Another milestone.
From the Sacramento Bee:
Prices keep falling.Statistics by county
February brought the lowest median sales price to Sacramento County's housing market since December 2000 as bank repos drove a decline to $160,000, researcher MDA DataQuick said Thursday. The county median...is down 59 percent from a 2005 high of $387,000.
From the Sacramento Bee:
Greater Sacramento unemployment jumped to 8.7 percent, up from 8.1 percent a month earlier...The region has now lost 22,400 jobs in the past year, or 2.4 percent of its employment base.From the Sacramento Business Journal:
The highest local jobless rate was in Yolo County, at 9.8 percent. The county has a labor force of 99,900 with 9,800 unemployed last month. The county had a 9 percent unemployment rate in November.From the Sacramento Bee:
Unaccounted for [in the employment numbers is]...the growing numbers of workers who have had to settle for less of a job than they wanted. "The pain in the economy is much greater than the jobless numbers would indicate," said economist Sung Won Sohn of California State University, Channel Islands...Jenny Beard, owner of the Express Employment Professionals office in Roseville, said the number of former full-time workers seeking part-time work is undeniably up. "I'm positive of that," she said. "We're seeing many candidates who just want to keep themselves employed."From the Sacramento Bee:
Sacramento-area rental occupancy dropped nearly a percentage point – 0.7 percent – in the fourth quarter of 2008 compared with the year-previous quarter, according to a survey released Wednesday by Novato-based rental industry analyst RealFacts...About 93 percent of area rental properties were occupied, one of the lowest occupancy rates in the state....From Home Front:
...
One local analyst cited a "cacophony" of factors contributing to the drop, from overbuilding, to single-family homes turning to rentals in a disastrous housing market, to a struggling economy.
Here at The Bee, we do a ton of stories on the housing market, but don't often enough explore the world of apartments that house an estimated 35 percent of the region's population...The bottom line right now: the apartment industry is slumping, too. Sales prices are falling, a few have fallen into foreclosure and buyers are waiting on the sidelines to see if prices fall more, the two said. There's still more supply than demand, which has lessened investor interest, too, in apartments.From the Placer Herald:
Placer County’s foreclosure rate continued to gain steam in 2008, according to a year-end analysis of government records. And experts say to expect more of the same in 2009. The number of foreclosures in the just-ended period was up more than 110 percent from a year ago, with 2,552 residential properties being taken over, compared to 1,193.From CBS13:
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Homes in all segments of the market – from “starter” homes to area mansions – showed up on county default rolls last year en masse, experts say. “It’s pretty much going after all of them,” said Ben Herb, president of the Placer County Association of Realtors. “Even the houses that are a million-plus have been going into foreclosure.”
Loan consultant, Robert Turrietta, say that one particular foreclosed home in Sacramento's Oak Park neighborhood lost almost 75 percent of its value. "This particular home transferred a couple of years ago for around $200,000 and just recently sold and closed escrow for $39,000," Turrietta explains. Turrietta says while home prices fall, nearly half of the buyers applying for a loan are getting denied.Related Post: Housing Bubble Casualties: Professionals 'Suckered' into Oak Park
Most of Sacramento's local banks bet small on the real-estate boom and, as a rule, they haven't been badly hurt by the bust. But according to federal filings, most local lenders have a larger stake in the commercial real estate market, where vacancies – and loan defaults – are expected to soar this year as more businesses fold.Merced breaks the -50% YoY mark. From the Modesto Bee:
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[Colliers International's Garrick] Brown anticipates 5 percent to 6 percent of the region's commercial real estate properties will go into foreclosure in the next two years. That's similar to the rate of home foreclosures locally in 2007-8, according to data from foreclosures.com.
Stanislaus County's median sale price was $157,500 in December,...44 percent below the $281,250 in December 2007 and 60 percent off the $396,000 in December 2005, when the bubble was at its biggest...[YoY price declines:] 51.8 percent in Merced [and] 47.5 percent in San Joaquin.From the Sacramento Bee:
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Richard Green, director of the University of Southern California's Lusk Center for Real Estate, said the market is being hammered by tight credit, expectations of further price declines and job losses. "If you see the unemployment rate turn around, that's when you'll start to see housing prices bottom and start turning in the other direction," Green said. "Until that happens, I'm pretty gloomy."
Sacramento County is about to announce a mid-year budget shortfall of $42.3 million....As a result the county at the Feb. 10 Board of supervisors meeting will propose getting rid of almost 200 positions on top of almost $30 million in cuts, according to an official, not authorized to speak on the budget, who had been briefed on the situation.From CBS13:
With a skyrocketing foreclosure rate and plummeting sales taxes, Stockton has to cut $30 million from their $180 million general fund...[O]fficials say layoffs are inevitable.From CBS13:
The recession is leaving some doctor's offices empty. More women are putting motherhood on hold and recent reports show contraceptive sales are through the roof. The data runs about two years behind, we won't know for sure until 2011, but it appears that with the economic slowdown has come something of a pregnant pause.
From News10:
A big presence in the Northern California home-building industry says it could be shutting down some projects. John Laing Homes spokeswoman Linda Mamet confirmed to News10 Wednesday the homebuilder is "reviewing operations based on market conditions and will determine whether sales will continue. Some offices may be closed. It is not clear on whether all or part of the Sacramento area operations will be closed."From the CVBT:
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Sacramento real estate consultant Jake Allen says the company appears to be in serious trouble. "I think it's a very sobering sign of the times, when we see a large, national builder like John Laing Homes that is essentially on the ropes at this point in time and looks like fighting for their life."
There’s a smidgen of good news for the Central Valley in the latest PMI Mortgage Insurance Co.’s “risk index.” The region, where the mortgage meltdown started more than a year ago, is surpassed by many Florida cities that PMI estimates will have the risk of lower house prices two years from now. Still, virtually every metropolitan area in the Central Valley is ranked at better than a 90 percent likelihood of further price declines.From the CVBT
...
Merced (High) 95.4
Modesto (High) 96.5
Sacramento (High) 96.3
Stockton (High) 96.6
The Stockton metropolitan area in the Central Valley led the nation in 2008 in per capita foreclosures, according to a report from RealtyTrac Inc. of Irvine, a foreclosure information company. Stockton’s foreclosure rate last year was nearly double that of 2007, says RealtyTrac, up 99.16 percent. There were 21,127 homes in some level of foreclosure in Stockton last year, or 9.46 percent of all homes.From CNN Money:
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Sacramento was ninth, says RealtyTrac, with 39,876 homes foreclosed or 5.20 percent of all units.
[RealtyTrac's Rick] Sharga thinks that as many as 70% of the bank-owned homes listed on RealtyTrac's site have not yet been posted on multiple listings services (MLS), the industry databases of homes for sale. Those homes are less likely to be sold because most real estate agents won't know they're available. "Either banks are overwhelmed and can't get the houses on the MLS quickly, or they're deliberately slowing down so they don't have to take markdowns to actual home values on their books," Sharga said. Either way, it has the effect of underestimating the foreclosure inventory problem.From the Sacramento Bee:
Facing a projected $8.6 million shortfall in the current fiscal year alone, the city of Folsom on Tuesday took the first step toward effectively throwing out the current budget and adopting a new 18-month spending plan that would take the city through June 30, 2010. The proposed plan calls for the elimination of 55 positions – including 39 layoffs – and service cuts. Folsom joins other area municipalities looking to cut because of the recession.From the Sacramento Bee:
Faced with losing 43 jobs, including a dozen police and firefighter positions, Lincoln's remaining city workers also have been asked to take a two-year pay freeze.From the Sacramento Bee:
Roseville city officials announced Monday a voluntary employee buyout program to close a nearly $4.5 million budget gap. The city has been freezing positions and cutting costs since March 2007, but another 40 to 50 positions must be eliminated, City Manager Craig Robinson said in a letter to employees.From the Sacramento Bee:
The city of Sacramento is more than $11 million short of balancing its books, meaning more cutbacks are likely in the coming weeks. Mayor Kevin Johnson said Monday that "the outlook is not good" for a city that already made significant cuts in recent weeks.
...
Asked if it is likely city officials will need to make midyear cuts next month – either through layoffs or reductions in services and programs – Johnson said, "I think we will have to."
From the Stockton Record:
TrendGraphix said the median sales price fell from $190,000 in October to $175,000 last month in San Joaquin County. That compares with a $200,000 sales mark in January 2002, when TrendGraphix began tracking sales as the market was well into the start of a six-year boom.That's a whopping $250,000 price cut from its $425,000 peak in September 2005.
The worst performing market in the nation [according to Zillow.com] was Stockton, Calif. The average home price there plunged 32.3% year-over-year to $210,179 in the first three quarters of 2008. Almost as bad were nearby Merced, down 31.2% to $167,282, and Modesto, was was off 30.4% to $197,368 in the same time period.From the Christian Science Monitor:
[Zillow's Stan] Humphries expressed surprise that these areas are still performed so poorly. "I would have thought that they would have produced some more positive trends by now," he said, "but we are seeing no slowdown."
The housing market in California's Central Valley...is showing signs of new life...Buyers are out in force. Here in Lathrop, Calif., and in nearby Stockton – the nation's foreclosure capital – home prices could be bottoming out..."At this point, I don't think you'll see more price declines in Stockton," [says ForeclosureRadar's Sean O'Toole].
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A recent NAR survey found 20 percent of buyers are investors, but Stockton-area real estate agents put the investor share at one-third or more...The pricing floor provided by these investors, however, has broken through several times when the number of new listings exceeded the ability of investors to absorb them, he [real estate agent Jim Muthart] says.
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Strong rent prices are key to a good return, and rents have softened recently, says Muthart...[D]on't assume each foreclosure equals a new renter, argues Caroline Latham, CEO of RealFacts, a rental data-tracking firm. Many families who are foreclosed on will move in with another family or move to a cheaper region, not rent. "We are seeing a return to the notions that [investors] had in 2005," warns Ms. Latham, referring to the buying frenzy in the run-up to the housing bubble peak. "They think they'll be able to rent it and come out smelling good."
From the Sacramento Bee:
You would think people with mortgage problems have enough trouble. But rogues in real estate always find new ways to inflict more. Last year it was foreclosure rescue schemes that robbed desperate people of their homes. Now, it's loan-modification firms taking cash advances from struggling borrowers and disappearing.From the Modesto Bee:
Home Front has heard countless stories from struggling borrowers of phone calls offering to mediate with banks for $2,000 to $4,000 or more. Many are so desperate and confused they pay for what they can do themselves or get for free from nonprofit loan-counseling firms. Some say they have paid their advance fees, then can't reach the firm.
The California Department of Real Estate cites an "explosion" of for-profit loan-modification firms as the foreclosure crisis deepens. Former lenders and real estate agents have retooled, and jumped to the newest way to generate income.
~~~
It's just one more example of rogues in the real estate industry who are always adapting to the newest problems people are having. Honestly, this is an industry that is going to have years of an uphill fight to rebuild trust.
Foreclosure filings fell nationwide in November, but they spiked dramatically in the Northern San Joaquin Valley, statistics released today by RealtyTrac show. Lenders repossessed 1,641 homes last month in Stanislaus, San Joaquin and Merced counties, and they warned 2,727 additional homeowners that foreclosure was imminent if they didn't pay up.From the SF Chronicle:
The recession that has already devastated the Central Valley has started to hurt the Bay Area, causing job losses that will continue through 2009 when the economy should begin a slow and weak recovery, according to a bleak forecast issued today. "There is no suggestion in the data that we are near that bottom," was the somber message of the UCLA Anderson Forecast, a quarterly look at the state economy conducted by the university's business school.From USA Today (hat tip Jeff):
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"The inland areas have been hardest hit by the housing downturn and are being hardest hit by the pullback of the retail and the wholesale sectors," he [economist Jerry Nickelsburg] said. "Here you're talking about areas of the East Bay and the Central Valley."
[H]ome values have fallen so sharply since hitting a historic peak in the spring of 2006 that many Americans are wondering how much more prices can sink. As painful as the decline has been, history suggests home values still may have a long way to drop and may take decades to return to the heights of 2½ years ago. "We will never see these prices again in our lifetime, when you adjust for inflation," says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. "These were lifetime peaks."
The boom in home prices — fueled by heavily leveraged loans built on low or even no down payments — made it easy to forget that housing values had been remarkably stable for a half-century after World War II, rising at roughly the same pace as income and inflation. Prices soared in most of the country — especially in Arizona, California, Florida and Nevada and metro areas of Washington, D.C., and New York — during a brief period of easy lending, especially from 2002 to 2006. That era's over.
From the Sacramento Bee:
Chicago-based Kimball Homes, a significant home builder in the Sacramento region since 1995, announced Tuesday it will close its business in coming months. The announcement comes eight months after the builder, once among the nation's largest, filed for Chapter 11 bankruptcy...Kimball Hill has projects in Rancho Cordova, Natomas, Elk Grove, Galt and Stockton.From MarketPlace:
Home prices fell more than 10% in the third quarter in nine central California communities [according to IHS Global Insight]. The Central Valley communities of Merced, Stockton, and Modesto have seen property values fall to less than half their 2005 value. Twenty-nine metro areas in California, Florida, and Nevada -- at one time among the most overvalued -- have seen price declines in excess of 30%.From the Modesto Bee:
Nearly 33 percent of Stanislaus homes and 40 percent of Merced County homes had their property taxes lowered this year because of value declines...Next year assessments will drop again, providing perhaps half of all Stanislaus homeowners a tax cut, said county assessor Doug Harms. He said next year he likely will review assessments for all homes purchased since 1990, which is when prices peaked before the last big housing market slump.
...
Despite the high cost [in penalties], last year 8.6 percent of Stanislaus County's property taxes -- around $36 million -- were delinquent. Ford said that was the highest rate on record, though he doesn't have statistics from the Great Depression.
From the Sacramento Bee:
Sacramento-area home prices declined at nearly triple the national average during the past year, according to a new Loan Performance Home Price Index from First American CoreLogic. The property research firm said September home prices in El Dorado, Placer, Sacramento and Yolo counties fell 28 percent from the same month in 2007.From the Sacramento Business Journal:
[Per CAR] the median price of an existing home in Sacramento fell 34.8 percent to $195,000, with the city of Sacramento seeing a 45.1 percent drop to $150,000. Elsewhere in the region, the median price of a home in El Dorado County was $387,000, down 3.7 percent; in Placer County it was $320,000, down 20 percent; while in Yolo County, it was $279,000, down 22.5 percent.From the Seatle PI:
The biggest annual metro-area drops were in Merced, Stockton and Modesto, Calif., down 42.3 percent, 41.4 percent and 36.7 percent, respectively, according to the Federal Housing Finance Agency index.According to FHFA (formerly OFHEO), Sacramento metro home prices dropped 22.5%, another record decline.
The federal government's newest bailout package has lit a new fire under the Sacramento housing market. The government's move, announced Tuesday, brought mortgage rates down nearly a full percentage point. It brought some new buyers out of the woodwork..."Where Friday is going to be black Friday for retail people, it'll be a day for people to start looking for houses," said Alan Wagner of Re/Max Gold, president of the Sacramento Association of Realtors. "We're seeing hits on the Internet sites going up."From the SF Chronicle:
Jon Haveman, with Beacon Economics in San Rafael, said the variations [in unemployment rates] have to do with housing. The regions with the biggest price inflation are suffering the worst due to a falloff in construction and the psychological impact that foreclosures and falling home prices have on consumer spending. "This all began with the housing bubble, and it was in places like the Central Valley, the Inland Empire and the East Bay where prices got most out of whack," he said.From Kiplinger (via Yahoo) (hat tip Jeff):
The market hit hardest by the housing bubble is the Central Valley in California, where aggressive development and price hiking has yielded more homes than jobs. Now many homeowners owe more than their house is worth and are being forced into default.From Housing Wire:
Still, it's not all doom and gloom for the California housing market. The drop in home values has created an affordable market for first-time home buyers. And, on average, monthly sales have almost tripled from last year. Although the Valley has seen the worst of the crash, it may well be one of the first areas to recover.
In the Merced, California area...average home prices have declined 43 percent over the past 12 months, and are projected to fall another 22 percent by the middle of 2009,...data provider [Fiserv] said.From the Sacramento Bee:
In December, REDC will put up for auction 1,288 Northern California homes during a five-day marathon. Leonard Green, a Sacramento real estate broker who works the multiday events, said most bidders are investors, and "a lot of them follow us from town to town."
...
"What these really are are bank marketing events," said Sean O'Toole, owner of ForeclosureRadar, a foreclosure tracking firm in Contra Costa County. "The idea is to create excitement and hype around these properties to deliver a better price to the bank than they would get with a traditional sale through a Realtor."
From the Sacramento Business Journal:
California and the Sacramento region’s jobless rates both increased a half-percentage point, reaching the highest levels since 1994....The Sacramento area’s jobless rate increased to 7.9 percent, from 7.4 perent in September and 5.5 percent a year ago, according to the state report.From the Sacramento Bee:
[T]he Sacramento region has lost 10,200 jobs in a year, a 1.1 percent decline. The state has lost 101,300 jobs in a year, a 0.7 percent drop.Interactive Map: Unemployment by County
Stacy Brown of Sacramento hasn't missed any [house] payments, but said she's worried about the months ahead. "Our hours are being cut due to the budget, so I see my salary decreasing so I just want to try to keep ahead of the game," she said. She was among dozens waiting up to three hours to meet with their lenders.From News10:
Mike Lyon of TrendGraphix said to get ready for another 10 percent price drop over the next four months. It could very well dip to 2001 pricing, he said.From the News-Review:
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Lyon predicted the median home price will bounce above $200,000 in the coming months but says that won't be because home prices are increasing. Instead, he expects foreclosures on larger move-up homes to increase, especially in newer subdivisions in the foothills. He believes those homes will have foreclosure pricing in the $300,000 range and up, thereby increasing the median price of homes in the area.
Ray Davis won’t ever refute a moniker bestowed upon him — “the eternal optimist” — because the chief executive officer of Umpqua Bank sees signs of financial recovery, even in these troubled economic times. Take the housing market in Sacramento, Calif., for example, where the average selling time for a home went from 18 months in September 2007 to now less than five months, Davis said...“People are bidding on foreclosures which says we’re hitting bottom in Sacramento,” he said....From the Sacramento Bee:
Bank repossessions again accounted for the majority of home purchases, especially in Sacramento County, the largest sector of the region's real estate market. DataQuick said two-thirds of the county's sales involved bank repos. "The bad news is there's a lot of foreclosures in the market. The good news is they're selling," said Pat Shea, Sacramento regional manager for Prudential California Realty. "Teachers, policemen, nurses – they can all buy houses now."Interactive Map: Sacramento Home Price Trends By Community
Yuba County's $175,000 median price in October was 34.5 percent below a year ago, MDA DataQuick reported Thursday...Median prices in the county have fallen 50.2 percent since their November 2005 high of $351,500...Sutter County's October median price was $183,000, down 29.7 percent from the same time last year....Median home prices are now 46 percent below their December 2005 peak of $339,000.From the Modesto Bee:
Stanislaus County homes sold for a median $161,500 last month....Home prices have dropped a staggering 59.2 percent below the $396,000 peak hit in December 2005...Merced County is even worse. Median-priced homes there sold for $136,750 last month....Merced prices have plunged 64.3 percent since peaking at $382,750 in December 2005...San Joaquin County home values...are 55.7 percent below their November 2005 peak of $451,500.
"It's impossible to say when the bottom will hit," said John Knight, professor of finance and real estate at the University of the Pacific. "I never anticipated such a huge drop in housing prices so quickly."
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[F]or "prudent consumers who waited to buy," [basically ignoring everything the UOP folks have said for the last three years] Knight said, "there are some tremendous opportunities now. Prices really cannot go much lower ... because it's becoming less expensive to own than to rent. That provides kind of a floor to housing prices."
From the Sacramento Bee:
"Sacramento is well into the first phase of the housing stabilization process, which starts with sales recovering on a year-over-year basis," [DataQuick's Andrew LePage] said.DataQuick sales/price stats by county
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Discounted foreclosures were 65.8 percent of September sales in Sacramento County, according to MDA DataQuick. Foreclosures were half of sales in the Los Angeles region and 42 percent of those in the Bay Area during September, the firm said.
Local median prices were down last month compared with September 2007, declining 31.5 percent in Sutter County, and 36.8 percent in Yuba County. Both counties were well under the $200,000 mark — the only counties in the Sacramento region in that range — coming in at $190,000 in Sutter County and $175,000 in Yuba County.From the Modesto Bee:
The clearance sale in real estate continued last month, with another jump in the number of homes sold and a continuing drop in prices. Stanislaus County's median sale price was $179,000 in September, down 40 percent from a year earlier, MDA DataQuick reported Tuesday...In Merced and San Joaquin counties, the number of sales also soared last month compared with a year earlier. Each had a 47 percent drop in the median price, to $140,000 in Merced and $191,500 in San Joaquin.Bottom out in three of four months? How can that be when prices bottomed out back in June 2007?
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Craig Lewis, president and chief executive officer at Prudential California Realty in Modesto, said the foreclosure wave appears to be waning. He said prices could bottom out in three or four months. "The next 90 days is the best time to buy in the last 10 years," he said.
Craig Lewis, president of Prudential California Realty...said [Stanislaus County] median home prices have fallen from $414,000 in 2005 to $359,000 now, and it takes nearly three months to sell the typical home. "First-time home buyers have the ability to buy now, but … they're sitting back and waiting because they think the price will go down more," Lewis said. He doesn't agree. "I certainly feel we're at the bottom of the market."From CNBC:
[What] strikes me is the positively bewildered expressions on the faces of the chief economists of both associations. These poor guys are tasked with telling everyone when its all going to get better, and the fact of the matter is they just don't know. Don't get me wrong, these are supersmart guys, number crunchers with decades in the business, but as NAHBs David Seiders said, the risk in housing right now is just so high that it makes forecasting extremely difficult.From the Wall Street Journal:
[Bill] Knoff's house has traveled the arc of the local market. Built on vacant land in 2002, it sold for $280,000. Its original owner unsuccessfully tried to sell it in 2006 for $450,000. Mr. Knoff bought it out of foreclosure in March of this year for $320,000. Today, based on local sales, he figures the house is worth about $220,000. Mr. Knoff paid nearly half of the purchase price in cash, so most of his equity has been wiped out. But he said he believes in taking responsibility for such choices. "The government can buy up troubled mortgages. But it should kick the people out of their houses," said the 61-year-old information technology manager. "Why should I pay for someone to buy their house?"Interactive map thingy
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[T]he bottom still may not be in sight. Home prices in California could end down as much as 60% from peak values, according to recent research from both Barclay's PLC and J.P. Morgan Chase & Co. Towns like Los Banos may have further to fall. According to the city and a local title office, roughly 2,000 of 10,000 homes in the town are in the foreclosure process. The city expects that number could grow before the crisis passes.
Ward Smith of J. Smith & Sons Inc., a home-entertainment business in Natomas, said business already was slow because of the soft housing market. Then, when the stock market faltered, things came to a near complete halt. "The phones became eerily quiet for no good reason," he said. "Well, maybe there is a good reason. Everyone's (saying), 'We'll wait and see until we know what's really going on.' "From the Sacramento Bee:
...
Prominent real estate broker Mike Lyon also knows what it's like when the phones stop ringing. The president of Lyon & Associates said things got very quiet when the stock market went into its downward spiral. "It was kind of like 9/11, to be honest with you," he said.
[CEO Gary] Pruitt said skeptics wrongly assume the vast majority of McClatchy's decline in revenue is due to a permanent migration of business to the Internet. Instead, he said, most of the problem is due to the economic downturn. McClatchy will "return to revenue growth when the economy resumes growing," he said. As evidence, he noted that McClatchy's biggest problems in the past two years have emerged in California and Florida, where the real estate market has crashed the loudest. But now McClatchy's papers in the Carolinas are experiencing somewhat similar declines as economic woes have spread to those states, he said.
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."From the Sacramento Bee:
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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."
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.Or maybe not.
Last year, real estate agents feared inventory might reach a disastrous 25,000 this year. They got lucky so far instead.
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
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."From the Sun Post:
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.
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.
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[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.
From the Sacramento Bee:
Nearly 7 percent of home loans in El Dorado, Placer, Sacramento and Yolo counties were 90 days or more delinquent during June...up from 2.8 percent the same time last year...First American CoreLogic reported today.From the San Jose Business Journal:
Home builder Taylor Morrison Inc. has merged its Bay Area and Sacramento operations into a new Northern California division with its divisional office based in Sacramento. The company has cut its regional staff by about 33 percent, or roughly 35 people, said Steve Wethor, western region president for Taylor Morrison.From the Sacramento Bee:
[T]he growing store closings and empty commercial spaces are an eerie echo of the housing downturn that has slammed the region...For the longest time, the retail sector and commercial real estate were relatively immune to the meltdown that spread through residential real estate. No more. An almost identical chain of events that took down housing in Sacramento is spreading into shopping and its vast network of building owners, leasing agents and national investment brokers.From the Sacramento Bee:
"As the bottom was dropping out of the housing market, I hardly noticed a thing," said Scott Crowle, associate director of national retail for Encino-based brokerage firm Marcus & Millichap. "Then it trickled down to my business." Crowle works in the broker's Rose-ville office. It recently released a national index that ranked Sacramento's retail scene in the bottom quarter of 43 U.S. metro areas.
...
Like home builders in 2005 and 2006, commercial developers in the region overbuilt in 2007 and are still building as consumer spending slows...As with housing the past two years, there is too much supply in the commercial sector and too little demand. Building values are falling. Rents are, too.
The tough times have hit the RV industry hard. Three area dealers – La Mesa RV Center in Davis, Dan Gamel's Rocklin RV Center and Nu Star RV Center near Rancho Cordova – recently announced they're closing up shop...The reasons are all too familiar: Look to low consumer confidence, flat household incomes, high gas prices and tight credit for the decline.From the Sacramento Bee:
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Henry Myers of Sacramento isn't waiting for the economy to improve. He was shopping the RV lots in Davis – including La Mesa RV Center – looking for a large trailer. "I know you hear this everywhere, but it's true: Now is the best time to buy," Myers said. "If you have the money to buy a house, prices now are lower than they have been in years. The same thing is going on now with (RVs)."
First the banks took away C.C. Myers' pride and joy. Then they moved to take away nearly everything else. The result was bankruptcy. Stripped of his beloved Winchester Country Club housing development and facing the potential seizure of numerous personal assets, Myers filed for Chapter 7 personal bankruptcy protection last month.From the Press Democrat:
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"I think this was his baby," said Donna Lucas, a retired Winchester homeowner whose living room overlooks the Sierra. "I just can't imagine the pain of putting your heart and soul into something at his age and losing it all. It's just tragic; it really is."
The Santa Rosa bank has more bad loans than any other local financial institution, the result of a risky bet on builders in the Sacramento region near the peak of the housing boom...About three-fourths of Exchange Bank's problem construction loans were made to builders with projects in the Sacramento area, according to bank officials.From the Stockton Record:
...
"They were proven developers with proven market success. They went to a market with very attractive performance. It was what we perceived as an intelligent risk," [bank president William] Schrader said. "If you look back now, you might call that an aggressive move. We certainly didn't see the full magnitude and I don't think any of the major players there saw a correction coming like this one."
What once was a promising region for Sonoma County builders has become a quagmire of homes that take months to sell.
For church Sunday, Pastor Kyle Hedwall had his congregation bring lawn mowers, form crews and spread throughout Mossdale Landing, a subdivision full of brown and weed-filled lawns in front of homes left vacant by foreclosure...Hedwall...mowed lawns on his street before calling for Sunday's mow. About 30 people mowed nearly 50 lawns, he said.From the Stockton Record:
Dale Nichols, president and CEO of a real estate corporation that owns a Help-U-Sell realty franchise in Stockton and another in Lodi, said he expects the foreclosure market to have pretty much completed its run in San Joaquin County by next spring. Most adjustable-rate mortgages will have already reset by next year, he said, and the mortgage industry will be under growing pressure to work with struggling homeowners to keep them in their residences. "I'm looking for 2009 to have more stability in the market," he said.From CNBC:
Nichols said he's also seeing a lot of people looking at Stockton-area real estate via the Internet. "Basically, there's been a lot of bad press about the real estate meltdown in Stockton, and that has caused investors to come in and look at the market," he said. "They're absolutely buying."
The federal rescue of Fannie and Freddie is just one sign we aren’t at the bottom of the housing mess yet. Other signs are all over Stockton, California. First dubbed “The Foreclosure Capital of America” a year ago, I came back this month, expecting to find some signs of a turnaround. I was disappointed.From the Stockton Record:
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[N]o one seems to think we’re through the worst of it. “If we have the bulk of defaults in the pipeline now, we could wash it out within 12 months,” realtor Kevin Moran told me. When I asked if he thinks the “bulk of defaults” is in the pipeline, he answers, “No.”
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Realtor Kevin Moran is hanging on, hoping to ride it out. You could say Moran himself personifies all that’s happened in Stockton. Since we first met a year ago, his income has collapsed, and his own home went into foreclosure. Like a lot of other people around here, he’s trying to regroup. “My ego wants to say it happened to everybody,” he says. “And then my other side wants to say how foolish I was, and I think the truth is somewhere in between the two.”
The outer bands of a Category 5 mortgage hurricane began strafing San Joaquin County about 18 months ago, uprooting families, damaging homes, devaluing property, devastating whole neighborhoods and destroying lives. Yet the eye of this financial storm remains months away from passing over the Central Valley. The analogy to Hurricane Katrina that struck the nation's Gulf Coast three years ago was heard numerous times Saturday afternoon during a congressional field hearing on the foreclosure crisis that drew four members of Congress, nine key witnesses and about 100 interested onlookers to a meeting room at the Stockton Arena.From CVBT:
[Rep. Dennis] Cardoza says 25 percent of his district has been, is now or will be in foreclosure. “We have some devastating consequences,” he says. There have been more 12,000 foreclosures in San Joaquin County since January 2007 and “there’s no relief in sight,” says Steve Guiterrez, who has been a county supervisor for 12 years.From the Modesto Bee:
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Foreclosure nightmares are not confined to Stockton. Merced Mayor[/Realtor] Ellie Wooten detailed the statistics for the hearing. There have been 2,185 foreclosures in Merced County so far this year, equal to one home out of every 20, Ms. Wooten says. It will just get worse, she says. Fifteen percent of Merced County mortgages are now delinquent by 90 days or more, she says. One out of 12 property owners unable to pay property taxes, she says.
"We risk creating a moral hazard with government intervention to step in and save those who would otherwise lose their homes," warned state Sen. Michael Machado, D-Linden. "Rewarding risky behavior will only perpetuate the problem."
Machado predicted "the hardest hit areas of the Central Valley are likely to take at least two years before they hit bottom, and even longer before they begin to recover." He said foreclosures likely will keep increasing because so many valley residents took out risky adjustable rate mortgages that soon will require much higher monthly payments. "Unable to refinance due to minimal equity and tight underwriting standards ... many of the borrowers with payment-option ARMs (adjustable rate mortgages) are likely to become the next wave of foreclosures," Machado said.
From the Associated Press via Forbes:
U.S. home prices fell 4.8 percent in the second quarter compared with a year ago, easily a new record low, according to a government report.According to the government, Sacramento home prices dropped 17.7% over the last year. That compares to a decline of 14.6% during the entire 1990s housing bust.
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Prices in the weakest markets, he said, have receded to late-2005 levels, plummeting by more than 30 percent in two cities: Merced and Stockton, Calif.
I called Kathryn Boyce of Hanley Wood Market Intelligence, who said [Beezer]...has moved to smaller space on Roseville Parkway. With so many fewer staffers in this greatly-cooled market they didn't need the big building anymore. The office is being run now out of Southern California, she said.From the SF Chronicle (hat tip Anon1137):
Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, had a more bearish take on Monday's numbers. "It doesn't reflect a recovering housing market; it reflects a broken housing market," he said. "It's a reflection of the fact that foreclosed homes are being liquidated at very low prices."From the LA Times:
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Rosen believes that investors, not actual intended occupants, are buying up many if not most of the distressed properties in the hardest hit areas. That will do little to stabilize the markets in those areas, especially if prices fall further and foreclosures continue to climb, he said.
State and federal officials are unable to say how many Section 8 renters have been affected by the wave of foreclosures sweeping the country, but local housing authorities say the number is significant -- and growing. Sacramento County had fewer than a dozen people seeking new Section 8 homes in June because of foreclosures. In July, the number was 100.From the Sacramento Bee:
Not to be too dramatic about it, but fear is in the air. You don't have to lose your home to understand the woes of the housing market. You don't have to get laid off to see the effects of downsizing on your neighbors and friends. In a country busy doing the fear dance, it can be hard not to wallow in worries yourself. So maybe smart folks stay home, conserve gasoline and make do with leftovers and hand-me-downs. They take care of their families and pinch pennies.
In short, they channel our Depression-era forebears – who, it must be noted, are not shopping at the Roseville Hospice Thrift Store in the numbers they used to, either. "A lot of our customer base are people who don't need anything, but they like to come and browse," says Watson. "A lot of them are Depression generation. They've stopped coming in because they don't yet see an end in sight to our economic problems."
From the Modesto Bee:
This spring, median-income families could afford about half the homes sold in Stanislaus, Merced and San Joaquin counties. Compare that with three years ago, when the region's families could afford only about 3 percent of the homes sold. That's the upside of the housing downturn.From the Sacramento Business Journal:
The downside is that home prices keep declining: July's median sales price plummeted to $190,000 in Stanislaus County. That's less than half what houses were selling for in December 2005, when prices peaked at $396,000.
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San Joaquin's median sales price fell to $220,500 in July [down 51.2% from the $451,500 peak]. Merced's median fell to $155,000 [down -59.5% from the $382,750 peak].
The sharp fall in median home price in Greater Sacramento has helped drive up affordability....About 55.7 percent of all homes for sale in the four-county metro area were priced so that a family making the median income in the region could afford them, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. That was the highest affordability rating among any California market in the study, and was even better than the U.S. figure of 55 percent for the second quarter of 2008.From the Appeal Democrat:
In Yuba County, sales in July climbed 43.3 percent above a year earlier. The $183,500 median price was down 33 percent from the same period last year. In Sutter County, sales jumped almost 26 percent while prices were off 30 percent from July 2007, at $203,000.From the Sacramento Bee:
The cosmetic surgery industry is in need of a lift. Soaring unemployment, high gas prices and the mortgage crisis have left consumers with less discretionary income. For plastic surgeons, that means fewer patients are coming in for elective procedures.
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"Now financing (companies) are becoming more difficult in who they approve," said [Dr. Shahriar] Mabourakh [of the Folsom Plastic Surgery & Laser Center]. The Folsom doctor started seeing a decrease in calls from prospective patients in December.
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....From the Appeal Democrat:
"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.
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.From the Stockton Record:
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.
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.From the Financial Times:
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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.
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.
Excellent post by Max over at SacRealStats about Sacramento's shadow inventory.
The Sacramento Bee has a fancy interactive graph of Sacramento home prices back to 1990.
From Home Front:
Four in 10 homeowners who bought houses in El Dorado, Placer, Sacramento and Yolo counties since 2003 now owe more than their homes are worth, according to the online real estate firm Zillow.com.From Bloomberg:
In four of the state's metropolitan areas -- Stockton, Modesto, Merced and Vallejo-Fairfield -- the number of homeowners whose mortgage debts exceeded the values of their properties topped 90 percent, Zillow said. In five more California areas -- the Inland Empire (Riverside-San Bernardino), Bakersfield, Yuba City, El Centro and Madera -- the percentages were more than 80 percent.From the CVBT:
Tops in California for foreclosure sales per capita in July [per ForeclosureRadar] was Merced County at one foreclosure for every 409 residents, a jump of 305 percent compared to July 2007. Second is Stanislaus County, with one foreclosed home for every 488 residents, a 287 percent year-over-year increase. San Joaquin County is in third, with one for every 491 residents, an increase of 204 percent...Other Central Valley counties making the top ten for July are Yuba, with one foreclosure action for every 541 residents, an increase of 169 percent, and Sacramento, with one for every 704 residents, a 156 percent year-over-year increase.From the CVBT:
The Central Valley inland seaport city of Stockton is adrift in an ocean of red ink when it comes to home sales, according to a report from Zillow.com, a Seattle, Wash.-based online real estate information company. While U.S. home values dropped nearly 10 percent in the second quarter compared to the same period a year earlier, home values in Stockton plunged 38.2 percent. Zillow says 63.4 percent of the homes that sold in Stockton in the second quarter sold at a loss.From the Guardian:
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Stockton’s median home value was put at $216,100, down 38.2 percent in a year and down 47.6 percent from the market’s peak, Zillow says.
The stellar increase in house prices was inflated first, fastest and furthest in California. So it is not surprising, now that the bubble has burst and the market is in freefall, that places like Stockton are suffering more than most...But the city is far more significant in the big picture of California's troubled economy than many realise. The problems facing this part-old, part-new city are being duplicated all over the state, causing an economic ripple effect that could push America's biggest economy to the brink of collapse.From the Sacramento Business Journal:
Even a signature project such as the L Street Lofts in midtown Sacramento isn’t immune from the effects of the housing downturn. The top-floor penthouses that overlook the city were snapped up quickly to the delight of developer Sotiris Kolokotronis, including one loft bought by Kings basketball player Kevin Martin. About half of the 92 units, however, are still empty since the lofts opened for sales late last year. Kolokotronis and partner Resmark Equity Partners LLC are now in dispute over the project, according to sources familiar with the situation.From the Fresno Bee via the Modesto Bee:
Merced-based County Bank's parent company reported Monday that it lost $12 million in the second quarter of 2008 as it increased its provisions for bad loans tied to the region's declining real estate market.From the Modesto Bee:
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Key to the 41-branch bank's increasing loan-loss reserves is its "exposure to real estate declining rather dramatically in the Central Valley," Richard Cupp, the newly appointed chief executive and president of the company, said in a Monday conference call with reporters.
City Council members Monday advanced a package of proposals meant to provide relief for cash-strapped builders in a down housing market.From the Sacramento Bee:
A lot of what I'm seeing is people who were looking to upgrade their homes, and were told by real estate agents, as well as mortgage brokers, they would be able to refinance in a few years. They were told that home prices would go up, that they really didn't need to be too concerned about these adjustable-rate loan issues. And there are a fair number of people who didn't have a financial savvy about them, and believed on an $80,000 income they could afford a half-million-dollar house.From Home Front:I was an economics major in college. The rule I was taught was multiply your income by three, and that's the most expensive house you can afford. Everybody seems to have ignored that rule, which worked so long for so many people. Not just consumers, but brokers and real estate agents ignored that, as well. They believed multiples of five, six and seven were going to be sustainable.
This afternoon came a call from Sacramento, a woman looking for help for her sister who lives in Vacaville. Their loan payment went from about $2,000 a month to $3,200 or so, she said. She said the loan was from Washington Mutual, which makes me suspect Option ARM. That's where the payment that most people make doesn't even cover all the interest. The loan gets bigger. She was looking for some kind of phone number for help. I sent her to that HOPE NOW hotline, 888-995- HOPE. It was another sad story of two hard-working people, a Spanish-speaking mom and dad, who got "snookered" by a loan they didn't understand. Now they're having to figure they might end back up in an apartment with the kids. The complete opposite of the American Dream.
From the Sacramento Bee:
Government jobs declined during the month, particularly in Sacramento. Though the number of state jobs often dips in the summer, the loss of 1,900 state jobs in June helped drive Sacramento-area unemployment to 6.8 percent, an increase of four-tenths of a point. Unemployment in the region...is at its highest since March 1996.From the Sacramento Business Journal:
Other sectors continued to struggle in June, but the decline in state jobs was particularly troubling for the capital. For the past year or so, state hiring had been one of Sacramento's most reliable job sources, acting as an economic cushion while the private sector faltered. "Government was holding us up there," said Howard Roth, chief economist at the state Department of Finance.
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In the Sacramento area, payrolls shrank by 100 during the month and have dropped 7,100, or 0.8 percent, since last year.
Personal bankruptcies increased 88 percent in the Sacramento region in the first half of the year, and few debtors are showing up in court to plead for their houses. Most owe more than their home is worth and have nothing to argue about. This means large numbers of uncontested bankruptcies are packing court calendars. Business bankruptcies are up 50 percent from a year ago; total bankruptcies are up 68.5 percent.From the SF Chronicle:
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[Attorney] David Meegan has had to turn down most of the referrals that come his way. "I’ve been doing this for more than 20 years, and I’ve never had as many phone calls as I’ve had since the first of the year," Meegan said.
Apartment rents in the western United States are barely climbing — good news for renters but actually a sign of a weakening economy, according to a new report released Thursday..."Basically the rental market is reflecting the economy," [Caroline] Latham [CEO of RealFacts] said. "For many people, there's a misperception that as home foreclosures go up, there is increased demand for rentals and a rise in apartment costs. We don't see that correlation. It's all the housing market and when there's a weak economy, all of it suffers."...Often, people who lose their houses to foreclosures do not end up renting an apartment; rather, they move in with relatives, Latham said.From the Sacramento Bee:
Sacramento remains one of the state's best markets for renters, with average apartment rents up just 1.7 percent the past year, a new national survey shows. The region's secret? It still has an excess of housing after overbuilding during the boom, analysts said Friday.From the Sacramento Bee:
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Apartment owners face new competition from investors snapping up more foreclosed homes and renting them out, said Cory Koehler, deputy director of the Rental Housing Association of the Sacramento Valley.
Times have changed – definitely, for the worse – for more than half the lenders who dominated the Sacramento-area mortgage market during the excesses of the housing boom. Some are gone, ruined by loans made here and elsewhere that turned bad. Some are on the ropes.From the Sacramento Bee:
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The entire U.S. mortgage market seemed to be sliding off a cliff with the troubles of government-backed mortgage giants Freddie Mac and Fannie Mae. Local mortgage brokers admitted to being scared. They warned that if either collapsed, the housing economy would follow.
Anything might happen. But this is starting to look real. For the third straight month, capital-area home sales climbed above figures for the same time last year, a welcome indicator in a region searching for the bottom of its long housing slump. But median prices continued to slide...June's median price of $214,000 for resale homes in Sacramento County is the lowest since $210,000 in February 2003. Median prices for new and existing homes combined slipped to $220,000 in the county. That level was last seen in August 2002.June 2008 homes sales by county
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Though the sales uptick is encouraging, any rebound so far remains fragile, said DataQuick analyst Andrew LePage. He said much depends on the economy, rising foreclosure rates and conditions in credit markets.
Sales of existing homes - primarily foreclosures still - continued to climb in June in San Joaquin County for the fifth consecutive month while the median sales price slipped to the lowest level since spring 2002...The median sales price countywide fell from $235,000 in May to $220,000 last month....From the Modesto Bee:
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Jerry Abbott, president and co-owner of Coldwell Banker Grupe in Stockton, said that because of foreclosures, prices have declined 41 percent in the previous year after a 36 percent drop the 12 months before that, and that's good news for many people who couldn't afford to buy a home before the downturn. "We needed a correction in the market," he said. "The foreclosures - even as painful as they are - are part of a correction that has to occur."
Stanislaus County's median fell to $201,000 last month, down 6.5 percent from May and 41.4 percent from June 2007, DataQuick Information Systems reported Friday. The last time the figure was around $200,000 was in mid-2002, three years into a steep run-up that would peak in 2005...In Merced County, the median price slipped to $160,000 last month, 44.8 percent less than a year earlier...San Joaquin County's median was at $227,000 last month, down 42.8 percent from June 2007.From the Modesto Bee:
Indalex Inc., which makes aluminum parts for windows, doors and storefronts, laid off 154 workers in the past year. Just a year after announcing plans to expand its plant and make Modesto the center of its operation for Northern California, company officials blamed the closure on a weak construction market.
From Lyon Real Estate (via Home Front):
Our [4-county] average price has dropped to 297,000 down from a high of 472,000 in June of 2006. Inventory is now 16% lower than the same period last year but this does not mean we are at the bottom yet. There has been a continued increase in ‘notice of default’ being filed and those homes will be coming on the market in the next 60 days. In addition to that, REO (bank owned) accounts for 58% of all Pended and Sold transactions.Unlike 2006 and 2007, there was no spring bounce in Sacramento home prices this year.
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[E]ven though sales are brisk and better than last year we are still seeing price per foot of the sold properties continue to drop. REO inventory is expected to increase through the summer and if interest rates start to rise we will see greater pressure on home values to decline.
The momentum in existing-home sales in San Joaquin County has continued to build, with May sales reaching the highest monthly level since August 2005 as more buyers snapped up primarily foreclosure properties...The median selling price also continued to slip, sliding from $240,000 in April to $237,000 last month throughout the county, the report said. That's the lowest median price seen in the county since February 2003.From the Sacramento Bee:
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In a traditional sales market, a cross section of houses sell,...Art Godi of Art Godi Realtors...said. Currently, about 90 percent of sales are foreclosures and short sales, and almost all are under $250,000, he said, "and that's the bottom of the market."
Developer Allen Wayne Warren once planned to build hundreds of new housing units on and around Del Paso Boulevard, the North Sacramento main street the city has worked for years to revitalize. But the falling real estate market caused Warren to scale back his dreams. Now, he's negotiating to sell three mostly vacant properties on the boulevard to the Sacramento Housing and Redevelopment Agency.From the CVBT:
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If Warren accepts $1.4 million for the mostly vacant properties, he will be taking a substantial loss. According to property records, he paid about $2.5 million for the properties in 2005 and 2006.
For home sellers who are desperately devout or devoutly desperate, Modesto mortgage banker Philip Cates has something he’d like them to bury. Mr. Cates sells plastic statues of the Roman Catholic Saint Joseph. Home sellers desperate for any kind of nibble from a buyer are supposed to bury the statues near the “for sale” sign in the front yard, head down, “feet toward heaven,” he says.From the LA Times:
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Mr. Cates, who operates out of a modest suite of offices in a downtown Modesto building that house his Service 1st Lending office, says business, at least the statue selling business, is booming...Mr. Cates says he is now “the largest seller of St. Joseph statues in the country.”...“It’s kind of my hedge bet for the mortgage industry, I would say,” he says.
Home-mortgage specialists may have been the first lenders to suffer for their roles in financing the housing bubble. But, as foreclosures rise and home prices fall, many smaller banks and thrifts that backed residential developers and home builders are watching black ink turn red and are spending uncomfortable amounts of time with regulators.From the Modesto Bee:
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Residential construction loans, which generate big fees, were especially profitable for smaller banks -- until housing collapsed in places like the Inland Empire, where prices are down more than 30% from their highs, and the Central Valley, where some former boom markets are off more than 40%.
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According to data tracker Foresight Analytics of Oakland, 15.8% of single-family home construction loans were at least 30 days delinquent in Riverside and San Bernardino counties last quarter, up from just 1.7% a year earlier. The delinquency rate was 14.7% in Los Angeles County, 14.9% in Orange County and 15.4% in Ventura County. It was 30.4% in Merced County, near Sacramento.
The Modesto Bee is cutting 15 jobs, or 4 percent of its work force...and The Fresno Bee, 44 people, or 7 percent of its staff.From the Star-Ledger:
The second quarter of the year fared no better than the first, as the nation's commercial real estate market continued its downward trend, according to the latest PricewaterhouseCoopers Korpacz Real Estate Investor Survey...Transactions involving significant office, apartment and retail properties plunged at least 79 percent in April compared with a year earlier, the report states, while industrial sales fell the least, 67 percent.
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According to the survey, the office market in cities including San Francisco, Philadelphia and Fort Lauderdale, Fla., are in contraction. Other Florida cities, including Miami, Tampa and Jacksonville, are also declining, as are San Diego and Sacramento, Calif.
From the CVBT:
With one in every 75 Stockton area households receiving a foreclosure filing in May -- more than six times the national average – the Central Valley city leads the nation in foreclosures. For the second month in a row, California and Florida cities accounted for nine out of the top 10 metropolitan foreclosure rates among the 230 metropolitan areas tracked in the report. Seven California cities were in the top 10, led by Stockton in the top spot. Other California cities in the top 10 were Merced at No. 3, Modesto at No. 4, Riverside-San Bernardino at No. 5, Vallejo-Fairfield at No. 7, Bakersfield at No. 8, and Sacramento at No. 9.From the Sacramento Bee:
Sales prices for existing homes are down 40 percent from their 2005 highs in Sacramento County, and similarly down 36 percent in Yolo County, 31 percent in Placer County and 25 percent in El Dorado County.From the Modesto Bee:
The dollar volume of homeequity loans, too, has fallen. In 2007, homeowners in the four counties borrowed $2.1 billion less than they did in 2006, according to DataQuick Information Systems. During the housing boom's peak – 2002 through 2005 – consumers in those counties collectively tapped almost $22 billion in home equity. Sometimes even those who want to spend are finding their credit lines rescinded by lenders because of falling values, says Baker of D & J Kitchens and Baths.
A combination of slow sales and a desire to do something different has led Gary Robinson to close his 33-year-old business, The Yard Lumber & Fence Supply in Modesto..."The timing just kind of fits," said Robinson, who explained that though the business is viable, he didn't want to keep it going during an economic downturn, waiting for sales to improve.From the Lodi News-Sentinel:
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The Yard has about 20 employees, down from about 70 a year and a half ago, when Robinson said he consciously chose to scale back the business.
Roughly 50,000 homeowners throughout San Joaquin County — one third of the total — will receive notices next month showing what they likely already know: That their home values are in a free fall. Ken Blakemore, the county's assistant assessor, said the notices should arrive July 10. They're the largest number to show declining values in a generation, if not ever, the longtime county official said.
From CNNMoney (hat tip Average Buyer):
With home prices plunging by more than 30% in some markets, bargain-hunters are ready to pounce. But it may pay for buyers to wait. Many housing experts say that the worst-hit metro areas have even farther to fall, and could see total drops of as much as 50%.Currently, several Sacramento home price measures have crossed the 40% off peak threshold. Compare that with some other famous housing busts:
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Many erstwhile bubble cities have sustained particularly brutal hits. The median-price of a home in Sacramento, Calif. was down 35% during the three months ended May 31 compared to the same period last year, according to the real estate web site Trulia.com...Smaller cities in California's Central Valley, such as Stockton (-39%), Modesto (-37%) and Bakersfield (-29%), also recorded steep declines.
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"The housing boom was unprecedented in U.S. history," said Michael Youngblood, a portfolio analyst with FBR Investment Management, "and the correction will be as well."...Youngblood expects that these markets will likely endure total price drops of 50% or more.
[P]rices are falling faster and further than in any other post-war housing bust. [Prices are also falling faster than during the Great Depression.] During the bust in Austin, Tex., which started in 1986 and is one of the worst on record, prices fell 25%, according to Local Market Monitor, a financial data provider. And that cycle took four years to bottom out. In other major downturns, prices in Los Angeles fell by 21% during a six-year period in the 1990s, and Honolulu home prices saw a decline of 16% in the five years starting in 1994.Given the lack of American precedent, it might be a good time to brush up on the history of the housing bubble in Japan (where home prices in the largest six cities fell by 64% over a 13-year period and Tokyo fell by more than 80%).
Almost $70 million of tax-exempt bonds were sold in June 2007 to build roads and sewers for thousands of new homes planned for Elk Grove, California, once the fastest growing city in the U.S. A year later, the lots are largely vacant and the bonds lost 41 percent of their value.From the Appeal Democrat:
The debt plummeted as construction all but ceased after the biggest developer on the Laguna Ridge project fell behind on the property taxes used to pay interest. Scattered homes sit among tracts overgrown with weeds as housing sales wilt. "It's stopped completely,'' said Onkar Singh, 76, who lives in an adjacent development in the 129,000-person town outside Sacramento. "Everything's vacant."
Nearly 50 employees at the Kbi Norcal Truss plant in Olivehurst will be without jobs next month, victims of the slumping housing market. Mark Kailor, vice president and treasurer of San Francisco-based Building Materials Holding Corp., which owns the Olivehurst plant, said the decision to close the plant was made because of market conditions.From the Modesto Bee:
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"What we have in terms of manufacturing is based on the housing industry; hopefully they will come back when the market turns," [John] Fleming [Yuba County's economic development coordinator] said.
Finally there's some good news on the foreclosure front: Northern San Joaquin Valley mortgage default rates seem to be stabilizing. After nearly two years of staggering increases, the number of homes issued notices of default, the first step toward foreclosure, was lower in May than in April or March.From the National Review:
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"The region definitely is stabilizing. It's stabilizing at a pretty high level, however," said Sean O'Toole, who founded and runs ForeclosureRadar...."The banks still are taking back more inventory than they're able to resell," O'Toole said...He said the three counties were among the first in California to enter the foreclosure crisis. "Now I think you're leading the way out."
Until this week, that predatory-lending narrative dominated the housing conversation. But in the past few days, three poster children for irresponsible lending and borrowing have taken center stage in the debate over the housing bailout...The first is Rep. Laura Richardson, a California Democrat...The second poster child is Michelle Augustine, another Sacramento homeowner (what’s going on down there?) who was featured Wednesday in a Wall Street Journal article about a phenomenon called "buy and bail."More discussion of the legality of "buy and bail" over at the Volokh Conspiracy blog.
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Nowhere in the Journal story does Augustine claim to be a victim of predatory lending. She presumably understood the terms of her mortgage, and she knew her payments would go up. Like many Americans, she probably just assumed that house prices would continue to rise and that she could refinance into a more affordable mortgage once that happened.
Assuming Augustine’s lender had accurate information about her income, it made the same mistaken assumptions about house prices and her ability to pay that she did. Congress wants us to bail these people out. Instead, they deserve each other — and whatever consequences befall them.
From the Modesto Bee:
The signs are painted over. The models are empty. All building has stopped at the three Falling Leaf subdivisions in Modesto's Village I. With less than half of the planned 314 homes complete, developer William Lyon Homes has quit construction. Empty lots growing weeds remain. Falling Leaf apparently is the latest victim of the housing market downturn plaguing the Northern San Joaquin Valley.From the Modesto Bee:
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Falling Leaf repeatedly cut prices. Example: Its smallest house, a 1,620-square-foot plan, was priced at $379,000 in August 2006, then dropped to $329,990 by February 2007 and dropped again to $269,900 in April 2007. By last month, the development drastically sliced prices on its remaining inventory to about $100 per square foot.
Modesto home builder Harinder Singh Toor hadn't planned on being a landlord, but he's become one because he hasn't been able to sell what he's built. Now he rents out eight custom homes, some as large as 5,400 square feet. "I built this house to sell, but I haven't gotten a single bite on it in a year," Toor said about the empty five-bedroom, four-bath house on North Canyon Drive. He had hoped to sell it for $1.2 million, but he'll settle for $3,000 a month in rent, even though that will cover only about half of his carrying costs.From the McCook Daily Gazette:
The sign proclaimed "House for Sale (bank owned)." The construction looked recent and maybe a little ticky tacky but the place was obviously abandoned, with lawn, landscaping shrubs and trees dying from drought. A house, or three, down the block was not even completed but abandoned mid-construction. The current housing financial crisis is vividly on display in and around Merced, California. It was enlightening to drive through the new but blighted fields of dreams in the town that used to be our home some 35 years ago.From the LA Times:
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I asked my host, Jim Glidden, what happened to the people that purchased and then abandoned all the new housing...The speculators from San Jose and other affluent areas simply abandoned their investments. The poor souls who purchased a home to live in are emotionally as well as financially strapped and either leave to rent if their job is still available or just hang on by the skin of their teeth.
[Sean] O'Toole, 40, founded the website ForeclosureRadar.com last year. The site, he said, lists every default, auction and foreclosure in California...Rather than join the rush of those mining for gold in distressed real estate, O'Toole has set himself up as Levi Strauss once did. Instead of selling jeans to prospectors, though, he is selling foreclosure data to would-be buyers.From the Daily Democrat:
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[In 2002] rather than compete with thousands of speculators flipping new homes, he scoured property records to find distressed houses. Over the next few years he bought and sold 152 such properties...He's stopped buying foreclosed houses because his time and money are tied up in the website, O'Toole said. But he also said he "doesn't want to catch a falling knife" as house prices plummet. Although the foreclosure explosion is fueling his business, foreclosure sales have turned into a speculator's market, O'Toole said.
Yolo County officials released their 2008-09 recommended budget Friday, which included layoffs, hiring freezes and other hard-line cost-saving elements to keep even during the lean years predicted to come. "This is probably the most difficult budget for Yolo County in more than a decade," County Administrator Sharon Jensen stated in her budget letter to the Board of Supervisors. "The economy in California is still reeling from the massive shockwaves of the sub-prime mortgage crisis and its effects on housing values, the bond market and the consumer economy." As a result, the report stated the county will have to use $8.3 million of its reserve funds to keep afloat, leaving only $8 million left for a rainy day. In addition, the county's recommended budget proposed the elimination of 118 positions or six percent of the county's total workforce.From the Sacramento Bee:
The collapsing housing market is squeezing all local governments, but Sacramento County is feeling a special pinch. Today, county supervisors will begin deliberating on a budget that could affect almost every resident in this county. Supervisors face a $123.7 million shortfall, and so they are considering cuts to medical clinics, senior centers, youth programs (to keep kids out of gangs), domestic violence counseling, probation services and many other programs.From News10:
Cali Krystal of Sacramento said she came to EDD to discuss her efforts to seek work...The former state office technician moved from Santa Barbara to Sacramento in December. "The cost of living was really high in Santa Barbara," said Krystal. "I thought I'd relocate back to Sacramento where a lot of state jobs are here." But her job search has fallen victim to California's tough economic times. "I've been looking for work with the state since January," she explained. "Before they did the state budget cuts, I was being called for interviews back to back. Then once the [budget reduction] bill got signed, it all just stopped."From the Modesto Bee:
United Way of Stanislaus County warned its partner agencies that a downturn in charitable donations will result in funding delays of up to six months. Overall giving, said Tom Ciccarelli, United Way president and chief executive officer, is down about 9 percent.From the Chico ER:
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"I've been a CEO for a long time," Ciccarelli said, "and I've never seen an economy like this. What scares me is (the) 'perfect storm' of factors." With food and gas prices climbing, and the bottom falling out of the housing market, Ciccarelli said, more people are worried about hanging on to their jobs and paying their bills.
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At the same time, Ciccarelli said, more people are turning to United Way and its partner agencies for help. "In this economy," he said, "we're seeing, and will continue to see, an increased demand for services. "All my life, I've pretty much been a 'half-full glass' kind of guy. But this is different. We really need to get out front and plan to weather this perfect storm."
A government agency that tracks the price of housing and has flagged Butte County repeatedly for high appreciation again indicates falling prices in this market. The Office of Federal Housing Enterprise Oversight listed declines in Butte County house prices for the first quarter of 2008 in a study released last week...The service showed that comparing the first quarters of 2007 and 2008, Butte County's housing prices were down a little more than 7 percent this year...Long-time appraiser Tom Fiscus of Chico has confirmed that his business is down. "I've seen this (slump) three or four times, but never this bad. I've seen the requests (for appraisals) dwindle."From Bloomberg:
The California Public Employees' Retirement System, the largest U.S. public pension fund, may sell part of its $2 billion in residential land holdings after the investments lost 31 percent last year amid falling home prices and forecasts of further declines. Sacramento-based Calpers hired Morgan Stanley to review seven land deals it made with joint-venture partners and real-estate advisers, said fund spokeswoman Pat Macht.From the Daily Breeze:
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U.S. home prices will fall another 10 percent through the end of next year, with even steeper declines expected in "bubble areas'' in parts of California, Nevada and Arizona where there's already an "overhang of supply,'' Michelle Meyer, economist for Lehman Brothers Holding Inc. in New York, said in an interview.
The real estate broker who bought Rep. Laura Richardson's house at a foreclosure sale last month is accusing her of receiving preferential treatment because her lender has issued a notice to rescind the sale. James York, owner of Red Rock Mortgage, said he would file a lawsuit against Richardson and her lender, Washington Mutual, by the end of the week, and has every intention of keeping the house. "I'm just amazed they've done this," York said. "They never would have done this for anybody else."From The Hill:
The Congressional watchdog group Citizens for Responsibility and Ethics in Washington (CREW) on Tuesday fired a shot at Rep. Laura Richardson (D-Calif.), describing her financial problems as “appalling” and calling her a “deadbeat congresswoman.”...“Rep. Laura Richardson’s appalling financial dealings raise serious questions about her ethics,” Sloan said in a statement. “What kind of responsible adult — much less elected public official — only pays her bills when she’s called out by journalists?From KCRA:
