In Come the Waves: Tech Spending

From the NPD Group:

The consumer technology industry, whose performance has traditionally outpaced the broader economy, is showing signs of being affected by today’s weakening economy, especially in certain cities, according to the Market Tracking Service provided by leading consumer and retail information provider The NPD Group, Inc.

According to NPD, five of the six designated market areas (DMAs) with the biggest declines in consumer technology spending for the fourth quarter of 2007 - among the top 30 DMAS based on population - were also housing markets with some of the most significant price declines for the fourth quarter of 2007 (as reported by The National Association of Realtors). Sacramento, Tampa, Phoenix, Detroit, and Orlando all experienced the largest declines in consumer technology spending, based on dollars per store.

Q4 2007 Consumer Technology Spending By Market

Total U.S. -4.3%
Sacramento -14.0%
Tampa -12.8%
Phoenix -11.2%
Detroit -11.1%
Orlando -9.1%

From ForeclosurePulse:

The five — Sacramento, Tampa, Phoenix, Detroit and Orlando — were also among the nation’s top metropolitan statistical areas (MSAs) ranked by foreclosure rate, according to RealtyTrac, for the quarter studied by The NPD Group. Sacramento ranked No. 5 on RealtyTrac’s Top 100 metro areas for the first quarter of 2008, reporting a 135 percent year-over-year increase in foreclosure activity and a foreclosure rate of one in every 55 households receiving a foreclosure filing during the period.
...
The point here is simple. People who bit off more than they could swallow in the last upswing of the real estate market now can’t afford to pay their readjusting mortgages, or their credit card debt, or higher prices on gas and food. So as the effects of the mortgage meltdown continue to trickle down further, how can consumers continue to afford the electronic toys and the supplies for them?

The answer is…increasingly…THEY CAN’T!

From the Stockton Record:

Attorneys who work at the downtown Stockton courthouse and rely on local residents to decide court cases say more potential jurors these days are begging out of their duty. They tell heartrending woes of losing their jobs and they fear home foreclosures...Attorneys describe jurors as the canary in the coal mine of the local economy, offering a glimpse into the tough times people are experiencing these days.

Ask San Joaquin County Deputy District Attorney Mark Ott, who recently picked a jury for a 21/2-month murder trial. Several people cited what Ott called "eye-opening" financial hardships. That is a marked change from a trial just six months earlier, he said. "You think in your mind there's no recession," Ott said. "Yeah, right."

From Home Front:

Reports swirled in the Sacramento-area building industry scene today that Fort Worth-based D.R. Horton Inc. (DHI on NYSE) had cut local staff and moved some functions to its Concord-based Northern California division.

Rep. Jerry McNerney in the Tracy Press:

Americans all across the county are feeling squeezed by the subprime mortgage crisis. Nowhere is that feeling more acute than here in San Joaquin County, where we suffer from one of the nation’s highest foreclosure rates.
...
The road to recovery starts with stabilizing the housing market, and just this past week, the House of Representatives passed a foreclosure prevention package that will benefit all Americans.

NAR: Sacramento is the Biggest Loser

From Bloomberg:

The median price for a single-family home in the U.S. dropped 7.7 percent in the first quarter, the biggest decline in at least 29 years, as values tumbled in two-thirds of U.S. cities, the National Association of Realtors said...The biggest declines were in Sacramento, the capital of California, which had a 29 percent drop, followed by the metropolitan area around Riverside and San Bernardino, with a decline of 28 percent.

From the NAR's October 2005 Sacramento "Anti-Bubble Report" (shockingly, the report is no longer available on nar.org!):

With home prices rising strongly in most parts of the country, there has been widespread media coverage on the possibility of a housing market bust. A thorough analysis of the Sacramento-Arden-Arcade-Roseville metro market, as detailed below, reveals that there is little danger of this. In fact, the local housing market is in excellent shape with a potential for significant housing equity gains, particularly for homebuyers who plan to remain in their house for the long run...Housing equity will most likely continue to accumulate to local homeowners.
...
Price declines in the local market are unlikely according to our stress test. The local housing market will experience a price decline of 5% only under extreme unlikely scenarios. For example, mortgage rates rising to 7.8% in combination with 25,000 job losses could lead to a price decline.
...
Home price declines are very rare. In fact, the national median home price has not declined since the Great Depression of the 1930s...There have been few times when local prices declined. In nearly all these cases, the price declines were accompanied by sharp prolonged job losses. It is difficult to foresee a price decline in a job creating economy.

So will the NAR be wrong twice? Can Sacramento home prices bounce back in the face of a recession?

From the CVBT:

More than 1,000 homes per day were sold in foreclosure auctions in California last month, according to ForeclosureRadar Inc....Sacramento County had 1,653 homes auctioned in April. That is one sale for every 838 residents, sixth highest in California. The number is 217 percent higher than April 2007.

From the Wall Street Journal:

Here's another consequence of the troubled housing market: Some homeowners associations are running low on cash.
...
One estimate puts the delinquency rate on dues at less than 5% in many markets -- higher than normal, though still not enough to threaten basic services....Elsewhere, the rate is much higher. At Spanos Park East in Stockton, Calif., owners of about 25% of the development's 1,500 single-family homes have been delinquent in paying their quarterly dues, according to Adrianne Bretao, a manager at M&C Associations Management Services, which helps to manage the community association. As a result, the association has put off expanding a patio area in the clubhouse and swimming pool this year, says Denise Laven, the association's president.

"It's frustrating," Mrs. Laven says. "We're seeing the people not paying the fees, so we know it's our money that has to pay for everything. And our dues will go up next year because we set them annually."

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

From CNN Money:

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

From CBS 13:

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

From the Stockton Record:

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

From the Sacramento Bee:

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

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

From the Sacramento Business Journal:

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

From the Modesto Bee:

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

From the Sacramento Bee:

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

"Leery of Too Much Sunshine"

From the Today Show:

The six scariest real estate markets

Stockton, Calif.
Stockton has the highest rate of foreclosures in the nation...Unemployment is a whopping 10 percent, almost double the national average of 5.2 percent.
...
Some people are simply walking away from their homes because they're spending too much on gas to commute back and forth to work in the Bay Area, plus their homes are no longer worth what they paid for them. Instead, they just move closer to work and rent rather owning. Local realtors report that homes have become vandalized or burglarized for copper plumbing or wiring, cabinets and other re-salable fixtures. In some areas of Stockton, there are more than five homes on a single street that are abandoned. Homeless people are squatting in homes, even without power or water, just to find shelter.

Sacramento, Calif.
Home prices in this area more than doubled between 2000 and 2005, setting Sacramento up for a hard fall. Since last year, the price per square foot in Sacramento dropped 29.8 percent to $161, according to the real estate data company Radar Logic Inc.

Worse still, Sacramento has the highest concentration of homeowner debt in the country according to Forbes.com. More people here have combined their mortgages with home equity loans, second loans, or both.

When the housing market slowed here, jobs were lost in related industries: title companies, interior design, lumber supply companies, electricians, plumbers, roofers, appliance stores and so on, dealing a heavy blow to the Sacramento job market.

From the Sacramento Bee (hat tip Jeff):

Sacramento bankruptcy attorney Daniel Weiss said he's never seen this rate of filings in nearly 40 years of practice. "I've never seen this many people who are losing their homes," Weiss said. "Before they would say, 'Help me save my home.' Now, they're not even considering there's a chance."

At Sacramento's NeighborWorks Homeownership Center, which counsels struggling and first-time homeowners, director Mike Himes sees firsthand the impact of subprime loans that have left homeowners crushed beneath unpaid bills and mounting debts after moving into homes that were beyond their means. "Some people were so far over their heads on everything – property taxes, mortgage, credit," Himes said. "They were living off their credit cards."

It often began, he said, with a loan application that overstated their income. With mortgage payments based on an inflated income and often set to readjust at higher rates, many sank deeper in debt as they tried to stay afloat.

From the Sacramento Bee:

Might it be that as Sacramento helped lead the nation into the housing crisis, it is among the first to help lead it back out?

Not so fast, said Robert Kleinhenz, deputy chief economist of the California Association of Realtors. "We still have rough patches we're going through this year," he told the Sacramento Association of Realtors during a housing outlook forum earlier this week. "But I do see some hopeful signs on what we've gone through the past few months."

Kleinhenz, like many who prognosticate about the real estate market by reading conventional economic indicators, has proved to be overly optimistic in the past. But with rules for home loans getting tighter, he now sounds leery of too much sunshine.

From the Sun Post:

Enrollment numbers for the Manteca Unified School District — which also includes Lathrop and the Weston Ranch area in Stockton — have dropped 1.5 percent from March 2007 to March 2008, falling to 23,051, according to data collected from the district. And a private consultant hired by the Manteca Redevelopment Agency also reported a slight dip in the city’s population. Claritas, a New York-based demographic and marketing consultant, estimated that Manteca’s population was 64,688 in the beginning of 2007 and 64,669 in 2008, according to reports produced for the city.
...
Two factors — rapidly rising home prices in the last several years and a proliferation of foreclosures in 2007 — may have led to a stop in growth, according to Jeff Michael, who heads the Business Forecasting Center at University of the Pacific. Net migration into the county has essentially dropped to zero in the past two years, Michael said, and recent foreclosures may have led people who moved to the county from the Bay Area to move back to the place where many of them still hold jobs.

However, the local impact of foreclosures remains a mystery to demographers, he said. If people are simply moving into rental homes down the street, populations should remain steady. But forced home sales could also send residents out of state.

Bank Bidding War Games

From CBS 13:

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

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

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

From Home Front:

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

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

From the Sacramento Business Journal:

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

From the CNNMoney:

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

From the CVBT:

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

Sacramento Real Estate Blog: Home Prices 41% Off Peak

The Sacramento Real Estate blog reports that Sacramento County's price per square foot was $149.84 in April, a 33.9% drop from last year. That translates into a 41% decline in 31 months. Of note, this is the first resale home metric to cross the 40% off peak mark.

With regards to asking prices, Housing Tracker shows a median price decline of 28.9% year-over-year. The median has dropped 37.7% since August 2005.

More Sacramento real estate market figures for April at the Sacramento Real Estate Statistics blog.

From the Central Valley Business Times:

Home values in the first quarter of 2008 fell 1.6 percent from the fourth quarter and 7.7 percent from the year-ago quarter, marking the most significant year-over-year decline in the past 12 years, Zillow says.

Many in the Central Valley might wish they had it so good. The Stockton metro area has seen one of the nation’s sharpest year-over-year price declines, Zillow says. The 33.5 percent plunge puts the median price for all types of homes at $244,000. In the Central Valley, home values are down in every market monitored by Zillow.

• Fresno, $204,500; -22.8 percent
• Chico, $239,000; -14.6 percent
• Bakersfield, $196,000; -23.4 percent
• Sacramento, $289,500; -20.5 percent
• Stockton, $244,000; -33.5 percent

Zillow Q1 2008 Report

More fun maps from the Federal Reserve via the Wall Street Journal [pdf].

From the Bakersfield Californian:

Tim Fryer is stuck with $7,000 worth of useless letters for the entryway of a tract gone bust. The Bakersfield signmaker is among many local companies scorched by the bankruptcy of Sacramento developer Dunmore Homes Inc. “I paid out of pocket,” said Fryer, owner of Victory Signs, about two cast-metal sets of logos, vowels and consonants spelling “Diamond Ridge” that now gather dust in his shop attic.

The 319-home subdivision in southwest Bakersfield won’t go forward under the Dunmore name. The homebuilder’s assets are currently being liquidated in a federal district court in Sacramento. Fryer doesn’t expect to get any money back.

Like other small subcontractors — Victory Signs employs eight — he’s at the end of the line for any bankruptcy payouts...A litany of such businesses supplied Dunmore entities with everything from engineering services to portable toilets.

From ABC 7:

UC Berkeley Business School Professor Tom Davidoff of the Haas Real Estate Group predicts that we haven't hit the bottom yet. "There's no way prices fall 30-40 percent around Stockton and don't fall at all in San Francisco, that just can't happen," said Davidoff.

From the Sacramento Bee:

After 35 years, a landmark restaurant site in Old Sacramento is dark. The Fat family has closed California Fat's Asian Grill & Steakhouse, which originally opened in 1973 as China Camp. "It was a combination of things. No. 1, the economy,"...says Jerry Fat.

The "take the money and run" loan officer gets 15 months in prison.

Finally, hell freezes over. (hat tip Dr. Housing Bubble)

Sacramento Incomes Dropped as Home Prices Bubbled

From the Sacramento Bee (hat tip DJ):

Even as housing prices doubled and the construction industry flourished, most Sacramento County residents saw their incomes effectively drop during the housing boom, according to new state tax figures. Adjusting for inflation, the median income of Sacramento County families who filed joint tax returns fell about 1 percent from 2002 to 2006, a showing worse than 51 of the state's 58 counties, according to California Franchise Tax Board figures released this week.
...
Several economists said the apparent good times created by the boom masked problems in local sectors not related to housing. And many local residents were fooled into feeling flush by the abundant cash coming in from home equity loans – the same, nonrecurring funds that would later turn into high-interest debt.

From the Sacramento Bee:

Worn down, feeling deflated as a bad tire? Consider a "staycation," a stay-put vacation where you absorb the budget-minded, healing powers of home sweet home...What could be more budget-minded than spending nights in your palatial home master suite and skipping the airfare, too?
...
[E]njoy the amenities of Sacramento "resort" backyards. During the recent boom years, homeowners used their equity for massive home-improvement projects – indoors and outdoors. In the Sacramento region with its warm climate, many backyards have been designed into mini-resorts with palapas and Tiki torches, palms and cycads, fire pits and pools that appear more Maui than Citrus Heights.

From Investment News:

The opportunity presented by the housing crisis can be a double-edged sword. Not only are homebuyers sitting on the sidelines, but many homeowners, especially speculative in-vestors, are opting to rent their homes rather than sell them. This means a glut of rental homes are being dumped into the market that will compete with apartment rentals.
...
At the same time, unemployment is rising, which also could dampen demand for apartments and the ability of landlords to raise rents, [David] Harris [an analyst with Lehman Brothers Holdings Inc.] said. Americans who lose their jobs or are worried about job security may opt to rent a smaller apartment or take in a roommate to avoid paying higher rent, he said. "Most tenants will find a way to avoid paying an increase in rent," Mr. Harris said. He sees this playing out in the second half of the year.

[Craig Leupold, president of Green Street Advisors Inc., a buy-side REIT research firm] agrees. "That sort of offsets the benefit of the weak single-family housing market," he said. Mr. Leupold expects to see job losses in the construction and financial industries, and competition from single-family home rentals will likely affect apartment rentals the most in such markets as Florida, Phoenix, Las Vegas, Sacramento, Calif. and central California.

From the Sacramento Business Journal:

When Elk Grove approved its most recent major new-home development three years ago, builders couldn't move fast enough to put houses there.

Times have changed. The city is expected to approve its first new residential project since 2005, a 200-acre proposal for almost 1,200 houses by Santa Clara-based Citation Homes...But like many other approved developments across Greater Sacramento that have been mothballed, construction won't start until there's been a recovery in the housing market.
...
When Elk Grove was booming six years ago, builders sold more than 2,600 new homes in one year within the city. Last year, there were 233 new-home sales, according to The Gregory Group in Folsom. The city said as of last week there are 1,029 bank-owned properties in Elk Grove.

From the Sacramento Business Journal:

California's residential construction industry is approaching uncharted waters as a housing slump, tight liability insurance coverage and new laws for handling construction defect litigation all collide. The collision makes an already challenging business environment fraught with even more danger. Some attorneys, especially those representing subcontractors, say they fear for their clients' future. "This is going to be a big problem," said Blane Smith, an insurance-coverage attorney.
...
Tami Boeck, a Sacramento defense attorney who handles construction defect litigation at Bullivant Houser Bailey PC, worries about her contractor clients and fears what she calls a "perfect storm." She thinks some contractors, if sued, could burn through their limited insurance coverage and go belly up.

Radar Logic: Sacramento Home Prices Drop Nearly 30% YoY

From the New York Times:

At the end of 2007, areas with the highest vacancy rates in housing intended for owner occupancy fell into two categories: Rust Belt areas like Detroit, Cleveland and Akron, Ohio, and former boom areas like Orlando and Tampa in Florida, and Las Vegas. Although home prices have fallen sharply in parts of California, only the Sacramento area shows high vacancy levels.

High vacancy rates put renewed pressure on prices, of course, and also serve as a warning that the home building industry may have a long wait before it can regain volume.

From the Modesto Bee:

"The new home sales rate is nothing short of dismal," lamented Dean Wehrle, vice president of Sullivan Group Real Estate Advisors. He said Stanislaus, Merced and San Joaquin county subdivisions are averaging one sale per month...Sales have been so slow throughout the three-county region that Hanley Wood said the inventory of approved lots is enough to last until 2012.
...
New home prices have dropped dramatically to lure buyers, but Wehrle said homes in the region still cost far too much for most residents...He said it was "outrageous" how the region's home prices more than doubled from 2000 through 2005, rather than appreciating at a more "natural" 6 percent a year.

Though home price have fallen since 2005, Wehrle's charts demonstrated how it will take until the end of 2011 or early 2012 for the valley's housing market to stabilize enough to bring it in line with builders' current median prices. He said that means builders must continue dropping prices or stop building.

From Bloomberg:

Home prices fell in 22 U.S. metropolitan areas in February, led by Sacramento and Las Vegas, as record foreclosures deepened the housing slump. The price per square foot in Sacramento, California's capital, dropped 29.8 percent to $161 from a year earlier, according to a report released today by New York-based Radar Logic Inc., a real estate data company.

From Radar Logic:

The increasing number of foreclosures occurring throughout the country has introduced a new supply of homes and a larger segment of a nontraditional type of seller. This increasing segment of foreclosures in the market highlights a type of unusually ‘motivated seller’ who is influenced by a desire for greater liquidity rather than obtaining a higher price. Radar Logic’s analysis creates a baseline estimate by tracking sales by financial institutions (e.g. banks, mortgage servicers), foreclosure service firms, and foreclosure auction sales in order to track the trends of motivated sellers. After taking ownership of the homes, the institutions face capital constraints and incur carrying costs. If they believe prices will not rebound soon, they have an incentive to unload the house quickly and minimize losses.

As this segment becomes a larger fraction of transactions, many markets show significant differences in both price levels and price trends between motivated sellers and the rest of the market. In all 25 MSAs motivated sales show median prices at lower price points than non-motivated sales. Some markets currently experiencing large percentages of motivated sellers include Sacramento (51.7% of all transactions), Las Vegas (44.1%), San Diego (37.0%) and Los Angeles (27.0%). In Sacramento, year-over-year price per square foot declines of 29.8% are influenced by more than half of the market being motivated sellers selling for 26.4% less than non-motivated sellers.

From Time:

The black bus rivals a greyhound in size but has an interior like a limo--and it gets a few curious looks as we wander into the dense neighborhoods of Elk Grove, Calif., a quiet suburb 15 minutes south of Sacramento. Five of us--a mortgage counselor, three investors and I--are looking at 10 recently foreclosed homes....

Like many communities across the U.S. that boomed during the housing bubble, Elk Grove is feeling the pain of the housing burst...Elk Grove alone has about 2,120 bank-owned houses for sale and 1,280 in pre-foreclosure, according to RealtyTrac, a real-estate-data website.

From the Stockton Record:

Clearly this foreclosure mess has yet to run its course. That should surprise no one who paid attention in the first half of this decade and saw, for example, the median home price in Stockton jump from about $100,000 in 2000 to about $400,000 in late 2005. At the same time, more and more of the sales pressure from speculators and Bay Area transplants that fueled the run-up in prices was being financed by interest-only and adjustable-rate mortgages. In other words, too many people were speculating in homes here or buying homes they could not afford.

The good news is that home sales, which have increased each month this year, continue to climb. Granted, most of the sales are of foreclosure properties, but until those homes are sold, there is no real hope of the market stabilizing. It will take time. How much is unclear since we cannot yet tell how many more homes will fall into foreclosure.

From the Auburn Buzz:

If a deal is not reached, the bank will hold a foreclosure sale on more than a third (137 unsold lots) of the 409 lots in the Winchester development, it’s massive 35,000-square-foot country club, and its pristine 18-hole private-member golf course. In preparation for a possible sale, Winchester Country Club employees confirmed bottles of wine and other items in its gift shop have been discounted in an effort to move the merchandise before the scheduled foreclosure sale.
...
While the soft housing market in Placer County and throughout the nation is at the root of Myers’ financial woes at Winchester, there is speculation he failed to lower lot prices and club membership fees, which run up to $80,000 a year for non-residents, as the market softened.

From the Sacramento Business Journal:

Home furnishings retailer Linens 'N Things filed for Chapter 11 bankruptcy protection Friday and said it will close 120 underperforming stores as part of its restructuring, including its store in North Natomas and 26 other California locations.
...
"The significant deterioration in the mortgage, housing and credit markets and the resulting impact on the retail marketplace, particularly the home sector, has overwhelmed the operating and merchandising improvements that we have made over the past two years," said Robert J. DiNicola, Linens Holding executive chairman....

Sacramento Real Estate's 'Ripple Effect'

From the Appeal Democrat:

Six people are expected to lose their jobs and funding to 25 others cut back as the impact of the housing slump hits home in Yuba County. The Community Development and Services Agency Director Kevin Mallen said he had anticipated the slump and began closing positions when vacancies occurred in order to absorb the effects, but not all employees were safe. "This is directly tied to the volume of work. Building permits are off," Mallen said...In 2006, during the housing boom, the building department was issuing 1,200 permits; about 30 permits have been issued each month for the last six months.

From the Sacramento Bee:

Far removed from billion-dollar writedowns and the subprime meltdown, the Sacramento area's community banks appear to have escaped the worst of the housing slump. But they aren't immune, either. The downturn in real estate and the overall economy has cut into their profits just like the big banks. Although they largely sidestepped subprime lending, many are bracing for losses on loans to construction firms, subcontractors and suppliers. Two banks are owed millions by John Reynen, the prominent Sacramento home builder who filed for personal bankruptcy recently.
...
Court papers say River City and Bank of Sacramento are each owed about $6 million by Reynen, who personally guaranteed the loans and then was forced into bankruptcy by the housing market collapse. "Sacramento is so real-estate driven," [chief executive of Bank of Sacramento William] Martin , said. "There's a ripple effect."

From the Redding Record Searchlight:

We are seeing subdivisions or developers that are experiencing either a slowdown in sales ... or price declines that are such that banks can no longer cover in terms of collateral," North Valley Bancorp CEO Mike Cushman said Tuesday afternoon.
...
Cushman said higher housing inventory as a result of foreclosures, especially in the Sacramento area, are affecting every bank's bottom line...Cushman, who's been a banker for more than 30 years, said the current housing downturn is the worst he's experienced. "We actually feel pretty lucky. Most of our markets are still performing pretty well. ... It's the Sacramento area where we are experiencing the greatest reduction in values," Cushman said.

From the Modesto Bee:

Dennis Swann of Swann's Automotive Repair in Modesto said he's seeing more people forgo repairs for things they see as unnecessary, such as air conditioning. Dennis Slewoo of USA Auto Service, also in Modesto, said he's had to schedule more repairs in stages, rather than doing them all at once. Both men see the same standard: Consumers, stung by high gas prices and a downbeat economy, are clamping down on their automotive expenses.
...
"Buying a vehicle because it looks good is less and less of a reason," [publisher of Automotive Digest Chuck] Parker said. "People are looking for utility, for cars to last. People are fighting to keep their kids in school and pay their mortgage."
...
In Modesto, car dealers have reported a drop in sales over the past year that mirrors the decline in housing.

From the Sacramento Bee (updated):

By eliminating 174 jobs at its Elk Grove campus, Apple Inc. created more economic problems for a suburb that's been hit particularly hard by the real estate downturn. Apple said Thursday it's moving some of its sales and support functions from Elk Grove to the company's site in Austin, Texas.
...
[T]he job cuts come at a particularly difficult time. Real estate analysts say Elk Grove is doing worse than most other parts of the Sacramento region. Vacancies at its smaller strip malls were three times as high as the region's average at the end of 2007.

Residential foreclosures there have more than quadrupled this year and are growing at a faster rate than in Sacramento County as a whole, according to Foreclosures.com, a Fair Oaks-based Web site for investors.

CBS13: Foreclosed Home May Have Been Burned For Insurance

From the Stockton Record:

A Stockton man accused by federal officials of spearheading a multimillion-dollar house-flipping scheme has pleaded guilty and faces a maximum prison sentence of 21/2 years, his attorney said. Iftikhar Ahmad, 36, admits he was wrong, but that he also was a symptom of a broken mortgage system failing people throughout the nation, San Francisco defense attorney John Runfola said, adding that Ahmad became the fall guy for powerful bankers and brokers who go unpunished. "I'm sure there are tens of thousands of people like Iftikhar," Runfola said.
...
Runfola said his client got caught up in a "gold rush" mentality, where a lot of people were taking advantage of the skyrocketing real estate market and at times bending unchecked rules. Runfola also said Ahmad rehabilitated abandoned homes that are still occupied today.