Tuesday, January 13, 2009

'Nothing Left To Trim'

From the Sacramento Business Journal:

Angel Ahumada, founder of recruiting firm Integrity International Partners of Rancho Cordova that recruits professionals for the building industry, said homebuilding companies have pared down staffs and combined offices as much as possible. “I think that 2009 will be a survival year for everyone in the housing market,” he said. “Layoffs are finished and office consolidations are over with — there is nothing left to trim. I heard from one of my senior executive contacts that he sees ‘large storm clouds ahead’ for them.”
[Gregory Group's Greg] Paquin admitted he hasn’t been able to accurately call the bottom of the housing market, as housing sales appeared to bottom out at various points during the past two years. “I was joking with some people this morning that it was probably the lowest since there’s been a capital in Sacramento,” he said of the fourth-quarter figures. “That’s probably not true, but the reality is no one’s buying.”
From the Sacramento Bee:
GreenFiber LLC, a manufacturer of natural fiber insulation, on Tuesday closed its plant in Sacramento, citing the decline in the local housing market and decreased demand for its products. The company said the 26 employees working at the plant...received severance pay.
From the Sacramento Bee:
It's approaching crunch time for Circuit City Stores Inc. and Fresno's Gottschalks Inc., two troubled retail chains whose possible demise would add to the miseries of Sacramento's commercial real estate market..."We're going to see more of this," said George Whalin of Retail Management Consultants in San Marcos. "We're just getting started."
The region's shopping center vacancy rate, pegged at 8.8 percent in the third quarter of 2008, will probably peak at around 11 percent sometime this fall, said research director Garrick Brown of broker Colliers International's Sacramento office...Rents have fallen by a third in some areas of Sacramento.
From the Sacramento Bee:
J.C. Penney's decision to close its Carmichael call center on March 20 will cost 260 local jobs and put a dent in the Sacramento area's recent reputation as a call-center magnet...At the dawn of the decade, Sacramento was being hailed as a call-center mecca. From 1996 through mid-2001, about 40 centers set up shop in the Sacramento area, according to the Sacramento Area Commerce and Trade Organization.
Layne Holley, managing editor of publications with the Colorado Springs, Colo.-based International Customer Management Institute (ICMC), said Monday that call centers are a likely cutting point for retailers amid the recession.
From the Stockton Record:
The median sales price fell to $133,000 in Stockton and $165,000 countywide...In Stockton, that has meant a 47 percent drop in prices in 12 months alone, from $250,000 in December 2007 to $133,000 last month, according to figures from the Grupe Real Estate-TrendGraphix monthly sales report....Foreclosures continue to dominate the existing home market, accounting for 84 percent of all December sales.
"Median sales prices may go lower, but they can't go much lower," he [Mike Collins of Collins Realty in Stockton] said. "Some people pay that much for a high-end luxury car."
From the Associated Press (hat tip DJ/SMF)
The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates.
Financial adviser Barry Hartz lived in California for 60 years and once ran for state Assembly before relocating with his wife last year to Colorado Springs, Colo., where his son's family had moved. "The saddest thing I saw was the escalation of home prices to the point our kids, when they got married, could not live in the community where they lived and grew up," Hartz says. "Some people call that progress."
From News10:
"It's getting too expensive for us to live here. We just can't afford it," said Cathy Hawkins of Sacramento. The Hawkins are moving from California for an area that's more affordable to live..."We just lost our house to foreclosure and I recently lost my job," said Daniel Hawkins.


patient renter said...

I love it how these guys admit that they suck at predicting the market, then go on to predict some more.


Median sales prices may go lower, but they can't go much lower

Because this guy says they can't go lower, you can bet they absolutely will.

Jacob said...

"Median sales prices may go lower, but they can't go much lower," he [Mike Collins of Collins Realty in Stockton] said. "Some people pay that much for a high-end luxury car."

And why would someone who can pay $100k for a car want a $100k home?

We have almost reached a bottom in sales right? I mean once we get to 0 you are at the bottom...

69% off peak for stockton and they are likely to get another 20% in 09to put them around 76% off. But prices always go up, so this must be a mistake.

Well we can't count the distressed sales cause those are distressed are err, don't show the true value, or something... So don't count 84% of the sales and maybe the remaining 16% is slightly better...

Nothing left to trim sounds about right. Companies have been cutting back for a while. If they continue to lose money and can't cut costs anymore then it will mean more store closures or bankruptcy for many companies.

But there is still plenty of housing porn on tv so I don't think we are at the bottom. When everyone is so sick of those shows that nobody watches and they are all canceled and replaced with shows about saving money, growing your own garden, etc. then we will be at the bottom.

But will banks have any money to lend when we get there?

Sold in '05- Bought in '09 said...

"Median sales prices may go lower, but they can't go much lower," he [Mike Collins of Collins Realty in Stockton] said. "Some people pay that much for a high-end luxury car."

This is just plain stupid. Some people pay $9000 for a Kia. Used Oldsmobile Firenza's are selling for $300. Some people pay $1.5 million for a Ferrari. So what? If you were to use cars as a indicator of affordability, the average price paid is somewhere near $30k. So how many average cars should the average house cost? Once we figure this out, we'll have the formula for cornering the real estate AND car sales markets!


smf said...

There's plenty left to trim.

Just look at year 2000 costs and budgets.

norcaljeff said...

So Paquin is finally coming clean that his housing bottom calls have been wrong, and bogus. At least he's admitting that he has a serious problem, that's the first step. Maybe that's even a sign of the bottom, lol, but I doubt it.

Regarding all the people exiting CA, more so than are coming in, I've been preaching this fact for the past year, all to deaf ears! And illegal immigrants have been fleeing back over the southern border. So my question is, who's gonna buy all this outstanding inventory??

Now its my turn for another prediction: Anyone in the RE industry making a prediction of housing prices in 2009 will be wrong, especially the ones calling the bottom, AGAIN! :)

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

Can I get that car with 1 1/2 baths and will you throw in the floor mats?

We go too low, and we're ARE in a depression that sucks more jobs, houses, cars, and lifestyles away...the negative feedback loop at its finest. '08 was a warm-up for '09

Deflationary Jane said...

from a few posts ago:

Applications up but...
UC may admit 2,300 fewer freshmen

'UC officials say they must cut back because funding from the state is shrinking. Already, they say, UC educates 11,000 California students for whom they receive no state funding.

Gov. Arnold Schwarzenegger's Dec. 31 budget proposal calls for cutting $131 million from the UC system by June 2010 and eliminating a planned budget increase of $210 million for 2009-10.

If the university accepted more students without more funding, Vazquez said, campuses wouldn't have the money to hire faculty and it would be difficult for students to get classes they need.'

This ties into the post on the freeze at UCs from CR:

In reference to DD, meant to post last night:

Exactamondo! Where funds are being stripped is fund dependant (state). It's not just UCD - it's all over the state.

UCs tend to be funded only about 30% from the state which in part is why we aren't considered state employees. Nor are we considered Phed employees. Our salaries are also less then both of those entities as well.

Now applications are up but..... UCD is cutting back on admissions. I did a post on this back few weeks ago. It will be less then last year and the year before because instate funding comes from the state budget and the state budget is being cut so less slots open for CA residents. It's a downward spiral.

UC may make up for it with non-resident students but costs for that are comparable to private and private schools are starting to cut deals. Giving a 15% school sponsored scholarship means they are still getting 85% of their needs met.

Deflation in education, it's what's for dinner.

Cow_tipping said...

This may be the stupidest thing I have ever heard.
"Median sales prices may go lower, but they can't go much lower," he [Mike Collins of Collins Realty in Stockton] said. "Some people pay that much for a high-end luxury car."

OK so why should a car really cost less than a house, a car can move you and many of your life's possessions from one place to another in relative comfort, its easy to sell withoput having to deal with a 6%er, and in a pinch can doube as a house.

Further, cars are also not selling but I dont see large swaths of them sitting empty on a long term basis except on dealer lots.