and financial activities. Combined, those industries lost about 2,100 jobs. "All are definitely related to the housing crisis and mortgage credit issues," Baker said.

Greed "Coming Back to Haunt" "Investors"

From the Sacramento Bee:

...William Lyon Homes is offering...a 42-inch plasma in each of the 300 homes it's selling in Rocklin, Elk Grove, Fair Oaks and Rancho Cordova. But, for one month, the home builder is also throwing in a bunch of other goodies....Those would be a year's worth of free phone, Internet and premium TV service from SureWest Broadband, along with appliances, furniture, window coverings, landscaping and housekeeping services...Such incentives are becoming increasingly common as builders grapple with a slowing housing market.

From the Sacramento Business Journal:

Standard Pacific Corp. is merging its Central Valley operations into its Sacramento office. About 10 of 35 people in the Central Valley lost their jobs in that transition.

From the Sacramento Bee:

A government bailout will only shift risk from the borrowers and lenders to the taxpayers and future borrowers. It is nothing more than a new taxpayer-subsidized program that will rescue disreputable mortgage banking or brokerage firms at the expense of working families, taxpayers, and lower- and middle-income homeowners. Responsible consumers and taxpayers should not have to pay for poor decisions by a handful of consumers who took out loans they could not afford, nor should they be forced to bail out the lenders who helped these folks dive into the deep end of the financial pool.

From the Stockton Record:

Nervous homeowners in foreclosure or experiencing sleepless nights over the prospect of losing their homes were among some three dozen Record readers who took advantage of a free two-hour call-in Thursday night to speak with financial experts.
...
[Hank] Klor, a tax expert and enrolled agent the past 14 years in Stockton, fielded a call from a middle-aged woman who lives in a home she paid about $475,000 for and soon bought three more homes as investments with mortgages of at least $350,000 each. She told Klor she already had lost two of the homes and the third investment home was in the process of being foreclosed. She felt confident she had enough income to be able to keep her primary residence, although she has no savings.

"She is losing sleep over this. Potentially, she could be on the hook for taxes of over $300,000 in income in a single year," Klor said, noting the income is derived from the forgiveness of debt. "She will have some huge income exposures because of the three foreclosures. She should contact her tax adviser to get some tax relief. There is a legal way to reduce the tax if you meet the IRS rules for being insolvent," he said. "This is an example of someone who got greedy and now it is coming back to haunt her."

'I Think the Market Is Showing Life Toward the Bottom'

From the Sacramento Bee:

Sacramento's 2-year-old real estate downturn has a good chance of hitting bottom in 2008, banking and building industry analysts told struggling area builders gathered Wednesday in the capital...[N]ew home builders were told to expect months more of the slowed sales and heavy discounting that have marked 2007.
...
Last year at the same session, builders heard that analysts were monitoring Sacramento for signs it would begin leading the nation out of the housing slump. This year more sober assessments prevailed in a market hit hard by too many houses for sale, lack of buyer urgency and, lately, a credit crunch that dried up financing for an estimated 30 percent of would-be buyers.
...
Overall, Sacramento's journey to recovery has "been a longer road that I thought," said Steve Smiley, a managing director for Hanley Wood. Smiley, who watches Bay Area and Central Valley housing markets, said that despite builders' current troubles buyers probably shouldn't expect new home prices to fall a lot lower. "I think the market is showing life toward the bottom," he said.
...
Hanley Wood's Smiley predicted Wednesday that builders are likely to end this year with about 9,000 new home sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. That's down considerably from his prediction a year ago that 2007 would end with up to 11,500 sales. Through July, builders sold 5,068 homes in the six-county region, Hanley Wood reported, compared with 6,175 the first seven months of last year. "We expect sales next year to push 10,000," he said. "The incentives will continue."

From The Union:

A developer of a south county subdivision is downsizing his original housing project to meet the demands of a changing real estate market.The one-time luxury housing development is now being repackaged as a subdivision for smaller, lower-priced homes and senior apartment complexes. “We’re kind of revisiting the demographic, because the market is going through transitions,” said Dave Snow, president of DAS Homes.
...
Snow first brought his ideas to Nevada County three years ago, when home sales were booming. Since then, the housing market has declined sharply, leading to defaults on subprime loans and foreclosures — in Nevada County and nationally.
...
Snow is bypassing his original plan of two-story custom homes with pricey doors and granite countertops priced between $495,000 to $860,000 for smaller single-story homes with tile countertops priced at $450,000 to $600,000. "There’s a lot of people just as happy with tile countertops if it can save them money," Simmons said.
...
Snow said he will keep a watchful eye on the market, and if it continues to show stagnant signs, he would have to re-evaluate his plans for the site. "Ultimately it’s my responsibility to be open-minded and meet the demands of buyers. If the community needs housing, that’s our goal. I’m not going to build a project out if there’s no buyers," Snow said.

'Sales are Slower Than a Tortoise on NyQuil'

From the Sacramento Bee:

It's come to this: For roughly every two homes sold in August in the capital region, one house went into foreclosure, according to the newest sales statistics released Thursday. Last month, 2,978 new owners picked up keys to homes they purchased in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, La Jolla-based DataQuick Information Systems reported Thursday. But in those same counties during August, 1,367 homeowners in foreclosure handed their keys back to the bank, according to Fair Oaks-based Foreclosures.com, a Web site for real estate investors.

That grim ratio may worsen as fall and winter sales traditionally slow and foreclosures keep rising, analysts say. Already, in Sacramento County in August, there were more defaults -- the first indicator of payment problems that can trigger foreclosure -- than sales, DataQuick reported...The county...tallied more defaults during the month -- 1,869 -- than sales, statistics show..."Sacramento (County) was positioned almost perfectly to take the brunt of this housing storm," said DataQuick analyst Andrew LePage.
...
The number of sales, meanwhile, fell to a 12-year August low in Sacramento County and an 11-year low in Placer County...Clearly, such numbers are fuel for still more for-sale signs -- now at a record 16,262 in El Dorado, Placer, Sacramento and Yolo counties -- and further declines in sales prices...The county's $332,000 median sales price for new homes alone is the lowest since October 2003, the firm reported.

Prices by zip
Prices by county

Also from The Bee:

In a tough market of hesitant homebuyers, builders are trying every incentive and attention-grabbing idea they can to encourage a purchase. This weekend, New Jersey-based Hovnanian Enterprises Inc. is launching a national three-day sales blitz, which includes its nine projects in the Sacramento region.

In a local market where Dallas-based Centex Homes is running radio ads promising free swimming pools, and Texas-based D.R. Horton just held a multimillion-dollar "giveaway," K. Hovnanian Homes is throwing in free furniture for every house it sells from Sacramento to Suisun City on Friday, Saturday and Sunday. The company's model home designers have furnished six new houses -- in Galt, Natomas and Suisun City -- to show buyers what they'll get.

"The idea behind it was to come out with a big blast. The economic data is still fairly strong, jobs and incomes are still good, home prices are low, and interest rates are still low," said the builder's Sacramento spokesman Ian Cornell. "Anybody who's been considering it ought to be hopping off the fence. This is one of those mechanisms, to get them to take advantage of it."

From The Union:

Median house prices in Nevada County fell nearly 12 percent for August to $417,000, compared to $472,500 a year earlier, a real-estate tracking firm said Thursday.

"It's a fabulous time for buyers to buy," said Diane DiLeo of Network Real Estate in Grass Valley.

From the Stockton Record:

Dismal home sales have thrown Gorilla Glue into downtown Stockton's comeback, forcing postponement of a key plan to build waterfront homes. To root for a city center's redevelopment, it seems, is to wish for the 969-year life span of Methuselah. And that still may not assure you'll be there at the ribbon-cutting.

Still, you cannot blame The Grupe Co. for delaying construction of 150 condominiums on the south bank. There have been 8,000 foreclosures this year in Stockton. About 3,000 homes are for sale. In this lame market, sales are slower than a tortoise on NyQuil...Rate increases on 80 percent of adjustable-rate mortgages nationwide have not kicked in. The housing carnage is going to get worse.

Artificial Price Hikes, Greed, Layoffs, and Feng Shui

From the Sacramento Bee:

"Closed" in real estate has long meant the moment when a home loan was approved, escrow was finished, buyers got keys and everybody got a nice commission. Now it likely means the office is empty and your job is gone.
...
Exact figures on how many people in the Sacramento-area mortgage industry have lost their jobs aren't available, but the number is likely several hundred...Already gone is the Roseville branch of Houston-based Aegis Mortgage Corp., with an estimated 50 to 60 employees losing their jobs. Gone, too, in the same Douglas Boulevard building is the Roseville branch of Scottsdale, Ariz.-based First Magnus Financial Corp. Farewell to 20 jobs...Those closings came after lights also went out in the Folsom branch of American Brokers Conduit. The number of employees let go is unclear.
...
This week brought more reports of area mortgage office closings. On Monday, Sacramento employees of GreenPoint Mortgage received news that their office will soon be history...On Tuesday, employees at Accredited Home Lenders offices in Sacramento, Roseville and Folsom also got word their offices will likely close by Sept. 5.
...
[Heather] Fern-Luzzi of First Magnus remembers the mortgage business during the housing boom as practically euphoric and populated by newcomers attracted to the commissions..."We got a lot of people into it because they were greedy."

Also from The Bee:

With almost 16,000 existing houses for sale in El Dorado, Placer, Sacramento and Yolo counties, it takes all the mojo you can muster to make your house stand out in the crowd. If yours has sat on the market for a while or had an escrow fall through, it might be more than supply and demand. A pair of Lake Tahoe authors say you might have a feng shui problem.

From the Modesto Bee:

Statistics documenting the challenging reality faced by new home builders in the Northern San Joaquin Valley were shared this week with members of the construction industry. Sales are down. Prices are down. And plans for future projects are dwindling.

That was the gist of Stephen Smiley's presentation at the Building Industry Association of Central California's an-nual meeting of purchasing agents, subcontractors and suppliers...He predicted new home sales throughout Stanislaus, San Joaquin and Merced counties may remain slow despite price cuts and purchase incentives from builders.

"We'll really be fortunate to see 5,000 sales this year," Smiley said Wednesday. That's less than half as many homes as sold annually 2003 through 2005 in the three counties. "But our expectation is to see the market ticking back up a bit next year." Prices may continue to fall, however, because the region's builders are stuck with about 637 completed homes waiting for buyers. Smiley said such "standing inventory" was virtually nonexistent during the 2000-'05 building boom.
...
Because of the sales slowdown, Smiley said, many big builders have curtailed construction plans in the Northern San Joaquin Valley. "If you're trying to sell land, there aren't many people buying," he said.

From the Merced Sun-Star:

Wander into the sales office at the Sandcastle subdivision on Gerard Avenue and you'll find a whopper of a deal: a $90,000 price cut on a four-bedroom house. But even with bargains like that, Merced can still lay claim to this dubious distinction: it remains one of the least affordable housing markets in the country.

For the third year running, Merced clocked in near the top of a nationwide ranking of the least affordable housing markets released this week by the National Association of Home Builders. Among smaller cities, Merced ranked as the second- least affordable housing market in the country, behind Salinas. That means that only 3.8 percent of the homes sold here during the second quarter of 2007 were affordable to families earning Merced's median income of $46,800.
...
During the second quarter, Merced's median home price fell to $296,000 -- down from the high of $376,000 in 2006. But even with the price plunge, the gap remains vast between what houses cost and how much families here can afford to pay. One reason: while Merced's housing prices spiked into the ionosphere during the recent housing boom, local families did not see a similar rise in their incomes. Housing prices surged by about 75 percent between 2004 and 2006, but household incomes climbed only five percent.
...
[O]n the price side of the equation, Merced is still suffering the effects of an artificial price hike created by out-of-town investors, said real estate broker Carole McCoy. "We had a false increase in value driven by investors coming in from out of the area," she said.

Sacramento Horton Lays an Egg

From the Associated Press:

The traditional spring home-selling season was a bust for D.R. Horton Inc., one of the biggest nationwide homebuilders. Horton said Tuesday it will post a loss from operations for its latest quarter after net orders fell 40 percent and it wrote down the value of unsold houses...The rate of canceled orders was 38 percent...The report provided more evidence that the housing sector continues to sink.
...
A glut of unsold homes has pushed prices lower - Horton said it has adjusted prices to cope with the deteriorating market. Builders have also been throwing in extras to entice buyers. But neither freebies nor lower prices have brought in enough traffic, particularly for entry-level homes where the pool of available buyers is being reduced by tougher mortgage-underwriting standards.

Horton's June-quarter orders fell the most - 53 percent - in California. Horton was building entry-level homes in Sacramento and other inland markets that emerged as affordable alternatives to the pricey coastal markets but are struggling now.

From the Sacramento Business Journal:

In the six-county Sacramento area, D.R. Horton sold 182 homes January through May 2007. The homebuilder had sold 590 homes in the same period of 2006.

-69%? Ouch!

Cue the Marketing Mavens

From the Sacramento Business Journal:

Scavenger hunts and concert sponsorships are just a couple of the more creative tools that marketing firms have recently unveiled to lure potential buyers to a sluggish new-home and condominium market.
...
Greg Paquin, a new-home analyst and founder of The Gregory Group, said price cuts and incentives are now widespread, so homebuilders are looking for new ways to distinguish themselves. "The philosophy is: 'Let's get people in the door before they go next door,' " Paquin said. "Everyone's trying to be unique and stand out from the crowd."

Advertising has become common on radio, with live presentations at new-home sites; television advertising is the next logical step, he said. Paquin noted other ploys, such as free dips in swimming pools for those touring model homes.
...
With a market expected to continue to slump, perhaps for another 18 months to two years, according to Paquin's estimate, builders will likely continue to rely on unique marketing. "Soon you'll be seeing hot air balloons with messages on the side," Paquin said.

Flashback: Jasmine Condominium

Sacramento Land(ing), April 25, 2006:

This condo complex in Elk Grove wants to reward reluctant buyers "big time."

Jasmine, a community of attached homes in Elk Grove, will hold a special spring celebration with as much as $50,000 off some homes, as well as special financing and other incentives. "When we say this is a special celebration, we really mean it," said Scott Bolli, director of sales for Pacific West Cos., a residential development company. "We've never offered so much. If you've been waiting, it's paid off, big time."

Wow! I wonder what the payoff will be if one waits even longer!

Sacramento Land(ing), May 30, 2006:

At Jasmine:
May 13, 2006: "Prices start in the high $200,000s"
May 20, 2006: "Home prices start in the mid-$200,000s"

Today, seven Jasmine condos went on the auction block. A reader sent in this ad:

Seven Luxury Condos in Elk Grove
Reduced! Opening Bids Now From $149,000!

$175,000 Off? Centex, Say It Isn't So!

Sacramento Bee, June 2006:

Some Centex Homes buyers can get a $125,000 price break...[Jack] Pautsch [Sacramento division manager for Centex] said the deals reflect an oversupplied market and are likely to recede within weeks as builders slow construction.

Current Sacramento Centex ad:

You'll love savings a minimum of $30,000 and up to $175,000 on the home of your dreams - and choosing Centex is a great way to assure it's a lasting love affair. Come see how easy we're making it to live "Happily Ever After" this weekend at your favorite Centex neighborhood. Hurry for best selection and maximum savings!

Hurry folks, just a few days left! You just never know when these deals will disappear!

'Feeling the Effects of the Slowdown in the Subprime Market'

From the Sacramento Business Journal:

National homebuilding giant D.R. Horton Inc. on Tuesday announced its second-quarter new-home sales dropped by 37 percent -- or almost 5,800 fewer homes than a year ago, with much of the slow down in California and the Southwest.
...
D.R. Horton was the Sacramento region's leading homebuilder last year, selling 1,168 homes -- almost 12 percent of the market share. But the company's sales in the area have slowed in recent weeks, after an impressive 100 homes in January, but only seven in February, according to Hanley Wood Market Intelligence. D.R. Horton has 5.6 percent of the new-home market for the first two months of the year.

From the Stockton Record:

New-home sales jumped by nearly 20 percent in the first quarter in San Joaquin County, up from the previous quarter as well as from the first quarter of 2006, when a housing slowdown was settling in.

Prices, though, continued to slide, from an average $519,350 at the end of last year to $507,115 in the most recent quarter, a decline of 2.4 percent, according to the latest sales numbers from the Gregory Group, a real estate information and consulting service in Folsom.

That's down from a high of well above $550,000 in the third quarter of 2006.
...
Even with the sales-numbers growth, the first quarter was mixed, said Joe Anfuso, president of Stockton-based Florsheim Homes.

The number of people out looking at home models significantly increased beginning in mid-January, he said, but that dried up again several weeks ago with the implosion of the subprime market, which either took many potential buyers out of the market or scared them off for now with reports of tightening credit standards.

"I certainly think all the builders are going to be feeling the effects of the slowdown in the subprime market," Anfuso said. "It will take some time to flush out of the system."

Gregory Group president Greg Paquin said builders have been lowering the presence of incentives in the sales market because these days, would-be buyers are responding better to lower sales prices, rather than to higher base prices with incentive packages thrown in.

Sacramento Contractors Hammered by 'Retroactive Pricing'

From the Sacramento Business Journal:

Lennar nails contractors with rebate request

It's common for homebuilders to ask for price reductions from their framers, plumbers and roofers during a slump, but a construction trade association says housing giant Lennar Corp. has taken a new tactic that has trade contractors steaming -- lowering prices on work that already has been done.
...
Contractors and suppliers fear reductions on finished work could become a trend as builders slash new-home prices and increase incentives around Sacramento to stay competitive.

Some subcontractors reached by the Business Journal said they've been asked to drop prices for completed work or refund money they've already been paid. One trade contractor said the price changes were made without his consent. Another alleged the new tactic isn't exclusive to Lennar.

"There are other builders in the Sacramento market who are doing this," said the contractor, who spoke on the condition of anonymity from fear of losing business if he revealed his name. "I've been in the business for 25 years, and this is the first time I've ever seen retroactive pricing."
...
He alleged the company rebid his job without his knowledge, forcing him to drop prices 15 percent, and later applied reductions to invoices on work his company had completed, even though he assumed the price reduction would apply only to future work.
...
Don Harmata, an attorney who represents trade contractors, heard of Lennar's policy through his clients. He said it was highly unusual to ask for reductions in work that's already done.
...
[Marc] Chasman [president for Lennar's Northern California/Northern Nevada region] said he's pleased that a majority of the local companies have accepted the price reductions. Asked if he was surprised at the trade contractors' reaction to the policy, he said, "I'm not surprised. There's a disappointment on our side, too, that the market isn't better."
...
Since January 2006, the Sacramento region has lost 2,400 construction-related jobs, about a 3.5 percent decline.

'Maybe This is the Bottom'

From the Sacramento Bee:

After weathering one of their toughest periods in a decade, Sacramento-area home builders closed 2006 with a bang, boosting year-over-year quarterly sales of new homes for the first time since 2004 with steep price cuts and giveaways that often totaled as much as $150,000 per house.

The aggressive sales tactics, designed to clear excess stock off builders' books by Dec. 31, drove fourth-quarter sales 58 percent higher than the same time in 2005 and 25 percent above the third quarter of 2006, according to a report released today by the Gregory Group, a Folsom-based real estate consulting firm.

Lower median prices -- ranging from $353,689 in Natomas to $498,365 in Elk Grove to $524,001 in Roseville -- helped drive the 2,445 reported sales across the region, with prices dipping 4.7 percent below the same time last year. Only El Dorado Hills -- $863,684 -- and Rocklin -- $609,820 -- reported higher median sales prices than last year.
...
Placer County showed the quarter's biggest year-over-year sales gains as builders cut prices and offered huge incentives at large master-planned communities in Lincoln, Roseville and Rocklin. In Roseville, for example, fourth-quarter sales prices fell 11.3 percent from the same time in 2005 -- but the number of sales jumped 654.1 percent, from 37 to 279, according to the Gregory Group. Similarly, 11.3 percent sales price declines in Yolo County sparked a 245 percent gain in year-over-year sales.
...
It also marked an end to the rising inventory of unsold new homes that have swamped the market since 2005. According to the Gregory Group, 3,925 homes were for sale at the end of 2006, compared with 4,598 the previous quarter.
...
But even as builders celebrate a strong finish, 2006 still saw the fewest new home sales since 1998 in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. Builders sold 9,588 single-family homes and condominiums during the year -- 4,500 fewer than in 2005.
...
"Maybe this is the bottom," Paquin said.

(In April 2006, Mr. Paquin predicted that sales in 2006 would be "even with or slightly less than the 14,094 homes sold last year.")

Whether he's right is still the key issue looming over a market that saw home prices double in five years. Paquin cautioned that one good quarter does not make a trend, and analysts nationally have differed over whether the downturn is ending. Recent reports of sales declines by several national builders prompted analysts to say the new home market may remain challenging "for the foreseeable future."

UPDATE: Chart Here

Also from the Bee:

Suzie Rivera's dream of home ownership may soon be within reach. The 53-year-old housekeeper for a local hospital lives in a rental home -- a neat, two-bedroom dwelling on 39th Street in Oak Park. Her daughter, Margarita, age 9, lives with her.

"I'd like to buy a house, not so much for myself as for my daughter," Rivera said last week. "Home prices are climbing so fast that by the time she's an adult, she won't be able to buy one."

Update: The Sacramento Business Journal also reports on new home sales:

But as sales perked up for new homes, prices generally fell. Paquin said that suggests builders are cutting deals...Incentives such as upgrades to appliances or floor coverings, which don't show up in a home's price, are making the true cost of a home even lower.

It's a rare situation when homebuilders can take heart in climbing sales and buyers in falling prices, Paquin said. "Look at Yolo County," Paquin said, where the average price plummeted by about $65,000. "The interesting thing is how rapidly it's going down. Buyers may be saying that, whether it's hit bottom or not, the prices are good enough for them."

2006: "Year of the Hangover" 2007: ?

From the Sacramento Bee:

"In the boom-and-bust history of Sacramento's growth, from Sutter's Fort to today's metropolitan area of nearly 2 million people, 2006 was a year of the hangover. For the real estate dreamers, the fast-money speculators and everyday sellers of thousands of homes, the year abruptly crashed the housing party, ending the sure thing and the easy bet. The spring rebound, which many hoped would reignite the five-year boom in home prices, failed to materialize. Then home prices began to fall. A year just hours from ending saw an entirely new real estate cycle."
...
"Who now has the crystal ball for 2007? Will it be a better year?"

Leigh Rutledge, 2006 president of the Sacramento Association of Realtors:

• "I don't see any price increases. I think we're going to have a similar year."

Scott Syphax, president and chief executive officer of Nehemiah Corp. of America, a Sacramento-based community developer:

• "Flat appreciation. And that's the best you can hope for."

• "The people that I run into who are the most unrealistic are the speculators and investors because they had a particular rate of return or amount of appreciation they were looking for, and it's sort of like the world's flat. It doesn't matter whether or not the world's round. Some of them are still not ready to accept that."

John Karevoll, analyst with La Jolla-based DataQuick Information Systems:

• "But for right now it does look like things are flattening out. We've basically come as far off the peak as we're going to be, with adjustments, you know."

• "You've got this enormous amount of inventory ... and it will go down -- it will go down by spring, significantly. A lot of these people will say, 'Well, I can't sell it for $500,000, so I'm going to sit on it.' They're going to just take them off the market. That's going to bring a bit more balance to the market."

• "There may be another percent or two of price decreases ahead of us. I think the sales counts will stay roughly where they are right now. That's kind of my 80 percent projection. If any of the dire, ominous stuff happens ... then things could get bloody. I don't think they will get bloody, but there is a chance they could."

Kathryn Boyce, analyst with Costa Mesa-based Hanley Wood Market Intelligence, a home-building market researcher:

• "I think with new-home sales, I think prices are still going to drop some and (new-home builders are) going to (cut back on) the incentives."

• "I think that the prices are going to drop more. I think the incentives, those $150,000 incentives, aren't going to be there any more. I think they're still always going to have incentives. It's just not going to be to the crazed amounts that they are right now. I think it will stay relatively the same way as it is now. We're going to stay good in '07 and probably come back up in '08."

Greg Paquin, president of the Gregory Group, a real estate consulting firm based in Folsom:

• "I would suggest on the new-home side that we haven't reached the bottom point yet, and I'm optimistic we will in 2007. ... I think next year is going to be very similar to this year. I don't necessarily think it's going to go down a whole lot more. I think new-home sales are going to be relatively the same as this year."

• "I think sales on the new-home side are going to be pretty consistent with this year. I think we'll see a little bit of a bump in '08 in terms of sales volume. In terms of pricing we may see a consistent level. Maybe a little lower next year, not significantly by any means. And then maybe net pricing is a little bit up."

From the SF Chronicle:

2008 and beyond: "It wouldn't surprise me if it took five years for sales volume to return to normal and to see some significant appreciation," he [Ed Leamer, Director, UCLA Anderson Forecast] said.

The interior areas of California, where much of the housing boom and bust has been due to new homes, will recover more quickly than the coast, he said. The sharp drop in prices in places such as Sacramento and Southern California's Inland Empire mean a faster correction is in store for those regions, he said. "The interior has a different cycle," Leamer said. "The coastal areas all had relatively small amounts of building and huge amounts of appreciation."

From the Auburn Journal:

Mark Wexler and Alice Brooks will be very busy. The palmist consultant and astrologer from Auburn suspect that this change in the stars and the coming new year will lead to many people seeking their services to find out what's in store for 2007. "Oh yeah. Everybody wants a reading for the new year," said Wexler.

The coming of a new year not only means we look back on what happened over the last 12 months, but we also tend to look ahead and speculate on what the new year will hold. Will the loveless find love? Will the burned out find satisfaction on the job? Will the housing market heat up or continue cooling off?

Many people ask these questions of Wexler and Brooks. "There's a curiosity," Brooks said. "Maybe people feel like they're on the wrong road and they need help."

Pulte New House: 88% Off

This story has it all: incentives, a change in psychology, a cancellation, the flight of buyers, and finally a fire sale auction. Think of this as Sacramento's 2006 housing market in miniature. Bob Shallit has the scoop:

Discount digs: The declining real estate market has produced some bargains. But none like this: a Pulte-built home with furnishings and toys from outdoor gear retailer Cabela's, plus lots of extras.

For $5,000.

OK, this isn't exactly a full-sized residence. It measures just 8 feet by 8 feet. The furnishings are all pint-sized.

It's a playhouse, left over from the biannual "Dream, Play, House" fundraiser held in September by the Placer County Child Abuse Prevention Council.

Six local builders created incredible tiny homes for the event. Pulte's "Mother Lode Prospector's Cabin" -- with a sluicelike slide, a hidden cave, rope swing and a miner's cart full of fake gold -- was the auction's top attraction.

It earned an award for craftsmanship and received an auction-high bid of $16,000. But the buyer had a change of heart and stopped payment on his check.

"The home was left without a home," says CAPC's Donna Wood.

Nobody has stepped up since to buy the log cabin house. So CAPC has listed it on eBay (Item No. 200059385693). Minimum bid: $5,000 (including delivery). Deadline for bids: Christmas Eve.

The home actually is valued at nearly $40,000, including the furnishings. Good deal. Great cause.

Looks like something you might find on Burbed.

Have a Merry Christmas everyone!