'Our Neighborhood Has Depreciated Tons and Tons of Thousands of Dollars'

From CBS 13 (and video):

Northern California is home to one [of] the highest foreclosure rates in the entire country. Some homebuilders are leaving half-built homes in new developments. One of 15 sites in Elk Grove are on hold after struggling Dunmore Homes company sold [to] a local business man.

"My personal best guess would be a few more months. It's going to take some time. It's a long process," said V.P John Slaughter who thinks it could be a white before the bulldozers break ground again, "The market has really hurt us." He's also concerned about the half built homes with winter coming. "Currently, with our lenders, we're looking at completing those homes to the point of making their weather proof," said Slaughter.

From the Elk Grove Citizen:

Home foreclosures and disruptive tenants are affecting many Elk Grove residents these days, especially those who watched their neighborhood and property decrease in value because of it...Sergio Perez lives off of Bilby Road in East Franklin. Recently, a neighbor abandoned their home and left it. The neglect could be seen in the lawn. Perez took it on himself to maintain the exterior. “I’m watering the lawn,” he said. For the sake of his neighborhood’s appearance and value, Perez has been looking after property he does not own.

[Tim] Chan said that situations like this are the main problem in the area. “The issue is with all the abandoned houses, all the foreclosures, because that is what sets it all off because A affects B, B affects C, C affects D,” Chan said. “Why are we having to pick up the slack for somebody else?”

From ABC's Good Morning America (with video):

A troubled real estate market in Manteca, Calif., has forced a town to resort to gimmicks to sell homes, including big one-day sales, much like the ones at car dealerships or appliance stores. Real estate is on the edge. Around the country there are communities of brand new luxury homes with no buyers. So the developers have now taken the drastic step of putting dozens of them up for auction at a huge discount.
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"Within the last 13 months our neighborhood has depreciated tons and tons of thousands of dollars. I can't believe it," said Sherry Bergquist, a homeowner in Manteca, where developers will soon begin to employ this sales tactic.
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Randy Brown's dream backyard is now just a patch of dirt. He can't bear to spend any more money on the house. "I paid $440,000 for this house," Brown said. Today, he could buy it for $285,000.
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[H]omeowners are at their wit's end. "We can't sell. We can't refinance," Bergquist said. Even as the homes sit empty on the verge of a controversial auction, construction continues and new homes continue to go up in the neighborhood.

From the Tri-Valley Herald:

For the fourth consecutive quarter, the amount of money Tracy collects in taxes has dropped, this time by nearly 6 percent, the largest fall since revenue began declining a year ago. Coupled with fewer new homes being built in Tracy — limited to 100 until at least 2012 through Measure A — the city might have to tighten its belt before the end of the year.
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Jeff Morri, with Stan Morri Ford in the Tracy Auto Mall — the largest tax engine in the city — said the industry is in a downturn nationwide. "We all wish we could tell you why," Morri said. "Personally, I believe, with the housing market as soft as it is, and so many foreclosures, its creating a vacuum. It's a very symbiotic relationship."

"Civil Protest"

From the San Jose Mercury News:

One-third of the houses in Paseo West will go on the auction block Saturday - houses that are sitting eerily empty in tidy rows along newly paved streets, houses that wouldn't sell even though Anderson Homes cut prices by $100,000 and offered free granite countertops and big screen TVs with surround sound.
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Saturday's auction in a Hilton Hotel ballroom in Pleasanton is the latest sign that the subprime lending crisis is hitting hard. Banks are tightening loan requirements on some of the Central Valley's best customers - first-time home buyers who need easy credit with little money down. Builders like Anderson Homes, who have catered to these buyers with homes in the $500,000 to $600,000 range, are stuck with a glut.
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Since the auction advertising blitz of Paseo West was launched three weeks ago, foot traffic at the sales office has tripled - infuriating homeowners who see potential bidders as the enemy. In his own attempt at civil protest, homeowner Randy Brown tried to scare off investors one day by raising his garage door, pulling out his jacked-up truck painted with green flames, cranking his music and revving up his motorcycle. "I bought my house on August 16," Brown said. "If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks."

From the Sacramento Business Journal:

Sacramento's Development Services Department is facing an unexpected shortfall of $3 million to $4 million stemming from the slowdown in new-home construction, as the city joins the ranks of other municipalities that have been forced to adjust financially. As a result, the city has delayed hiring 36 workers intended to further streamline its development-approval process, which in the past has been a sore point with developers. Officials say they won't cut staff or reduce effectiveness of programs to bridge the budget gap.
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[R]esidential construction, which encompasses new homes, remodels and repairs, began falling steadily from a high of $569 million in 2003 to $329 million in 2006. Fewer than 900 new homes are projected to be built in Sacramento during the current fiscal year, compared to more than 3,000 during the peak building years of 2003 and 2004.

Greed "Coming Back to Haunt" "Investors"

From the Sacramento Bee:

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

From the Sacramento Business Journal:

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

From the Sacramento Bee:

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

From the Stockton Record:

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

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

Radar Logic: Sacramento Leads Nation in Price Declines

From Inman News:

Home prices fell in two thirds of the metro areas reported in a monthly home-price index released this week by real estate research firm Radar Logic. Sixteen of 24 metro areas in Radar Logic's newly launched monthly housing market report [pdf] experienced price declines during July compared to July 2006, with the most severe price drops in Sacramento, Calif., San Diego, Calif., and Washington, D.C.
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The price per square foot fell 12.7 percent in the Sacramento metro area during the 28-day period ended July 31, 2007, compared to the same period last year. The price per square foot of homes fell 10.8 percent in San Diego; 10.2 percent in Washington, D.C.; 7.3 percent in Tampa and Detroit; 5.9 percent in Las Vegas, 5 percent in Miami, 3 percent in Minneapolis, 2.4 percent in Boston, 2.2 percent in Jacksonville and 1.9 percent in Phoenix during the reporting period in July compared to the same period last year.
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Sacramento [also] had the biggest drop in price per square foot during...[the last two years], at 15.1 percent, followed by San Diego at 11.8 percent, Detroit at 10.4 percent, Washington, D.C., at 5.3 percent, and Boston at 3.8 percent.

Data and graphs here.

From Forbes:

Economists generally agree that a market requires around a 2% annual price growth to stay neutral. That means an 8% or 9% drop in price can cause chaos. That's what those living in California, Arizona, Florida, Detroit and Las Vegas can expect. These markets are projected to post the biggest price drops in the coming year. Except for Detroit, all experienced impressive price growth during the boom, which in turn spurred a great deal of construction. When the housing market fell apart, it hurt these markets in two ways. First, they were left with high amounts of unsold inventory, which depresses prices. Second, when construction stopped so did all the housing-related job growth that came with it.
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In a real bind is California, which gets hit by lending and credit problems on both the top and bottom end of the market. Riverside, Sacramento and Los Angeles all have high ARM shares and loads of subprime mortgages, but also have such expensive housing stock that the securitization freeze is hitting those buying in the middle of the market.
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Weakest U.S. Housing Markets
#5 Sacramento, Calif
Projected price change to 2008: -7.9%

Another market that could potentially feel positive effects from a loan cap raise, Sacramento was a hotbed of speculation at the tail end of the housing boom. Now there are simply too many unsold homes on the market and sellers looking to unload property are stuck in one of the nation's strongest buyers' markets.

'To put this in the shortest term possible, this sucks.'

From KCRA:

One of the best known properties in Granite Bay, the multimillion-dollar home belonging to movie star Eddie Murphy's ex-wife, may be the housing market's latest victim. KCRA 3 reports that Murphy's mansion is now in default...According to documents obtained exclusively by KCRA 3, Nicole Murphy is behind more than $79,000 in payments.

From the Stockton Record:

Mad owners of 26 homes in the upscale Paseo West development in Manteca got nowhere with their organized protest against Lodi-based Anderson Homes, which intends to auction off 34 homes in that partially built subdivision Oct. 13. But they hope the glare from print and television media will put on enough pressure to make the company cave in to their requests that each homeowner family receive $20,000 cash compensation for lowered home values resulting from what they call a "fire sale" auction. "Basically, they blew us off," homeowner organizer Dave Cantrell said.
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In an e-mail letter to Cantrell, Anderson Homes owner and President Larry W. Anderson wrote that in nearly 25 years of building homes, he has never asked a homeowner to pay more for a house when the value of their Anderson Home increased. "Your request for a rebate in light of current conditions leaves me perplexed," he said.
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Randy Brown, a Manteca construction contractor, is the newest resident of Paseo West. He got the keys on his $440,000 house in mid-August, two weeks before finding out about the planned auction. The minimum bid on an auction house such as his is $285,000. "To put this in the shortest term possible, this sucks," he said.

From the Modesto Bee:

An Anderson official...defended the auction as an appropriate way to attract interest. "You can pick up the paper every day and see what is happening in the financial and real estate markets," said Craig Barton, chief financial officer of Lodi-based Anderson Homes. "We have people coming in with some level of interest in buying a home but with no level of urgency, and we felt an auction is a very efficient and proactive way to reduce our inventory. It's as simple as that."
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The disappointment of these homeowners is likely to be repeated in subdivisions across the region as struggling developers step up incentives to lure buyers of new homes...Kennedy Wilson Auction Group, the company conducting the Paseo West auction, has others scheduled for new homes in Los Banos, Elk Grove, Pinole and San Pablo.
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Cantrell, who works in the development business, said developers had other options: They could have offered more upgrades or a free sports car while keeping prices higher.

From KCRA:

Frequently Asked Mortgage Questions

• My payment just adjusted and I can't make the payment, what do I do?
• I owe more on my home than its worth, what can I do?
• How does a short sale work and will that negativity effect my credit?
• I just received a Notice of Default, what does that mean and what should I do?
• We have a sub prime loan, can we get rid of the pre payment penalty?
• How do we go about refinancing our home?

'Under-Exuberance' for Sacramento Real Estate

From the Sacramento Bee:

The housing market should start recovering in 2009, but that prediction could get pushed back a year or longer if the economy falls into recession, forecasters told a Sacramento audience Wednesday. Analysts from Sullivan Group Real Estate Advisors, addressing homebuilders and real estate executives, said the market is expected to start stabilizing next year, with recovery beginning in 2009.

Yet much depends on the overall economy. With job growth slowing and unemployment rates rising, many experts say a recession is now a distinct possibility. "Will we head into a recession? Possibly," said Tim Sullivan, president of the firm. Sullivan Group is a market research firm based in San Diego. He said a recession "pushes everything back" in terms of forecasting a stronger housing market. Recovery might not begin until 2010 or later, he said.
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Dean Wehrli, the Sullivan firm's vice president for the Sacramento area...said prices grew unrealistically high during the housing boom. Now, there's a danger that the market could wither to a degree that isn't warranted by the economic fundamentals. "In the same way there was over-exuberance in 2003 and 2004, there's probably under-exuberance in 2007 and probably 2008," he said.

'All Indicators Point to Further Price Reductions'

From the Sacramento Real Estate Blog:

In terms of price, this year’s average home sold in Sacramento County for $342,640, 12.4% less than last September’s average of $391,165. Sold price per square foot declined more, 14.2%, from $235.08 on average last year to $201.79 on average this year. The median price fell 12.1%, from $353,750 last year to $311,000 this year.

From the Sacramento Real Estate Statistics blog:

Median asking prices in Sacramento County have fallen by $20,000 (6%) in the two months since the beginning of August. There was a 4% drop in the price-per-square-foot during that same period. Stress continues to build, and every week a greater percentage of the market is selling at a loss. Clearly, the Sacramento market is in transition, and all indicators point to further price reductions. There is no bottom in sight.

From the Sacramento Bee:

A car tire, an empty bottle of Wild Irish Rose and a handful of Bud Light cans litter the yard. Shoots of dried weeds stand 5 feet tall. The doors and windows are covered with plywood. This Sky Parkway duplex happens to be in south Sacramento, but Sacramento County officials say, the downturn in the housing market is resulting in scores of vacant uncared-for homes blighting local neighborhoods.

Sacramento County supervisors took action Tuesday aimed at forcing property owners to take care of their vacant properties or face escalating fines. The ordinance, approved on a 4-0 vote, also allows the county to take over maintenance of properties determined to be a blight on the community and pass on the bill to property owners.
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Supervisor Roger Dickinson said not just poor neighborhoods are affected. "We are seeing foreclosures in neighborhoods that are considered middle class or upper middle class," Dickinson said.

From the Modesto Bee:

There's the tax bill in the mail again. Hey! How come my tax bill still went up when property values are diving around here? Stanislaus County Assessor Doug Harms is getting a lot of calls like that these days. The calls usually stem from a misunderstanding of how the tax system works, Harms said, although if the caller bought the home in the past year or two, a reassessment may be in order.
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The Stanislaus assessor's office is reviewing the assessments on many homes that were sold in the past couple of years, Harms said -- more than 20,000 homes since spring 2006. Assessors found 4,400 of them had declined in value, and that was reflected in the July 1 tax rolls used for this year's tax bills. "We looked at everything that transferred (sold) after July 2005," he said.
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There will be many more adjustments for the 2008-09 tax year, Harms said. "We will move back this January to (reviewing sales back to) July of 2003. We had 5 percent to 10 percent a month increases for a couple of years, so the decreases will have to be pretty substantial to get back to 2003." There will be many adjustments, however. "It looks to us that the values have dropped at least as much in the last six months as they did the year before that," Harms said.

Housing Boom Gamblers

From CBS 13 (and video):

The county is tired of using taxpayer money to clean up the vacant properties. "The average is $1,500 to $2,000 to board up these house" said Carl Simpson, Sac. County Code Enforcement.

On Tuesday, the county may adopt the ordinance. Homeowners and mortgage companies who don't take care of properties could face fines that can go as high as 5,000 dollars in just 90 days. That could help ease some of the burden this blight is putting on taxpayers.

"We think in the spring [we] are going to see a rash and increase of open vacant home[s] because of the economy and real estate,' said Simpson.

From the Sacramento Bee:

Faced with falling home sales, builders in the flood-prone Plumas Lake development have capped the amount of fees they're willing to advance Yuba County to strengthen levees protecting thousands of new residents...A group of nine builders has been paying the fees in advance with the agreement that they would get paid back later as other landowners sought to pull building permits for their properties. This group previously had agreed to advance the county up to $135 million in fees. But now -- with the housing market in a slump -- they are willing to kick in just $30 million more -- for a total of $100 million...[County Administrator Robert] Bendorf said construction of new homes in Plumas Lake has dropped 50 percent since last year.
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Yuba County supervisors today will decide whether to fill the gap in flood protection funding by issuing $23.3 million in debt backed by the county's general fund. It would be the largest general fund debt obligation ever assumed by the largely rural county, according to a staff report. Annual debt service would top $2 million...In theory, the county could repay the debt from future homeowner assessments, but those still have to be approved by residents, Bendorf said. Builder fees are another potential source. But if the home market remains in a slump, there's no guarantee they will materialize.
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From the start, [Supervisor Mary Jane] Griego readily admits, Yuba County was gambling when it allowed construction to start in Plumas Lake before the levees were fixed. But she argues that it was the best way to get money for levee improvements protecting the 35,000 or so people who already live in the area.

From CBS 13 (and video):

It seems no matter where you look there are signs everywhere trying to get you to buy homes. It is a auction sign that has many homeowners not very happy. "I put all my money into this home," said Anna Alfaro, Home Owner..."These people that are coming to buy now, they have their yards landscaped and everything. How do you think we feel?" said Alfaro...People who live here say they paid close to double of what the houses will be auction off at..."It would be good if it could be turned around or if we could get our money back. At least what we put into it," said Alfaro.

From the Tri-Valley Herald:

Paseo West homeowners also chide Anderson Homes for overbuilding..."At what cost do we have to pay for their poor business plan," Cantrell said, adding that in his background as a subdivision developer others did not extend themselves that way.
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"When we moved in, we knew we were paying more money, but we were also buying into a quality neighborhood where the price value wouldn't go down," said Joseph Leon, who moved to Paseo West from Fremont 14 months ago.

Asking Price Decline Breaks 15% YoY, -21% Since Aug 2005

The median asking price for Sacramento area homes fell 15.3% from a year ago, according to Housing Tracker. Since mid-August 2005, the median has dropped 20.6%. For a visual of the decline, please see these charts at the California Housing Forecast blog.

Meanwhile, preliminary data suggests that Sacramento area home sales took a serious hit in September. More at the Sacramento Real Estate Statistics blog.