Half-Filled Developments - "Advertisement for a Failing Housing Market"

From KCRA:

A new Centex Homes development in Rancho Cordova is in limbo because of a dreary housing market, the developer confirmed Thursday. The 13 homes currently under construction in the Cypress at Kavala Ranch development will be finished, but none of the other lots will be developed for now.

From Bloomberg:

When Quinn Cuthbertson looks around his new neighborhood in El Dorado Hills, California, he sees rows of empty homes and barren hillsides. A promised new school and a clubhouse haven't materialized. Cuthbertson paid $460,000 for a four-bedroom house in this northern California town named for the mythical golden city. He now suspects his neighbor spent $45,000 less. Nearby, 87 of 98 Toll Brothers Inc. home sites are undeveloped.
...
"Half-filled developments are an advertisement for a failing housing market," said Retsinas, a former assistant secretary for housing at the U.S. Department of Housing and Urban Development. "It also has a spillover effect on the surrounding community."
...
Brent Sease, who bought a five-bedroom home built by Miami-based Lennar in El Dorado Hills, said a park and school that were supposed to be constructed are at least two years from being completed. Across the street, red tags that say "Available" are pasted on two houses. "That's the thing I'm concerned about," said Sease, a software manager with three daughters. "It's going to be a while before they put all that in, because they're not selling homes."

From Folsom Telegraph:

Quick, where’s the foreclosure rate higher – upper-middle class Folsom or low-upper class El Dorado Hills?

It’s higher in suave El Dorado Hills, significantly higher – by 50 percent...That might reflect the fact that EDH housing prices tend to outstrip income more than they do in Folsom, according to Money Magazine. El Dorado Hills’s median income of $116,406 amounts to 17 percent of the median home price of $672,335. Folsom’s $94,180 median income accounts for 19 percent of the city’s $490,000 median home price.

From KCRA:

Placer County SPCS animal shelter leader Leilani Vierra said she has 20 animals in her shelter as a result of people suffering from foreclosures, and the numbers are growing...Now we are seeing an animal a day at our shelter, if not more, as a result of people losing their home," Vierra said.

Wells Fargo labels Sacramento area counties as "severely distressed markets" (via Blown Mortgage).

From the Wall Street Journal:

Sgt. First Class Nicklaus Skaggs is among those looking to walk away. Mr. Skaggs bought his home in April 2005 shortly after returning to California from a one-year tour of duty in Baghdad. The $455,000 three-bedroom home he and his wife purchased in Vacaville, about one hour northeast of San Francisco, is worth an estimated $285,000 today, well below the $453,000 he owes on his mortgage. The monthly mortgage payment, which jumped after its interest rate increased, is now $4,000, up from $2,980 when he bought the house.

Mr. Skaggs expects to be redeployed to Iraq again later this year. But he can't sell his home, since there are few buyers, and he can't refinance because lenders require a large down payment he doesn't have. Now, the 18-year Army veteran has decided to walk away from his mortgage. He hopes in a few years lenders see his decision as a unique situation created by the housing meltdown. "I don't think that house is going to recover in value any time soon," said the 40-year-old. "I'd just be throwing the money away."

A rise in the number of people choosing to default on their mortgages would represent a significant departure from past behavior of American homeowners, who during past housing downturns tended to walk away only as a last resort....What's different now, analysts and economists say, is that home prices have fallen so far so quickly that some homeowners in weak markets are concluding that house prices won't recover anytime soon, and therefore they are throwing good money after bad.

From KCRA:

Doug Heisch works for the Baldwin Company in Sacramento, an auto repossession agency...Heisch said the last four months have been quite a bit busier than normal. Owner Mike Baldwin's seen a 15 to 20 percent increase in repossessions this past year. Baldwin said it's obviously the downturn in the housing market, construction trade, real estate, loans, mortgages that they are seeing borrowers and consumers falling victim to repossessions.

From the Sacramento Business Journal:

Budget problems mean the city of Sacramento is "facing elimination of approximately 500 positions" in the coming year, according to a report to the City Council released Friday, or nearly one out of every 10 city jobs.

From the Sacramento Bee:

Sacramento unemployment rose to its highest level in more than a decade...Sacramento-area unemployment rose a half-point to 6.4 percent, the state's Employment Development Department reported Friday.

Dun For Good

From the Sacramento Bee (updated story):

Three months after it filed for bankruptcy protection from its thousands of creditors, Granite Bay homebuilder Dunmore Homes says it has begun shutting down its operation and going out of business. In a bankruptcy court filing, the firm's lawyers say Dunmore..."is currently winding down its business and liquidating its assets."

The statement stands in sharp contrast to others in recent months that the builder hoped to emerge intact from its financial struggle and resume building when the real estate market improved.
...
State officials say if Dunmore goes out of business recent home buyers may find no one to honor warranty obligations.

From Roseville & Rocklin Today:

The question, "If they think my home is overpriced, why don’t they offer me something lower?" may be one of the most common heard by real estate agents around the Sacramento area. This seems like a logical seller response to learning that the potential buyer who looked at their home yesterday said, "We liked the house but it was overpriced."

Squatlords - "Professional" Squatters "Renting" Out Foreclosed Homes

Flippers. Floppers. Floplords. Now Squatlords.

• CBS13: Squatters Posing as Landlords In Foreclosed Homes
  

More videos:

• KCRA: Land Park In Real Estate 'Bubble Area' (hat tip Jeff)
• CBS 13: New Craigslist Scam Pops Up In Sacramento
• News 10: Renters Caught in Foreclosure Crisis

Sacramento Real Estate Market - 'It's Never Been As Bad As It Is Today'

From the Sacramento Bee:

"We keep seeing more and more horror stories about the economy," said Michael McGee of Winchester McGee Financial, a Rancho Cordova mortgage brokerage firm. McGee said higher mortgage rates aren't helping a housing market that he believes is the worst of his 36-year career. "It's never been as bad as it is today," he said.
...
Consultant Steve Dutra said higher rates will blunt the impact of falling housing prices, which analysts had hoped would kick-start a new round of buying. "With prices coming down, we were hoping interest rates would stay low as well," said Dutra, a vice president in the Sacramento office of Irvine-based John Burns Real Estate Consulting. Higher rates means "a certain amount of people will be taken out of the market," he said.
...
Alan Wagner, president of the Sacramento Association of Realtors, said he's trying to persuade potential homebuyers to jump in now before rates get any higher. "Now's the time to buy your property," he said.

Yet other analysts weren't as hopeful. Dean Wehrli of consulting firm the Sullivan Group said higher rates aren't especially worrisome – but the economic trends are. "We have to be worried about jobs again – Sacramento's job growth has slowed down so much the last few months," he said.

From the Sacramento Bee:

The Sacramento region's slumping housing scene is affecting at least one dealer in high-end wine. Roseville wine merchant Marcus Graziano, customarily a big buyer at the Premiere Napa Valley barrel auction each winter, spent just $80,000 on unusual wines during this year's sale last weekend. "Our business is still growing, surprisingly, but a lot of my clients are in home building," said Graziano in explaining why he cut back his bidding this year. A year ago he spent about $250,000 at the sale and the year before he invested $174,000.

From the Sacramento Bee:

As fears of falling home values continue to grip the Sacramento-area market, more home builders are offering limited protections against losses to help worried buyers sleep at night..."I started hearing about it maybe three or four months ago," said Hanley Wood's Kathryn Boyce. "Builders know there are a lot of people who aren't buying because they think the market is going to go lower."
...
To woo anxious buyers, KB promises if it lowers prices during the three or four months between a signed sales contract and finished construction, the buyer will get the lower price.
...
One of the Sacramento region's leading town house and condominium builders, Reno-based Pacific West Cos., is going a step further. It's telling customers that if they buy today and the builder drops prices before the development is finished – even as far out as two years – they'll be reimbursed for the difference.

From CNN Money:

Many owners simply went too far amidst the mania, over-improving their homes beyond what the local market would bear, according to Darius Baker, a veteran Sacramento, Calif., contractor. In the past his clients were more likely to opt for expensive redos even if they were planning to move, since they knew they'd recoup most of their costs. "I definitely saw a lot of tract houses built in the 1970s, in developments with three basic floors plans, get expensive renovations," he said. "We did a lot of radical projects, moving walls around, installing granite counters instead of Formica and cherry wood cabinets instead of oak."

From the Stockton Record:

Cesar Dias, a real estate agent and mortgage loan officer in Stockton, became a media star in October after he launched a bus tour for people interested in buying foreclosed homes in the area. The catchy marketing concept not only has worked for Dias - he said his business is up fourfold - it's now being picked up by other real estate agents and brokers, with at least a half-dozen such repo bus tours being staged in the Sacramento metro area alone...TV news crews from France, Japan, Australia and Holland, and even "60 Minutes," among others, went along for one of the Saturday Repo Home Tour.com jaunts....

...Dias recently decided to franchise, in a manner, his concept by charging real estate agents and brokers a consultation fee for helping them start up their own tours. There already are a half-dozen "alliances" up and running, he said, and as many are about to launch. His goal is to have 50 in place during the next 60 to 90 days."I had no idea it would be that large," he said. "Every week, every month, it's just been growing and growing."

OFHEO: Another Record Drop for Sacramento Home Prices

From Bloomberg:

U.S. home prices had their biggest fourth quarter decline since 1991, according to a report [pdf] by the Office of Federal Housing Enterprise Oversight released today.
...
California, with a decline of 6.6 percent, led all states, Ofheo said. It was followed by Nevada (5.9 percent), Florida (4.7 percent) and Michigan (4.3 percent). All 20 areas with the greatest price declines in 2007 were in those four states, according to Ofheo. The top three were in California: Merced (19 percent), Modesto (15.5 percent), and Stockton (15.3 percent), Ofheo said.

The Sacramento region came in at #12 with a record 11.0 percent year-over-year drop, the first double-digit decline in the index's history. With that, every price index now shows double-digit depreciation.

From the Sacramento Business Journal:

Sacramento-area's median home price fell 28.3 percent in January from a year ago, as a flood of homes enter the market. The four-county region's median home price -- meaning half the homes sold for more, the other half for less -- dropped to $258,230....

From the Sacramento Bee:

Sacramento County has sued embattled home builder Reynen & Bardis for failing to replace 500 mature oaks it cut down to make way for houses in Rancho Murieta. The county's lawsuit, filed Friday, adds to the legal and financial troubles facing Reynen & Bardis, which just a few years ago was aggressively buying land in the Central Valley but is now struggling to survive. The local company has stopped building houses and laid off half its employees.

From the Sacramento Bee:

The slowed demand for building materials can be seen in the U.S. consumption of dimension stone – the term for granite, marble, slate and other stone used in construction. Consumption rose 26 percent in 2004 from 2003, but just 5 percent in 2007 from 2006, according to the U.S. Geological Survey. Consequently, manufacturers and suppliers are competing fiercely for the remaining business and driving down prices, according to Cleveland-based market analysts, The Freedonia Group Inc.

The cost of prefabricated granite has dropped considerably from the building boom highs of four years ago – as much as 50 percent or more, said Cheryl Tarido, a sales associate at Medimer Marble & Granite, a Sacramento company that provides granite and limestone for general contractors and commercial and residential clients.

From CBS13:

In a new twist on the housing crisis, homeowners are being sued by landscapers and contractors after the property builders go bankrupt. If features like fountains and concrete foundations have not been paid for, the contractors are increasingly going after the homeowners for the balance.

The Petree family paid $450,000 for their Dunmore home right before the builder went bankrupt. "Within 24 hours of closing escrow, we had four liens on our property," Kathleen Petree said. "Within 30 days, we had 17, and last I checked, we have 28 liens on our property."

From the Central Valley Business Times:

California and Florida metro areas accounted for eight of the top 10 metro foreclosure rates in January...The Stockton metro area in the Central Valley documented the second highest metro foreclosure rate. Other California metro areas in the top 10 were Riverside-San Bernardino at No. 3, Modesto at No. 4, Merced at No. 5, Vallejo-Fairfield at No. 7 and Bakersfield at No. 9.

From the New York Times:

Seattle, which has nowhere near the kind of foreclosure problem other cities have, began a modest program last month offering loans of up to $5,000 to help a few dozen homeowners avoid losing their homes...[N]o sooner had Mayor Greg Nickels announced the program than opposition surfaced...Mark Ellerbrook, who manages Seattle’s homeownership program, said that, aside from residents hoping to apply, few people were enthusiastic about the program. He said he understood that reaction, given the local housing market. “People struggle to buy homes in this city, for sure,” Mr. Ellerbrook said. “And then you have what looks, on the face of it, like the city giving money to people who made bad decisions.”
...
In California, the notion of a government loan program seems remote to some state leaders, given how big such a fund would have to be and that California’s budget deficit is larger than most state budgets. State Senator Michael Machado, a Democrat who is chairman of the Senate Committee on Banking, Finance and Insurance, is from Stockton, where the foreclosure rate increased 271 percent in 2007. “If they got into a situation that got bad for them, they need to live through that and they shouldn’t expect government to bail them out,” he said, summarizing what he says is a commonly held view. “And when you’re dealing with a $14.5 billion deficit like we are here in California, it’s difficult to do that anyway.”

From Reuters:

Years of double-digit price gains put homes out of the reach of many consumers, and a correction is necessary...[Robert] Shiller said it can't be all or nothing, and that there has been a big misperception that houses will constantly appreciate. "Some times people will try to imagine that we can have both high home prices and affordable housing. But I can tell you that doesn't add up," he said. "You either have high home prices or lower home prices and lower home prices are what we want, and people shouldn't be afraid of that," said Shiller. "Most of us care about our children and grandchildren, and these people have to buy houses so why would we want high home prices. We want economic growth, we don't want high home prices."

From KCRA:

Sacramento's Faux Economy Unmasked: Bald Tires on Beemers

From the Sacramento Bee:

That economic downturn bug that's going around? Local tire sellers have caught it. "My sales are off 20 percent," said Ahad Parvez, owner of A&A Tires on Watt Avenue in Sacramento. "Business is terrible. This is the worst it's ever been – and I've been selling tires for 20 years."

Local tire retailers are in a jam. Construction firms that used to wear out tires running between jobs during the home building boom haven't been driving as much since the bubble collapsed. Meanwhile, wary consumers are tapping the brakes on spending, especially higher-end tire and wheel purchases that give shop owners the most profit.
...
As the economy has slowed, consumers have found more ways to save on tires. "I'm seeing more tires come in bald than ever," said A&A Tire owner Parvez. "Scary." Cunnington said that he also has seen a jump in the number of unsafe tires that roll into his shop, sometimes on expensive cars like Mercedes or BMWs.

From the Sacramento Bee:

As the spring real estate season begins, all the normal market rules have changed, frustrating not only sellers but also a smaller crowd of real estate agents. The 24,944 agents and brokers working now in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties today are 1,240 fewer than the same time last year, says the state. The Sacramento Association of Realtors says its membership has dropped by 12.6 percent over the past year. In Placer County, the Realtors association is down 7 percent from a year ago and 16 percent off its September 2005 high.
...
"The level of frustration in the real estate profession is as high as I've ever seen it," said Howell Ellerman, a business and real estate professor at Folsom Lake College.

From the Sacramento Bee:

The big white bus rolled up to a dozen empty houses in Elk Grove, where last year something went badly wrong for those who lived inside them. Saturday, their swimming pools were green, the electricity off and pieces of a child's puzzle lay scattered across one upstairs hallway. The houses were the main attractions of a new phenomenon to rock this housing market: the foreclosure bus tour.
...
"Oh, so that's what's going on," said a surprised Dena Ruiz in her 1990s neighborhood. "We've been here six years and we make our (mortgage) payments." She pointed toward several houses on the street in financial distress and lamented the collective effect on her home's value. "Our house was worth $450,000 2 1/2 years ago, and now it's worth $340,000, if not $240,000," she said. "They just keep dipping."
...
[Lori] Mode, who plans another foreclosure bus tour March 29 in Elk Grove, said she was sorry there weren't more first-time buyers on the $20 tour. She said, "They don't know what they're missing in this market."

From the Sacramento Business Journal:

Kimball Hill, the Sacramento region's 24th-largest builder last year, might be one of the most honest about its financial position, but it is likely not the only one with serious doubts about viability. Looking at the Greater Sacramento market, there simply isn't enough business to go around. New-home sales fell to 7,500 last year, less than half of what they were in the boom in 2004, despite plummeting prices.

With thousands of foreclosures, the median price for resale homes dropped 23 percent in a matter of 10 months to $285,000 as of December, according to the California Association of Realtors. [Make that down 29% in 10 months as of January.] And brokers are predicting that land will be sold at pennies on the dollar as some firms struggle to stay afloat.

From the Sacramento Bee:

Sacramento County's financial officials got a huge shock last month. Their monthly interest payment on a single bond increased by more than $500,000. The hit is fallout from continuing turmoil in the nation's credit markets and specifically nervousness affecting a class of variable-rate bonds called auction-rate securities...The rising bond costs here show just how widespread the ripples are from a crisis tied partly to the collapse of the housing market.

From the Stockton Record:

When did it all change for the housing market? I've had plenty of discussions in and out of the office about the timing of events that led to the decline that caused Stockton to become the nation's foreclosure capital.
...
Just like the stock market, fear and greed have driven the housing market. It's fear you'd be priced out of the housing market forever without doing something. It's the greed of those making big money through commissions or fees.

From Bloomberg (hat tip New Jersey Real Estate Report):

With no bottom in sight for the U.S. housing market, buyers are in game-show mode. There are plenty of deals out there, yet you have to make some decisions if you are buying a new home. Choices flash in front of you as if a host is badgering you to decide your next move. Do you wait for prices to fall further? Or do you buy now and take the builder's incentives or their financing?
...
Whether you are looking in Florida, Southern California, Las Vegas, Phoenix or Ohio, one variable continues to taint several areas. Until the government can stem the number of foreclosed properties due to come on the market -- an estimated 2 million -- it's a good time to hold off.

Prices are going to fall a lot more than Freddie Mac's forecast 12 percent in the most overpriced areas, which may experience 50 percent declines or more. Patience is a virtue in this market. It will also net you a better deal if you can turn off your game-show impulses.

Sacramento Housing Affordability Increases...to 2004 Levels

The good news (from a buyer perspective): Homes are becoming more affordable as prices plummet. From the the Sacramento Bee:

There's a flip side to the Sacramento-area housing downturn that has would-be buyers cheering: Sacramento is getting more affordable. Falling sales prices between last summer and the end of 2007 triggered a nice jump in affordability in El Dorado, Placer, Sacramento and Yolo counties, according to an index compiled this week by the National Association of Home Builders and Wells Fargo & Co. 27.2 percent of homes sold in October, November and December were affordable to households earning the region's median income of $67,200.

The bad news? Affordability is only back to 2004 levels:

The new eligible buyer percentage for Sacramento was the best since 27.4 percent in the first quarter of 2004...[I]t doesn't take much to remember better days from 10 years ago. In the first quarter of 1998, 70 percent of area homes were affordable for people earning at least the median income, according to the home builders and Wells Fargo.

The last time affordability was this low (aside from 2004) was in 1991, at the front-end of the 1990s housing bust. Between 1993 and 2000, the index remained above 50%.

Here's a look at the index since 1995. You can download the data here.

From the Sacramento Bee:

Dozens of Rancho Murieta homeowners have been left with cracked walls and listing foundations after local builder Reynen & Bardis said it can no longer afford to fix their defective houses. Thirty-six residents have hired a law firm and begun filing lawsuits against the company, already reeling from the real estate downturn.
...
Francis Furtado, president of Reynen & Bardis' home building division, said the firm doesn't intend to abandon the Rancho Murieta residents. For the moment, it can't afford further repairs. "We are in a very tough market," he said. "There's no profit in home building. There's no profit in land development. Our income shut off. We had to hunker down. Our intention is to go back in, but right now the finances aren't there."
...
Since the bottom fell out of the land market, the firm has faced mounting pressure from creditors. It has shut down home building and recently furloughed 89 of its 180 employees.
...
The firm's problems have left Lynn and his neighbors with more than cracking walls. Their gated neighborhood is now filled with vacant and rental homes owned by Reynen & Bardis, which is now trying to unload them "as is" at bargain prices...Residents say the flood of cheap houses makes it harder for anyone else to sell, should they decide to get out.

From the Lincoln News Messenger (hat tip HBB):

The effects of a deepening national housing slump are hitting close to home. Even Gladding, McBean, one of Placer County’s oldest businesses and a Lincoln institution since 1875, is feeling the market’s pinch. “I’ve been here since 1991, and this is the most significant downturn in our market I’ve seen in that time,” said Bill Padavona, general manager and vice president of Gladding, McBean.

Padavona said the clay company has seen a 60 percent to 70 percent decline in products tied to home construction, such as sewer pipes and roof tiles. Though Gladding, McBean provides products throughout the West Coast, the market is especially bad in Northern California, where “the market has slowed to a near standstill,” Padavona said. Since the downturn began, the company has laid off 100 of its 235 employees.
...
That’s bad news as well for another Lincoln company, lumber supplier Sierra Pacific Industries. "It’s had a dramatic downward impact on lumber prices," said Mark Pawlicki, a spokesman for the Redding-based business. "Prices today go back to about 1992, the last time we had a housing recession."

Sacramento Real Estate Market - February 2008 Water Cooler

Post off-topic links, observations, and stories about the Sacramento real estate market here. Please read the comment policy before posting.

Fire Escape?

From KCRA (hat tips - Spacebar & SacramentoCrash):

Across the country, fire investigators are looking at some homeowners in foreclosure as potential arsonists...Sacramento fire investigator Steve Johnson said spite, revenge and pyromania are a few reasons for arson. But firefighters are adding desperation to that list. "Nationally, we've been told foreclosed homes have been set on fire," Johnson said. "People are thinking this is the easy way out."
...
"That sign in the front yard is always going to be in the back of our head going, 'I need to really concentrate on why is this an accidental fire? To make it look like an accidental fire? And in retrospect, they are trying to burn their house down to pay it off?'" Johnson said.

From the Tri-Valley Herald:

An early morning house fire gutted a Tracy home Wednesday morning, a few hours before bank and police officials arrived to post an eviction notice on the foreclosed property.
...
While conducting the investigation, Bramell said representatives from the bank and the San Joaquin County Sheriff's Office arrived at the scene to post an eviction notice. A document posted in the window, dated Feb. 20, 2008, said the family was being ordered to leave the home, which is currently owned by World Savings Bank. Bramell called the notice an "area of interest" for the investigation, which is still ongoing and being completed in conjunction with the Tracy Police Department.

From the Sacramento Business Journal:

GMAC LLC is going to be closing its regional business center in Roseville by the end of the year...The Roseville center has 56 employees....

From the Sacramento Business Journal:

"There has been a significant slowdown in new loan activity within the region, coupled with regional fallout from the subprime mortgage debacle," said David Kaiser, chief executive officer, in a news release. "While Granite Community Bank did not directly participate in the subprime mortgage industry, the region's economy and many of our clients have been impacted."

From the SF Chronicle:

Vallejo is on the brink of a dubious distinction - becoming the first city in California to declare bankruptcy. The fiscal crisis, which comes more than three years after the state took over the city's debt-ridden public schools, is a result of snowballing police and firefighter salaries and overtime expenses coupled with plummeting tax revenue from the weak housing market, officials say.
...
Since the federal government allowed municipalities to declare Chapter 9 bankruptcy during the Depression, fewer than 500 cities have taken the action, according to federal court data.

From the Tri-Valley Herald:

Continuing struggles in the real estate market have affected municipal bonds in the past month. As a result, Manteca officials are taking measures to keep the city's redevelopment bond money intact. Over the past 30 days, the credit rating for the city's $50.7 million variable rate bonds has been downgraded twice, Finance Director Suzanne Mallory said, adding the credit downgrades didn't have anything to do with local problems.

From the Lincoln News Messenger:

The Western Placer Unified School District is exploring California’s financial hardship program as a means to fund future schools. Cathy Allen, the district’s assistant superintendent of facilities and maintenance, presented trustees with a crash course in State Allocation Board funding opportunities at a Tuesday school board meeting. The program is available for districts that, despite levying maximum developer fees and exhausting opportunities for local debt capacity, are still unable to fund facility projects.

“We’re just looking at all the options and this is one,” Allen said. “We’re still collecting developer fees, but we have to be concerned about the foreclosures and how that affects the tax amounts (the district collects).” A downturn in the housing market led Western Placer to shelve proposed new facilities, including Twelve Bridges High School.

From ABC News:

It's a tactic called "re-listing," which is legal and more common than you think. "Re-listing is just refreshing the home on the market," [Minnesota realtor Joe] Niece explained, "making the home look like it just came on the market."
...
Across the country in Sacramento, California, the problem got so bad that Michael Lyon, CEO of Lyon Real Estate, blew the whistle after he noticed that one third of all "new" listings were re-listings. "This is just silliness," he said. "I'm sorry, but you can't pull the wool over the buyer's eyes."

Lyon forced his regional listing service to set a new standard. "We let people see all the previous listings, period, there are no secrets," he said. "We want the buyer to know everything about all the times it was listed, so we can allow them to truly investigate the home." The Sacramento listing service also requires a material change in the house if it is to be re-listed.

12-Month Price Drop Exceeds Entire 1990s Decline

It's been a while since I last posted charts based on data from the Sacramento Association of Realtors (SAR). Here's a look at January's price and sales trends for single-family homes in Sacramento County and West Sacramento. Click the charts to enlarge. To compare to other price indexes, click here.

Sacramento's median home price declined an astounding 28.2% over a 12-month period, the sharpest drop on record. That compares to a 24.1% decline over the 6-year 1990s housing bust. January marked the 19th consecutive month of year-over-year percentage declines and the 6th month of double-digit declines.



The total decline since peak breached the 30% barrier for the first time, falling 35.1%.



Like DataQuick, the SAR's median price dropped to 2003 levels (in this case November 2003).





The number of escrows closed in January declined by 1.6% compared to last January. This marked the first single-digit percentage drop since August 2005. Sales have dropped on a year-over-year basis for 32 consecutive months.



Here's a look at sales since 2001.

Multiple Burns From Sacramento Housing Market's "Record-Breaking Collapse"

From CBS 13:

This is a new and troubling twist on what's becoming a record-breaking collapse in the housing market. Melanie Brown's family leased this home in Lincoln, after trying to short sell their own place to avoid defaulting on their subprime mortgage...So she says it came as a surprise when she learned now this house they were leasing in Lincoln was on the market for a short sale of it's own.
...
And she discovered her family isn't alone. "We looked down the block and there's two-other homes with the same for sale sign, the same realtor listed."...These three-homes were bought by a group of bay area investors a year ago. Those investors have apparently decided to short sell them, or walk away if they can't.
...
[R]ealtors, mortgage brokers and property managers say they're seeing families like the Browns getting burned two, and even three-times by the collapsing market."

From the Sacramento Bee:

The FBI is investigating a suspected "foreclosure rescue" fraud that may have cost as many as 256 homeowners title to their property and stripped them of their equity. The alleged scam includes at least seven Sacramento homeowners and 61 statewide, and the probe is based in the Sacramento FBI office, according to court documents, interviews and an Internal Revenue Service search warrant obtained by The Bee.
...
The Sacramento FBI office is working the case as it continues to sort through 2,000 reports of suspected mortgage fraud from 2007 – a fourfold increase over the 500 similar reports in 2005.

From the Sacramento Bee:

The state budget deficit has increased to about $16 billion, primarily due to continuing problems in the housing market and high energy prices, according to an independent budget analysis released Wednesday.
~~~
Gov. Arnold Schwarzenegger on Tuesday ordered additional cuts across the state bureaucracy that will slow down state hiring and nonessential service contracts – a move he said could save the cash-strapped state $100 million by June 30.

The governor ordered all agency secretaries and department directors to immediately begin reducing their current budgets by 1.5 percent by cutting nonessential services and activities. The order, which takes effect immediately, directs secretaries and directors to find savings, whether it's on personnel, travel or equipment.

From the Inman News Blog:

Inman News contacted the City of Stockton/San Joaquin County Animal Shelter to find out if the shelter has seen an increase in pets and if there may be a link to foreclosures....

A police staffer at the shelter directed the call to Connie Cochran, Stockton's public information officer, who said that the city is no longer researching "foreclosure-related issues for the media ... because we've spent so much time. We feel our time is better spent addressing issues within our community."
...
Maybe foreclosures have created a real problem there for the animal shelter, and maybe they haven't. The city wouldn't tell us. Foreclosure, Cochran continued, "really is a national crisis. We don't own it." The city apparently isn't owning up to it, either.

"The only answer is for the government to get out of the way"

From the Appeal Democrat:

Our View: Stimulus plan is like giving drink to an alcoholic

When home prices soared as the result of cheap and easy credit, not many people considered that a crisis. It was fun for homeowners to stand around the proverbial water cooler and boast about the price of the house down the street. Well, prices have since fallen to the lowest levels since 2004.
...
What goes up often comes down. But there's more than a market phenomenon going on here. Federal monetary policy has a direct effect on lending practices, and the government is getting actively involved now. That, in particular, should be reason for worry.
...
The only answer is for the government to get out of the way and let the market self-correct. That may mean allowing prices to fall to levels they need to be so that buyers can afford them. For most people, that's not as much fun to watch, but that's the real solution.

From the Inman News Blog:

In looking at markets that may see a temporary increase in the $417,000 conforming loan limit, I ran a table yesterday that relied on median home price data from the third quarter 2007. Running the numbers again today with preliminary fourth quarter numbers from NAR highlights a potentially serious problem. All 19 metropolitan statistical areas (MSAs) identified as places that might see an increase in the conforming loan limit are declining markets...Sacramento now looks like it won't see an increase at all, based on the new fourth quarter numbers.

From the Boston Globe:

Cesar Dias, an agent from Stockton, Calif., who appeared on "60 Minutes" and is credited with starting a national trend, said foreclosure tours accomplish twin goals of moving properties and drumming up prospective buyers in lean times. "We knew we couldn't sit with our hands crossed hoping for the best," said Dias, who is working on tours in Dallas and San Diego; Las Vegas and Phoenix may be next.

From the Atlantic Monthly (hat tip Gwynster):

Strange days are upon the residents of many a suburban cul-de-sac. Once-tidy yards have become overgrown, as the houses they front have gone vacant. Signs of physical and social disorder are spreading.
...
In the Franklin Reserve neighborhood of Elk Grove, California, south of Sacramento, the houses are nicer than those at Windy Ridge—many once sold for well over $500,000—but the phenomenon is the same. At the height of the boom, 10,000 new homes were built there in just four years. Now many are empty; renters of dubious character occupy others. Graffiti, broken windows, and other markers of decay have multiplied. Susan McDonald, president of the local residents’ association and an executive at a local bank, told the Associated Press, "There’s been gang activity. Things have really been changing, the last few years."

Commercial Real Estate - 'Everything Has Gone Quiet'

From the Sacramento Bee:

Thelma Pugh of North Highlands came to rely on home equity as a cushion. She and her husband took out a $25,000 line of credit a year and a half ago from Countrywide Financial Corp. They've used about $9,000, mostly to pay for home repairs and – when her husband was hospitalized recently – to pay some bills. "It was like a lifeline," she said. "If I couldn't make ends meet, I had this."

That lifeline was just cut off. The Pughs were among 122,000 Countrywide customers recently notified that, because of vanishing equity, they no longer can tap into their lines of credit.

From the Auburn Journal:

The average sales prices of Auburn and Newcastle homes decreased from $502,510 last year to $476,493 this year, according to a January homes sales report from the Placer County Association of Realtors. That figure means the market is beginning to balance, according to Joe Newton, president of the Placer County Association of Realtors. “Prices are starting to level out,” Newton said. “Houses are a little more affordable. Couple that with the lending side and interest rates being down makes it for a very good time to consider buying.”

From USA Today:

David Brown, manager of the Sacramento and Yolo County, Calif., mosquito-control office, says growing concern over the mosquito-borne West Nile virus is prompting expanded efforts to identify problem pools...Sacramento's mosquito-control operation has asked the Sacramento Association of Realtors for a list of vacant homes with swimming pools. Since May, 400 pools have been reported.

From the Sacramento Business Journal:

Steep reductions in demand for lumber used for residential construction has caused a dramatic decline in price. In February 2005, one thousand board feet of Douglas fir sold for $880, according to a spokesperson at Pacific Coast Building Products in Rancho Cordova. One year later, those prices had dipped to $337 per thousand board feet. This month, the price stood at $170.
...
While economic factors are bound to shift, Terry Street, president of Roebbelen Contracting, estimated wood prices are likely to stay low in the near future. "I think it's going to be down there for a while," he said. Street's company specializes in wood-intensive projects such as schools in the Sacramento area. "I'm not expecting the housing market to quite jump back overnight."

From the Stockton Record:

Some of Stockton's commercial office corridors look grim these days as small financial and real estate services firms fall prey to the housing-industry meltdown and vacate the premises...[D]ozens of those smaller, under-the-radar real estate and financial companies have gone under, quietly left town or substantially downsized, adding to the ranks of the unemployed, vacating numerous office buildings and leaving some commercial landlords begging for tenants.

"The commercial tenants are not there to attract any longer. Everything has gone quiet, the phone has stopped ringing," said Chuck Lantznester, owner of American Commercial Brokerage in Stockton who has spent 35 years as a commercial property manager leasing office space..."A year ago and beyond, things were really fabulous. Even when the residential market was going down, the commercial market was holding up. The downturn is going across the board now," Lantznester said.

Soup Line

From the Lodi News-Sentinel:

The housing boom was good for Ben Juarez, like so many other Lodi residents. It meant steady work and extra cash from overtime jobs, installing air conditioners and gutters at tract homes across the region.
...
Now, with the housing bust, life is full of worry for Juarez — who's been jobless since November — and for thousands like him in the area. The EDD estimates that Lodi's jobless rate reached 7.3 percent in December, the latest figures available. That's up from 5.5 percent in December 2006 and 5.6 percent in December 2005....It adds to up to more than 1,000 extra residents without work compared to the past couple years. Because of the epic housing meltdown, many of those unemployed are local carpenters, plumbers, landscapers, real estate and finance workers.

San Joaquin County — where the jobless rate was estimated at 9.7 percent in December — lost 1,400 construction jobs and 1,000 real estate/finance positions in the past year alone, Baker noted. That's 9 percent and 10.1 percent of the jobs in the respective local industries.

From the Sacramento Bee:

Gallows humor was served up Friday – along with a last meal and a small dollop of frustration on a "soup line" – when more than two dozen Sacramento city employees received layoff notices..."It was just a joke. Somebody said, 'Let's have a potluck,' and I said, 'Well, the Depression wasn't so long ago,' " said technician Nora Robinson, 58, joking about her age. "How about we call it a soup line?"

From the Sacramento Bee:

Faced with the prospect of slowing sales in a slumping economy, burger joints and family dining businesses are tweaking menus and fiddling with prices and portion sizes, catering to budget-conscious consumers feeling a little poorer by everything from tightening credit to higher gasoline and grocery prices. "I'm hearing from our customers that they're pinched for money," said Michael Pettit, owner of Lodi-based CJK Associates, which owns Applebee's restaurants in the Sacramento area. "Value is what people are looking for."

From the Modesto Bee:

The median sales price for a Stanislaus County home was $260,000 last month, 26.7 percent lower than in January 2007, when the median sales price was $354,500, according to DataQuick Information Systems, a real estate research firm. The median sales price in Merced County was $215,000, down 33.8 percent from a year earlier. And San Joaquin County's median price was $295,000, down 26.3 percent from the January 2007 price of $400,000.

From KCRA:

"Housing Market Slump Is Hurting Rental Housing"

From the Sacramento Bee:

Every business day in the region an average of 85 people lost their homes to lenders, near double the number of foreclosures from June, according to Fair Oaks-based Foreclosures.com, a Web site for real estate investors.
...
"I don't think we are seeing the worst of these numbers," said Robert Kleinhenz, deputy chief economist for the California Association of Realtors. Kleinhenz and others said they expect high foreclosure numbers to continue for at least another six months.

DataQuick Stats by County
DataQuick Stats by Zip

From the Sacramento Bee:

As foreclosures continue to grow in the capital-area real estate market, Sacramento and Elk Grove are copying a trend launched last year in Stockton: bus tours of bank-owned homes. As the buying season begins, three tours are planned for Feb. 23. There's one for investors in Sacramento and two for first-time buyers and investors in Elk Grove.
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"I'd say one-third to half the bus will be Bay Area folks coming in," said Erin Newington, a First Priority mortgage coordinator.

From the Modesto Bee:

Rents are flat, sales are scarce and values are way down for apartment complexes and rental properties throughout the Northern San Joaquin Valley, landlords were told Wednesday at a Modesto luncheon. The California Apartment Association's economic forecast event told landlords what most of them already knew: The housing market slump is hurting rental housing.
...
John Citrigno, who specializes in multi-family housing sales for Coldwell Banker Commercial...said "historically unprecedented" competition from single-family rental homes is holding down apartment rents. Single-family home rents also have dropped. Citrigno said typical three-bedroom home rents in Stanislaus County two years ago were $1,200 to $1,500 per month. Now they're $900 to $1,200 per month.

From the Stockton Record:

Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton, said most of the houses selling are foreclosure properties - about 77 percent of January's sales. Most home are selling below the $250,000 mark, he said.

Although prices could slip perhaps 5 percent more this year, he said, the market appears to be stabilizing. "Everyone thinks it's going to get a little better, but by the time it gets better, the smart money is already in," Balsbaugh said. "We're not going to see any more dramatic decreases."

DataQuick: Sacramento's Median Price Returns to 2003 Levels; Down 26.8% YoY

From the Sacramento Bee:

In the most ominous indicator yet of the capital region's struggling housing market, January saw nearly as many people lose their homes as buy them. January's 1,815 closed escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties was only 33 more than the 1,782 foreclosures recorded in the same counties that month, according to statistics from La Jolla-based DataQuick Information Systems of La Jolla and Foreclosures.com. of Fair Oaks.
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Median sales prices for all new and existing homes combined...have returned to June 2003 levels in Sacramento and to December 2003 levels in Placer County, according to DataQuick statistics. Sacramento County's median sales prices for all new and existing homes are down a record 26.8 percent from January 2007, the firm reported. The county's $253,000 median sales price is down now 34.6 percent from an August 2005 high of $387,000.

From Bloomberg:

Home prices fell in the fourth quarter in the majority of U.S. metropolitan areas surveyed by the National Association of Realtors, according to a report [pdf] today...Prices fell in 77 of 150 metropolitan areas, the most since the group began tracking values in 1979.
...
The metropolitan area with the deepest decline was Lansing- East Lansing, Michigan, which had a 19 percent decrease. Prices fell 18.5 percent in the Sacramento, California, region....

The folks at Hardtack have posted a nice overview of asking price trends in Sacramento's submarkets. Check it out here.

From the Stockton Record:

According to Coldwell Banker Grupe-TrendGraphix monthly sales reports, based on Multiple Listing Service data, the median selling price for an existing single-family home in San Joaquin County has plunged by one-third over the past 18 months. The median selling price peaked during the housing boom at $425,000 in July 2006 and has declined steadily to $283,000 last month, a 33.4 percent drop.

'Relying on Luck' in Folsom

From the Central Valley Business Times:

Five of the top ten [California] counties for foreclosures last month were in the Central Valley, led by San Joaquin County with 1,000 homes going on the auction block, a 700 percent increase over the number a year earlier. Stanislaus County is ranked third in the state on a per capita basis with Sacramento County fourth, Yolo County fifth and Merced County seventh, according to the computations by ForeclosureRadar.

From the Central Valley Business Times:

The Stockton metro area in the Central Valley had the nation’s second-highest home foreclosure rate last year among the nation's 100 largest metro areas, says a new report from RealtyTrac Inc. of Irvine, a foreclosure information company. With 4.866 percent of its households entering some stage of foreclosure during the year, Stockton saw a total of 22,184 foreclosure filings on 10,608 properties, up 271 percent from 2006, RealtyTrac says.
...
Other California metros with foreclosure rates in the top 20 are Riverside-San Bernardino at No. 4, Sacramento at No. 5, Bakersfield at No. 7, Fresno at No. 14 and Oakland at No. 16.

From the Sacramento Bee:

The city of Sacramento is sending out additional pink slips to 12 workers in its Development Services Department today, for a total of 28 full-time employees this month.
...
Development Services, which found itself in the red this year, has taken the first significant hits, said Director Bill Thomas. His department handles building permits, planning and inspections, among other tasks. "When you get a housing slump, we're the first to feel impacts," Thomas said.

From Bloomberg:

When Mary Kamanu paid $409,000 for a house in Folsom, California, she never imagined that three years later it would be worth about 20 percent less and she would have to pay the bank more than $80,000 just to sell the place. "I'm completely upside-down on my mortgage, like a lot of people,'' said Kamanu, who wants to move 12 miles away to live with her fiancé in a suburb of Sacramento. "I know I'm going to have to come up with a big chunk of change.''
...
Kamanu refinanced her house in May 2007 and owes $415,000 on her mortgage. Homes in her neighborhood now sell for about $330,000, she said...Kamanu said she doesn't want to put her life on hold until the housing market improves. She's planning a sunset wedding later this year on the beach at Folsom Lake, about half a mile from her property, even as she waits for a buyer.

She said she's willing to sell the three-bedroom, two-bath, 1,272-square foot house fully furnished and include two wide-screen televisions to entice a buyer. The home has a fireplace and a two-car garage. "I'm hearing it might be a year or two before the housing market comes back, and I can't wait that long," said Kamanu, 38. "I'm relying on luck, hoping that someone will come along and fall in love with the house, like I did.''

WSJ: Still Way Too Early to Go Bargain Hunting in the Bubble Markets

From the Wall Street Journal (hat tip Calculated Risk):

If you own a home in a former bubble region like California or southern Florida, there's bad news… and really bad news. And they suggest that it is still way too early to go bargain hunting in these markets, although -- of course -- there is always the occasional deal around.

The bad news is fresh market data published Monday night by real-estate Web site Zillow.com. They show prices, as expected, kept slumping through the end of last year.

But the really bad news is that, even after a year of misery and falling prices, homes in many of these regions still aren't cheap. They remain wildly overvalued compared to average personal incomes. There is a strong long-term correlation between the two figures. And in many regions, house prices would still have to fall a very long way to get back into line. How far? Try around a third in Florida and Arizona -- and closer to 40% in California. Yes, from here.

From News 10 (video):

Countrywide Financial notified 122,000 customers that they may no longer draw on their credit lines, even if they were previously approved for a higher limit...One of them is a woman who spoke to News10 and asked that her name not be used. "Apparently the fact that I have excellent credit, that I am not late, and that I have lived in my home for 25 years didn't count for much," she said.
...
In a statement on its Web site, Countrywide said federal regulations allow lenders to block additional extensions of credit in a declining market [pdf].

From the Sacramento Bee:

...January struck an especially hard blow to homeowners in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. Banks in the eight counties repossessed 2,292 properties – 755 more than December – according to foreclosures.com, a Fair Oaks-based Web site for real estate investors.

From the Associated Press (via Forbes):

A growing share of home sales are from foreclosures, especially in states hardest hit by the housing bust. In some parts of California lately, nearly 50 percent of home sales come from foreclosed houses.
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In December, 46 percent of homes sold in the Sacramento area and 31 percent in the San Diego area had gone through foreclosure, up dramatically from about 4 percent a year earlier, according to San Diego-based DataQuick Information Systems, a real estate information firm.

From CBS 13:

It's called "Cash for Keys," and it's been happening for years, but the strategy has been kept quiet. Until now...The deal is simple: Occupants get out within 30 days without trashing a house, hand her the keys, and she hands them back a check from the bank. Then it's done.

CBS 13 has video of the San Joaquin County mansion ransacked by thieves. Also from CBS 13: Foreclosed Homes With Pools: Home To Mosquitoes

From the Sacramento Bee:

Don Snyder's voice cracked as he talked about the end. The emotion welled up from owning Sacramento's oldest toy store, from the joy of selling playthings to Sacramento's children to watching his own kids grow up in the store's aisles. Now it's almost over. Soon Carousel Toy & Party will close for good. Snyder is shutting down the Fulton Avenue store, a Town & Country Village mainstay that started as Bob's Toyland in 1951. He's endured rough patches before, but this year the economy, the housing market and consumer confidence in toys all tumbled at once. Holiday shoppers didn't come to the rescue.
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The housing market's slide – the Sacramento area is among the nation's hardest-hit – continues to hurt retail spending. So does the volatile stock market – along with high prices for gas and food, the escalating credit crisis and a weak job market.

From the Modesto Bee:

Northern San Joaquin Valley home values have declined so much that more than a quarter of homeowners can expect to pay less property tax next year. About 37,000 Stanislaus County homes will be reviewed. Their assessed values are expected to drop 10 percent to 40 percent, Assessor Doug Harms said Monday.
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Assessors will be more aggressive in lowering San Joaquin County home values this year. "We're reviewing (home purchases) back to 2002," said Ken Blakemore, San Joaquin's assistant assessor.

Painting the Lawns Green: The Housing Bust's Newest Growth Industry

From the Stockton Record:

A Stockton man sees the growing number of dead brown lawns of foreclosed homes in the area and sees nothing but green. Nick Terlouw has launched the Greener Grass Co., which amounts to a service in which he sprays dead lawns with a deep green, water-based dye that makes the turf look good enough for a golf course or a professional football stadium.

For between $175 and $225 per yard, Terlouw uses a motor-powered 50-gallon insecticide sprayer designed for treating orchard trees. He waves his magic wand and in broad sweeps, a la painting a house, makes tired, if not expired, turf sit up and sparkle like Shirley Temple.
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Terlouw is trying to market his service to real estate agents and property managers. One home-owners association has hired him to spray a couple of dead lawns, he said. "Honestly, I see a gold mine here."

From the Stockton Record:

While abandoned rural homes have always appeared to attract attention from lawbreakers, Environmental Health's Alan Biedermann has seen a sharp increase in problem homes that are damaged like the Guzman house. Many are way beyond repair and must be demolished, he said. "Stealing is becoming way more common. We've got five properties in that area alone that we're dealing with now," said Biedermann, the county's lead senior registered environmental health specialist.

About every six months, he takes demolition contractors on a tour of abandoned homes so they can bid on deconstructing the property. Typically, five to 10 contractors are interested in the work. On last summer's tour, they visited 17 homes. Last week on his most recent tour - called a bid walk - Biedermann led 30 contractors through 32 homes slated for the wrecking ball. "It's going to probably get worse before it gets better," he said.

From Howestreet.com:

"In addition to the residential wasteland being created here, I have noticed a few visible changes in the commercial real estate market. I drive by some of the nicest office space in Stockton, and I am noticing more and more "for lease" signs on the properties. These are offices of well-to-do professionals. The vacancies are accelerating, and it seems like it's just begun. The road ahead looks bleak."
...
"Maybe the rest of the country will fare better than here, maybe not. I actually pictured the residentially displaced people forming communes in the empty warehouses. Now that would be different."

From News10 (video):

Local mosquito control officials worry the alarming number of homes with swimming pools being lost to foreclosure could lead to a mosquito population explosion...A random check by News10 of five bank-owned homes with swimming pools discovered four of them with green water.

From the Sacramento Bee:

The city of Sacramento is trying to squeeze every nickel of fees and taxes out of North Natomas before the federal government shuts down new construction. City staff has been asked to identify key revenue-generating projects north of the American River and move them quickly through the development approval pipeline to qualify for building permits by year's end.
...
Faced with an estimated $55 million budget deficit in the next fiscal year, largely attributed to the severe decline in the housing market, city officials say they can't afford to see revenue from North Natomas completely cut off even for a year. The area accounts for about 45 percent of the dollar value of building permits issued in the city annually.

From the Sacramento Bee:

Elk Grove Unified School District is anticipating an enrollment decline of about 500 students this fall...The district blames the region's housing slump for the drop. Families and their students are moving out, [district spokeswoman Elizabeth] Graswich said.

From the Elk Grove Citizen:

There will be less than 300 students attending both an upcoming high school and middle school when they open this August. The schools’ neighbors are also currently vacant lots and construction sites instead of homes that were expected to pour in during Elk Grove’s housing boom that is now over.

From the Redding Record Searchlight:

While numbers have not been released, the housing downturn was expected to slash lumber demand in 2007 to about 50 billion board-feet, according to the Western Wood Products Association. That would mean a reduction of 14 billion board-feet from 2005 to 2007. That's equal to the combined annual lumber output in Oregon, Washington and Idaho.

"It's the steepest two-year decline ever in lumber consumption. It's even worse than what we experienced in 1980 to 1982, and 1974 to 1976 with the oil crisis," said Butch Bernhardt of the Western Wood Products Association....

Last Game of the Season?

From the Sacramento Bee:

[I]f this year is like the last two, the Super Bowl is now just the last game of the season, not the opening shot of the home- selling year. Indeed, there's a chance the peak buying activity of 2008 may have already happened.

In both 2006 and 2007, escrow closings – where all the paperwork is done and buyers get the keys – peaked in March, according to La Jolla-based DataQuick Information Systems. That means the homes were likely sold sometime in January or early February.

A March peak isn't something the industry likes or wants to see again this year. In 2006, a March peak showed there wouldn't be a big spring rebound and proved the downturn was real. In 2007, the subprime crisis arrived in March and pushed down sales for the rest of the year.

So far this year, builders and real estate agents say they're seeing the usual rise in sales compared with December...Tina Wilks, who owns the midtown Sacramento office of Prudential California Realty, said investors, more than first-time buyers, are driving activity she's seen. Many are picking off houses repossessed by banks.

From publicradio.org:

[F]our years ago we bought an 80-year-old home in a nice Sacramento neighborhood. My wife, an escrow officer, and I, a notary public, were earning good money. We had every intention of staying here forever, but the subprime lending crisis has triggered another real estate meltdown. Now my wife's salary has been cut and her bonuses eliminated. My notary work has dwindled to a trickle. It becomes more difficult to make our house payment each month.

Financially it doesn't make sense to even try. We owe about $430,000 on the house. It's currently worth no more than $400,000. Selling isn't an option. Sooner or later we will probably give up another home to foreclosure. The interest rate is competitive, six and an eighth, and it's fixed until August of 2012. A sudden upward adjustment of our loan won't force us out. It's the sudden decrease in our incomes.

The Sacramento Real Estate Statistics blog digs a little deeper here.

From the Sacramento Bee:

Before the real estate bubble burst, Sid Dunmore ran one of the largest locally owned development enterprises in the region. The Dunmore empire built more than 22,000 homes from Elk Grove to Granite Bay to Nevada, making Dunmore a rich man. Yet like many other developers, Dunmore bet too heavily on a boom that was sure to end. That left his company, Dunmore Homes, with a glut of unsold property when the market crashed. After Dunmore sold it, the company filed for bankruptcy, listing assets of $280 million and liabilities of $250 million.

Dunmore is unlikely to end up in the poor house. As The Bee's Jim Wasserman reported in December, Dunmore stands to receive an $11.2 million federal tax refund for selling his company for a mere $500.

The same cannot be said for some of the families who bought some of his homes. In Elk Grove, as The Bee's Loretta Kalb reported Tuesday, homeowners in the partly finished Monterey Village subdivision are facing lawsuits and liens by several of Dunmore's contractors and suppliers.
...
Ultimately, the responsible party here is Sid Dunmore, who seems primed to benefit from a federal tax return but has remained silent on the predicament faced by people who purchased his homes. Dunmore has so far not responded to Kalb's efforts to reach him. If he continues to stay on the sidelines, it will serve as one more reason for lawmakers to get involved.

From the LA Times:

As home prices soared higher earlier this decade, the buying frenzy was fueled in part by what real estate industry experts now claim were exaggerated -- or outright fraudulent -- appraisals. A lawsuit filed by two couples this week adds a new twist: It claims that Los Angeles builder KB Home and a unit of lender Countrywide Financial Corp. pumped up appraisals in their Sacramento-area development to sell homes at higher prices.

One couple, Deborah and Lonnie Bolden, says they paid $70,000 more for their home than neighbors who used different appraisers. Their lawsuit, filed Wednesday in Los Angeles County Superior Court, alleges that KB Home and Countrywide "conspired with affiliated appraisers to generate fraudulent" appraisal reports.

From the Modesto Bee:

While lower mortgage interest rates might help some Americans refinance their home loans, Northern San Joaquin Valley homeowners are finding it more difficult because house values have plummeted. "If your current home value is less than your outstanding loan, you're dead meat," warned Paul Carroll, president of Carrollton Mortgage Co. in Modesto. Unfortunately, Carroll said, that's the case for many homeowners who are desperate to refinance their high-interest rate mortgages.
...
It's getter ever harder to refinance in the Northern San Joaquin Valley, however, because the Federal National Mortgage Association (Fannie Mae) has designated this region as a "declining market." Because of that, Fannie Mae -- which buys mortgages from lenders -- has reduced its permitted loan-to-value ratio by 5 percent. So, homeowners who used to be allowed to borrow up to 95 percent of their homes' value now can't borrow more than 90 percent. The new restriction took effect for mortgage applications filed after Jan. 15.
...
"There's a lot of people who are really stuck," said [George] Erbele, who's been in the mortgage business 19 years. "We probably used to be able to find mortgages for about 95 percent of people who requested loans, ... but now only 10 percent to 15 percent of the refinancing requests get approved."

Sacramento Real Estate Prices: Cliff Diving

Some January price statistics for Sacramento County via the Sacramento Real Estate blog:

• Median: -27.5% YoY
• Average: -28.4% YoY
• Price per square foot: -27% YoY

From the Stockton Record:

A second major foreclosed-home auction will be coming to Stockton next week, with about 85 Stockton-area houses going up for sale at the San Joaquin County Fairgrounds.
...
"The sellers are motivated, but they're not going to just dump the properties on the market," company spokesman Joe Joffrion said.
...
Jerry Abbott, president and co-owner of Coldwell Banker Grupe, said the real estate community looks upon foreclosure auctions as a good way to help clear out some of the foreclosure properties that continue to dominate the sales market. About 70 percent of current sales are foreclosure properties, he said.

Agent Bubble is reporting that 50% of Sacramento listings are either short sales or foreclosures. The Sacramento Real Estate blog says 67% of all sales in January fell into those two categories, compared to 7% a year ago.

From the Wall Street Journal:

Sales of large commercial buildings have dropped nationally, but the downswing in north-central New Jersey has been particularly chilly. In the fourth quarter, the region's overall sales of office, retail, warehouse and apartment properties valued at $5 million or more fell 75% from the year-earlier quarter to $811 million. The region tied with the metropolitan areas of Sacramento, Calif., and Kansas City, Mo., for the largest percentage drop of 50 major U.S. markets, according to Real Capital Analytics Inc., New York, a real-estate research firm.

From the Modesto Bee:

Knowing that Stanislaus County has one of the highest foreclosure rates in the country, I find it disturbing to read that Modesto planning commissioners voted 4-3 to approve the Tivoli project. I wonder if they are reading the same newspaper or watching the same TV reports on the housing market as I am. The proposal calls...[for] more than 1,300 new homes, 800 condos and duplexes, and 1,000 apartments.

Granted, these proposed homes will not be completed for some time, as stated by the investors, but when hearing that the current market crisis is expected to last for at least another couple of years, I cannot help but ask: Who will buy all these new homes? Considering the market is not expected to bounce back for quite some time, I fear that just as we begin to see a light at the end of the tunnel and finally begin to clear a large inventory of existing homes, the emergence of so many new homes will cause us to backslide.

From KCRA:

The housing market may be in a freefall but that didn't stop Rocklin Voters from giving the green light to the [Clover Valley] development of more than 500 homes.

"The Wrong House at the Wrong Time"

From the Sacramento Bee:

Sukhwinder "Suki" Kaur bought the wrong house at the wrong time. Within months of her July closing on the two-story home in Elk Grove, work in the new subdivision stopped and the builder's parent company, Dunmore Homes, filed for bankruptcy protection. Kaur, who is paying on a $430,000 mortgage, has become the target of two lawsuits and 28 liens from unpaid subcontractors and suppliers. More than a dozen other individuals in the Monterey Village development are in similar predicaments.
...
At one end of Kaur's street are the visible signs of the owners' distress. Rows of utility lines are capped and waiting for homes across a sea of mossy dirt. Nearby, temporary poles mark one subdivision entrance where a gate was never installed. In the distance, a cluster of unfinished homes are sore reminders of the unfolding tragedy. Many of the 50 or so homes completed are vacant.
...
Rebecca Westmore, senior staff counsel for the state Department of Insurance, said contractor liens could become more common as the home market slides. If builders are closing up their shop and not paying, "that's the natural fallout of this market," she said.

From the Wall Street Journal:

The six cities showing the greatest deterioration in home prices are Sacramento, Las Vegas, San Diego, Tampa, Los Angeles and Miami, according to Radar Logic, a New York-based research and analytics firm. All these locales showed double-digit declines in November from November 2006. The report, which looks at prices in 25 metropolitan statistical areas across the U.S., showed that the price per square foot for homes fell 18.6% in Sacramento to $185.98....

November was the fifth consecutive month that Sacramento has claimed the bottom spot on Radar Logic's list. To read the report, click here [pdf].

The Radar Logic stats are a bit stale. Do more recent stats show any improvement in Sacramento home prices? No, says the Altos Research blog.

From CBS 13 (video):

[T]hree zip codes in the Natomas area are being hit the hardest. Homes there typically sell for well over $250,000. But in the past year, some have seen a 50% depreciation.

From the Stockton Record:

The city of Tracy is headed toward a $6 million deficit by the end of this budget year, as the downturn in the housing market finally takes its toll on the city's property tax revenues, Tracy Finance Director Zane Johnston said.

From the New York Sun:

Mr. Clinton stopped in Sacramento at lunchtime, where he was greeted by a crowd of about 1000, according to the Associated Pres. In the afternoon, he was in Stockton, Calif., where several thousand people attended a hastily arranged rally at the University of the Pacific. He honed in on the subprime mortgage crisis, which is severe in cities like Stockton. Mr. Clinton said his wife's plan to keep people in their homes is "much more aggressive than any of the other candidates" and would stave off what he warned would be a "calamitous collapse" of the housing market.

From Reuters:

In Stockton, where single-family neighborhoods are tied together by expressways lined with small and mid-sized shopping malls, many mortgages are in defaults or foreclosure. "I go to the gym and hear a lot of horror stories," Gonzalez said. "A lot of people bought houses a year, year-and-a-half ago and paid top dollar and now can't make the payments."
...
But many who bought during Stockton's housing boom simply ignored loan terms, said Bill Herrin, an economist with the University of the Pacific: "Everybody wanted to do it now, today ... Collectively, we went a little nuts out here."

From the Stockton Record:

The CBS news magazine "60 Minutes" put Stockton on the national map last Sunday in the program's lead story about the foreclosure crisis, "House of Cards." Ground zero, reporter Steve Croft called us, and ground zero we are.
...
Croft's report, mercifully, did not paint the city as unique in this meltdown. Neither did he suggest that what's going on is the result of a concentration of nincompoops in residence (although there was one family interviewed ready to walk away from a mortgage they could afford simply because they were disgusted their home had dropped in value).

One of the many things not guaranteed in life is that your home, or anything else, will appreciate in value. Had appreciation continued unabated - something that carries its own dangers - it would have covered up all the ills being visited on us by the subprime mortgage meltdown. Stockton would not be ground zero in this one and Steve Croft would have busied himself reporting on something else, like reporting that no one, outside a few millionaires, could ever buy a house here because prices had gotten so astronomical. You know, sort of like they were two years ago.
...
The fact is this isn't over, not by a long shot. A lot more loans are going to reset to much higher rates, a lot more families are going to lose their homes, a lot more neighborhoods are going to be hurt and a lot more equity is going to be lost by homeowners who are making their payments.

Median Asking Price Falls Nearly 25% YoY

Median asking price year-over-year change: -24.8% ($89,000)


Median asking price change since August 2005: -32.5% ($129,900)

For more Sacramento price statistics go here.

Sacramento Bee: "Bubble Bursts in Elk Grove"

From the Sacramento Bee:

Bubble bursts in Elk Grove

Elk Grove, already mired in an economic slump, may be at the forefront of what's coming to the entire Sacramento region. Already home foreclosures there are up fivefold. Unemployment has climbed. Vacancies at small strip malls are three times the regionwide average, and Laguna Ridge – a big new master-planned development – is largely a ghost town of unsold homes and vacant lots.
...
The downturn calls into question just how strong the boom really was. Rising prices enabled an untold number of residents to tap their home equity to buy sport-utility vehicles and other consumer goods. But others did well just to buy a house. They were wealthy on paper but chronically short of cash.

The Sacramento Natural Foods Co-op found this out the hard way. Preparing to expand, the Co-op looked at demographic studies of Elk Grove and saw nothing but high incomes. The Census Bureau pegged Elk Grove's median family income in 2006 at $81,771, or 25 percent higher than the state's median. But when the Co-op opened in the Elk Grove Marketplace on Bond Road, it found many residents weren't so rich after all. "A lot of these 70,000 new residents down there were young families with mortgages up to their eyeballs," said general manager Paul Cultrera. "The disposable income wasn't there. … It's tied up in mortgages and new furniture." The store closed in January 2007 and gave way to a discount food chain, Grocery Outlet.
...
Because of massive overbuilding and other issues, the vacancy rate at Elk Grove's smaller strip malls – those that frequently cater to independent merchants – has jumped to nearly 35 percent...Garrick Brown, regional research director at Colliers International real estate...said. That's three times the area average. In one stretch along Interstate 5, the vacancy rate is 68 percent, he added.

From the Stockton Record:

The lunch rush used to fill Campesino Café. That hasn't been the case for the past several months. A handful of south side businesses, such as Campesino Café, that cater mostly to Latino immigrant workers are not only seeing the effects of a sluggish economy, but they also say reverse migration has left their business nearly empty of customers, who are fleeing lackluster employment conditions.
...
The soft housing market has played a huge role in the economic slowdown in San Joaquin County. The housing market slowed job growth in the county from 1.3 percent in the fourth quarter of 2006 to 0.4 percent in the fourth quarter of 2007, according to University of the Pacific's Business Forecasting Center.

From the Sacramento Bee:

Sacramento home builders have tried practically everything to move product in a slow market: lower prices, auctions, luxurious upgrades and so on. Now they're offering cheap money. Working in tandem with lenders, two home builders are offering mortgage financing for new homes at below-market rates.
...
John Arvanitis, a Citrus Heights mortgage broker, said interest-rate buydowns are preferable to continued price reductions, which drive down market values for everyone in the community. "You don't want to perpetuate (or) assist in a market crash," said Arvanitis, president of Sunrise Vista Mortgage Co.

From the Sacramento Business Journal:

There are 9,310 bank-owned properties in Sacramento County, according to RealtyTrac Inc., and there are 8,337 more homes in pre-foreclosure, which means the owner is at least two months late making mortgage payments.

News10: Foreclosure Fears Pack Stockton Workshop (video)