'Business as Usual'

From the Tracy Press:

[C]rooked real estate agents were so common that to get targeted for prosecution, lenders and agents had to go the extra mile in duping buyers. “When I started out, everyone was doing that, those stated-income loans,” said Susan Wilson, who sells homes for Corral Hollow Real Estate in Tracy. “It’s really discouraging, because no one does them now, but the same people who did them are still selling homes.” She said that realization makes her consider leaving the business. “I just don’t want to be in a line of work where things like that could happen — where peoples’ lives are falling apart because of this industry,” she said.
...
“When we started out, that’s what we were taught,” Wilson said. “Even the veterans, with decades behind them, said this is the way to do it. No one said it was wrong — and when you’re new, how do you know?” In fact, victims of brokers and agents who helped people procure homes they couldn’t afford wonder why the people who misled them are still free. “It’s like business as usual,” Wilson said. “I wonder when, or if, it’s going to catch up with them.”

From News10:

What was expected to be a flood of foreclosures is turning out to be a trickle. Michael Lyon of Lyon Real Estate agreed..."It's becoming a seller's market. I didn't think I would be saying this for years." Lyon predicts that instead of seeing a wave of foreclosures sweep in over the next few months, it will likely now be a steady stream over the next few years.

From Rocklin & Roseville Today:

The greater Sacramento area housing market has improved, but it has not yet fully corrected itself. The first-time tax credit needs to be extended and if possible expanded in order to build upon the progress the market has made. Any uncertainty about the future of the credit has the power to dampen consumer demand. The best way to assure continued housing activity in Sacramento and around the country is to extend the credit and do it quickly. I urge you, even if you are not a potential first-time home buyer to contact your congressperson and ask them to support the extension of the credit.

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.

DataQuick: Sacramento Median Price Back to 2000 Levels

Another milestone.

From the Sacramento Bee:

Prices keep falling.

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.

Statistics by county

Modesto & Stockton metros are now down 66% from peak, while Merced hit -72%.

'Who would have thought?'

From the Sacramento Bee:

Gov. Arnold Schwarzenegger will send layoff warnings to at least 20,000 state workers Friday unless he reaches a budget agreement with legislative leaders that precludes the need for such cuts, his office announced Tuesday. The Republican governor intends to eliminate 10,000 full-time positions from the state's general fund, either by job cuts, attrition or transfer to positions funded by special revenue streams, according to Schwarzenegger spokesman Aaron McLear.
...
Jason Dickerson, a budget analyst at the nonpartisan Legislative Analyst's Office, said the state has never laid off 10,000 workers before. "It might be possible to lay off 1,000 to 2,000 people, but laying off 10,000 or more employees would be next to impossible without gutting core services," Dickerson said.

From the Sacramento Bee:

Executives at the two local banks that have received shots of federal capital say the money isn't likely to spur much new lending, at least until the economy begins to recover. "It's that old economic spiral thing. … It's really difficult in this environment to find loans that we can underwrite," said Mark Lund, president and chief executive at Auburn-based Community 1st Bank. Last month, the bank received a $2.55 million investment as part of the government's Troubled Asset Relief Program.

From the Sacramento Bee:

Andrea Hawkins, 31, said she was doing well financially, running a mortgage business out of her Elk Grove home until the housing downturn. Now she's struggling to pay her own mortgage each month. "It's scary trying to make ends meet," she said...Now the single mother of four has joined the ranks of those needing assistance.
...
Blake Young, director of Sacramento Food Bank & Family Services,...said his organization served 25 percent more people in 2008 than 2007. Many are larger family groups from the same address. "People are finding it necessary to combine households to make ends meet," he said.

From LA Land:

[L]ooking ahead, the Zillow survey found a surprisingly sunny outlook. Fully 25% of homeowners in the West thought their home will increase in value within six months. That's up from 14% in the third quarter who had such high hopes for their home.

An update on the squatlord story. From News10:

The neighbors were suspicious but the tenants showed police a lease to prove they belonged. But now, the case of mystery tenants moving into a vacant upscale Natomas house in the Westlake subdivision last week has brought arrest warrants for those tenants and their real estate broker.

More here.

From the Tracy Press:

The sinking housing market has taken down an 18-year-old Tracy business that once employed more than 300 people. Piedmont Lumber and Truss...will issue its last paychecks to its 25 or so employees Thursday....

From the OC Register:

National Association of Realtors’ chief economist Lawrence Yun told an Orange County crowd today that he failed to foresee the depth of the housing crash....“What I found out was there was a credit market bubble that led to a housing market bubble. There was not check and balance in the system,” he said.
...
When the bubbles burst, home prices fell by as much as 45% in Stockton, he said...“Who would have thought a tangible asset would fall 45% in one year?” Yun asked.

Certainly not the NAR!

From the CVBT:

Home prices have plunged three and a half times more in San Joaquin County than the nation as a whole, according to a report Tuesday from Integrated Asset Services LLC....San Joaquin County leads the nation with a 51 percent drop in home values compared to the height of the housing bubble – more than any county in the nation, the report says.

From the Stockton Record:

Stockton resident Jorge A. Aragon is shocked at the ever-sinking house prices, hammered down by a predominantly foreclosures market over the past 21/2 years, but he's not looking to buy. He bought a house in 2002 for $220,000 and another in 2007 for $344,000, and now he's working with two banks to try to get loan modifications that will keep them out of foreclosure. Meanwhile, he can only be amazed as people move into his neighborhood into homes such as his at prices running below $100,000.
...
Jerry Abbott, president and co-owner of Grupe Real Estate of Stockton...thinks prices won't sag further. "We're dragging along the bottom."
...
In Stockton, the median sales price of $125,000 last month is a level not seen since 2001, said John Knight, professor of finance and real estate at University of the Pacific's Eberhardt School of Business. "I cannot envision that prices are going to continue to go down," he said. "I think we're either at or near the bottom for selling prices." Now the rents that investors can get for foreclosure homes covers mortgage payments for these lower-priced houses and then some, he said, and that's why the market is clearing out the listings.

From Seeking Alpha:

Having just returned from Sacramento/Stockton to look at defaulted condominium projects, I can tell you it's a solid mess out there. Investors from all over the Bay Area, and indeed the entire country, are making the same drive across Interstate 80 and descending on more or less the same spots. Unfortunately, the smartest investors will tell you they have no idea when it will end or what their exit strategy is, so not much is getting done on any scale.

The unemployment rate in Sacramento/Stockton is now in double digits (and climbing), and most people will have no choice but to relocate in order to find work. Consequently, there are some projects that will simply need to be bulldozed and plowed under.
...
[F]oreclosures not only create additional supply of "shadow" rentals, but home prices in these hard hit areas will eventually drop (if they haven't already) to levels where it will be much cheaper to buy than to rent.

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.

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

From Time:

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

From the Stockton Record:

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

From News10:

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

From the Sacramento Business Journal:

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

From Home Front:

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

From the Sacramento Business Journal:

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

From the Sacramento Bee:

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

From the Sacramento Business Journal:

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

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

From Inman News:

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

From the Modesto Bee:

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

From the Press Democrat:

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

From the Appeal Democrat:

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

From the Sacramento Bee:

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

Mayor Short Sale

From the Stockton Record:

Former [Stockton] Mayor Ed Chavez, who left office in December for a home he had built in Indio, has put his Cavendish Square condominium on the market in a short sale, another in one of the nation's cities hit hardest by the foreclosure crisis...It is listed for $160,000. Chavez paid $332,000 for it in 2005.

"I guess it's kind of the ultimate in symbolism, isn't it?" former City Councilman Clem Lee said. "The mayor of Ground Zero going through the same thing."

From KCRA:

Marilyn Thiele, who lives in the Cavendish Square complex, said she and some of her neighbors feel the situation is wrong, and that Chavez' short sale is helping to bring down their property values. "I think for him to walk away basically that's what it is, he's is walking away from a commitment he made ... to buy a home and pay his dues, make his payment," Thiele said.

More at David Siders' blog.

High-End Immunity? Not So Much.

From the Sacramento Bee:

Even as new legislation, moratoriums and alternatives such as short sales and loan modifications have slowed foreclosures, another wave could begin this year, many warn, as new categories of risky housing boom loans reset in higher-end neighborhoods. "The last 60 days it's really become palpable. More El Dorado Hills and Sierra Oaks agents are seeing more people request homes for sale with short sales," said Mike Lyon, head of Sacramento-based Lyon Real Estate.
...
Lyon said he recently told the Placer County Association of Realtors it will take another four years to work through the region's housing slump. Partly, he said, that's due to projected waves of resetting Alt-A loans...and so-called pick-a-payment loans, also known as option ARMS...."I think it really gets back to those Alt-A's," he said, explaining rising stresses in capital-area neighborhoods that have considered themselves immune from the housing crisis.

From the Stockton Record:

The [state] law mostly just delayed defaults, said Jerry Abbott, president and co-owner of Grupe Real Estate in Stockton. "It's a pause in the storm," he said. "It's going to be more of the same in 2009."

While most previous foreclosure problems arose from adjustable-rate mortgage resets, he said, a new layer of foreclosure woes is arising from homeowners who have lost work because of the recession.

From the Sacramento Bee:

Strategic Investment Partners...scooped up 187 home lots and 35 unfinished homes, buying half of a repossessed Elk Grove subdivision named Monterey Village. The announcement this week...is a new sign of money looking beyond the capital region's housing bust to better days.

From the Stockton Record:

...[D]emand for apartments in San Joaquin County has been getting softer in the recession....[According to RealFacts] average apartment rents in the county slipped by 0.6 percent....

Randy Thomas, a Sperry Van Ness commercial real estate broker in Stockton who specializes in the Northern California apartments market, said the apartment rental market is getting softer because of the increasing number of "shadow" properties - rental houses - out there.
...
[A]n increase in the number of foreclosure properties converted to rentals has slowed demand for apartments [Norbert Huston, a Stockton real estate broker] said. "It's very hard for us right now to raise rents when the market has softened," he said.
...
While the decline in rents and occupancy is good news for renters, it's less welcome news to those who have invested in rentals as income properties....

From News10:

[Sanjay] Varshney [dean of the College of Business Administration at Sacramento State University] said the severity of the recession has been unexpected with the "complete collapse of the financial system" occurring in less than two months.
...
He said at the core of the collapse is an astonishing level of dishonesty, from financial institutions and the real estate industry, to homeowners taking out loans they knew they couldn't afford.

Bay Area SOS

From the Sacramento Bee:

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

From the Sacramento Business Journal:

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

From the KCRA:

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

From the Stockton Record:

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

From Business Week (hat tip RV6Flyer):

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

From The Housing Bubble blog's Ben Jones:

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

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

Sacramento Unemployment Hits 8.7%; Rental Occupancy Drops

From the Sacramento Bee:

Greater Sacramento unemployment jumped to 8.7 percent, up from 8.1 percent a month earlier...The region has now lost 22,400 jobs in the past year, or 2.4 percent of its employment base.

From the Sacramento Business Journal:

The highest local jobless rate was in Yolo County, at 9.8 percent. The county has a labor force of 99,900 with 9,800 unemployed last month. The county had a 9 percent unemployment rate in November.

From the Sacramento Bee:

Unaccounted for [in the employment numbers is]...the growing numbers of workers who have had to settle for less of a job than they wanted. "The pain in the economy is much greater than the jobless numbers would indicate," said economist Sung Won Sohn of California State University, Channel Islands...Jenny Beard, owner of the Express Employment Professionals office in Roseville, said the number of former full-time workers seeking part-time work is undeniably up. "I'm positive of that," she said. "We're seeing many candidates who just want to keep themselves employed."

From the Sacramento Bee:

Sacramento-area rental occupancy dropped nearly a percentage point – 0.7 percent – in the fourth quarter of 2008 compared with the year-previous quarter, according to a survey released Wednesday by Novato-based rental industry analyst RealFacts...About 93 percent of area rental properties were occupied, one of the lowest occupancy rates in the state....
...
One local analyst cited a "cacophony" of factors contributing to the drop, from overbuilding, to single-family homes turning to rentals in a disastrous housing market, to a struggling economy.

From Home Front:

Here at The Bee, we do a ton of stories on the housing market, but don't often enough explore the world of apartments that house an estimated 35 percent of the region's population...The bottom line right now: the apartment industry is slumping, too. Sales prices are falling, a few have fallen into foreclosure and buyers are waiting on the sidelines to see if prices fall more, the two said. There's still more supply than demand, which has lessened investor interest, too, in apartments.

From the Placer Herald:

Placer County’s foreclosure rate continued to gain steam in 2008, according to a year-end analysis of government records. And experts say to expect more of the same in 2009. The number of foreclosures in the just-ended period was up more than 110 percent from a year ago, with 2,552 residential properties being taken over, compared to 1,193.
...
Homes in all segments of the market – from “starter” homes to area mansions – showed up on county default rolls last year en masse, experts say. “It’s pretty much going after all of them,” said Ben Herb, president of the Placer County Association of Realtors. “Even the houses that are a million-plus have been going into foreclosure.”

From CBS13:

Loan consultant, Robert Turrietta, say that one particular foreclosed home in Sacramento's Oak Park neighborhood lost almost 75 percent of its value. "This particular home transferred a couple of years ago for around $200,000 and just recently sold and closed escrow for $39,000," Turrietta explains. Turrietta says while home prices fall, nearly half of the buyers applying for a loan are getting denied.

Related Post: Housing Bubble Casualties: Professionals 'Suckered' into Oak Park

From the Sacramento Bee:

Most of Sacramento's local banks bet small on the real-estate boom and, as a rule, they haven't been badly hurt by the bust. But according to federal filings, most local lenders have a larger stake in the commercial real estate market, where vacancies – and loan defaults – are expected to soar this year as more businesses fold.
...
[Colliers International's Garrick] Brown anticipates 5 percent to 6 percent of the region's commercial real estate properties will go into foreclosure in the next two years. That's similar to the rate of home foreclosures locally in 2007-8, according to data from foreclosures.com.

Merced breaks the -50% YoY mark. From the Modesto Bee:

Stanislaus County's median sale price was $157,500 in December,...44 percent below the $281,250 in December 2007 and 60 percent off the $396,000 in December 2005, when the bubble was at its biggest...[YoY price declines:] 51.8 percent in Merced [and] 47.5 percent in San Joaquin.
...
Richard Green, director of the University of Southern California's Lusk Center for Real Estate, said the market is being hammered by tight credit, expectations of further price declines and job losses. "If you see the unemployment rate turn around, that's when you'll start to see housing prices bottom and start turning in the other direction," Green said. "Until that happens, I'm pretty gloomy."

From the Sacramento Bee:

Sacramento County is about to announce a mid-year budget shortfall of $42.3 million....As a result the county at the Feb. 10 Board of supervisors meeting will propose getting rid of almost 200 positions on top of almost $30 million in cuts, according to an official, not authorized to speak on the budget, who had been briefed on the situation.

From CBS13:

With a skyrocketing foreclosure rate and plummeting sales taxes, Stockton has to cut $30 million from their $180 million general fund...[O]fficials say layoffs are inevitable.

From CBS13:

The recession is leaving some doctor's offices empty. More women are putting motherhood on hold and recent reports show contraceptive sales are through the roof. The data runs about two years behind, we won't know for sure until 2011, but it appears that with the economic slowdown has come something of a pregnant pause.

DataQuick: Sacramento Median Price Drops Below $180,000

From the Sacramento Bee:

Median sales prices dipped to $176,000 in Sacramento County last month, reflecting the dominance of bank repos in the market following a wave of 2008 foreclosures...[That] is the lowest since May 2001.

From the Sacramento Bee:

Greg Paquin of the Gregory Group, the Folsom housing market consultant, said new-home sales in greater Sacramento will total 4,695 this year, the same as 2008. But he acknowledged that prediction is probably optimistic.

From Home Front:

It was...interesting to see the links between the real estate declines that started here in Sacramento in 2005 and the budget nightmares that are now in full swing statewide as home values fall. The speakers made it especially clear that the housing crash that started in the Central Valley and the Inland Empire of Southern California is now happening everywhere in the state.

Realtor Julie Jalone:

I believe 2009 will be a repeat of last year when looking at inventory and unless the recession continues or the credit crisis worsens I predict we will have less than 10 thousand homes on the market by the end of the year. Having fewer homes on the market will dampen the downward pressure on home prices...I believe 2009 will be another year of declining prices/value although by late year I think we will see some firming of prices and maybe even some upward movement in the most desirable neighborhoods.

From the Manteca Bulletin:

Stockton-Manteca-Modesto was among the very first regions to feel the impacts of loose lending standards. This area led the nation for more months than anyone else when it came to foreclosures. It is also expected to be the first to pull out of it. The reason why the region was first going into the mess and will be the first coming out is due to growth.

The worst is either over or close to it in Manteca. That doesn’t mean there won’t be more foreclosures — there will be. It doesn’t mean prices are going to start climbing again any time soon nor does it mean that retail is going to bounce back overnight. We took a huge punch in the gut of the economy — housing — but we’re getting up for the next round and are still a strong contender. That’s not the case elsewhere.

From Housing Wire:

[H]ousing has some serious correcting to do yet ahead of it...If you want to know which markets are going to bleed most heavily through this year, then, you need look no further than those markets that are already mostly underwater relative to home equity.
...
The nation’s most troubled housing market by this measure would be the town of Tracy, Calif., in San Joaquin County....Ensconced by the 95391 ZIP code, a full 88.7 percent of outstanding mortgage debt in this area is estimated to be underwater, with 91.5 percent of all mortgages ranking as “near negative equity” by First American CoreLogic.
...
Coming in at number four? Rancho Cordova, Calif., home to the 95742 ZIP code and part of Sacramento County in Northern California — 84.3 percent of the 2,099 mortgages in the ZIP have reached a negative equity position, CoreLogic’s data showed, while an additional 83 mortgages are considered “near” negative equity as well...[Y]et another NorCal property disaster waiting to unfold.

From the CVBT:

A very grim outlook for employment in the Central Valley is found today a study [pdf] prepared for the U.S. Conference of Mayors. It predicts that by the end of the year, unemployment rates will be as high as 17.5 percent in Merced. But the report says every major metro area in the Valley will be in double digits, with more than 36,000 jobs being lost over the next 12 months.
...
The largest job loss [in the Central Valley] is predicted for the Sacramento metro area – 17,900 jobs. It is estimated that will put unemployment at 10.0 percent.

From LA Land:

Because housing is just one part of an increasingly dismal economic picture -- add to that the giant budget problems here in California -- I scratch my head every time I read a prediction that California housing prices could stop their decline in 2009. I just think there are too many factors in the big picture for a quick bounce back.

From the Sacramento Bee:

The current economic downturn has created a window of opportunity for people looking to remodel their homes and who can still afford the investment. Skilled crafts-people – once too busy for small projects – are looking for work. Lumber is bargain priced.
...
"There's never been a better time to remodel," said [George] Henley, who has been in the home construction business for 30 years. Henley and many other local contractors have experienced the ups and downs of the building market before. "It was bad in 1980, again in 1990, but never this bad," he said. "Business might slow down for building new homes, but remodeling usually stayed steady. Now, we're seeing a slowdown for remodelers, too."

From the Sacramento Bee:

Surprisingly, [St. Joseph statute seller Philip] Cates acknowledged Thursday that "sales are a little bit flat. We're wondering if people aren't talking about it anymore, or if people are light with the $10."

Home Front noted one possibility: banks, dumping repossessed properties, now account for three-fourths of home sales in Sacramento. Presumably, St. Joseph isn't part of their corporate tool kits.

From the Sacramento Bee:

"The breaking point is property value," said Kevin Baker, supervisory special agent of the financial crime squad at Sacramento's Federal Bureau of Investigation. "If it goes stagnant and declines, that's when fraud comes to the surface," Baker said. Reports of mortgage fraud from financial institutions to Sacramento's FBI office increased from 500 in 2005 to more than 3,000 in 2008, Baker said. Based on 2008 figures, the Sacramento region ranks fifth nationally in the number of mortgage fraud cases.

From the Modesto Bee:

Home values in many Northern San Joaquin Valley communities have declined more than 60 percent since the housing boom peaked three years ago. "This has been very, very difficult on our residents," said Rick Robinson, Stanislaus County's chief executive officer. "We were not a wealthy community to begin with." Robinson recalled how Stanislaus enjoyed unprecedented growth before 2006, "then our world collapsed."
...
Besides first-time buyers taking advantage of bargain prices and near-record low interest rates, [PMZ real estate agent Judi] Alves said, investors are scooping up foreclosures. "The average Joe now has an opportunity to become an investor and to add a rental home to their retirement portfolio," Alves said.

"Serious Trouble" Ahead

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."
...
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."

From the CVBT:

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.
...
Merced (High) 95.4
Modesto (High) 96.5
Sacramento (High) 96.3
Stockton (High) 96.6

From the CVBT

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.
...
Sacramento was ninth, says RealtyTrac, with 39,876 homes foreclosed or 5.20 percent of all units.

From CNN Money:

[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."

'Nothing Left To Trim'

From the Sacramento Business Journal:

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

From the Sacramento Bee:

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

From the Sacramento Bee:

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

From the Sacramento Bee:

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

From the Stockton Record:

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

From the Associated Press (hat tip DJ/SMF)

The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates.
...
Financial adviser Barry Hartz lived in California for 60 years and once ran for state Assembly before relocating with his wife last year to Colorado Springs, Colo., where his son's family had moved. "The saddest thing I saw was the escalation of home prices to the point our kids, when they got married, could not live in the community where they lived and grew up," Hartz says. "Some people call that progress."

From News10:

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

"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.

Fortune on Sacramento Real Estate: 5th-Worst Market in 2009

Fortune Magazine says the Sacramento real estate market will be the 5th-worst market in 2009, with the median home price projected to decline 22%. However, Fortune expects prices to rise in 2010, albeit only 2%. (hat tip DJ)

High jobless rates and low population growth are helping burst the capital city's inflated housing market.

Stockton is #2.

From the Sacramento Bee:

[Average Buyer:] Back then (early 2007) I interviewed several agents. They all said the same thing: "Oh, it's just going to kind of ebb a little bit and go down." I'm thinking, "How can that be?"...That's when I kind of went looking for alternative answers and the experts in the field. That's when I found some of the other regional blogs and found an alternative view.

[Jim Wasserman:] What was that?

[Average Buyer:] They were more bearish on the market. They were saying things which were not mainstream at all at that point. That was the point before Wall Street, before pundits started acknowledging that things were going to happen. I read the Wall Street Journal every day. In August 2007 everyone was saying, "Oh, it's just a little shaky. Things are good now." Then it was spring (2008) and we start losing Bear Stearns. And it was, "Oh, we're over it now and we're into summer." They just keep having this false sense of delusion.

From the Sacramento Business Journal:

Not everybody is a fan of Sacramento’s vacant building ordinance, which was approved in August 2007. “The city is creating a perfect storm for themselves with this new ordinance,” said Bruce Slaton, a real estate agent who works in south Sacramento. “If a house has $20,000 in fees and $30,000 in fines on a property that’s worth $40,000, the deal just doesn’t work,” he said. “The city might end up getting a lot of these handed to them by the banks.”

In some cases, he said, potential sales of foreclosed homes don’t work because the house was cited for violating the city’s dangerous or vacant building codes. “By the time the banks get these homes back from the trustee sale, they’ve got thousands of dollars of fines and fees on them,” which some banks try to pass through to the buyer, Slaton said. “And if the city doesn’t relax some of these fees, it precludes a lot of buyers from doing anything with them.”

From the Sacramento Business Journal:

The Sacramento Metropolitan Statistical Area, which includes Sacramento, Arden-Arcade and the Roseville area, saw its occupancy fall to 93.8 percent in the third quarter compared to 94.3 percent in third-quarter 2007, according to TRI Commercial’s apartment advisory team.

From the Sacramento Bee:

Five Sacramento County ZIP codes had median sales prices below $100,000 in November, according to property researcher MDA DataQuick.

From the Modesto Bee:

"It comes down to just the sheer volume of problem loans in your area," said Rick Sharga, senior vice president of RealtyTrac, which monitors foreclosures nationwide. Sharga predicted the [Northern San Joaquin Valley] region will continue to lead the country in foreclosures through 2009.
...
Mike Zagaris, president of Modesto-based PMZ Real Estate...is concerned that many current owners are giving up their homes because they've lost so much equity. "I'm being told by my people in the trenches that the vast majority of those facing foreclosures now have no interest in redoing their loans. They just want out," Zagaris said. "If that's true, there's no stopping these foreclosures."

From the Modesto Bee:

The recession dug deeper into Stanislaus County last month, sending the jobless rate to a nearly 10-year high of 12.4 percent, the state reported Friday. It was the county's highest monthly rate since the 12.8 percent of January 1999 and the worst November since the 12.5 percent in 1997.
...
The collapse of the housing market in the past three years bears much of the blame. Real estate agents, builders and people in related businesses have lost jobs. "Those industries, of course, are related to the housing and credit crisis," said Liz Baker, a labor market analyst for the EDD.
...
Still, the overall numbers...are well down from the early and mid-1990s, when unemployment sometimes hit the high teens.

Uh-oh. Last time the media said something was not as bad as the 1990s, all hell broke loose.

From the Modesto Bee:

The Northern San Joaquin Valley has been hit especially hard in the economic downturn because of foreclosures and other fallout from the housing market collapse. Agriculture and related fields have been relatively strong, but even they can be hit by the economy's troubles. Roberts Ferry Nut Co., which sells almonds and other items in Christmas gift packages, has seen a roughly 15 percent drop, co-owner Dan Mallory said. "I just don't think the consumer has the same buying power as before," he said.

From the Associated Press:

Robert Ecker was bored with retirement, so he went back to work as a housing appraiser in Stockton. He trained four other appraisers during the real estate boom — all of them are now out of the business. "Since the real estate market closed down, I grew a beard and now I'm doing this," said Ecker, dressed in the trademark red suit with white trim. "The older kids are asking for clothes now, rather than gifts," he said. "Most of them are asking for one gift."

From Stockton to Miami, from ritzy Las Vegas to gritty Detroit, cities with the worst real estate markets led the U.S. economy into recession. Skidding home prices and soaring foreclosures have magnified the broader woes of unemployment, stock market turmoil and hard-to-get loans. Holiday shoppers are making a list, checking it twice, and then scratching off the nonessentials.

Stockton: $250,000 Off Peak

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.



From CNNMoney:

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.

[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."

From the Christian Science Monitor:

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].
...
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.
...
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."

"Rogues in the Real Estate Industry"

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.

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.

From the Modesto Bee:

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.
...
"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."

From USA Today (hat tip Jeff):

[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.

"New Year Bodes Ill for the Central Valley" Economy

From the Sacramento Real Estate blog:

Prices have fallen yet again...Sacramento county is now at $122.69 a square foot, a drop of 34.3% over last November...Median price has also fallen for the same period - here we see a fall of 40.3% year over year. Median price last November was $293,000 and is currently $175,000.

From Sacramento-based Foreclosures.com:

The nation's foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, pushing home prices up and fueling a real estate recovery, according to the 2009 Outlook from ForeclosureS.com....

"Recovery is underway. Affordable is back in the housing market," says Alexis McGee, real estate expert, educator, and president of ForeclosureS.com. "In 2009, housing will not only recover, but we'll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market. With 4.5% fixed mortgage rates, housing prices lower than they were 'pre-housing bubble', commodity prices lower, tax credits available for homebuyers, and the government eager to stimulate our economy, for the first time in years I can see prices rising again in 2009," adds McGee.

From the CVBT:

The New Year bodes ill for the Central Valley as the global recession deepens, says a new economic analysis by the University of the Pacific. “While home prices are beginning to find a bottom and real estate sales have surged with low prices, the outlook for the agriculture industry, trade, transportation and other key service sectors have weakened substantially in the past three months,” says the report written by Jeff Michael, director of the Business Forecasting Center at the Eberhardt School of Business at Pacific in Stockton.

From the Sacramento Bee:

Get ready for two years of 9 percent unemployment. California and Sacramento's jobless rate will top 9 percent sometime early next year and won't fall below it until early 2011, according to an economic forecast released Tuesday by the University of the Pacific. The higher unemployment is the obvious result of a deepening recession as the economy moves well beyond the initial job losses in construction and mortgage lending. "We're out of the housing thing and into a pretty severe … traditional structure of a recession," said Jeff Michael, director of UOP's Business Forecasting Center.
...
Michael said the Sacramento area figures to lose 2 percent of its jobs next year, a significant downturn.

From the Modesto Bee:

In preparation for slower times, Pacific Southwest Container of Modesto has laid off an undisclosed number of employees. The container manufacturer...joins a growing list of San Joaquin Valley companies that have scaled back their staffs to reflect slowing business...[A]s consumer confidence wanes and people buy less, there is less need to make and ship the goods that once flew off store shelves.
...
Initially, the decline in the valley housing market triggered job losses in real estate, finance, construction and other, related industries. As the economy continued to slow, the ripple effect has forced other businesses, including The Bee, to trim workers. Jeff Michael said he isn't surprised to hear of Pacific Southwest Container's layoffs. The director of the University of the Pacific's Business Forecasting Center said it is part of a coming wave in the manufacturing sector. Goods that people can put off buying will take a hit, Michael said.

From the Tracy Post:

As a soft housing market and rising food and fuel costs eat away many folks’ disposable income, the ancient art of bartering has become an increasingly common way to get what one wants.
...
Out-of-work Tracy carpenter Donald LaMmond, 42, can’t afford Christmas presents this year for his two daughters, ages 7 and 11, so he’s trading his handyman skills for board games and dolls to put under the Christmas tree. The contractor and his real estate agent wife, Kimberly LaMmond, 39, represent a pairing of two of the hardest-hit professions in today’s economy — definitely a source of stress for the couple, who sold their home 2½ years ago for much less than the loan that paid for it. "We’re both learning how to update our resumes, to get back out there," he said. "And we’ve applied to McDonald’s and Wal-Mart, but it’s hard to get out there — other people want those jobs now, too."

Paquin Predicts Sales Bottom for 2009

From the Stockton Record:

Question: It's been the slowest year yet for home builders. When do you anticipate that the market will hit bottom?

Answer [Gregory Paquin, president, Gregory Group]: It is our expectation that the Central Valley will hit bottom during 2009 and begin to see the signs of recovery in 2010 and 2011, although some areas - Sacramento and some northern Central Valley communities - may experience the recovery sooner than others (some mid- and southern Central Valley communities). Several things will need to happen before the housing recovery can begin: a slowing of foreclosure activity, less fear about job losses, the stabilizing of the overall economy and the easing of credit markets - a swing of the pendulum back to the center.

Related posts:
Paquin Predicts Sales Bottom for 2008
"I'm optimistic we will [reach bottom] in 2007"

Speaking of predictions, Sacramento Bee housing reporter Jim Wasserman invites readers to submit questions to an upcoming Sacramento real estate roundtable, which apparently includes blogger Average Buyer. Kudos to the Bee for making room for an informed consumer's perspective. Knock 'em dead AB! (no pressure or anything)

From the Sacramento Bee:

California's financial troubles have prompted Gov. Arnold Schwarzenegger to start talking about state layoffs...At a Los Angeles event last week, Schwarzenegger said the state has to look at all areas of government to close the $11.2 billion funding gap this fiscal year. "I think the longer we wait the more we will have to lay off people from government," he said in response to a question about the state's financial health. "And I think because of the delay now, we are almost, I think, forced – as a matter of fact, we are going to have a meeting … about that, how many people we need now to lay off in order to make ends meet."
...
About 112,000 state workers are employed in the Sacramento region, roughly 10 percent of the work force.

From the Sacramento Bee:

Sacramento, already weakened by one of the nation's highest foreclosure rates, is especially vulnerable. The stumbling state economy has prodded Schwarzenegger to propose that state employees take off one day per month without pay. "What I'm seeing now are state workers who are panicked … who are living paycheck to paycheck and are saying, 'Once I'm forced to take one day off a month I can't make my mortgage payment,' " said Jonathan Stein, an Elk Grove bankruptcy attorney.

From News10:

Sacramento Salvation Army homeless shelter supervisor David Benning...believes they've never had a higher percentage of first-time homeless in the shelter than they do now. The bad economy is likely to blame, as more people face the same crippling hardships. "Foreclosure, generally," says Benning, talking about the reasons people give when looking for shelter. "They lost their job, unemployment benefits have run out."

From the Sacramento Bee:

[B]orrowers rolled up the center's escalators for a massive foreclosure prevention workshop organized by Hope Now...The larger-than-expected crowd at the convention center spoke to the magnitude of problems in the region..."At 7 p.m. we had 1,200 borrowers registered," said Hope Now spokeswoman Katherine McGann. "They're still coming."

From CNBC:

The top U.S. banking regulators said Monday that some of their foreclosure prevention efforts are floundering and that they have no agreed plan for the future, two years into a housing crisis that has dragged the economy into a deep recession. More than half of troubled borrowers face losing their homes even six months after lenders have eased their monthly payments, one regulator said, a discouraging sign for reversing a tide of foreclosures.
~~~
[I]nstead of spending so much time focusing on trying to modify these loans, perhaps we need to look at the problem from a different perspective. How do we transition these borrowers out of homes they can't afford, with as little pain as possible, and in turn give qualified borrowers the incentive to buy up the inventory? Unless the lenders or investors or government officials are willing to simply throw the loan out and give away an awful lot of house to an awful lot of borrowers, modifications, and certainly "mass modifications" which a lot of government types are pushing, are just exacerbating the problem.

From the CVBT:

U.S. Rep. Dennis Cardoza, D-Merced...says the Treasury Department should immediately look into expanding the [4.5 percent fixed rate] program to all American homeowners...Homeowners who have been responsible and paid their mortgages every month should receive the benefit of a lowered mortgage, as well as those who need assistance meeting the demands of their mortgages, he says. "By lowering the monthly payments, we will essentially be giving each homeowner a stimulus check by putting more money in their pocket and without placing a burden on the Treasury or the taxpayer,” says Mr. Cardoza.

From the Stockton Record:

[N]ew numbers from Irvine-based RealtyTrac, which tracks the foreclosure market, indicate that the number of single-family homes actually repossessed by banks and mortgage companies is growing at a faster pace in San Joaquin County. In the first six months of this year, a total of 5,643 houses were repossessed countywide, RealtyTrac said. Compare that with 10,478 from January through October. That means the monthly average of repossessed homes is up from about 940 per month in the first six months of the year to more than 1,200 per month so far in the second half of the year - a nearly 28 percent jump.

From the Sacramento Business Journal:

Kobra Properties won’t bother to save 16 of its most troubled assets as it starts bankruptcy proceedings, the founder and president said in documents filed in the case. The plan to abandon 238 acres — mostly unfinished office, retail and restaurant projects — of its 900-acre real estate portfolio is part of Kobra’s strategy to emerge from bankruptcy as a more viable property developer...The abandoned assets will likely be repossessed by lenders and eventually offered for sale, and could be purchased at a steep discount by investors hoping to profit from one of the worst real estate reversals in decades.
...
“I have determined that certain real property assets of the debtors’ bankruptcy estates are unnecessary for the debtors’ reorganization and have no value to their respective estates,” company founder and president Abe Alizadeh said in court papers. “These assets are burdensome, of inconsequential value and have no equity or value.”

From the Manteca Bulletin:

More than 80 percent of the record 1,044 existing homes in Manteca that have closed escrow so far this year are foreclosures. That means owner-occupants and investors alike lost their homes because they couldn't make the payments. And for the most part it wasn't due to job loss or a catastrophic event such as a major illness. They simply borrowed more than they could afford and did it so with low introduction periods where interest - as well as sometimes part of the principal - was deferred for two to three years. They were betting prices would continue to increase and being able to refinance. The foreclosures are bad news for those who got caught in what is looking more and more like a Ponzi scheme where the last ones in on the housing bubble that expanded beyond reality by liar loans.

'It's sort of a Hail Mary pass'

From Inman News:

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

From the Sacramento Bee:

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

From the Sacramento Bee:

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

From the Sacramento Business Journal:

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

From the Sacramento Bee:

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

From the Sacramento Bee:

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

From the Sacramento Bee:

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

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

From the Stockton Record:

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

From the Stockton Record:

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

From the Stockton Record:

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