Calling All First-Time Homebuyers

A reporter from a national newspaper would like to interview first-time homebuyers in our area. If you are interested, please contact me and I will forward your e-mail on to the reporter.

The Bay Area will save us...or not

I'd be remiss if I didn't post links to the following set of articles. As the Sacramento housing market descended into the abyss, the Sacramento Bee floated (or pushed depending on your point of view) a series of bullish arguments about the local real estate market. Bullish theories included:

• Rents are about to skyrocket
• Sacramento's strong economy will blunt the effects of the housing downturn
• The housing downturn won't be as severe/long as the 1990s housing bust
• Renewed Bay Area migration will save us as Sacramento homes are now so cheap in comparison
• High-end/"core areas" are recession proof

The paper has conceded that the first three theories haven't actually worked out as planned (to say the least). Now it looks like they have capitulated on the "Bay Area will save use" theory:

In area conversations about real estate it's often an act of faith that a widening gap between Sacramento and Bay Area home prices might soon spark a new migration east to buy houses cheap and put an end to free-falling prices here.

Nice theory. But wrong. The once-widening gap that seemed to promise help has already closed. While 17 months ago the median sales price in Santa Clara County was $388,000 higher than in Sacramento County, it's now $248,000 higher, says researcher MDA DataQuick. Prices have tumbled in both counties to narrow the original gap.

It means we won't be seeing thousands of Bay Area residents coming anytime soon to prop up Sacramento's housing market or, by extension, its stores, office buildings and economy.

When they capitulate on the last theory (high-end immunity), we should be much closer to bottom.

More from the Stockton Record:

If you're a homeowner hoping for an equity-swelling Boom II, fed by Bay Area residents swarming back over the Altamont Pass again to start snapping up cheaper Valley home prices, forget about it - at least anytime soon. Home sellers and builders report that few Bay Area buyers are out shopping for homes in San Joaquin County, even with prices having been cut by almost 44 percent year-to-year to a median of $155,000 in February. Existing homes in Contra Costa County are moving at a median sales price of not much more than $200,000, for example, after prices shrank by 52.2 percent year to year in the foreclosure-hammered residential downturn.

"I don't see Bay Area buyers coming back yet, because the prices there are so affordable and the interest rates are so good," said Jerry Abbott, president and co-owner of Grupe Real Estate in Stockton...When a "normal" market returns, Bay Area prices will regain its typically much higher, pricier ground, and Central Valley prices will look much more attractive again, they said. "It will come back but not anytime soon," Abbott said.

Ryan Jessup: Sacramento Bee's Latest Housing Bubble "Victim"

One of the most disappointing aspects of the media's coverage since the housing bubble burst (besides the blind reliance on "expert" opinion), has been the parade of so-called victims. Is it just me, or has the media struggled mightily in its search for legitimate causalities of the housing bubble fiasco? Are they looking in the wrong places? Is it simply that there is not enough genuine victims?

I pondered these questions as I read an article by Jim Wasserman in Sunday's Sacramento Bee. Among others, the story profiles a man by the name of Ryan Jessup, who "walked away" from his Oak Park house (this site says it was a short sale).

[M]any who can afford their payments have decided it's no longer worth it. They walk, or, as is becoming the trend, park rent-free in the house for months until they get the boot.

It's a question that Ryan Jessup of Sacramento answered a year ago, when he, too, sensed the financial game had turned against him. Early in 2008, the software engineer stopped making payments on his Victorian house in Oak Park. A long habit of playing by the rules, he said, had provided him a good income, a credit score of 804 and a lovely $430,000 house. But when playing by the rules meant riding down the housing market to who knows where, he said, "It came down to morals or survival. I chose survival. It made no sense to stay."
...
Many borrowers like Clawson and Jessup no longer feel so obligated to a financial system they believe overstimulated the housing market, sold them questionable loan products, sometimes by fraud, and then didn't provide help they need in the face of falling home values.
...
Jessup walked away. "I haven't even looked (at the credit score)," he said. "It's like being hit by a train or a bus."
...
Jessup, looking back, has no regrets. He lives with a friend now who has also stopped making payments on a condo bought at the peak of the market in 2005.

What Mr. Wasserman didn't say in the article is that apparently Ryan Jessup has quite the history of touting the virtues of Sacramento real estate in comments at sacbee.com. As the name sounded familiar, I dug through Sacramento Land(ing)'s "save for future use" folder and ran across some quotes by a sacbee.com commenter named "rjessup2mouse." Could rjessup2mouse be Ryan Jessup?

I started to read the article's comments and sure enough, rjessup2mouse, purporting to be Ryan Jessup quickly chimed in on his own story:

rjessup2mouse wrote on 03/08/2009 06:47:04 AM:

Good article Jim - this is a very hotly debated topic right now and weighing on alot of peoples minds. yes the house was actually in a nice neighborhood. Not all of Oak Park is bad... I was extremely choosy of where I bought and wanted to be closer to downtown as I figured the value would hold up better. It did but still fell enough for me to leave. I did not think it would increase in price when I bought it. I am sure alot of people on this board are going to be angry - I figured as much - I am not happy with the way it turned out and I lost alot of $$$ on it. But to me it was better to lose alot then to lose it all (and keep losing). One of the reasons I chose to be a part of the article was for the people who were not speculators or anyone who thought the market would go up forever. Just for normal people who had always played by the rules and then the game changed. Each situation is different and deciding to miss that first payment is a tough one.

Assuming that rjessup2mouse really is Ryan Jessup, let's take a look at how Jessup got to the point of parting with his own bit of Sacramento real estate. Below are some excerpts from comments made by Ryan Jessup over the last few years. Jessup's arguments (and tone) nicely encapsulate the mindset of many, whether "experts" or not, in the face of the housing bubble's implosion.

For those who choose not to wade through the excerpts, here is a summary of Ryan Jessup's assertions over the years:

(1.) Employment is strong
(2.) Population growth is strong
(3.) Home prices will not crash
(4.) It's all about affording the monthly payment
(5.) State government is strong
(6.) The sky is not falling
(7.) This will not be like the .com implosion
(8.) There are a lot of buyers out there (especially in my neighborhood)
(9.) My neighborhood is special/great/different [see green highlights below]
(10.) The economy is strong
(11.) Those who did not buy "missed the boat"
(12.) Real estate is not the stock market
(13.) Real estate is not wildly unaffordable
(14.) People have made millions on real estate
(15.) Construction employment is still going strong
(16.) My industry sources say things are good
(17.) This is nothing like the 1990s (as in not as bad).
(18.) The bottom is near
(19.) Good areas (i.e. where I live) are doing fine
(20.) The worst is behind us
(21.) I bought in 200x, I will be fine
(22.) Subprime will have little impact
(23.) The Bay Area will save us...

Now on to the excerpts. Let's start out with Ryan Jessup's take on the Sacramento Bee's ill-conceived 'No Panic' piece, which was published just as home prices were going negative (yoy).

rjessup2mouse at 7:28 AM PST Tuesday, June 20, 2006 wrote:

To a lot of negative folks - the market will be ok

There are people who write comments in these sections that would LOVE to see housing fall down. So you come up with your doomsday scenarios and facts to support your own theories. Sorry - this article is one of the better ones around. Solid job and population growth in Sacramento will keep from a market crash. Sorry for all you "experts" out there who need to bash the bee and think the market is 53% overvalued. If prices drop 53% here I will buy 20 of them..... I do believe prices will drop a little more and then basically become stagnation for a long time. People who own should not expect appreciation for 5 years at least. Homeowners - just ride out the current downtrend by staying in your house. Homebuyers - maybe wait a couple of months. Or find a homeowner who is panicking and get a bargain.

According to DataQuick, the total home price decline exceeded 53% back in December. Funny, I don't remember any recent reports of software engineers buying 20 homes at a time. Also note Jessup's advice for homeowners to ride out the downturn.

rjessup2mouse at 9:24 AM PST Thursday, June 22, 2006 wrote:

...I also agree there seems to be alot of negativity. Those generally come from people with a vested interest in seeing the market fall. Everyone tried to talk me out of buying in 2002 - saying that it was better to rent and the sky will fall. All I can say is I know a TON of friends that sure hate renting and I am sure glad I didn't listen to the naysayers. It really all comes down to the monthly payment and can you afford it...If you are in the house for the long haul - you will be fine if you lock in a good rate and price isn't as important...


rjessup2mouse at 2:45 PM PST Wednesday, June 28, 2006 wrote:

Prices will fall some but they won't crash
But I am suprised that there is a 42% chance that they won't decline. Prices will decline some but won't crash as incomes need to catch up. The State of California is Sacramento's main employer and the state is in hiring mode and doing well. There seems to be quite a few positions open.


rjessup2mouse at 9:13 AM PST Thursday, June 29, 2006 wrote:

...Prices will fall a little and then stagnate for a long while. There seems to be a vicious negative tone to the people who have an interest in the market and sky falling. I think you will see a pretty large difference in the .com drop and a housing drop. Wether you have money or not - there are people (alot) that have $ to buy houses and the region is not short of buyers . Plus the economy here is strong. People are simply waiting to see if they can get a better deal by holding off some. This combined with homeowners panicking to get the the best price now before any drop - that is why you see so many homes on the market. Prices have gotten high but they won't fall overnight (like stocks) and won't change much on even a yearly basis. I think the largest correction might happen in the next 3 months. Like I have said before - buyers - wait a little to get a better deal - homeowners - don't panic and remember why you bought your house (to live in) and ride out the real estate game in sac.


rjessup2mouse at 7:57 AM PST Wednesday, July 12, 2006 wrote:

I agree prices are falling - I never said anything otherwise. I just don't believe the extreme view of the market falling apart. Extreme views rarely happen and are more based on theories and in cases such as this thread - hopes of someone who has a vested interest. Alot of people want to focus on the negative and ignore positive. There are too many things in Sacramento's favor for housing to fall apart. I totally agree a price correction is currently happening. I think a 8-10% correction is in order, then basically very little or no appreciation for roughly 5 years.


rjessup2mouse at 1:25 PM PST Tuesday, July 18, 2006 wrote:

markets are dictated by emotion coupled with supply and demand.I think there will be some more slight drops followed by some large stagnation. Can't wait to see all "the sky is falling" comments in this thread shortly.


rjessup2mouse at 10:10 PM PST Wednesday, August 2, 2006 wrote:

no the sky is not falling but there are going to be bouts of depreciation and people that have a difficult time. Sacramento will be ok. People who are looking for massive depreceation are in for a very slow letdown...


rjessup2mouse at 5:01 PM PST Thursday, August 3, 2006 wrote:

jobs are very healthy and growing in sacramento right now. Be thankful as that does have the biggest impact and is a massive cushion against the sky is falling folks...


rjessup2mouse at 8:24 PM PST Wednesday, August 16, 2006 wrote:

people who are waiting for a crash are in for a slow dissappointment. Prices will probably fall a little more and then hold steady for awhile. The regional economy is too strong for a crash. In fact I have seen alot of Pending Sales in my area (East Sac) because some folks are swooping in to pick up $10-20k price drops...


rjessup2mouse at 7:34 AM PST Thursday, August 17, 2006 wrote:

NoNewArena sounds like a reasonable voice


rjessup2mouse at 9:15 AM PST Thursday, August 17, 2006 wrote:

The people who want housing prices to crash are people who have an agenda. So they try and add fuel to the fire and get joyful of a families demise, just be glad you are not them. There is alot of jealousy over missing the boat and not making $ while others made a lot of money. yeah - prices may fall a little - it isn't going to crash - and the local economy is strong - and mortgage rates are falling. There are alot of buffers. I am already seeing some Pending sales in my neighborhood finally. Buyers wanted to see 10k -20k price drops. People seem to forget there are alot of buyers. And simple math - owning your own home over the long run saves $$. It seems as if its a big game/stock market right now. When prices do a hit a bottom - I bet they spring back up pretty good as people pull inventory out because their houses are making money again and buyers pent up demand comes in pretty quickly.


rjessup2mouse at 12:59 PM PST Thursday, August 17, 2006 wrote:

Be funny when the price bottom hits to see how fast the mentality turns again. Sacramento housing will not fall 25% - thats too steep a decline with so many buyers out there.


rjessup2mouse at 9:05 AM PST Friday, August 18, 2006 wrote:

No the market will not tank - sorry for people who want it too its simple math. what you would be paying for rent principle tax write off = Sacramento is not as overpriced as you would think. sorry andersb - the local economy does matter and the housing market is NOT the stock market. They are both assets but they ACT VERY DIFFERENT. People need to realize that the underlying factors that make them different but I will let you figure that out yourself. I am blown away by the hositlity of people on these postings with their number twisting to try and persuade that the housing market is going to fall 50%. Yes - the market is dropping right now and may drop a little more. But I bet it won't even drop 10% more. But there are alot more factors than simple hope it tanks so you can make a buck by getting a cheaper house. Seems some areas are already starting to rebound (midtown, east sac and med center area)...There are A LOT of buyers out there.


rjessup2mouse at 11:48 AM PST Friday, August 18, 2006 wrote:

...There are too many good things about Sacramento for the market to tfall alot. People have been saying the Bay Area is totally unafforadable and overpriced for about 25 years. that doesn't mean that it was going to drop. Just because some people don't have money - doesn't mean it isn't out there. Don't get me wrong - I probably will not buy in the next 2-3 months or so to see what happens. The market is not good- except maybe closer to downtown - that seems to be showing some suprising strength the last couple of months as prices dropped some and inventory is lower.

rjessup2mouse at 12:43 PM PST Friday, August 18, 2006 wrote:

...People have made MILLIONS on real estate. I don't believe i know ANY wealthy renters but I know a TON of wealthy homeowners...


rjessup2mouse at 8:38 AM PST Thursday, August 31, 2006 wrote:

...Currently I don't believe prices are really that much higher than they should be. I am sure alot of people would disagree with that and probably about 90% of folks on this forum(most people on this forum have a vested interest in wanting prices to come down)...I believe housing will fall maybe a little more and then hold steady for a long time. Just my personal opinion but my track record for being correct has made a lot of $ for people.


rjessup2mouse at 8:46 AM PST Thursday, August 31, 2006 wrote:

I see you are a doomsdayer. Yes - even though the state is adding many jobs and employment is very strong in sacramento its going to all fall apart because....housing employment is down? ummm hate to tell you that construction employment is doing REALLY well right now. All of my construction sources say there is more work then they have folks right now. And comparing the 90's bust to today is comparing apples and oranges. But these housing forums are full of it. Some people on these forums need to get up in the morning and drink a little reality.


rjessup2mouse at 9:25 AM PST Wednesday, September 20, 2006 wrote:

Home prices are close to bottom...Some really good deals are out there. Good areas seem to be closer to downtown...


rjessup2mouse at 12:07 PM PST Sunday, September 24, 2006 wrote:

Thinking a 40% decline huh? your in for a big let down. And heck - that 40% you said was modest. why not bottom at 75%?? you should be able to pick up a 2000 sq foot for around $150k soon right? if you wait long enought maybe at $125k? Some people are absolutely nuts - how do you possibly think it could decline by that? how?


rjessup2mouse at 7:32 AM PST Sunday, October 1, 2006 wrote:

East Sac, Med Center, Midtown and Land Park have been selling alot lately. Closer to downtown seems to have gotten hot(relativly) in the last month and a half actually.


rjessup2mouse at 11:00 AM PST Wednesday, October 18, 2006 wrote:

...I disagree that prices will drop much further though...I think prices by far have gone through the worst of it now.


rjessup2mouse at 7:23 AM PST Thursday, October 19, 2006 wrote:

...and no - I bought in 2002 - I am fine...


rjessup2mouse at 8:57 AM PST Saturday, December 16, 2006 wrote:

...[Y]ou paint a pretty bleak picture of downtown. I think there are plenty of beautiful areas in downtown, east sac , med center and such.


rjessup2mouse at 7:41 AM PST Friday, December 22, 2006 wrote:

Have to completely disagree with Mr.Lyon's assessment on 10% decline for sacramento. Most "experts" predict 3.5%. His is by far the biggesst drop prediction I have read about. This last year seems to have come in about 8.2%. I thought it would have been 10% this last year so it was almost 2% better than i even expected. So is Mr. Lyon saying that this year should be worse than last? Why is he the only one saying this?


rjessup2mouse at 10:25 AM PST Friday, December 22, 2006 wrote:

I have no number crunching but I would have to say that I predicted a 10% drop for the year last year (I was off by 2% )and I will predict a 3-4% drop this year. But I am no expert - I just listen to people who are in the industry and what they see happening.


rjessup2mouse at 9:07 AM PST Sunday, December 31, 2006 wrote:

...Smart money right now is saying that sac is going to do 0 to -3% for the year....


rjessup2mouse at 1:08 PM PST Friday, January 5, 2007 wrote:

people are so negative that have an agenda or a vested interest. The bee has covered stories that make housing look bad and they cover stories that make housing look good. Are you some of the same folks that said it would be down 20% this last year? I remember those predictions a year ago. Looks like Sac was down 8.2%. Some areas in Sac were worse than that and some areas less. But just hoping/waiting for the bottom to fall out is not going to make it happen. California Real Estate is and always will be a good investment long term. The worst is over. That doesn't mean it is bottom but I believe by far the worst is behind.


rjessup2mouse at 10:01 AM PST Wednesday, January 17, 2007 wrote:

Oak Park is changing and I have seen investor interest in it. Next to it - The med center area - is a really good place to have a home and rather safe. Remember - not all of Oak Park is considered "bad".


rjessup2mouse at 8:22 AM PST Wednesday, March 14, 2007 wrote:

...I am not to worried about the subprime headlines of right now. It will have some impact I am sure but not much. Just like everyone was saying the housing market would already be down 35%...


rjessup2mouse at 8:41 PM PST Wednesday, April 4, 2007 wrote:

I think Med center area is already pretty nice.


rjessup2mouse at 1:02 PM PST Thursday, April 5, 2007 wrote:

kindof what I have been saying - Dowtown and Midtown are solid
the suburbs and sub divisions have taken a large hit while closer to downtown has been fairly steady. The houses closer to downtown are bouncing back quicker because people are realizing that you can't make these homes anymore and therefore have good price stability. There will only be less - never more of these homes.


rjessup2mouse at 8:20 AM PST Friday, April 13, 2007 wrote:

funny to see the gloomers again :-) - always makes me chuckle to see the 40% drop again predicted/wanted by home buyers. I am sorry for the doom and gloomers - your not going to get anywhere near that price drop. Not even close. Housing I think is going to take a small hit again - with negative publicity being the bigger culprit than what will actually shake out with the subprime situation. People tend to forget that we are tied to the bay area home prices and that the local job market is plenty strong. I am no real estate agent or optimist - just a realist. For the past few years my predictions have been pretty close - and i would predict possibly another 2-4% drop...


rjessup2mouse at 12:53 PM PST Friday, April 13, 2007 wrote:

...my finances are fine are yours? do you own a house or have you ever? I didn't think so. WIll you? and do the math - its not that tricky - fairly simple actually. As far as predictions - I am sorry to say that it has been fairly accurate. I do appreciate how emotional you are over it - I believe you probably one of the "its going to drop by about 30%" correct? Makes me laugh.


rjessup2mouse at 12:59 PM PST Friday, April 13, 2007 wrote:

isn't it funny? I have been seeing these posts for 2 years now - the predictions by most of the gloomers have been that the market would have dropped 25% as of now. It has not. I think I said 7 - 15% from the start.

I find the final two comments, made in January 2008, particularly interesting given that Jessup purportedly stopped paying his Oak Park mortgage in early 2008.

rjessup2mouse at 11:33 AM PST Friday, January 18, 2008 wrote:

a little advice - the really good deals
If you want a bargain and something thats gonna retain its value. Buy where a bunch of houses are NOT for sale and try and scoop up a bank repo. Some downtown and surrounding areas have it- just gotta find the right pockets of places.

0 out of 3 people found this comment helpful.


rjessup2mouse at 1:46 PM PST Saturday, January 19, 2008 wrote:

time to buy or at least look pretty hard
you folks that are sitting should be looking right now.

1 out of 5 people found this comment helpful.

Land(ing) in the Sacramento Bee

Today, the Sacramento Bee mentioned this blog for the first time.

[A] prominent real estate blog, Sacramento Land(ing), which has chronicled the housing bust for three years, has announced it is scaling back "due to time constraints."

Some loyal Land(ing) readers are seeing the pullback – and departure of other housing bubble bloggers – as a sign that most of the collapse has happened now and the bottom is approaching. Land(ing)'s author – whose identity is not known – was defiantly a bear when most in the real estate industry were bulls. He recently counseled his audience, "The story is not over yet. The 'landing' is still in progress."

LOL! I guess I should scale back more often ;)

Forbes: Stockton Home Prices to Drop to Mid-1990s Levels

From Forbes:

Topping the charts [of the Forbes Misery Measure] is Stockton, Calif., which was the runner-up on our list last year...Stockton was ground zero for the housing boom and now the subsequent bust. Home prices more than tripled between 1998 and 2005 and then came crashing down last year...Things are not looking much brighter in 2009 as housing prices are expected to fall another 36% on the heels of a 39% drop in 2008. Also, unemployment is expected to jump to 13.3% from 10.4%, according to economic research firm Moody's Economy.com.
~~~
[H]ousing prices should keep falling back to their mid-1990s level when the median home price was $130,000.

From Business Week:

It was good while it lasted. But the housing crisis and the recent economic downturn have forced many of the America's fastest-growing towns to adapt to the new reality of falling home prices and rising unemployment. And it's not clear whether the builders will return or whether the nation's next boomtowns will rise elsewhere.
...
When the construction boom crashed a few years ago in the farming town of Elk Grove, Calif., south of Sacramento, it caught retail developers off guard. The launch of the 1.1 million-square-foot Elk Grove Promenade open-air shopping mall, originally set for 2008, has been pushed off until the end of next year even though the project is nearly complete. Not only is the developer struggling financially, but the mall is located on the edge of a rural expanse where Elk Grove was expected to develop.

"When everything was booming, the builders said, 'We're going to get ahead of the game,'" said Garrick Brown, director of research for Colliers International in the Sacramento regional office. "Usually retailers follow rooftops. In this case, they followed building permits."

From the Sacramento Bee:

The McClatchy Co. will trim payroll, curtail its retirement plan and cut operating expenses by at least $100 million following a dismal fourth-quarter earnings report Thursday. Posting a net loss for the quarter, The Bee's owner is readying its third round of major cutbacks in less than a year. Details are still to come, but layoffs are likely, and the Sacramento publisher will freeze its pensions and suspend contributions to its 401(k) plans.

ADDED - From the Modesto Bee:

County Bank, reeling since the real estate market collapsed in the Northern San Joaquin Valley, was shut down late this afternoon by state regulators, the Federal Deposit Insurance Corp. announced. The FDIC agreed to sell bank's deposits and branches to Westamerica Bank of San Rafael...The move comes a week after County Bank reported its losses linked to bad real estate development loans had swelled to about $96 million.

"Could it get any worse for Sacramento's home builders?"

From the Sacramento Bee:

Could it get any worse for Sacramento's home builders? Publicly traded home-building giants and family builders alike endured their harshest year in possibly a generation in 2008, according to statistics being released today by the Folsom-based Gregory Group. Area home builders sold just 4,695 houses last year in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties [down 73% from the 2004 peak]....

During the fourth quarter, average new home prices fell 10 percent from 2007, to $384,347....The capital region's new home average peaked just shy of $500,000 in the second quarter of 2006....

2006 Sales Forecast: 14,094 (approx.)
2006 Sales Reality: 9,588

2007 Forecast: 9,500-10,000
2007 Reality: 7,407

2008 Forecast: 7,710
2008 Reality: 4,695

Gregory Group Q4 2008 statistics

From the Sacramento Union:

Ashley Feeney said that as a Sacramento homeowner and one who works in the building industry, he was disappointed to see home prices plummet in 2008. “I’m still working, so basically my situation is okay, but having to wake up every day having the psychological tolls of the newspapers and the media reporting the pain of the nation is a little depressing,” Feeney said.

From Christianity Today:

Pastor Johnny Murillo had often empathized with his congregation members at Christian Worship Center in Sacramento, California. But when one member came to his office during the 2006 Christmas season, panicked and desperate to keep his home from foreclosure, it hit too close to home. "Dude, I know what you are going through," Murillo told him. "There is a way out."

He really believed there had to be a way out. The only problem was that at the time, he didn't know what it was. Unbeknownst to anyone else, Murillo was also facing foreclosure.

From the Stockton Record:

Rep. Dennis Cardoza, D-Atwater, has a plan to reverse the housing crisis and boost the economy: a 4 percent interest rate on fixed-rate, 30-year loans for all current homeowners and qualified buyers of foreclosure properties. Under his newly proposed legislation, federal mortgage giants Fannie Mae and Freddie Mac would allow homeowners to refinance their mortgages at 4 percent interest on 30-year, fixed-rate loans. That would benefit not only homeowners struggling to make monthly payments but also those who have faithfully paid their bills each month but have been unable to refinance because of lost equity.
...
Carol Ornelas, CEO of Visionary Home Builders, which builds housing for low-income families and also provides mortgage counseling, said the plan wouldn't help many people in the Central Valley, though, because they still would have too-high mortgage costs even at such a low interest rate.

From the Sacramento Bee:

California will close most state offices on the first and third Fridays each month starting in February, padlocking DMV outlets and other services while reducing state worker pay to help survive a massive budget problem, according to a state Department of Personnel Administration memo...The state will save an estimated $1.3 billion over 17 months under the furlough plan. The move could have a significant impact on the Sacramento region, where the state employs 73,536 workers in Sacramento County alone, including 63,818 full time.

"An MSM Confession"

From the Sacramento Bee:

Sacramento-area real estate market befuddled the experts

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

But many of these seers proved correct.

From the Sacramento Bee:

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

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

From the Sacramento Bee's Bob Shallit:

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

From Rocklin & Roseville Today:

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

From Home Front:

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

From the Modesto Bee:

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

From the Appeal Democrat:

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

From the Sacramento Business Journal:

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

From the Appeal Democrat:

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

From the Sacramento Business Journal:

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

From the Wall Street Journal:

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

From the Sacramento Bee:

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

From the Stockton Record:

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

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

From the Stockton Record:

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

From the New York Times:

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

"Why didn't they see this coming?"

From the Sacramento Bee:

Restrictions in a homeowner rescue plan proposed by Sen. John McCain would likely block thousands of struggling Sacramento-area borrowers from participating, analysts say...The proposal would exclude borrowers who used 100 percent financing during the housing boom and possibly all who received loans without documenting their incomes. It also prohibits investors.

In the Sacramento area, such restrictions will rule out massive numbers of borrowers who need help, some said Wednesday. "I would say there's not going to be a lot of homes in that basket," said Scott Thompson, partner at Mortgage Resolution Services in Carmichael.

From the Sacramento Bee:

[I]t's hard competing against the collapsing Dow, rising unemployment and a financial crisis that appears resistent to bailouts. Anxious consumers are increasingly tight-fisted, putting off purchases and staying away from stores. "People are just scared," said Paul Atwal, a sales associate at Aquamarine Jewelers on Marconi Avenue. "They have money, but they don't want to spend the big bucks. They say, 'I may lose my job.' "
...
In a sign of tough times, he said, more people are coming in to sell their jewelry for scrap gold than buy it.

From the Wall Street Journal:

All of you who rent -- a respectable American tradition -- can look forward to buying more cheaply in the future. Take your time.

The housing disaster-in-motion was widely reported, complete with warnings, before the crash. But every word fell on deaf ears, because bubbles are never about reason, cool calculation and courageous politicians willing to risk defeat.
...
To the extent that the bailout shores up existing home prices and its paper, it delays the inevitable. It does not assure the early return of buyers.

From the Washington Post:

[A]s news organizations chase exclusives about the Wall Street meltdown, they also are grappling with a troubling question: Why didn't they see this coming? "We all failed," says [Charlie] Gasparino, a former Wall Street Journal and Newsweek reporter. "What we didn't understand was that this was building up. We all bear responsibility to a certain extent."
...
[T]he business press never conveyed a real sense of alarm until institutions began to collapse...It is not easy for journalists to take on the masters of the financial universe, especially when the market is going up and everyone is happy...PBS's David Brancaccio says that "we journalists have had a long history with accepting what the smart people hand down to us, especially on complicated stuff. . . . When I would cover these very issues about problems with regulation, problems with 'is this a disaster waiting to happen?' people would say: 'Well, young man, you don't have an MBA like I do. Trust us. We went to business school.' "
...
[J]ournalists are reluctant to target those who are guzzling the punch: the overstretched folks who bought houses they couldn't afford and second homes they wanted to flip, all based on the presumption of endlessly rising prices.

PMI on Sacramento: 96% Chance of Lower Home Prices in 2010

From the CVBT:

Increases in foreclosures and unemployment have heightened the risk of further home price declines over the next two years in the Central Valley, according to a report Wednesday from Walnut Creek-based PMI Mortgage Insurance Co....PMI’s risk scores translate directly into its estimated percentage risk that home prices will be lower in two years.
...
The risk of future price declines rose across the Central Valley...Sacramento is...at 96.3 percent, compared to a first quarter risk index of 84.4 percent.

From the Merced Sun-Star:

"Our entire industry is fraught with rumor and innuendo," [bank spokesman Thomas] Smith said. "Rumors are pretty much rumors until it becomes action." Though County Bank, much like all other lenders, has been dealing with bad loans, he said he intends to be at his desk next year talking about how the housing market has recovered.

From the Sacramento Bee:

Call it another casualty of the Wall Street bailout. A hotly debated down payment assistance program that started in Sacramento and helped fuel thousands of home sales nationwide came to an end Tuesday. Last-ditch efforts this week in Washington by Sacramento housing giant Nehemiah Corp. of America and others failed to save the program, which needed congressional approval.
...
In a region where some say up to 40 percent of first-time buyers are using the down payment assistance program, its demise raised alarms that it will trigger a noticeable slowdown in the capital region's real estate market. "I think we're going to see a dramatic difference in sales next month," said Jeff Johnson, Citrus Heights branch manager of Platinum Home Mortgage.

Others said it might not be huge, but "it will be meaningful and noticeable in the Sacramento market," said Andrew LePage, analyst for La Jolla-based property researcher MDA DataQuick.

From Globe and Mail:

Wyatt Kenoly doesn't have a lot of time to watch politicians haggle over the $700-billion (U.S.) rescue package for Wall Street or follow the stock market gyrations. He's too busy trying to stave off foreclosure of his home in Stockton, Calif. The monthly payment on his $425,000 mortgage is about to double to slightly more than $4,000. He and his wife bought the house in 2004, taking an interest-only loan that has been resetting at higher rates for the past couple of years. While the loan payments have soared, the value of the house has sunk and it's now worth about $240,000. The couple just can't pay the mortgage any more. “It is grim,” Mr. Kenoly said Tuesday after spending the morning negotiating with his bank, HSBC Bank. “We can only hope and pray.”

Mr. Kenoly's predicament reflects growing concern about the U.S. housing market and whether the problems that have plagued the sector are getting worse. Housing is at the root of the turmoil on Wall Street and at the heart of the proposed bailout package. Treasury Secretary Henry Paulson has said that even if the bailout is passed by Congress, everything depends on a recovery in housing. Experts say that recovery is far off.

From BusinessWeek:

American savers, take a bow. This is your moment of vindication. Your hour of glory. And you earned it (in a manner of speaking). You resisted the siren call of plastic teaser APRs, dutifully living within your means to store money for a rainy day. You never took out an interest-only mortgage. Never had to pawn the copper pipes from your exurban McMansion to pay the reset on your liar loan. Your credit score would have gotten you into Harvard at age 12.

Good for you! Your reward: injurious savings yields, inflationary rot, and election-season neglect, all served up with a dollop of institutional insecurity...All of which might be tolerable to the lonely and beleaguered saver if he weren't taunted daily by lopsidedly pro-spending, pro-creditor news stories. Forget about moral hazard. Forget about rewarding profligacy. Washington is hell bent on putting a floor beneath the housing market.
...
Maybe savers' ultimate vindication will arrive when and if every asset is so deflated, credit is so choked off, and misery is so prevalent that only those with cold hard cash can lob in lowball offers for homes, cars, and everything else.

Bee: "Bailout rejection could hurt Sacramento region's recovery"

From the Sacramento Bee:

The rejection of the Wall Street rescue plan may have jolted Sacramento's struggling economy and harmed the fragile recovery in the region's housing market...[Real estate broker Steven] Krohn, who's also an economist, had been seeing evidence lately that housing prices were firming up in Sacramento. Now he wonders where the market's going. "We have a lot more gloom and doom than confidence," Krohn said.
...
Others, though, were pleased with the House vote. Rick Hagstrom, chief operating officer at Tri Counties Bank in Chico, called the bill "a gross disruption of free markets" and said its proponents were exaggerating the severity of the problem. There's money available, he said, but borrowers are becoming gun-shy.
...
Kevin Harper, a resident of Cool in El Dorado County, had his house repossessed this year. A carpenter who worked on bridges, he was injured on the job. Unable to work, he said the banks wouldn't help him stay out of foreclosure. Now, he has no interest in seeing Wall Street bailed out. "I think they should have to pay exactly like I had to pay," he said. "I had to declare bankruptcy. Those fools, they should, too."

From the Sacramento Bee's Editorial Page:

Could more Republican members of the House of Representatives act like adults, please? If they can bring themselves to do so, the House may yet do the responsible thing and pass the financial bailout bill that failed on Monday. If not – well, let's not dwell on such a depressing prospect. What happened Monday was depressing enough.

Looks like The Bee may need its own bailout soon enough:

The McClatchy Co. had its credit rating downgraded again Monday amid continuing fears about the Sacramento publisher's falling revenue and profit. Standard & Poor's Ratings Services said it was concerned about McClatchy's announcement Friday that it had renegotiated its bank loans to provide more breathing room for the company. While investors seemed to welcome the news, S&P took it as a sign that McClatchy's troubles are deepening more quickly than expected amid a weak economy and competition from the Internet.

From the Associated Press:

The three vulnerable Democrats voting "yes" [on the bailout bill] were Tim Mahoney of Florida, Paul E. Kanjorski of Pennsylvania and Jerry McNerney of California. Some of those who voted for the bailout said they did so in possible conflict with the districts they represent.

McNerney, a wind engineer and political neophyte before his election to Congress in 2006, said his district opposed the bailout but he felt it was best for the economy. "People's jobs are a great deal dependent on this," he said, as well as "their home loans and all of their livelihood."

From News10:

Doris Matsui, D-Sacramento, also supported the bailout plan, stating that it would have taken responsible steps toward solving the financial crisis..."We must protect people's jobs. We cannot stand by and watch as businesses are forced to cut back operations. We have to preserve people's retirement accounts, their ability to access credit to buy a home, to open a small business or take out a loan to send their children to college," said Matsui.

From the Financial Post:

At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.
...
[W]hat should be done when that pyramidal scheme starts crashing to the floor, because of a series of cascading failures or concern from the central bank that inflation is getting out of control? It’s obvious that credit will shrink, because everyone will want to get out of risky businesses, to call back loans and to put their money in safe places. Malinvestments have to be liquidated; prices have to come down to realistic levels; and resources stuck in unproductive uses have to be freed and moved to sectors that have real demand. Only then will capital again become available for productive investments.
...
As Friedrich Hayek wrote in 1932, “Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ... To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about ...”

John Courson - The Next MBA President?

From the Sacramento Bee:

A veteran Sacramento mortgage banker who has been lobbying Congress to pass the $700 billion bailout has been accused of defrauding 11 of his former branch managers and embezzling $879,000 from them in the collapse of his Folsom mortgage brokerage in 2007. The allegations against John A. Courson, owner of the defunct Folsom-based Central Pacific Mortgage Co., are described in a civil lawsuit filed last year by eight of Central Pacific's former branch managers in California, two in Maryland and one in Florida.

Courson, 66, is chief operating officer of the Mortgage Bankers Association of America in Washington, D.C...Courson, a resident of Rancho Murieta, was named chief operating officer July 22. He is scheduled to become MBA president in January.
...
Florida branch manager and owner Jenny Mann alleges she lost $20,000. "When I saw he was appointed chief operating officer, I nearly died," Mann said from North Florida, where she lives. "Don't they know he did this to us? I would have assumed he would never work in this industry again."

From the Sacramento Bee:

Bertram Chatham, owner of a Citrus Heights Halloween store, says he's just as good a businessman today as he was a year ago. So when Wells Fargo & Co. slashed his available line of credit this summer from $26,000 to $10,000, he knew he'd gotten snared by the nation's credit crunch. The reduced financing prodded him to scale back his operation this fall, at a cost to the economy of about 30 jobs..."Credit is drying up," Chatham said. "Not just for the big banks but the guys on the street."
...
"No matter how you feel about Wall Street and the high-finance executives on Wall Street, you have to understand that no matter what, this would eventually land on Main Street's door," said Joe Anfuso, president of Central Valley homebuilder Florsheim Homes. "It's going to end up on everybody's front door in terms of credit cards being revoked, no more home equity lines, small business lines of credit, payroll lines of credit."

From the Sacramento Bee:

Hard times are swelling attendance at job fairs both locally and across the state. At McClellan Park on Thursday, 400 job seekers went through in the first hour of the state Employment Development Department "talent transfer" fair, designed to help unemployed workers from the depressed housing industry get into jobs where their skills are in demand. The five-hour fair drew nearly 1,000. State officials said job fairs are seeing about twice as many participants as they were getting only two years ago. Local companies said they're seeing two to three times the candidates they had at recruitment events in 2006.

From News10:

At Sacramento Crisis Nursury, every bed has been filled the last two weeks and Director Sue Bonk says the economy is the reason. "There are no jobs, and the stress level in people's lives is just getting over the top," Bonk said....Domestic violence counselors say phone calls to crisis centers are up this year and that many victims are afraid to leave abusive homes and face a worsening economy.

From the Sacramento Business Journal:

Matt Lemos earned $80,000 a year as a customer relations manager at Pulte Homes Inc. when he was laid off in June 2007. This year, he expects to make $20,000 to $30,000 less from two companies he started using his landscaping background and development contacts.

Lemos is not alone. Personal income growth slowed in 2007 in most U.S. metropolitan areas, but Greater Sacramento fared worse than the national average, according to estimates released last month by the U.S. Bureau of Economic Analysis. “California is bearing a larger brunt of what started as the housing crisis,” said Suzanne O’Keefe, an economist with the Sacramento Regional Research Institute. “And we seem to be losing jobs in more and more sectors as the time passes.”

From News10:

A Stockton company that paints dead lawns green is busier than ever because of the foreclosure crisis. The business is called Greener Grass Company and 40 times a month [versus 10 times in the first six months], owner Nick Terlouw is making brown yards look green again.

From the Modesto Bee:

Mark Wilbur, owner, McRoy-Wilbur Communities Inc: "As a builder, it is very painful to deal with this foreclosure problem, but a hands-off approach will ultimately be best for everybody. Many of the people 'losing' their homes have simply chosen to walk away because of declining values. Making victims for political gain seems to be rampant in both parties.

"A major reason many loans have not been modified or rewritten is that the owners cannot show economic hardship. The current mentality is to ignore your debt if it is not financially beneficial. The media has been just as guilty as our politicians in convincing people they have been victimized rather than irresponsible."

From the Modesto Bee:

When the mortgage bubble burst, Americans were "shocked" at how many Wall Street buccaneers had been gambling in a vast pyramid scheme with someone else's money. Paper fortunes were made buying and selling questionable subprime mortgages on the silly assumption that such gargantuan inside profiting would always expand -- even as the number of home buyers able to buy overpriced properties was shrinking.
...
All that remains of this Ponzi scheme is the election-year blame game...Who re-elected these shady politicians of both parties?...We citizens did -- red-state conservatives and blue-state liberals, Republicans and Democrats alike. We may be victims of Wall Street greed -- but not quite innocent victims.
...
We created the cultural climate for this shared madness. Television shows advised how to "flip" a house after putting in cosmetic improvements. Real-estate seminars and popular videos convinced us that homes were not places to live in and raise a family but rather no different from piles of chips on a Vegas table.

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

From the Sacramento Bee (updated link):

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

From the Sacramento Business Journal:

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

From the Sacramento Bee:

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

From the Sacramento Bee:

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

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

Or maybe not.

From the Sacramento Bee:

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

Prices/Sales by County

From the Modesto Bee:

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

From the Appeal Democrat:

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

From the Sacramento Bee:

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

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

From the Sun Post:

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

From the New York Times:

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

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

'The lenders still just have their heads in the sand'

From the Modesto Bee:

A record-breaking 3,000 homes were lost to foreclosure during July in the Northern San Joaquin Valley, pushing the 12-month foreclosure total to more than 20,000 homes. Mortgage defaults on those properties cost lenders about $1.1 billion in July, according to statistics released Tuesday by ForeclosureRadar....

"We're going to see even more foreclosures this month," predicted Sean O'Toole, founder of ForeclosureRadar, which tracks every California foreclosure. "The lenders still just have their heads in the sand." O'Toole said mortgage companies continue to be unrealistic in dealing with borrowers because they haven't accepted how bad the real estate market is in places like the Northern San Joaquin Valley.

From the Appeal Democrat:

Roughly three quarters of Yuba-Sutter homes purchased in the last five years are worth less than their mortgages, said Zillow.com, an Internet home-value provider.

And the last year has continued to be brutal to area homeowners. Zillow.com's median home value estimate for the second quarter sagged by 23.4 percent for the Yuba City metropolitan area compared with a year ago. Nationwide estimates dropped 9.9 percent for the same period.

"Obviously, Yuba City isn't doing that wonderful, comparatively," said Zillow spokeswoman Sarah Mann.

From the Stockton Record:

Sales of existing homes - mostly foreclosures - in San Joaquin County continued to rise in July for the sixth consecutive month. A total of 1,036 single-family home sales closed last month, up nearly fourfold from the previous July, according to figures from the latest Coldwell Banker Grupe-TrendGraphix monthly sales report, based on Multiple Listing Service data.
...
This while the median selling price countywide continued to drop, from $220,000 in June to $215,000 last month. That continuous slippage back to selling prices not seen since spring 2002 is driving sales, real estate brokers said.

From the Financial Times:

Subprime mortgage defaults are soaring in the northern Californian city of Merced and angry local officials are placing much of the blame for the rout on property speculators from the nearby San Francisco bay area..."There should be a special place in hell for those people," James Marshall, Merced city manager, says of the speculators.

From the Merced Sun-Star:

Merced Councilwoman Michele Gabriault-Acosta, a residential Realtor, hadn't read the Financial Times piece, but said such stories could keep people from moving to Merced. "It doesn't help matters," said Gabriault-Acosta. "People look at that and they automatically think negatively of the city." Gabriault-Acosta said her real estate clients routinely mention negative news coverage they've read about Merced.

She likened reports of Merced's housing bust to coverage of the downturn Detroit experienced in the 1980s during the collapse of the American auto industry. "You start to second-guess whether it's somewhere you really want to move to and bring your family to," she said.

In Come the Waves: Sacramento Bee to Cut Workforce by 8.1%

From the Sacramento Bee:

The McClatchy Co., battered by declining profits and revenue, announced a 10 percent companywide cut in its work force Monday, including the Sacramento publisher's first-ever across-the-board layoffs. The decision will eliminate 1,400 jobs through a combination of layoffs, voluntary departures and attrition. The Bee, McClatchy's largest paper, announced it will eliminate 86 jobs, 46 by layoffs. The reduction will trim the paper's workforce by 8.1 percent...McClatchy is the largest public company in Sacramento and the third-largest newspaper chain in the country.
...
The economic downturn has been another big blow to publishers, particularly McClatchy. The company gets a third of its revenue from California and Florida, two of the states hit hardest by the crash in the housing market. For instance, The Bee's revenue fell 16.9 percent last year, or about twice as much as the company as a whole, according to Securities and Exchange Commission filings.

From the Sacramento Bee:

On the street level in Sacramento, where unemployment is 6.1 percent, it feels as though hard times are already here. "My sense is that we're in really big trouble," said Alice Strombom, a Sacramento attorney who was pumping gas at $4.64 a gallon the other day at a 76 station on Freeport Boulevard. "I don't have that normal sense that everything's going to be fine." She recently traded her Audi for a Toyota Corolla with much better gas mileage.
...
Two Sacramento dealerships have announced shutdowns in recent months, Paul Blanco Chevrolet and Great Valley Chrysler-Jeep-Mazda-Isuzu. Senator Ford stopped selling new cars.

The slowdown has affected general retailers. Arden Fair's traffic counts are lower than a year ago, while sales volumes are flat. Clothing stores seem to be getting hit hardest, said property manager Tod Strain. "We are feeling it, no doubt about it," Strain said.

From the Appeal Democrat:

Every day Steve Nickless and his crew load up a trailer with mowers and weed trimmers and get to work on lawns. The homes they visit, though, are unoccupied. Nickless, as an employee of BV Home Services, is hired to maintain hundreds of abandoned and foreclosed homes in the Central Valley.
...
The hundreds of vacant properties and the lack of upkeep on those homes caused Yuba County to address the issue through code enforcement...Finding responsible parties, though, may not be easy. "It's going to be difficult," Strang said. "This is a new type of violation we haven't seen before. We've had vacant homes before but not to this level."

'Epicenter of the Boom...Epicenter of the Bust'

From CNN Money:

Mortgage delinquencies will continue to rise over the next six to 12 months as home prices decline and economic conditions remain difficult, according to one forecast released Monday. The Core Mortgage Risk Monitor (CMRM), an index of foreclosure risk compiled by real estate data analyzer First American CoreLogic, increased 16% compared with the same period last year.
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CoreLogic forecasts delinquency-risk to be worst in California's Inland Empire region, where home price appreciation has declined more than 21%. Elsewhere in the golden state, the Los Angeles and Sacramento areas are considered high risk for delinquencies.

From CBS 13:

[S]ome foreclosed homes are being damaged before they're even vacated. In 20 years of selling homes, agent Jon Nastro is now seeing more damage done by people with a personal attachment. Homeowners who have lost their homes...In about one out of every five foreclosures, Jon finds damage that's obviously not accidental. Cabinets ripped out, appliances stolen, people taking off with anything even if it is nailed down.

From the Stockton Record:

Apartment occupancy is up, and demand for rental units is up. That's usually a prime scenario for rising rents, but rents, at least for apartments in San Joaquin County, are flat, year to year...According to RealFacts, San Joaquin County apartment rents haven't increased at all from $881 in the first quarter of 2007 to last quarter.
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Terry Hull Sr., whose family owns and operates Property Management Experts in Stockton...said he's being very careful right now about holding rents steady. "My experience is you have to watch the unemployment rate," he said. "When people aren't working, you have a hard time raising rents."
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Hull said he expects the number of houses for rent to grow over the next year, as newly purchased foreclosures go onto the market as rentals. A year from now, when all the empty foreclosed houses the banks are currently holding wend their way to the rental market, there will be an oversupply of rental houses, he said. "If I had to guess, I would say 'Buyer beware,' " he said. "Right now, it's easy to rent out. In a year, I don't think it will be. It has the potential to be rugged if the economy stays in the tank."

From the Sacramento Bee:

In the first half of the decade, privately held Beutler rode the building boom to become the nation's largest new-home installer of heating, ventilation and air conditioning systems. With a full-time work force of 1,500, the company handled jobs from Bakersfield to San Jose to Chico. It controlled 60 percent of the Sacramento-area market and took in revenue of $212 million in 2005.

Then came the bust. For 2008, Wylie is hoping to do $65 million in business – an almost 70 percent drop from the peak. The company now employs just over 500 year-round workers. Last week, while some areas of the company's McClellan complex bustled, others were quiet. In several storage bays, hundreds of air-conditioning units sat stacked to the ceiling in boxes.

From the Sacramento Business Journal:

At a time when tighter credit is limiting the availability of financing, small businesses are finding it tougher to tap into a source of money that's targeted at them: U.S. Small Business Administration loans. For the start of the fiscal year on Oct. 1, 2007 through April 11, the SBA's 21-county Sacramento district reported both the number of SBA loans and their value is down from the same period a year earlier.
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SBA lending tends to be counter-cyclical: When the economy sours and business owners can't qualify for conventional loans, they seek government-backed SBA loans in greater numbers..."We're typically up, if not flat at worst, but now we're down. This is unusual," [National Association of Government Guaranteed Lenders president Tony Wilkinson] said.
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[Director of the SBA's Sacramento district Jim] O'Neal attributes the decline to an industrywide tightening of credit standards, and "a lot of businesses are finding that this is not a time to expand, and they're consolidating their operations and aren't looking to take on more debt."

From the Modesto Bee:

With soaring gas prices and unemployment on the rise, labor experts say they are seeing a different type of labor pool emerge: one that's highly-qualified, competitive and willing to take a pay cut from what they were previously earning...Many of those job candidates have long résumés that include experience in the mortgage, title, construction or related industries.
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"In general, we're noticing that there's a lot more people in the market looking for work, especially people with experience in title and mortgage companies because of the layoffs in those industries," said Nahrin Jacobs, division director of OfficeTeam in Modesto, a division of Robert Half International. At the same time, many companies are tightening their belts to cope with the economic downturn and jobs have become increasingly scarce.

From the Sacramento Bee:

Economic news once mainly confined to The Bee's Business section is now consistently on the front page, and often in both places. Wall Street's problem has walked over to Main Street.
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Covering the story has been a challenge because its ever-expanding outlines only became apparent over time. Yet, in my opinion, the paper has done a good job of organizing itself to meet the challenge and in seeking out local impacts in great detail from the ground up. For example, business reporter Jim Wasserman early on focused on troubles in residential real estate, reporting on the broader negative trends then only becoming apparent. His stories were filled not only with experts and brokers and real estate agents, but also with real people. Some told tales of woe about foreclosures, others were giddy over their first chance to own a home.
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Sacramento's place before and after the slowdown, [Business editor Cathie] Anderson said, gave the story a special resonance. "We were the epicenter of the boom and now we're the epicenter of the bust," she said.

Bank Bidding War Games

From CBS 13:

If you're looking to buy a home in the down market you may think you're getting a deal on a foreclosure. But beware, the bank may be one step ahead of you. Banks could be in a bidding war to sell you short...Banks find the fair market value on a foreclosed home then list the home for less -- sometimes tens of thousand of dollars less. What looks like a good deal to a potential buyer can spark a bidding war which drives the price back up for the banks and buyers.
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Tying to buy a foreclosed home is a nightmarish experience for Dan & Lori. They've waiting days then weeks to find out if their offer was accepted by the bank. "We were told different stories. We were told we were bidding against a certain person, then that there were five other offers," said Lori.

From Sacramento News & Review (hat tip Paranoid Renter):

A year or two back, when the housing market started to go all soft and squidgy, most real-estate agents pooh-poohed the notion of a bubble bursting. Couldn’t happen, they said. Wouldn’t happen. Too much was at stake. Too many people needed the bubble to keep floating along for it not to do so. Then it happened. And in Sacramento, it wasn’t just a matter of the bubble deflating slightly. Instead, it popped, leaving one hell of a mess in its wake. In many parts of the city, housing prices are down about 30 percent from their recent highs. The region has a higher percentage of homeowners in foreclosure than just about any other metro area in the country. We’re in the same club of shame, for Pete’s sake, as Detroit.

From Home Front:

[President-elect of the NAR Charles] McMillan talked about the sometimes strained relationships between the media and real estate agents who think the media has been overly negative. One questioner from New England asked about the image of real estate agents, however, noting that the National Association of Realtors ran full page ads in Oct. 2006 saying that: Now is a good time to buy. The questioner said that anyone who followed that advice in his part of the country has by now lost all their equity. McMillan kind of danced around that one, but it sure sounded familiar.

All during 2006 I recall calls from real estate agents to voice their concern about the tone of coverage as the market started to stumble. Almost always, they said it: Now is a good time to buy. And anyone who took their advice then has seen their values fall pretty hard. I am not saying anyone is always right or always wrong. But just as the media is often charged with having credibility issues, so too, does that apply to the real estate industry.

From the Sacramento Business Journal:

Greater Sacramento's home values have declined 30 percent since the peak of the housing market in fourth-quarter 2005....And almost 70 percent of families in the four-county region who bought their homes in 2006 have negative equity, one of the highest rates in the nation -- but far from the 90 percent-plus rates in Stockton and Las Vegas, according to Zillow. Almost 55 percent of homeowners who bought last year have negative equity.

From the CNNMoney:

The housing implosion is nowhere near over. In 75 of the 100 top U.S. cities, prices are expected to fall in the next 12 months according to Fiserv Lending Solutions...Pity the residents of Stockton, Calif., whose homes are likely to lose more than half of their 2006 value.

From the CVBT:

The U.S. House of Representatives may vote Thursday on a package of proposals designed to rescue the flailing housing industry and homeowners faced with foreclosure...If it were to become law, Congress would have to do something that it has been virtually incapable of doing – overriding a veto by President George W. Bush.
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But Central Valley Congressman Jerry McNerney, who has a proposal in the bill to raise FHA mortgage limits, says there may be enough support to cancel a presidential veto. “I don’t know what the President’s going to do but there’s really strong support for this here in the House and I think in the Senate as well,” Mr. McNerney says. “I think we’ll be in good shape to try and override that veto.”

"A common hope...is that...these waters will start to calm"

From the Sacramento Bee:

Calling the bottom of a real estate cycle is more than difficult these days. It's perilous, an invitation for news sources who answer the question to be ripped by critics. There are so many points of view and so much passion. And there are so many who have offered false sightings in the past two years.
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What many agree upon is that we're in the worst of it right now, shooting the river rapids and hanging on for dear life. A common hope, now that the first quarter is history, is that sometime in the third or fourth quarter of this year these waters will start to calm.

From the Sacramento Business Journal:

The median price of an existing, single-family detached home in California during March 2008 was $413,980, a 29 percent decrease from the revised $582,930 median for March 2007, C.A.R. reported...In the Sacramento area, the median price for a single-family home sold in March was $258,460, 28.8 percent below the sales price of a year ago....

From Sacramento State News:

Only 49 percent of area residents believe things in the Sacramento region are going in the right direction—the first time since 2002 that less than half of residents surveyed are happy with the direction in which the region is heading....

From the Wall Street Journal:

Local television stations across the country are suffering a decline in advertising revenue in the tough economy, despite a blockbuster political season. Buffeted by the faltering real-estate market and shrinking auto sales, total ad revenue for local stations nationwide fell 2.3% in the first quarter compared with the year-earlier period, according to the Television Bureau of Advertising, a trade group for local stations. And the second quarter is on pace for a 3% to 5% decline, according to Chris Rohrs, the group's president...Media companies have also been blaming slowdowns around Sacramento, Calif., and Las Vegas for lower ad revenue.

Sacramento Bee Launches Home Front Real Estate Blog

SL welcomes the Sacramento Bee to the Sacramento real estate blogosphere. What took so long?

'You Guys Have Been Slammed'

UPDATE: Here are updated charts for DataQuick's 4th quarter data. Note: The red bars inserted on the left-hand side show the 1990s highs of foreclosures & notices of default.





From the Sacramento Bee:

"We're still climbing to a peak in foreclosure activity in California," said DataQuick analyst Andrew LePage. "We don't even have a sign of the peak."
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Linda Caoili, a Re/Max Gold agent who works with homeowners struggling to prevent foreclosure, said the decline in prices makes some clients feel their home can't be saved. One Natomas-area client, who bought her home for $420,000, just watched an identical home across the street sell for $315,000 after foreclosure, Caoili said. This client, like others, is nearly ready to give up her home. "They're living on credit cards now. There's no equity left," she said. "I'm seeing people who have been able to hang on (but) are turning around and saying, 'Hey, why am I hanging on? I'm $150,000 upside down.' "

Foreclosures & NODs by County
2006 v. 2007 Chart

From the Modesto Bee:

Final 2007 foreclosure statistics are in and they're brutal. More than 8,000 homes in the Northern San Joaquin Valley were repossessed by lenders last year. That's nearly 10 times more than were lost in 2006...Foreclosures in Stanislaus, San Joaquin and Merced counties are among the highest in the nation. "You guys have been slammed," LePage said. "In some pockets of your region, it's about as bad as it gets."

From a Downey Financial press release:

At December 31, 2007, the allowance for credit losses was $349 million, comprised of $348 million for loan losses and $1 million for unfunded loan commitments which is reported within accounts payable and accrued liabilities. The increase to the allowance this quarter reflected further increases in delinquent loans and declines in the value of underlying home collateral due to the continued weakening and uncertainty relative to the housing market. This has been particularly true in certain geographic areas such as the greater Sacramento, Stockton, Modesto and Monterey areas of Northern California, the Inland Empire and San Diego County.

From the Modesto Bee:

The subprime crisis in the real estate market has been especially harsh in our Central Valley region. Many pundits have quickly jumped on the bandwagon, assigning blame to different players in the home building industry.

Having spent more than 30 years immersed in this industry, in this market, I have a special vantage point to assess just who and what might be to blame for our current sad state of affairs. My conclusion: Everyone in the entire loop was greedy, and the blame spreads across the spectrum. The land seller...the developer...cities, counties and schools...subcontractors and material suppliers...real estate brokers and sales staffs...the mortgage and money industry...and Wall Street.
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All of the above has been noted and pilloried by the press and by other observers. But I believe that equal blame lies in the lap of the buyers...[H]omeowners bought houses well beyond their means on the belief (or perhaps the hope) that prices would continue to skyrocket. When they did not, the buyers found themselves hopelessly buried.
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Sad to say, we were all in this together, and to ascribe guilt and blame to any single player is not appropriate. In the end, greed prevailed, and we are all losers for it.