"The housing optimists have systematically misjudged the market"

From the Sacramento Bee:

The carpet was filthy, and the walls needed paint. The backyard was a mass of dead grass. And that was before vandals threw a rock through a back window, climbed inside and wrecked the kitchen cabinets. That happened two days before the close of escrow. For banks, this is what making home loans has come to. Such scenes of destruction are commonplace. Lenders have dealt with the chaotic wake of an estimated 20,000 or more foreclosures in the Sacramento region over the past 18 months.
...
But there is a plus to this abundance of damage. It's proving a mini-boom for a niche sector of the construction trade known as "repo contractors."

From the Sacramento Bee:

The price of the two-story, 3,800-square-foot house for sale on Aspen Grove Lane in Elk Grove stands out even in a down market. The five-bedroom, three-bath home in a gated community is listed at $387,000 "as-is" or $437,000 with repairs. The low price – and the need for repairs – stems from the house's use as an indoor marijuana farm. Last fall, police hauled out 865 plants.

From the Sacramento Business Journal:

The economy is slowing and credit is tight. This should be prime time for Small Business Administration lending. Instead, the SBA is reporting declines in lending in the region and nationwide.
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Some banks that pushed hard in SBA locally last year have also slowed down. Bank of America made 130 loans in the district by May of federal fiscal year 2007. So far in this fiscal year, the bank’s SBA loans have declined by two-thirds, to 43 loans...Other active lenders include Capital One Bank and Washington Mutual Bank. Through May of fiscal 2007, Capital One Bank made 84 loans. This fiscal year, the bank has only made 29 loans, down 65 percent. Washington Mutual is down 68 percent over the same period last year, making 62 loans last year through May and 20 loans so far in fiscal 2008.

From the Long Beach Press-Telegram:

When she arrived in Congress last fall, Rep. Laura Richardson sought out a vehicle that would match her newfound status. She settled on a 2007 Lincoln Town Car - the choice of many representatives who lease their vehicles at taxpayers' expense. But hers was distinct: At $1,300 a month, it was the most expensive car in the House of Representives.

Richardson, a Democrat who represents Carson, has since become known for defaulting on two home loans and losing a third house in an upscale neighborhood in Sacramento at a foreclosure auction.

From BusinessWeek:

[T]he housing optimists have systematically misjudged the market. Some became convinced that the huge runup was justified by fundamentals such as population growth, rising incomes, and land scarcity. And because sharp national housing price declines are so rare in U.S. history, analysts assumed that prices would, at worst, flatten out for a few years.

What they forgot was that markets can overshoot on the downside just as easily as on the upside, with both financial and psychological forces feeding the decline. On the financial side, adjustable-rate mortgages are continuing to reset upward from their cheap introductory rates, making it more difficult for homeowners to afford their loans. What's more, each month of price declines pushes more homeowners underwater on their mortgages, making it impossible for them to refinance into more affordable loans. It doesn't help, either, that as the economy weakens, larger numbers of homeowners are finding themselves out of work.

Sacramento Real Estate Market - June 2008 Water Cooler

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Last Resort

From the Sacramento Business Journal:

Members of a Placer County country club stand to lose an estimated $11 million in initiation fees because of the club’s foreclosure. Winchester Country Club members will be allowed to play golf there for a nominal fee while the course’s fate hangs in limbo. They’re hoping a buyer will honor those memberships when the course, clubhouse and remaining land are sold by the foreclosing companies, led by Wachovia Bank. If not, they would lose $25,000 to $85,000 each, depending on when they joined and the type of membership.
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Winchester was the most expensive country club for members in the Sacramento region, said golf appraiser and consultant Ron Carciere of Auburn..."Not a lot of people around Auburn can afford a $1 million or $2 million home, so you’re relying on attracting people from L.A. or the Bay Area to relocate outside of Sacramento," he said. "It’s a market that won’t support the values they were looking to get. It struggled from the beginning."..."There are a lot of sophisticated people here who didn’t realize what we could lose," [a resident] said.

From the Modesto Bee:

The Western Hills Water District that serves the Diablo Grande resort development in western Stanislaus County has been cited by the California Department of Public Health for failure to clean up problems with the water supply in the development.
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Residents of Diablo Grande are frightened and frustrated with the problem, said Kristina Ross-Ortiz, who with her husband owns two homes in Diablo Grande, an investment property and their residence. "We have to use bottled water for drinking and cooking," she said. "There's no way around showering. We are just stuck. We are terrified of getting cancer or having children with birth defects," Ross-Ortiz said.
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Home prices at Diablo Grande have shrunk to half of what she and her husband paid, Ross-Ortiz said, making it difficult to move. "It makes you think we should just walk away. It comes down to the health of yourself and your family," she said.

From the Sacramento Bee:

It would have been easier for Rick Zibull to take it if his restaurant was closing because the competition beat him. But Z's Wine Bar and Bistro in El Dorado Hills is shutting down Saturday night for reasons beyond its owner's control: Gas at $4.50 a gallon. Soaring food costs. And that rotten housing market. "People having to make a choice: 'Do I spend a hundred bucks to put gas in my tank, or do I spend a hundred bucks on a night out?'" Zibull said. "You can guess which way that decision goes."
...
The number of customers visiting Z's to dine from a menu that includes $7 onion soup, rack of lamb for $19, and $25 for filet mignon and the trimming has fallen 50 percent from last year, Zibull said.

From Bloomberg:

Rising mortgage rates are driving up the cost of buying a house even as prices fall, making property more expensive across the U.S., according to a new study by Zillow.com, an online provider of home valuations.
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The trend holds true in California metro areas including Sacramento, San Francisco, Los Angeles, San Jose and San Diego, where mortgage payments on median priced homes range from 7 percent to 10 percent more now than in April.

From the Sacramento Bee:

Tom Kunz has been president and chief executive officer of Century 21 Real Estate LLC since June 2004.
...
Q: Year-over-year sales are up in the Sacramento area for the first time in three years. What might that signify?

A: A lot of that is because you have seen some decline in pricing. That has opened the marketplace to more buyers, both first-time buyers and move-up buyers. I think that's a good sign. I don't declare victory in any way, shape or form yet. I think we're not going to see an absolute V in the market. We're going to see somewhat of an elongated U. We're going to bounce around there for awhile.

From socialistworker.org:

It wasn't only an influx of outsiders that created the housing bubble. The root of the problem in Stockton is the same as everywhere else--people were convinced to buy homes at inflated prices, reassured by a whole cast of unscrupulous characters that everything would work out. The realtors, lenders and banks--and the corporate boards that oversaw the whole process and orchestrated massive profit margins out of it--are responsible for this debacle.
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The former escrow manager told me that when realtors or lenders were called on to explain the full implications of the contracts, they always found a way of convincing buyers that it would work out in their best interest. As she explained, "They would say, 'Interest rates are going down, the price on your home is going up, your salary is going to increase, so this will all work out. You can trust me.'"

'Change or Die'

From the SF Chronicle:

[A] subdued, and noticeably smaller, throng of West Coast building professionals gathered at Moscone Center this week for the annual Pacific Coast Builders Conference and trade show. Only 18,000 to 20,000 people are in San Francisco for the event, which just two years ago drew about 35,000.
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"We get (potential buyers) with the mind-set: I want to pay this price because I can buy a foreclosed home up the street," said Bill Misura, a sales associate with Tim Lewis Communities in Roseville (Placer County). He was among 30 attendees who paid an extra $395 for a daylong session called "Marketing boot camp for a new era: Competing for today's elusive buyers."

From the Mercury News:

Some of the week's conference sessions have titles such as "How to Sell Homes in a Down Market," "Leadership in the Face of Adversity," and "Change or Die."

From the Stockton Record:

California Building Industry Association...chief economist Alan Nevin...blamed the record number of foreclosures and short sales for depressing the market for new homes, but he also said rising high fuel prices have knocked commuters out of the inland housing market from Sacramento to Riverside/San Bernardino. "Folks are no longer willing to make that long drive, even though that house may be $100,000 less," Nevin said. "You can't justify it when the fuel (to commute) costs $1,000 a month." That will hamper recovery prospects, with future inland home construction growth being fed primarily by new jobs, he said.

From the Appeal Democrat:

In the market for a fuel-efficient car? How about a brand new Toyota Yaris with the purchase of a new home? That's the deal developers of the River's Edge community in Knight's Landing are offering potential buyers this weekend..."Our (home) prices are reduced too," said Mark Westphal, owner of Westphal Group. "We find a need and fill a need."
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River's Edge is a 67-lot community that offers three home styles of up to five bedrooms in Knights Landing. Knights Landing is a tiny farming community of 846 on Highway 113 just across the Sacramento River from Sutter County.

From the Sacramento Business Journal:

The median price of an existing, single-family home in Greater Sacramento was $233,230 in May, a 34.5 percent fall from the price in May 2007....The region's home price drop was slightly better than the statewide average, where the median home price fell 35.3 percent in May compared to the previous year, the California Association of Realtors reported...In Sacramento, sales were up 76 percent from May 2007....

From the Sacramento Bee:

Statistics show that thousands of...[pay option ARM] loans were made in the capital region. In 2005, pay option ARMs were 18.7 percent of all purchase loans and refinancings in El Dorado, Placer, Sacramento and Yolo counties, according to data from First American Core Logic, LoanPerformance. That rose to 26.7 percent of all loans in the first nine months of 2006, according to the firm.

From Rocklin & Roseville Today:

The Sacramento real estate market appears to have lost some of the steam it had developed earlier this spring. There are still buyers out there but the rush to buy a house has slowed. It is hard to tell exactly what is happening but with consumer confidence in the economy running very low and gas prices headed toward $5 per gallon it is surprising anyone is buying anything right now.

From the Sacramento Bee:

California is in a mild recession and has been since the last few months of 2007, according to the latest report from the University of the Pacific...Jeff Michael, director of the university's Business Forecasting Center, said the recession figures to be fairly long-lived but not severe...Sacramento-area unemployment will average 6.6 percent through 2010, he said.

From the CVBT:

"A housing market that has seen historic price drops and foreclosures is certainly a short-term negative economic influence and has created some undesirable social disruptions and property damage. However, the economic damage has not spread much beyond construction and finance sectors with much of the losses being felt out-of-state by those who financed high-risk California mortgages," it says. Mr. Michael believes the rapid price correction will get the real estate sector moving forward again "much more quickly than in previous downturns, and increased affordability will result in a long-run improvement in the state’s quality of life and business climate."

Sacramento Real Estate Market: First or Last to Rebound?

From InvestmentNews.com:

As economists and housing experts desperately look for signs of a bottom in the crumbling housing market, some investors are starting to make plans based on which major markets are predicted to rebound first.
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Markets that didn't see a huge run-up in home prices and a glut of new construction over the past five years, and those that are enjoying good job growth, will likely lead the rebound, said [UBS analyst] Mr. Goldberg....
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Markets that will take more than three years to rebound include Miami, Jacksonville, Orlando, Palm Beach and Tampa, Fla., Las Vegas, Phoenix, and Riverside and Sacramento, Calif., according to the report.

From the Los Angeles Daily News:

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said that...[the recovery] phase depends on whether there was a building bubble where you live. Not too much of one in the Los Angeles area but certainly in the Inland Empire and Central Valley.

"It was almost like a heart attack," he said of the market collapse. "But after the heart attack, you have a long period of convalescence." The recovery, he said, will likely show up in some areas early next year. Some building-bubble areas will have to wait until 2010.

Here's what economist Chris Thornberg is predicting for the Bay Area and Southern California:

Christopher Thornberg, principal at Los Angeles consulting firm Beacon Economics, said last week that the market isn't likely to reach bottom until at least the middle of next year. The overall Bay Area price will decline between 35 and 40 percent, about double the amount it has come down so far, he said. When you do find bottom, you will not see prices immediately start to rise again," he said. "Housing markets don't bounce, they splat." [SF Chronicle]

Economist Chris Thornberg said Southern California home prices likely will continue falling until mid-to-late 2009...Thornberg...said home prices would have to fall about 40% from peak to trough to return to the historical norm. But add in the impact of rising gasoline prices, the subprime mortgage meltdown and rising foreclosures, and it’s likely prices will fall 50% peak to trough. The S&P/Case-Shiller index shows that prices for the L.A./O.C. area are down 24% from the peak, so the region is about halfway to the bottom, Thornberg said. [OC Register]

From Portfolio.com:

There is still no joy in Mudville. To understand why the housing slump has been so deep and so prolonged, one could visit this California city, once called Mudville. A fast-growing bedroom community for San Francisco Bay area workers during the housing boom, Stockton stumbled badly when the mortgage market imploded. Prices tumbled and the number foreclosures rose. The city became a national symbol of boom and bust. 60 Minutes profiled a bus tour of repossessed homes in Stockton—what the Los Angeles Times called the "magical misery tour."

More than two years into the slump, there is no sign of a recovery. "Everybody wants to wait until the market hits the bottom, but nobody can assure them that the bottom is here yet," says Oliver Torlai, a local real estate agent in business for 40 years.

For those following the Sacramento economy, the Sacramento Regional Research Institute (SRRI) has a breakdown of the Sacramento region's employment numbers as well as some graphs. From SRRI.net [pdf]:

The six-county Sacramento Region posted negative job growth for the first time in 15 years due to slowdowns in nearly every major sector, according to May 2008 preliminary data. Despite showing some positive signs in recent months, continued losses in the housing-related sectors, rising prices, and the strain on consumer spending weakened economic conditions. The drop from stagnant to negative growth places the Region below both the statewide and national averages. The Region’s -0.7 percent growth rate translates to a loss of 6,500 jobs in the past 12 months.

Here's what SRRI predicted back in November 2007:

A first-time business forecast for Greater Sacramento predicts the region's job growth will improve slightly over the coming year, with an average growth rate of 2 percent...New research by the institute projects year-over-year employment growth rates between 1.7 percent and 2.2 percent from October 2007 to September 2008. [Sacramento Business Journal]

And here's what SRRI said in its revised forecast [pdf] from April 2008:

Job growth in the six-county Sacramento Region will slow during the next 12 months, but will not drop into negative growth. The average job growth in the coming 12 months is expected to be 0.2 percent, slightly lower than the last 12 months, which showed fairly low growth of 0.5 percent. The forecast estimates year-over-year employment growth rates between 0 and 0.6 percent during the April 2008 to March 2009 period.

From the Sacramento Business Journal:

Truxel Properties LLC, which owns the Truxel Business Center at 4090 Truxel Road in North Natomas and two residential development sites in the region, has filed for bankruptcy liquidation, listing $17 million in assets and $19.4 million in liabilities.
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The center is about 40 percent leased, said Walter Dahl, the bankruptcy attorney who filed the Chapter 7 case....The company, he said, was a victim of the depressed real estate market for both small-user office space and residential development sites.

From the Manteca Bulletin:

According to the final draft of the report that was distributed to each member of the [Manteca] Board of Education, the district lost 811 students last year. It is a number some have attributed to the housing market crash and the foreclosure crisis that left some families sleeping in their cars.

From Jim Wasserman's Home Front blog:

"Over the last six-seven months or so, we’ve been doing a lot more foreclosure evictions for banks in Sacramento County. I would say we used to do maybe one a month in my division and now we’re doing anywhere between 30 to 100 a month in our division."

From the Terk Smirk blog:

My husband was telling me that Foreclosure Rage was becoming common. One house had poo smeared on one bedroom wall. How should I feel about people who intentionally vandalized their home just before moving out? On one hand I do feel sorry that they lost their home. On the other hand, I know that many people who got loans in the past 3-4 years should have never been given a loan for a home they really couldn't afford. Either the lender didn't care or the borrower lied on his/her loan application. It sucks all around.

From MSNBC:

Some houses have been damaged by angry, frustrated homeowners who lose their homes to foreclosure, according to Mark in Stockton, Calif., where the foreclosure rate is among the highest in the country. "This city has so many foreclosed homes that are trashed there is an ad on local TV offering up to $1,000 to people not to trash their home before they are kicked out of it,” he wrote. “The problem here is grave.”

Sacramento Job Growth Goes Negative, First Time Since 90s

Another milestone in the Sacramento housing bubble saga. From the Sacramento Business Journal:

Greater Sacramento saw total industry employment fall by 3,700 jobs from May 2007 to May 2008, helping to push unemployment in the region to an estimated 6.4 percent, the state Employment Development Department reported Friday. It was the first year-over-year decline in that statistic since 1993.

From the Sacramento Bee:

Sacramento unemployment is the highest since early 1997.

From the New York Times:

Banks that issue cards like Visa and MasterCard, as well as the American Express Company, are cutting the limits for customers who have run up big debts, live in areas that have been hit hard by the housing crisis or work for themselves in troubled industries.
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Pamela Pfitzer, a family therapist with a stable six-figure income, was stunned when she went to a garden center near her home outside Sacramento in early April and tried buying about $30 worth of flowers with her American Express card. Her transaction was denied, she says, even though she had just made a $1,000 payment and almost never missed one in her life.

It turned out that shortly after falling behind on a mortgage payment and being hit with a tax lien, American Express had lowered her credit limit to $900 from $2,300. The flowers pushed her over the new cap. Then last month it happened again, she says, when she tried to buy office furniture with her Wells Fargo Visa card. Although she had just made a payment of about $700, Ms. Pfitzer found out that her credit limit had been lowered to $2,000 from $2,800.

From the Modesto Bee:

Another Modesto title insurance office is closing, continuing the escrow industry's exodus from Stanislaus County. The North American Title Co. will shut its last Modesto office July 18. It previously had closed its Turlock office. Two weeks ago, Fidelity National Title Insurance closed its Modesto office, laying off some employees and merging the rest with a pared-down staff from Chicago Title.
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"What we're seeing is a huge consolidation in the industry," said David Bakken, president of the San Joaquin Valley Escrow Association. "There's probably only 25 percent (of escrow officers) left."
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"It's a very scary time for all of us, and it's not over yet,"...Debbi Zimmerman, a 23-year industry veteran...warned.

From the Sacramento Bee (hat tip DJ):

A U.S. Justice Department crackdown on mortgage fraud that helped seed the nation's housing downturn has netted 400 industry players since March, including five from Sacramento, officials announced Thursday.

'Still Foreclosing On More Than We're Selling'

From the Sacramento Bee:

Since January, banks in the region have foreclosed on 10,224 homes, according to the Web site Foreclosures.com, based in Fair Oaks. At the same time only about half the number – 5,448 – of repossessed homes were sold, DataQuick reported. "The sales numbers are great, and if we can keep on that track we could have just a slight decline in value," said Scott Thompson, a partner in Mortgage Resolution Services in Carmichael. "But we're still foreclosing on more than we're selling, and that's the troubling part."
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Absentee owners, typically investors seeking rental properties, accounted for an estimated 19 percent of all sales. At one point near the peak of the boom, investor share reached almost 27 percent.

Stats by county
Stats by zip [xls] via Home Front

From the Sacramento Bee:

...Mark Zandi, chief economist of the financial research firm Moody's Economy.com, says the massive inventory of repossessed homes flooding the real estate market and pushing down home prices won't even peak before the end of 2009.
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Q: The end of 2009? Will it really take that long for bank-owned inventory to peak?

A: Given the continuing surge in foreclosure starts, and the fact that the average amount of time a loan remains in the foreclosure process is about a year – and then that it takes about six months to be sold – that would strongly argue it will not be before the end of 2009 that the inventory of (bank-owned houses) peaks.

From the Modesto Bee:

While low-priced existing homes are selling well, new houses are hardly selling at all. Only 68 new homes sold during May throughout Stanislaus County, which was a drop of nearly 45 percent compared with 2007. Melo said his agents handle sales in Atwater's Meadow View subdivision, which hasn't sold a single home in 45 days. It has 17 finished houses sitting empty. "It's hard for the new home builders to compete with the prices on all those bank-owned houses," Melo said.

DataQuick: Sacramento Home Prices Plunge Nearly 35% YoY

Another record price drop. From the Sacramento Bee:

Sacramento County...showed a 30.8 percent gain in sales over the same time last year...But those gains cost sellers dearly. Sacramento County's median sales price of $225,000 is almost 35 percent less than the same time last year. The median sales price - where half cost more and half cost less - hasn't been so low since January 2003.

Statistics by county via Home Front

From News10:

Chuck and Donna Rhodes recently bought a home in the Plumas Lake area of Yuba County, 25 miles from Donna's job and 35 miles from Chuck's. At the end of a recent work day, the two were working at home on what to do about the sagging price of their house. "The retirement is what bothers us because this is where the bulk of our money is and we can't retire unless we can sell it for at least what it was paid for and hopefully a little bit of appreciation on top of that," said Donna Rhodes.

From the Appeal Democrat:

Despite a loss of 60 positions, Yuba County's 2008-09 interim budget will grow slightly to fund millions of dollars worth of projects, including road improvements and the general plan update. The Health and Human Services Department and the Community Development and Services Agency will feel the greatest hit, losing a combined 59 positions, seven from layoffs.
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Yuba County's major blow in revenue came with the downturn in the housing market. The county estimates it will lose between 3 and 6 percent of tax revenue in the next fiscal year.

From USA Today:

Borrowers are turning back to [credit] cards because "the spigot has been turned off on home equity lending," says Mark Lauritano of Global Insight, a research firm. In a recent USA TODAY/Gallup Poll, one in five consumers said they'd been using their credit cards more in the past year. Within this group, 44% are paying for necessities they couldn't otherwise afford.
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"A lot of the clients we have work in the construction field, and there's not a lot of construction going on," says Diana Navarro, a housing counselor in Sacramento. "They've been using their credit cards for (everyday) expenses."

Stockton Realtor: 90% of Sales are Foreclosures and Short Sales

From Lyon Real Estate (via Home Front):

Our [4-county] average price has dropped to 297,000 down from a high of 472,000 in June of 2006. Inventory is now 16% lower than the same period last year but this does not mean we are at the bottom yet. There has been a continued increase in ‘notice of default’ being filed and those homes will be coming on the market in the next 60 days. In addition to that, REO (bank owned) accounts for 58% of all Pended and Sold transactions.
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[E]ven though sales are brisk and better than last year we are still seeing price per foot of the sold properties continue to drop. REO inventory is expected to increase through the summer and if interest rates start to rise we will see greater pressure on home values to decline.

Unlike 2006 and 2007, there was no spring bounce in Sacramento home prices this year.



From the Stockton Record:

The momentum in existing-home sales in San Joaquin County has continued to build, with May sales reaching the highest monthly level since August 2005 as more buyers snapped up primarily foreclosure properties...The median selling price also continued to slip, sliding from $240,000 in April to $237,000 last month throughout the county, the report said. That's the lowest median price seen in the county since February 2003.
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In a traditional sales market, a cross section of houses sell,...Art Godi of Art Godi Realtors...said. Currently, about 90 percent of sales are foreclosures and short sales, and almost all are under $250,000, he said, "and that's the bottom of the market."

From the Sacramento Bee:

Developer Allen Wayne Warren once planned to build hundreds of new housing units on and around Del Paso Boulevard, the North Sacramento main street the city has worked for years to revitalize. But the falling real estate market caused Warren to scale back his dreams. Now, he's negotiating to sell three mostly vacant properties on the boulevard to the Sacramento Housing and Redevelopment Agency.
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If Warren accepts $1.4 million for the mostly vacant properties, he will be taking a substantial loss. According to property records, he paid about $2.5 million for the properties in 2005 and 2006.

From the CVBT:

For home sellers who are desperately devout or devoutly desperate, Modesto mortgage banker Philip Cates has something he’d like them to bury. Mr. Cates sells plastic statues of the Roman Catholic Saint Joseph. Home sellers desperate for any kind of nibble from a buyer are supposed to bury the statues near the “for sale” sign in the front yard, head down, “feet toward heaven,” he says.
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Mr. Cates, who operates out of a modest suite of offices in a downtown Modesto building that house his Service 1st Lending office, says business, at least the statue selling business, is booming...Mr. Cates says he is now “the largest seller of St. Joseph statues in the country.”...“It’s kind of my hedge bet for the mortgage industry, I would say,” he says.

From the LA Times:

Home-mortgage specialists may have been the first lenders to suffer for their roles in financing the housing bubble. But, as foreclosures rise and home prices fall, many smaller banks and thrifts that backed residential developers and home builders are watching black ink turn red and are spending uncomfortable amounts of time with regulators.
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Residential construction loans, which generate big fees, were especially profitable for smaller banks -- until housing collapsed in places like the Inland Empire, where prices are down more than 30% from their highs, and the Central Valley, where some former boom markets are off more than 40%.
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According to data tracker Foresight Analytics of Oakland, 15.8% of single-family home construction loans were at least 30 days delinquent in Riverside and San Bernardino counties last quarter, up from just 1.7% a year earlier. The delinquency rate was 14.7% in Los Angeles County, 14.9% in Orange County and 15.4% in Ventura County. It was 30.4% in Merced County, near Sacramento.

From the Modesto Bee:

The Modesto Bee is cutting 15 jobs, or 4 percent of its work force...and The Fresno Bee, 44 people, or 7 percent of its staff.

From the Star-Ledger:

The second quarter of the year fared no better than the first, as the nation's commercial real estate market continued its downward trend, according to the latest PricewaterhouseCoopers Korpacz Real Estate Investor Survey...Transactions involving significant office, apartment and retail properties plunged at least 79 percent in April compared with a year earlier, the report states, while industrial sales fell the least, 67 percent.
...
According to the survey, the office market in cities including San Francisco, Philadelphia and Fort Lauderdale, Fla., are in contraction. Other Florida cities, including Miami, Tampa and Jacksonville, are also declining, as are San Diego and Sacramento, Calif.

In Come the Waves: Sacramento Bee to Cut Workforce by 8.1%

From the Sacramento Bee:

The McClatchy Co., battered by declining profits and revenue, announced a 10 percent companywide cut in its work force Monday, including the Sacramento publisher's first-ever across-the-board layoffs. The decision will eliminate 1,400 jobs through a combination of layoffs, voluntary departures and attrition. The Bee, McClatchy's largest paper, announced it will eliminate 86 jobs, 46 by layoffs. The reduction will trim the paper's workforce by 8.1 percent...McClatchy is the largest public company in Sacramento and the third-largest newspaper chain in the country.
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The economic downturn has been another big blow to publishers, particularly McClatchy. The company gets a third of its revenue from California and Florida, two of the states hit hardest by the crash in the housing market. For instance, The Bee's revenue fell 16.9 percent last year, or about twice as much as the company as a whole, according to Securities and Exchange Commission filings.

From the Sacramento Bee:

On the street level in Sacramento, where unemployment is 6.1 percent, it feels as though hard times are already here. "My sense is that we're in really big trouble," said Alice Strombom, a Sacramento attorney who was pumping gas at $4.64 a gallon the other day at a 76 station on Freeport Boulevard. "I don't have that normal sense that everything's going to be fine." She recently traded her Audi for a Toyota Corolla with much better gas mileage.
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Two Sacramento dealerships have announced shutdowns in recent months, Paul Blanco Chevrolet and Great Valley Chrysler-Jeep-Mazda-Isuzu. Senator Ford stopped selling new cars.

The slowdown has affected general retailers. Arden Fair's traffic counts are lower than a year ago, while sales volumes are flat. Clothing stores seem to be getting hit hardest, said property manager Tod Strain. "We are feeling it, no doubt about it," Strain said.

From the Appeal Democrat:

Every day Steve Nickless and his crew load up a trailer with mowers and weed trimmers and get to work on lawns. The homes they visit, though, are unoccupied. Nickless, as an employee of BV Home Services, is hired to maintain hundreds of abandoned and foreclosed homes in the Central Valley.
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The hundreds of vacant properties and the lack of upkeep on those homes caused Yuba County to address the issue through code enforcement...Finding responsible parties, though, may not be easy. "It's going to be difficult," Strang said. "This is a new type of violation we haven't seen before. We've had vacant homes before but not to this level."

Bail Now or Later?

From the Sacramento Business Journal:

With most of the country still reeling from the subprime mortgage meltdown, Mark Hanson is warning of the next looming blow. Hanson, a bank consultant and former mortgage broker from the Bay Area who writes a blog under the name "Mr. Mortgage," is among a handful of industry soothsayers who expect another big wave of foreclosures to hit sometime around 2010, driven by defaults among people holding less risky loans known as "alternative-A."..."I think we are through the subprime blowup, but that's nothing compared to what's coming," said Hanson, who made similar predictions on CNN in April.
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Others in the industry say such predictions amount to Chicken Little panic. "I hear that, too -- that there's another subset of groups that haven't come due yet," said Jeff Tarbell, broker of record for Sacramento's Comstock Mortgage. But Tarbell said he's not concerned about a second foreclosure tsunami because borrowers who owe more than their homes are worth aren't waiting for their mortgage rates to reset. Those inclined to bail are already doing so, he said.
...
Tarbell, who hosts the weekly "Talking Money with Jeff Tarbell" on KHTK-AM 1140, said upside-down borrowers looking at the prospect of an interest rate reset in a couple of years called his show frequently early this year, and seemed unlikely to sit tight until their loans reset. "It's like I'm Dr. Phil," he said. "I'm doing grief counseling. They have realized they are in a negative equity situation and they're not going to sit around and wait. How many people are going to be willing to double their monthly payment when they're upside-down on the house?"

From the Sacramento Business Journal:

In the good old days of a few years ago, opening an escrow on a house meant the sale was practically a done deal. Today, it's a toss-up whether a deal will make it to closing or fall apart before the sale is completed. Title companies say they are working hard to keep their escrow-closing rates above 50 percent in the face of declining home prices and tighter lending criteria..."I would say 70 percent would be normal...said Casey Sheehan, senior vice president of Old Republic Title Co. in Folsom. The past year has not been normal. "Just generally speaking in our industry, I think title companies are struggling to close 50 percent of what they open," Sheehan said.
...
The near future isn't looking much better. "The perception was that 2007 would be the worst, and in 2008 we'd start to see a turnaround. And we didn't," said Lenora Shealy, vice president and escrow administrator for Fidelity National Title Insurance Co. in Rancho Cordova.

From the Sacramento Business Journal:

Standard Pacific sold all of its inventory in the Sacramento region during a recent sales push and has about 200 lots left that are ready to build. It has no immediate plans for new lots once that inventory is sold, but the company, backed with the fresh cash, is looking. Deals are unlikely to happen until new-home prices start rising again or the price for lots falls far enough to make a profit. "I don't see it happening this year or next year," Nicholson said. 'We're going to continue to be in survival mode."

From the Sacramento Business Journal:

Aarrow Advertising, founded by two San Diego teenagers in 2002, specializes in "human directionals" -- people skilled at an aerobic form of sign spinning. Armed with iPods and energy, Aarrow employees were a regular sight on the streets near subdivisions, twirling, tossing and waving oversized arrows to attract visitors.
...
Aarrow general manager Ly Hai, 25, estimated that during the peak market, homebuilders made up about 75 percent of the company's clientele...[H]omebuilders have dropped to about half of Aarrow's business in Sacramento and other cities that have been hit harder by the downturn, Hy said. "As the recession came, the home developers are the ones that could no longer afford to keep a regular human directional out every weekend," Hy said.
...
Aarrow has picked up work in the past year from apartment complexes and retail businesses, from chiropractic stores to Round Table Pizza.

From the Sacramento Bee:

The Kings are more than just a sports team to Sacramento. They are like a mirror for the region. When the Kings arrived in Sacramento in 1985, an emerging city embraced the club with the innocent enthusiasm of new homeowners. When the Kings ascended to prominence in 2002, the local economy and housing markets were booming – and Sacramentans gladly dropped bundles on soaring ticket prices.

When the team tumbled a few years back, it was like the housing market meltdown: The prices at Arco Arena were not equal to the value of the product, so the old barn grew barren, like someone had foreclosed on the empty seats.

Still Foreclosure Central Valley

From the CVBT:

With one in every 75 Stockton area households receiving a foreclosure filing in May -- more than six times the national average – the Central Valley city leads the nation in foreclosures. For the second month in a row, California and Florida cities accounted for nine out of the top 10 metropolitan foreclosure rates among the 230 metropolitan areas tracked in the report. Seven California cities were in the top 10, led by Stockton in the top spot. Other California cities in the top 10 were Merced at No. 3, Modesto at No. 4, Riverside-San Bernardino at No. 5, Vallejo-Fairfield at No. 7, Bakersfield at No. 8, and Sacramento at No. 9.

From the Sacramento Bee:

Sales prices for existing homes are down 40 percent from their 2005 highs in Sacramento County, and similarly down 36 percent in Yolo County, 31 percent in Placer County and 25 percent in El Dorado County.

The dollar volume of homeequity loans, too, has fallen. In 2007, homeowners in the four counties borrowed $2.1 billion less than they did in 2006, according to DataQuick Information Systems. During the housing boom's peak – 2002 through 2005 – consumers in those counties collectively tapped almost $22 billion in home equity. Sometimes even those who want to spend are finding their credit lines rescinded by lenders because of falling values, says Baker of D & J Kitchens and Baths.

From the Modesto Bee:

A combination of slow sales and a desire to do something different has led Gary Robinson to close his 33-year-old business, The Yard Lumber & Fence Supply in Modesto..."The timing just kind of fits," said Robinson, who explained that though the business is viable, he didn't want to keep it going during an economic downturn, waiting for sales to improve.
...
The Yard has about 20 employees, down from about 70 a year and a half ago, when Robinson said he consciously chose to scale back the business.

From the Lodi News-Sentinel:

Roughly 50,000 homeowners throughout San Joaquin County — one third of the total — will receive notices next month showing what they likely already know: That their home values are in a free fall. Ken Blakemore, the county's assistant assessor, said the notices should arrive July 10. They're the largest number to show declining values in a generation, if not ever, the longtime county official said.

Finally: Analyst Predicts 50%+ Decline For Sacramento Housing

From CNNMoney (hat tip Average Buyer):

With home prices plunging by more than 30% in some markets, bargain-hunters are ready to pounce. But it may pay for buyers to wait. Many housing experts say that the worst-hit metro areas have even farther to fall, and could see total drops of as much as 50%.
...
Many erstwhile bubble cities have sustained particularly brutal hits. The median-price of a home in Sacramento, Calif. was down 35% during the three months ended May 31 compared to the same period last year, according to the real estate web site Trulia.com...Smaller cities in California's Central Valley, such as Stockton (-39%), Modesto (-37%) and Bakersfield (-29%), also recorded steep declines.
...
"The housing boom was unprecedented in U.S. history," said Michael Youngblood, a portfolio analyst with FBR Investment Management, "and the correction will be as well."...Youngblood expects that these markets will likely endure total price drops of 50% or more.

Currently, several Sacramento home price measures have crossed the 40% off peak threshold. Compare that with some other famous housing busts:

[P]rices are falling faster and further than in any other post-war housing bust. [Prices are also falling faster than during the Great Depression.] During the bust in Austin, Tex., which started in 1986 and is one of the worst on record, prices fell 25%, according to Local Market Monitor, a financial data provider. And that cycle took four years to bottom out. In other major downturns, prices in Los Angeles fell by 21% during a six-year period in the 1990s, and Honolulu home prices saw a decline of 16% in the five years starting in 1994.

Given the lack of American precedent, it might be a good time to brush up on the history of the housing bubble in Japan (where home prices in the largest six cities fell by 64% over a 13-year period and Tokyo fell by more than 80%).

From Bloomberg:

Almost $70 million of tax-exempt bonds were sold in June 2007 to build roads and sewers for thousands of new homes planned for Elk Grove, California, once the fastest growing city in the U.S. A year later, the lots are largely vacant and the bonds lost 41 percent of their value.

The debt plummeted as construction all but ceased after the biggest developer on the Laguna Ridge project fell behind on the property taxes used to pay interest. Scattered homes sit among tracts overgrown with weeds as housing sales wilt. "It's stopped completely,'' said Onkar Singh, 76, who lives in an adjacent development in the 129,000-person town outside Sacramento. "Everything's vacant."

From the Appeal Democrat:

Nearly 50 employees at the Kbi Norcal Truss plant in Olivehurst will be without jobs next month, victims of the slumping housing market. Mark Kailor, vice president and treasurer of San Francisco-based Building Materials Holding Corp., which owns the Olivehurst plant, said the decision to close the plant was made because of market conditions.
...
"What we have in terms of manufacturing is based on the housing industry; hopefully they will come back when the market turns," [John] Fleming [Yuba County's economic development coordinator] said.

From the Modesto Bee:

Finally there's some good news on the foreclosure front: Northern San Joaquin Valley mortgage default rates seem to be stabilizing. After nearly two years of staggering increases, the number of homes issued notices of default, the first step toward foreclosure, was lower in May than in April or March.
...
"The region definitely is stabilizing. It's stabilizing at a pretty high level, however," said Sean O'Toole, who founded and runs ForeclosureRadar...."The banks still are taking back more inventory than they're able to resell," O'Toole said...He said the three counties were among the first in California to enter the foreclosure crisis. "Now I think you're leading the way out."

From the National Review:

Until this week, that predatory-lending narrative dominated the housing conversation. But in the past few days, three poster children for irresponsible lending and borrowing have taken center stage in the debate over the housing bailout...The first is Rep. Laura Richardson, a California Democrat...The second poster child is Michelle Augustine, another Sacramento homeowner (what’s going on down there?) who was featured Wednesday in a Wall Street Journal article about a phenomenon called "buy and bail."
...
Nowhere in the Journal story does Augustine claim to be a victim of predatory lending. She presumably understood the terms of her mortgage, and she knew her payments would go up. Like many Americans, she probably just assumed that house prices would continue to rise and that she could refinance into a more affordable mortgage once that happened.

Assuming Augustine’s lender had accurate information about her income, it made the same mistaken assumptions about house prices and her ability to pay that she did. Congress wants us to bail these people out. Instead, they deserve each other — and whatever consequences befall them.

More discussion of the legality of "buy and bail" over at the Volokh Conspiracy blog.

"Buy and Bail"

From the Wall Street Journal:

Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby. "I can find the same exact house as what I live in right now for half the price," says Ms. Augustine, 44 years old, who runs a child-care service out of her home. She says she soon will be unable to afford her monthly payments, which will jump to $4,000 from $3,300 in August, and she doesn't want to continue to own a home that is now worth $200,000 less than what she paid for it two years ago.

In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the "buy and bail," in which borrowers with good credit buy a new home -- often at a much lower price -- then bail out of the "upside down" mortgage on their first home.
...
Ms. Augustine, the Sacramento day-care provider, became a first-time homeowner in November 2006 by taking out two loans with nothing down to cover the $426,000 home purchase. With her home valued at about $220,000 now, she is actively looking in nearby communities for another one to buy before the bank forecloses on her current home.

From the Wall Street Journal:

The Sacramento Association of Realtors says that a whopping 65.5% of 1,654 homes sold by Realtors in May were bank-owned, foreclosed, homes. The median sales price in Sacramento County and the City of West Sacramento May was $230,250, down 34.2% from a year ago.
...
Sacramento may be leading the nation in the sheer percentage of lender sales, which are known in the business as “real estate owned,’’ or REOs.

From the Sacramento Union:

The truth is that...Congresswoman [Laura Richardson] is a failed speculator. She flipped houses as the housing bubble was popping and her bets have come due. Now she wants some sympathy and, yes, a bailout. If Congress and the White House decide to rescue defaulters like Richardson, it will be a “life-changing moment” for the nation. We will have rewarded those who carelessly leveraged themselves during the housing bubble at the expense of those who prudently avoided mortgages they could not afford.

"New But Blighted Fields of Dreams"

From the Modesto Bee:

The signs are painted over. The models are empty. All building has stopped at the three Falling Leaf subdivisions in Modesto's Village I. With less than half of the planned 314 homes complete, developer William Lyon Homes has quit construction. Empty lots growing weeds remain. Falling Leaf apparently is the latest victim of the housing market downturn plaguing the Northern San Joaquin Valley.
...
Falling Leaf repeatedly cut prices. Example: Its smallest house, a 1,620-square-foot plan, was priced at $379,000 in August 2006, then dropped to $329,990 by February 2007 and dropped again to $269,900 in April 2007. By last month, the development drastically sliced prices on its remaining inventory to about $100 per square foot.

From the Modesto Bee:

Modesto home builder Harinder Singh Toor hadn't planned on being a landlord, but he's become one because he hasn't been able to sell what he's built. Now he rents out eight custom homes, some as large as 5,400 square feet. "I built this house to sell, but I haven't gotten a single bite on it in a year," Toor said about the empty five-bedroom, four-bath house on North Canyon Drive. He had hoped to sell it for $1.2 million, but he'll settle for $3,000 a month in rent, even though that will cover only about half of his carrying costs.

From the McCook Daily Gazette:

The sign proclaimed "House for Sale (bank owned)." The construction looked recent and maybe a little ticky tacky but the place was obviously abandoned, with lawn, landscaping shrubs and trees dying from drought. A house, or three, down the block was not even completed but abandoned mid-construction. The current housing financial crisis is vividly on display in and around Merced, California. It was enlightening to drive through the new but blighted fields of dreams in the town that used to be our home some 35 years ago.
...
I asked my host, Jim Glidden, what happened to the people that purchased and then abandoned all the new housing...The speculators from San Jose and other affluent areas simply abandoned their investments. The poor souls who purchased a home to live in are emotionally as well as financially strapped and either leave to rent if their job is still available or just hang on by the skin of their teeth.

From the LA Times:

[Sean] O'Toole, 40, founded the website ForeclosureRadar.com last year. The site, he said, lists every default, auction and foreclosure in California...Rather than join the rush of those mining for gold in distressed real estate, O'Toole has set himself up as Levi Strauss once did. Instead of selling jeans to prospectors, though, he is selling foreclosure data to would-be buyers.
...
[In 2002] rather than compete with thousands of speculators flipping new homes, he scoured property records to find distressed houses. Over the next few years he bought and sold 152 such properties...He's stopped buying foreclosed houses because his time and money are tied up in the website, O'Toole said. But he also said he "doesn't want to catch a falling knife" as house prices plummet. Although the foreclosure explosion is fueling his business, foreclosure sales have turned into a speculator's market, O'Toole said.

From the Daily Democrat:

Yolo County officials released their 2008-09 recommended budget Friday, which included layoffs, hiring freezes and other hard-line cost-saving elements to keep even during the lean years predicted to come. "This is probably the most difficult budget for Yolo County in more than a decade," County Administrator Sharon Jensen stated in her budget letter to the Board of Supervisors. "The economy in California is still reeling from the massive shockwaves of the sub-prime mortgage crisis and its effects on housing values, the bond market and the consumer economy." As a result, the report stated the county will have to use $8.3 million of its reserve funds to keep afloat, leaving only $8 million left for a rainy day. In addition, the county's recommended budget proposed the elimination of 118 positions or six percent of the county's total workforce.

From the Sacramento Bee:

The collapsing housing market is squeezing all local governments, but Sacramento County is feeling a special pinch. Today, county supervisors will begin deliberating on a budget that could affect almost every resident in this county. Supervisors face a $123.7 million shortfall, and so they are considering cuts to medical clinics, senior centers, youth programs (to keep kids out of gangs), domestic violence counseling, probation services and many other programs.

From News10:

Cali Krystal of Sacramento said she came to EDD to discuss her efforts to seek work...The former state office technician moved from Santa Barbara to Sacramento in December. "The cost of living was really high in Santa Barbara," said Krystal. "I thought I'd relocate back to Sacramento where a lot of state jobs are here." But her job search has fallen victim to California's tough economic times. "I've been looking for work with the state since January," she explained. "Before they did the state budget cuts, I was being called for interviews back to back. Then once the [budget reduction] bill got signed, it all just stopped."

From the Modesto Bee:

United Way of Stanislaus County warned its partner agencies that a downturn in charitable donations will result in funding delays of up to six months. Overall giving, said Tom Ciccarelli, United Way president and chief executive officer, is down about 9 percent.
...
"I've been a CEO for a long time," Ciccarelli said, "and I've never seen an economy like this. What scares me is (the) 'perfect storm' of factors." With food and gas prices climbing, and the bottom falling out of the housing market, Ciccarelli said, more people are worried about hanging on to their jobs and paying their bills.
...
At the same time, Ciccarelli said, more people are turning to United Way and its partner agencies for help. "In this economy," he said, "we're seeing, and will continue to see, an increased demand for services. "All my life, I've pretty much been a 'half-full glass' kind of guy. But this is different. We really need to get out front and plan to weather this perfect storm."

From the Chico ER:

A government agency that tracks the price of housing and has flagged Butte County repeatedly for high appreciation again indicates falling prices in this market. The Office of Federal Housing Enterprise Oversight listed declines in Butte County house prices for the first quarter of 2008 in a study released last week...The service showed that comparing the first quarters of 2007 and 2008, Butte County's housing prices were down a little more than 7 percent this year...Long-time appraiser Tom Fiscus of Chico has confirmed that his business is down. "I've seen this (slump) three or four times, but never this bad. I've seen the requests (for appraisals) dwindle."

From Bloomberg:

The California Public Employees' Retirement System, the largest U.S. public pension fund, may sell part of its $2 billion in residential land holdings after the investments lost 31 percent last year amid falling home prices and forecasts of further declines. Sacramento-based Calpers hired Morgan Stanley to review seven land deals it made with joint-venture partners and real-estate advisers, said fund spokeswoman Pat Macht.
...
U.S. home prices will fall another 10 percent through the end of next year, with even steeper declines expected in "bubble areas'' in parts of California, Nevada and Arizona where there's already an "overhang of supply,'' Michelle Meyer, economist for Lehman Brothers Holding Inc. in New York, said in an interview.

From the Daily Breeze:

The real estate broker who bought Rep. Laura Richardson's house at a foreclosure sale last month is accusing her of receiving preferential treatment because her lender has issued a notice to rescind the sale. James York, owner of Red Rock Mortgage, said he would file a lawsuit against Richardson and her lender, Washington Mutual, by the end of the week, and has every intention of keeping the house. "I'm just amazed they've done this," York said. "They never would have done this for anybody else."

From The Hill:

The Congressional watchdog group Citizens for Responsibility and Ethics in Washington (CREW) on Tuesday fired a shot at Rep. Laura Richardson (D-Calif.), describing her financial problems as “appalling” and calling her a “deadbeat congresswoman.”...“Rep. Laura Richardson’s appalling financial dealings raise serious questions about her ethics,” Sloan said in a statement. “What kind of responsible adult — much less elected public official — only pays her bills when she’s called out by journalists?

From KCRA:

'There's Work Out There, But It Pays Less'

From the Modesto Bee:

This time last year, Ernesto Dias, 31, of Modesto was framing houses in Merced. By autumn, he and his co-workers realized that work was slowing and it wasn't just a seasonal shift. "The supervisors weren't talking about the next job because there wasn't a next job," Dias said.

He hasn't swung a hammer in eight months. After being out of work for two months, he started looking for nonconstruction work. A friend helped him get a part-time job washing dishes at night. His family was barely making it on his minimum-wage salary, so he took a second part-time job with a landscaping company. "I still don't make as much as I did in construction," Dias said. "My friends are going through the same thing. There's work out there, but it pays less, so you have to work more."

Farm labor contractor Jose Flores of Salida can attest to that. He supplies workers to many Central Valley farmers. "Most of them started working in the agricultural fields. They stayed (in the United States) and went for better-paying jobs. Now, they're coming back to their roots," he said. A few years ago, farmers watched their pears and apricots shrivel and drop from the trees because growers couldn't find enough workers to harvest their crops. "This year, we have plenty of labor. I wish I could hire more so they could have a job," Flores said.

The Wrong Stuff

From the Sacramento Bee:

Pressured by a faltering economy and often burdened by loans they took out during the housing boom, more Sacramento-area homeowners are looking to reverse mortgages for an escape route. But many are finding the road blocked by the falling values of their homes. "A lot of them aren't qualifying now. With the falling values they don't have as much equity," said Sylvia Williams, a Elk Grove loan specialist with San Rafael-based Sequoia Reverse Mortgage.

From Home Front:

[A] lawsuit [was] f[i]led in Sacramento County Superior Court by the Park River Oak Estates Homeowners Association in Sacramento against Chuck and Victoria Scott Yeager. The lawsuits alleges that the Yeagers owe the association $12,000 in overdue assessments and fees. Yeager was...the first pilot to break the sound barrier in 1947 at Edwards Air Force Base.

'It's Kind of Like Bleeding to Death'

From Bloomberg:

Home prices fell in 23 U.S. metropolitan areas in March, led by Sacramento and San Diego, as rising foreclosures prolonged the housing recession. The price per square foot in Sacramento, California's capital, dropped 31 percent to $160 from a year earlier, according to a report released today by New York-based Radar Logic Inc., a real estate data company.

From Housing Wire:

Most key markets in California saw motivated sales comprise a growing portion of transaction volume, as well. In Oakland, distressed sales were 35 percent of the housing market in March, RadarLogic said; in Sacramento, that number soared to nearly 50 percent.

From the Sacramento Bee:

At the current sales pace, real estate experts say, it will take 13 years to develop and sell all the new homes planned in Yuba County and its neighbor, Sutter County. "That is horrifying. That's like seeing a mouse under the table," says Dean Wehrli, a Sacramento-based home-building industry consultant, addressing a home-builders meeting last week. "My take is that marketplace is going to be hurting for a while."

From the LA Times:

It wasn't long ago that Andy Krotik was selling houses to out-of-town investors who would sometimes buy two at a time. Now, Krotik spends his days warily entering abandoned houses, checking for angry holdouts or startled squatters. He wants to make sure the properties are empty and secure so he can sell them for the banks that have repossessed them. "We're experiencing a tsunami of bank-owned properties," said Krotik, who has been selling real estate in this Central Valley town since 1989.

Few places in California flew as high in the real estate boom and crashed as hard as Merced.

From the Associated Press:

Robert Lindsey was not surprised by new data last week that showed new home sales have fallen more than 40 percent from their peak almost three years ago. He can tell from his company's bank account. "We're literally losing money every month," said Lindsey, general manager of Signature Drywall Inc., in Sacramento, which installs drywall in new homes and apartments in the Sacramento and San Francisco areas. In 2005, the firm raked in some $30 million in sales. Last year, sales were less than half that, and this year Lindsey hopes he can make $8 million. "It's kind of like bleeding to death," he said.
...
In California alone, subcontractors have laid off, on average, up to 80 percent of their staff, according to the California Professional Association of Specialty Contractors in Sacramento, which mostly represents firms engaged in new home construction projects...Head hunters say workers have fled California for Utah, Texas and other states where there's a better chance to get work in homebuilding.

From the Sacramento Bee:

Democrat Vicki Cabrera, 47, of Sacramento, who also plans to vote, directly feels the effects of a lagging economy. She lost her job as an administrative assistant for a real estate firm due to the weak Sacramento housing market. "I've never in my life gone without a job. Never," said Cabrera, who had to let go three of her family's five prized Sacramento Kings season tickets and is contemplating selling her sports memorabilia collection.

From the Modesto Bee:

Katina Hearn has been a waitress for almost 20 years, the past two at Skewers Kabob House in Modesto. She's seeing the same trend now that servers experienced during the recession of the early 2000s: people are eating less-expensive dishes and leaving smaller tips. "It really does affect us," Hearn said about the economic downturn. Servers must claim 8 percent in tips for their taxes at the end of each night. But on some nights, that isn't balancing out because people may tip only 5 percent, Hearn said.

From the Sacramento Bee:

Private schools are also seeing some changes with the downturn in the economy. Several in the Sacramento region reported a slight drop in the number of applicants for next year and a small increase in the number of requests for financial aid. "We know that some of our parents who are in development or home construction or sales, we know they've experienced significant downturns in their income," said Stephen Repsher, headmaster of Sacramento Country Day School, where tuition is around $16,000 a year.

From the Lodi News:

Two weeks after Galt City Council members urged the public to help keep up abandoned homes, one of them has been fined $100 for doing just that. Barbara Payne received a citation from the city's Public Works department last week for watering the lawn of an abandoned home next door — a violation of the city's code.