Bee: Sacramento Real Estate Market Bottoming Out?

From the Sacramento Bee:

Is Sacramento's woeful housing market bottoming out?..."We might be hitting that bottom … but we might be at that bottom for a while," said Dean Werhli, a vice president in the Elk Grove office of market researcher Sullivan Group Real Estate Advisors. "We could be skidding along this bottom for quite some time."...Even if the economy worsens, "it's going to be difficult for prices to go much lower," he said.
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Consumer advocate Paul Leonard offered a bleaker prognosis: The foreclosure crisis could worsen over the next year, and the state's faltering economy won't help. "It's certainly good to see that there is new (sales) activity, but there are still a number of factors out there that suggest that this problem is going to be with us for a while statewide, particularly if you look at the Central Valley," said Leonard, director of the California office of the Center for Responsible Lending.
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The region's economy has a lot riding on this. The bursting of the housing bubble caused considerable harm to the economy in Sacramento and across the state. As home values plunged, equity "extractions" – cash generated by refinancing, home equity loans or outright sales – fell by 34 percent last year in Sacramento, according to MDA DataQuick. That took $2.1 billion out of the region's economy.

From the Sacramento State Hornet:

As the effects of the housing crisis and the international economic crisis ripple through everyday life, students and faculty at Sacramento State are forced to change lifestyles. For some, this means driving less; for others, the changes are more severe. Many students are finding they have to spend less to survive these days. Matthew Harris, undeclared freshman, said his spending habits have changed recently. "I don't spend money at all anymore," Harris said. "The only things I spend money on are school and food, and only when necessary."...Harris said he feels it is likely the U.S. will enter into a depression in the near future. [Student Anthony] Gragg said he feels the country is not quite to the point of worrying about a depression, but it is getting close.
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[Kristin] Van Gaasbeck [associate professor of economics] said many professors are likely being affected heavily by the burst of the housing bubble. "Many instructors were recently hired at Sac State, and many, myself included, probably bought homes in the area during the housing run-up," Van Gaasbeck said. "I suspect that some of them are in a better boat than others, but depending on how much they were gambling on property values increasing, they might get stuck."

From the Tracy Press:

What developers had hoped would be the first retail-office-industrial anchor in Mountain House has folded under the weight of a foreclosure-saturated housing market and the national credit crisis. Chapter 11 bankruptcy of Pegasus MH Ventures I LLC forced parent company Pegasus Development to cancel plans to build a business park on 140 acres of land along Interstate 580 and near the Alameda, Contra Costa and San Joaquin county lines.

From the Sacramento News & Review:

In Folsom, home of the prison, the factory outlets and the historic downtown, the local economy will be the incoming city council’s No. 1 priority. As the election approaches, evidence of the downturn is everywhere you go in this city of 70,000 people just east of Sacramento. Reality is setting in, and it’s looking grim.

The number of foreclosed homes is growing, and property-tax revenues are shrinking. Several commercial areas in town continue to thrive, but elsewhere businesses have disappeared, leaving gaping holes in silent strip malls. Vast swaths of new commercial development lie vacant. The housing bubble has burst, the boom is over, yet the ideal of perpetual growth lives on. An enormous new shopping center continues to rise north of Highway 50. Plans for residential and commercial development south of the highway are proceeding...The city faces its bleakest budget crisis in years, and the city council will have to figure out how to fill all those empty businesses and homes....

Sacramento Home Buyers "Still Face An Elevated Risk of Being 'Upside Down'" in 2012

From Inman News:

Purchase a home in 67 of the nation's 100 largest metropolitan areas and you should be able to build positive equity by 2012, according to a new study comparing ownership and rental costs. The report from the Center for Economic and Policy Research concluded that prospects for building equity by 2012 have improved somewhat in 36 cities, compared with an analysis performed in the spring. In many markets, declines in house prices and modest increases in rents are helping return rent-to-price ratios closer to historical levels, the report found.

But the report identified 33 bubble markets areas where home buyers still face an elevated risk of being "upside down," or owing more than their home is worth, four years from now. One-third of those markets were in California, including San Jose, San Francisco, Los Angeles, Sacramento, San Diego, Fresno, Stockton, Bakersfield, Modesto and Riverside.

From the CEPR report [pdf]:

Given the remaining mismatch between home prices and rent levels in most bubble markets, we argue it is still unwise for policy makers to attempt to directly intervene in housing markets to maintain what are historically unprecedented high home prices. Policies that encourage occupancy, discourage vacancy, and maintain employment to stabilize hard hit communities are likely to be the best approach to assuring prices do not fall any further than is necessary to reestablish a stable housing market.

From the Wall Street Journal:

Lower home prices are luring some buyers back into the U.S. housing market, but foreclosures and a weakening economy are likely to keep downward pressure on prices for at least another year, economists say. A quarterly Wall Street Journal survey of housing data in 28 major metro areas shows that the glut of unsold homes listed for sale is shrinking in most of them. In many cases, sales have been stimulated by investors who are grabbing what they see as bargains on homes that can be turned into rentals. Metro areas with the biggest drops in for-sale signs include Sacramento and Orange County in California and the Virginia suburbs of Washington, D.C.
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Housing analysts caution that many homes that aren't currently listed for sale may hit the market in the next year or two. This looming supply includes pending foreclosures and homes temporarily taken off the market while their owners await stronger demand. With banks chopping prices on foreclosed homes, other sellers "are giving up and taking their homes off of the market," says Michael Lyon, president of Trendgraphix Inc., a research firm in Sacramento.

From the Sacramento Bee:

[A]s auto sales erode, local governments are feeling the squeeze. "Car sales are certainly our biggest contributor to the general fund," said Roseville Treasurer Russ Branson. "Sales taxes overall are down. Property taxes are flat. So all we can do is control expenses." Roseville, home to one of the region's big auto malls, depended on car and truck sales for about 7 percent of its general fund money last year, Branson said. Local vehicle sales dropped 15 percent for the fiscal year that ended in June, according to city statistics. That ripped $1.4 million from the city's coffers and represented a $146.5 million drain on the economy, Branson said.
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Employment at car dealers in the four-county Sacramento region has fallen by 8 percent in the last year to 12,700, according to the state Employment Development Department.
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There are a few reasons to hope a rebound is coming, experts said. The housing market may be close to a bottom – sales over the past few months are up, even though prices continue to fall.

From the Modesto Bee:

With declining home prices, tightening credit and the collapse of several major financial institutions, experts say now may not be the best time to think about leaving your job, even if it's one you hate.
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Suck it up and recommit yourself, said Lee Merchant, a psychology professor at Modesto Junior College. You can do that by assessing where you are in dealing with the fact that quitting will hurt you more than help you in this economy. "Are you in denial? Ask yourself if you have job options or not, because the job market is really bad," Merchant said.

From News10:

Usually you can spot the foreclosure homes through abandoned yards and newspapers in the driveway. One home in Lathrop is identifiable by its missing garage door...The garage door has been torn from the foundation, as has a regular door leading from the garage to the side yard.

'You didn't have a choice but live in debt'

From the Sacramento Bee:

"Welcome," says the letter dated May 20, 2005. "It is a pleasure to have you as a new loan customer of Fremont Investment & Loan." They were only 18 words written at the height of a housing boom. But mailed to Erin O'Hagan of Sacramento, and multiplied hundreds of thousands of times elsewhere in the United States, they launched a financial crisis that is now rocking the world. More than three years after getting that letter, O'Hagan said, "Who would have thought it all would crash and burn the way it did?" Not just her own world. The whole world.
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In the spring of 2005, Erin O'Hagan worked at Chicago Title's Roseville branch, helping close the thousands of escrows that were part of the region's sizzling housing boom. "I was making a better salary than at any time in my life," she said. "I never thought it would end."

From the Tennessean:

Some banks, trying to reduce their exposure to risk, have been canceling the remaining balances on existing home equity lines of credit. That's what happened to [Wayne] Anderson on his second home in Sacramento. His lender, Citigroup, informed him that home values were falling in the area. A spokesman for Citigroup, Mark Rodgers, said in an e-mailed statement: "The reduction or suspension of the line protects our customers from borrowing more than the value of their properties."
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Anderson had hoped to use his home equity loan for unexpected expenses, such as maintenance on one of his two homes. He moved from Sacramento last year to find more work, but was unable to sell his home in a declining real estate market, so he rented out the home in California while buying a new one in Mt. Juliet.

He said the high cost of homeownership in California helped fuel certain feelings about debt — feelings that he no longer has. "Prices were through the roof,'' he said. "You didn't have a choice but live in debt. The average person can't afford those houses. You just become accustomed to living in debt. I've come to this realization I don't want to live in debt anymore. All the money I was making was trying to pay off those credit cards."

From the Christian Science Monitor:

[Kevin] Smith, a car salesman, faces many of these pressures and is reconsidering his expenses. Between his home and a second rental property, he’s $400,000 under water. He recently lost his renter, to boot. “If the principal balance isn’t reduced for everyone, then this situation is going to keep going on,” says Smith. He figures within three months he will stop making payments on both mortgages. “Several friends in the neighborhood, they are talking about the same thing.”
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As for the roof over Smith’s head, it’s now worth roughly $475,000. That’s low compared with his $690,000 mortgage, but perhaps too high for a replacement loan insured by the Federal Housing Administration (FHA).

Smith might get more time to cut a deal with his lenders if Obama becomes president. His plan calls for a 90-day moratorium on foreclosures by those financial institutions getting federal bailouts. The idea is to give time for new loan modification programs to get up and running. “I think it would be delaying the inevitable [unless] there would be help with the balance,” says Smith, who says his lender, GMAC Mortgage, “hasn’t been too flexible.”

From the New York Times:

An eternity ago, people in this city in northern San Joaquin County braved four-hour round-trip commutes to the San Francisco Bay Area for a toehold on the dream. Today, Manteca’s lawns and driveways are storefronts of the new garage-sale economy — the telltale yellow signs plastered in the rear windows of parked cars Friday through Sunday directing traffic to yet another sale, yet another family. “You can get great deals,” said Sharrell Johnson, 32, who was scouting for toys in the Indian summer heat last Friday amid boxes of tools and DVDs and forests of little skirts and shirts dangling from plastic hangers on suspended rope. “Sad to say, you’re finding really good things. Because everybody’s losing their homes.”

From the Stockton Record:

There may be a financial crisis on Wall Street and a housing crisis on Main Street, but it's a busy time for jewelry buyers and pawnbrokers. That's a mixed bag for Annette Hoag, co-owner of Annette's North Stockton Jewelry and Loan on Pacific Avenue. In terms of making small, short-term loans, she said, "We're up 57 percent in the last six months, but what people don't realize, the retail side of the business ... is gone. People aren't buying anything."

From the Fresno Bee:

The Valley's economy isn't dependent on heavy manufacturing like the industrial Midwest, where plant closures have devastated communities and helped boost the national unemployment rate to 6.1%. But the waves from Wall Street's market tumble, the credit crisis and declining consumer confidence are rocking segments of the Valley economy once thought insulated from job losses.

Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific's Eberhardt School of Business, said the Valley seems headed into a second phase of recession. After the collapse of the real-estate market and the burst homebuilding bubble, "it's spilling over into consumer spending. We're starting to see some pullback in employment in retail, restaurants and other consumer-discretionary things," Michael said. "What we're seeing in this second phase is a more broad-based weakness; there are fewer 'safe havens' out there for jobs" except in health-care fields.

From the Sacramento Business Journal:

Dunmore Capital LLC and its affiliates have lost more than one-fourth of the 7,000 acres they once controlled, and more land is at risk if disputes over tens of millions of dollars in debt can’t be resolved. An investor in six of the company’s properties from Bakersfield to Red Bluff has foreclosed on about 2,000 acres. Another 400 acres, which are considered among the company’s most promising development sites, are at risk of foreclosure as lenders filed notices of default alleging late payments on $28 million in loans.
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A year ago, the Dunmores touted a deal with a Dutch pension fund and other institutional investors they said would carry them through the housing slump. But since then, they have been hit with numerous allegations of default. The company has resolved many of its debts, but the recent round of filings presents a new challenge.

From CBS 13:

A large fence weighing hundreds of pounds was stolen in broad daylight in front of a Sacramento home, but experts say that the metal is worth virtually nothing if sold for scrap. All that's left of the six-foot-tall, rod iron fence is less than dozen posts, cut nearly down to the ground. The home on Sierra Vista Avenue has been in foreclosure for the past two months....

From the Sacramento Real Estate blog:

Hardly anyone is happy about the events of the past few weeks. To be sure, there are a few dubious winners. Those for whom predictions of economic doomsday is a hobby have had the satisfaction of saying "I told you so".

From the Modesto Bee:

Booms and busts provide valuable lessons. The housing market boomed for a decade. Then, over the past two years, it busted as the subprime loan game ran its course and, like an overworked wad of Bubblicious, left the nation covered in the reddish slime of a $700 billion bailout.

It's perfectly acceptable to blame all involved: greedy buyers who demanded the 3,400-square-foot McMansion on a tent-trailer budget, real estate and mortgage types who scored hefty commissions by nudging buyers into these exploding loans, and the greed-mongers who orchestrated this fiasco from Wall Street's end.

Sacramento Real Estate Market - October 2008 Water Cooler

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"Empty Homes Have Turned into Giant Bird Houses"

Housing Bust Consequence #867. From CBS 13:

A local neighborhood is going to the birds. With so many vacant homes, it's a problem that can develop in any neighborhood. Birds are now taking over empty homes and bringing with them a lot of noise and mess. Birds have taken over two vacant homes on Coop Drive in Elk Grove, turning what was a quiet neighborhood into a nightmare...Empty homes have turned into giant bird houses.

From the Sacramento Business Journal:

Home sales, likely fueled by hundreds of foreclosed homes on the market, soared in Sacramento and California in September as the median price of homes sold in the state capital dipped below $200,000 for the first time in years [according to the California Association of Realtors]. The median price of a home selling in Greater Sacramento last month was $195,900, down 11.3 percent from August and 39.8 percent lower than a year ago. Sales, meanwhile, were up 8 percent over August and 186 percent higher than a year ago.

From the Sacramento Bee:

Jennifer Harris, executive director of the Home Loan Counseling Center of Sacramento, a nonprofit loan counseling agency...said there's also a rising new class of people now "just willing to walk away." "For us, it's a new thing to deal with," she said. "People are calling and saying, 'My values have dropped. Why shouldn't I walk away?' "
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[A]n abundance of trouble for struggling homeowners has been a blessing for buyers priced out during the housing boom. Foreclosure resales have driven prices down by a third or more the past year. Sacramento County median prices for resale homes – where half cost more and half less – have fallen by 37 percent in the past year to $190,000, the lowest in more than six years [per DataQuick].

From the Appeal Democrat:

The housing boom kept on busting during July, August and September as foreclosures jumped sharply compared with a year ago, according to figures released by a real estate information firm Thursday. Sutter County foreclosures increased five-fold during the third quarter of 2008 compared with the same period a year ago, totaling 291 homes, according to figures from MDA DataQuick.
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The glut of inventory from foreclosures plus short sales is causing downward pressure on home prices, said David Burrow, president of the Sutter-Yuba Association of Realtors. He said the inventory of homes has been accumulating beyond the number sold..."We're actually accumulating them faster than they're selling them," said Burrow, a Realtor who is with Keller Williams Realty Yuba Sutter.

From the California Progress Report:

Yesterday’s Sacramento Bee had a story which indicated at least 7,600 Sacramento-area residential foreclosures and the number may grow. I live in the Pocket Area and there are signs of foreclosures there and this is the most stable or one of the most stable parts of Sacramento County.

From the Redding Record Searchlight:

Alan Nevin, chief economist for the California Building Industry Association, said building smaller homes will work only if the buyer can't get the larger home for the same price. In foreclosure-ravaged areas such as Merced, Stockton and Riverside, prices are falling rapidly. "They've declined so far that it doesn't make much difference how small a new house is — builders can't beat the foreclosed price," Nevin said.

From the Sacramento Bee:

"Everyone is getting hit by this because they're short of money," said Joe Ortiz, who just got a $2,700 property tax bill. "It's really outrageous." Many homeowners, like Ortiz, had assumed their property taxes would fall in the wake of the housing crisis – a small measure of relief in the face of tumbling stock prices, shaky pensions and general economic fear.

From the Sacramento Bee:

Turns out, the bottom falling out of the housing industry is a good thing for districts such as San Juan Unified School District....The district broke ground this week on a $4.3 million gym at Mesa Verde High School would have cost about 25 percent more to build just a few years ago, said Don Myers, the district's senior director of facilities and planning...[B]ecause of the downturn in the economy for the last year now, as well as the downturn in housing market, we've actually gotten a very good price (on the gym construction)."

From the Sacramento Bee:

Edible Events owner Margie Tose, who specializes in corporate catering, said she began fielding calls for holiday parties as early as August. "But then, all of a sudden, it just stopped," Tose said, attributing the drop in calls to the flailing economy. "I think they'll still do something, but they'll scale back. These past couple of weeks have been scary, but once things settle down, I think they'll start calling, probably around November."

From the Sacramento Bee:

In his 36 years behind the counter, [Jim] Relles, longtime owner of Relles Florist in Sacramento's midtown, has seen economic good times and tougher ones. He harbors no illusions this year. "These are probably the worst economic times in my existence of running a business," he said. And it's shown at the cash register.

Relles' August sales were off 30 percent compared with last year, he said. September was better – sales were only 4 percent off the year-previous numbers, he said. Then the financial crisis reached a head, scattering would-be shoppers. "Then we had October come, when everything started to crumble. Everything came to a screeching halt," Relles said. He's already cut back on ordering Christmas items, anticipating as much as a 40 percent drop in sales from the year-ago holiday season.

From USA Today:

Stockton, a boom-and-bust town hit early and hard by the nation's foreclosure crisis, is digging out of the financial excesses of its past...But the city's hangover is likely to be a doozy...Some blocks have been so depopulated that even the Saturday afternoon jingle of an ice cream truck is greeted with silence....In September, the city's unemployment rate hit 12.4% vs. 8% for the same month two years earlier, when construction and finance jobs were plentiful...School enrollment is down 7% from 2006 in a district heavily affected by foreclosures and population dips...
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During Stockton's boom years of 2003, 2004 and 2005, home builders constructed almost 8,000 homes in the city — an amount equal to 11% of its single-family-home inventory.
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Homeowner Deramous was caught in the frenzy. She and her husband relocated to Stockton from the Bay Area in 2000, buying a 2,400-square-foot home for $176,000. As home values soared, so did their spirits. The house appraised for $500,000 in 2006. They refinanced, took money out for a new car, vacations and other expenses. Now, they owe more than $300,000, and the house "is probably worth $176,000 again," Deramous says. "It was foolish of us," she says. "My parents never took money out." Deramous hopes their lender will lower their payments.
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Manuel Leighton...bought the home in 1998...Near the peak of the market, the house was appraised for $465,000. He and his wife refinanced three times in almost six years, each time taking out cash to pay for a pool that never got built. Now, Leighton laments the loss of his better judgment and that he owes $390,000 on a house worth far less. A house next door recently sold at auction for $265,000, he says. "That hurts me," he says. "I'm going to call my lender and see if they'll redo my loan. If they can't, I may end up walking."

Sacramento Foreclosures 8x 90s Record

From the Sacramento Bee:

More than 7,600 Sacramento-area homeowners surrendered their keys to the bank in July, August and September as foreclosures in the region and state showed no signs of leveling off, according to the newest statistics from La Jolla-based MDA DataQuick. The Sacramento region recorded almost 10 percent of the state's 79,511 foreclosures during the third quarter, the newest numbers show.

Sacramento County Foreclosures
2008 Q3: 5,643 (up 173.3% YoY)
1997 Q2: 703 (1990s record)

Sacramento County Notices of Defaults
2008 Q3: 5,541 (up 12.0% YoY)
1997 Q1: 2,441 (1990s record)

From DQ News:

Of the [California] homeowners in default, an estimated 20 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was about 46 percent.

From the CVBT:

Stockton in the Central Valley continues to lead the nation in foreclosures, despite the buffer of the a new state law delaying initial foreclosure actions...Stockton took the top spot, with 3.69 percent of its housing units receiving a foreclosure filing during the quarter. Stockton's foreclosure activity was down 9 percent from the previous quarter but still up 87 percent from the third quarter of 2007 [according to RealtyTrack].

Other California cities in the top 10 for foreclosure rate were Riverside-San Bernardino at No. 3, Bakersfield at No. 4, Sacramento at No. 7, Fresno at No. 9 and Oakland at No. 10.

From the Sacramento Bee:

As property tax bills land in mailboxes across the region, county assessors are reporting record numbers of complaints and assessment appeals from homeowners who assume – in the midst of a declining housing market – they've been overbilled. In Sacramento County, which mailed out its annual property tax bills Friday, the Assessor's Office received 2,000 calls Monday. Placer County officials report getting triple the number of assessment appeals this year compared to a year ago. In El Dorado County, four times as many people are appealing, and officials say the number is growing.

Local officials say there is a widespread misconception – that declining home values amid a soured economy and the subprime mortgage crisis will automatically result in property re-assessments and lower tax bills.

From the Stockton Record:

City Hall intends to flip houses, using $12.1 million from the federal government to buy and restore abandoned or foreclosed homes, then sell or rent them out...."This is kind of a windfall," Councilman Steve Bestolarides said. "This is going to give us an opportunity to really deliver something."
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The program allows money to be used until 2013. Until then, money used to buy and renovate a house would be recovered when the house is sold, allowing the city to recycle that money into additional home purchases, officials said. "These funds give us a huge opportunity," said Fred Sheil of STAND - Stocktonians Taking Action to Neutralize Drugs - a nonprofit group that buys, renovates and sells homes to people with low incomes. "We have the potential for double or triple or quadruple this money."

From the Sacramento Bee:

State workers such as Tamara Martfeld are worried..."I'm not buying anything that I don't have to," said Martfeld, a 25-year state employee who lives and works in Sacramento. "Co-workers I've talked to say the same thing."
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Economists who watch Sacramento say the region usually avoids the wild swings of places like the Silicon Valley, thanks to our vast, stable and secure state workforce. By their sheer numbers and buying power state workers are the grease that lubricates the local economy. They make house payments, buy food, go to the movies and pay taxes. And, says University of the Pacific economist Jeff Michael, most of the tax money paying their wages comes from outside the area. "But ... if they're feeling anxiety about their future income or retirement, they pull back on consumption," he says. That drags down everyone.

From the Stockton Record:

The housing meltdown has regional transportation officials considering scaling back on what projects can be completed with the half-cent sales tax approved by voters in 1990. Originally thought to generate $735 million over its 20-year life span, Measure K's half-cent sales tax could instead bring between $650 million and $670 million, said officials at the San Joaquin Council of Governments.
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Original projections showed revenue from sales tax rising steadily from year to year throughout the 20-year span of Measure K, but it has peaked. "Now we're looking at falling off a cliff here," said Steve Dial, deputy executive director of the Council of Governments.

From the AP:

The federal government should move swiftly to enact a second economic stimulus package to help teetering homeowners or face another possible crisis — banks stuck with a massive stock of vacant homes, Gov. Arnold Schwarzenegger warned Wednesday. A day after urging congressional leaders to consider a new jolt for the ailing economy, the Republican governor said Washington needs to "put money into the housing market." California has been devastated by the mortgage crisis, with thousands of foreclosures and median home prices falling sharply. "The key is to make people stay in their homes," the governor said during a panel discussion with investor Warren Buffet.

From the BMIT blog:

This bubble threw a whole generation of young people for a loop. They did the work, they got the education, and then they were told because you took time for school now all you can afford is the desert or the barrio. Message was loud and clear, screw this young generation because we need our retirement.

Calling Market Bottom (Again)

From the Sacramento Bee:

"Sacramento is well into the first phase of the housing stabilization process, which starts with sales recovering on a year-over-year basis," [DataQuick's Andrew LePage] said.
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Discounted foreclosures were 65.8 percent of September sales in Sacramento County, according to MDA DataQuick. Foreclosures were half of sales in the Los Angeles region and 42 percent of those in the Bay Area during September, the firm said.

DataQuick sales/price stats by county
ADDED: by zip [pdf]

From the Appeal Democrat:

Local median prices were down last month compared with September 2007, declining 31.5 percent in Sutter County, and 36.8 percent in Yuba County. Both counties were well under the $200,000 mark — the only counties in the Sacramento region in that range — coming in at $190,000 in Sutter County and $175,000 in Yuba County.

From the Modesto Bee:

The clearance sale in real estate continued last month, with another jump in the number of homes sold and a continuing drop in prices. Stanislaus County's median sale price was $179,000 in September, down 40 percent from a year earlier, MDA DataQuick reported Tuesday...In Merced and San Joaquin counties, the number of sales also soared last month compared with a year earlier. Each had a 47 percent drop in the median price, to $140,000 in Merced and $191,500 in San Joaquin.
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Craig Lewis, president and chief executive officer at Prudential California Realty in Modesto, said the foreclosure wave appears to be waning. He said prices could bottom out in three or four months. "The next 90 days is the best time to buy in the last 10 years," he said.

Bottom out in three of four months? How can that be when prices bottomed out back in June 2007?

Craig Lewis, president of Prudential California Realty...said [Stanislaus County] median home prices have fallen from $414,000 in 2005 to $359,000 now, and it takes nearly three months to sell the typical home. "First-time home buyers have the ability to buy now, but … they're sitting back and waiting because they think the price will go down more," Lewis said. He doesn't agree. "I certainly feel we're at the bottom of the market."

From CNBC:

[What] strikes me is the positively bewildered expressions on the faces of the chief economists of both associations. These poor guys are tasked with telling everyone when its all going to get better, and the fact of the matter is they just don't know. Don't get me wrong, these are supersmart guys, number crunchers with decades in the business, but as NAHBs David Seiders said, the risk in housing right now is just so high that it makes forecasting extremely difficult.

From the Wall Street Journal:

[Bill] Knoff's house has traveled the arc of the local market. Built on vacant land in 2002, it sold for $280,000. Its original owner unsuccessfully tried to sell it in 2006 for $450,000. Mr. Knoff bought it out of foreclosure in March of this year for $320,000. Today, based on local sales, he figures the house is worth about $220,000. Mr. Knoff paid nearly half of the purchase price in cash, so most of his equity has been wiped out. But he said he believes in taking responsibility for such choices. "The government can buy up troubled mortgages. But it should kick the people out of their houses," said the 61-year-old information technology manager. "Why should I pay for someone to buy their house?"
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[T]he bottom still may not be in sight. Home prices in California could end down as much as 60% from peak values, according to recent research from both Barclay's PLC and J.P. Morgan Chase & Co. Towns like Los Banos may have further to fall. According to the city and a local title office, roughly 2,000 of 10,000 homes in the town are in the foreclosure process. The city expects that number could grow before the crisis passes.

Interactive map thingy

From the Sacramento Bee:

Ward Smith of J. Smith & Sons Inc., a home-entertainment business in Natomas, said business already was slow because of the soft housing market. Then, when the stock market faltered, things came to a near complete halt. "The phones became eerily quiet for no good reason," he said. "Well, maybe there is a good reason. Everyone's (saying), 'We'll wait and see until we know what's really going on.' "
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Prominent real estate broker Mike Lyon also knows what it's like when the phones stop ringing. The president of Lyon & Associates said things got very quiet when the stock market went into its downward spiral. "It was kind of like 9/11, to be honest with you," he said.

From the Sacramento Bee:

[CEO Gary] Pruitt said skeptics wrongly assume the vast majority of McClatchy's decline in revenue is due to a permanent migration of business to the Internet. Instead, he said, most of the problem is due to the economic downturn. McClatchy will "return to revenue growth when the economy resumes growing," he said. As evidence, he noted that McClatchy's biggest problems in the past two years have emerged in California and Florida, where the real estate market has crashed the loudest. But now McClatchy's papers in the Carolinas are experiencing somewhat similar declines as economic woes have spread to those states, he said.

DataQuick: Repo Sales Soar, Prices Plummet

From the Sacramento Bee:

Still-falling sales prices and a rush to buy discounted bank repos pushed Sacramento home sales still higher in September, reaching their greatest levels since June 2006, property researcher MDA DataQuick reported today. But analysts have their eyes on next month, wondering if fresh public fears of an economic slowdown might have caused some buyers to pull back.
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Sacramento County's $201,00 median September sales price for new and existing homes combined is 34.4 percent below the same time last year, and 48 percent below its 2005 peak of $387,000. Sales were up 126.4 percent from the same time last year.

From the Sacramento Business Journal:

Home sales are up dramatically over last year because of fire-sale prices on foreclosed homes. But the foreclosure rate itself shows no sign of slowing. Mortgage-loan delinquency in the city of Sacramento, for example has risen from 0.82 percent in mid-2006 to 5.48 percent now, according to credit information company TransUnion.

From the Manteca Bulletin:

Three years ago not a single existing home that closed escrow in Manteca sold for under $320,000 in October. This October it is a drastically different story. Of the last 43 homes to close escrow through Tuesday in Manteca all but three ended up changing hands for less than $320,000.

From the Sacramento Bee:

Sacramento's share of the $3.92 billion national [bailout] pie is larger than that of 20 states, according to the Sacramento Housing and Redevelopment Agency...About 40 percent of the money will be used by SHRA to buy houses, fix them up and sell them to new buyers."The city and county are becoming (real estate) flippers," said Sacramento Mayor Heather Fargo....

...$32 million won't go very far, said Cindy Cavanaugh, assistant director of housing policy for SHRA. She said the money will likely be enough to fix up and sell 234 houses in the county and 178 in the city.

Flippers.gov

From the Sacramento Bee:

The federal government soon will send Sacramento city and county nearly $32 million to help fix up foreclosed properties -- a tool to prevent deterioration in neighborhoods hard hit by the housing crisis. Sacramento received one of the largest allocations in the nation....

City and county officials today detailed a plan that includes paying developers to buy foreclosed properties, restore them and either rent or sell them. In an effort to spend the money more quickly, the county and city also would become real estate flippers. About 40 percent of the money would be used by SHRA [Sacramento Housing and Redevelopment Agency] to buy and restore properties then sell them directly to buyers.

From the Sacramento Bee:

The supply of competing single-family house rentals is still growing, says Janet Regan, a broker with Citrus Heights-based Horizon Properties, who manages 450 rental homes for clients. Investors are buying bank repos and renting them out, she says. Homeowners who left the region but can't sell their homes are renting theirs, too. "They don't have them on the market because the market is horrendous," Regan says.

From the Modesto Bee:

Apartments, of course, aren't the only rental option for Modesto families these days. There are thousands of rental houses in the city, and their numbers are increasing daily as investors scoop up bargain-priced foreclosed properties. "We have a flood of investment homes on the rental market now," said [Debra] Clover, whose company manages more than 300 of them.
...
Many of the families who had been living in those [foreclosed] homes have left the county, Clover said. "When these people -- especially those who were commuting to the Bay Area -- lose their houses, they don't stay here to rent. They move closer to their jobs," Clover said.

From the Stockton Record:

Hank Klor, a Stockton-based tax and financial adviser, spoke to a 49-year-old single mother who owes nearly $250,000 on two mortgage loans, recently had her income drop by a third and can't make her paycheck stretch over all the necessities anymore. With her home worth only $140,000 to $150,000 because of falling prices, refinancing seems impossible. She might seek to have her loans modified, get the lender to agree take a loss on a short sale or, Klor said he told her, "You need to look at the possibility you may have to walk away from your home."

From the Sacramento Business Journal:

Year-over-year, the capital region lost an estimated 9,800 jobs, or 1.1 percent of the total. There were 3,700 fewer construction jobs; 3,700 fewer retail trade jobs; 2,900 fewer leisure and hospitality jobs; 2,200 fewer financial jobs; 1,300 fewer government jobs and 1,000 fewer manufacturing jobs than in September 2007, when the local jobless rate was 5.4 percent.

From the Stockton Record:

Hayward-based department store chain Mervyns LLC is expected to announce today that it is filing for Chapter 7 bankruptcy protection, a move that means shutting the doors of its 175 retail outlets, including two in San Joaquin County.
~~~
[N]ine are in the greater Sacramento area....

'Foreclosures have taken the place of new construction'

From the Sacramento Bee:

The excesses of the housing boom pushed another major Sacramento home builder and land developer on Wednesday to seek personal bankruptcy protection from creditors. Christo Bardis, co-founder of Sacramento-based Reynen & Bardis Communities, filed for Chapter 11 protection in U.S. Bankruptcy Court in Sacramento, the development firm announced. He listed liabilities of $100 million to $500 million and assets between $10 million and $50 million.
...
Most of the millions of dollars now owed by Bardis and Reynen were used to pay for thousands of acres of land that have since collapsed in value. "Both he and John Reynen … backed a lot of these deals with their personal fortunes," said Dean Wehrli, a vice president with the consulting firm Sullivan Real Estate Advisors. "They were way, way too hungry for land during the good years and even a little bit beyond. … They were still buying even after it was obvious that things were changing."

From the CVBT:

For landlords, it’s not been a year of contemplating vacations in Bora Bora. The average rent per square foot in the Central Valley in the third quarter was $1.11, a penny higher than in 2007 [according to RealFacts].

From the Stockton Record:

San Joaquin County home construction remains in the doldrums, based on the latest building permit figures from the Construction Industry Research Board. The Burbank-based research board reported that in the first nine months of 2008, county builders took out 641 permits for single-family homes valued at a total $143 million. During the same period of 2005, the height of the housing bubble, local governments issued nearly eight times as many home building permits, 4,976 in all, with a value of $1.17 billion.
...
John Beckman, executive officer of the Building Industry Association of the Delta, said area home builders at looking at 2010 for any upswing in activity. "Foreclosures have taken the place of new construction," he said Tuesday, noting that there's probably a year's worth of inventory - foreclosure homes being actively marketed or simply vacant - that needs to be absorbed at current sales rates.

From the Sacramento Bee:

U.S. automakers' efforts to streamline operations continue to chip away at Sacramento area new-car dealerships. On Wednesday, Chrysler Jeep of Elk Grove said it is ceasing new-car sales as part of a consolidation buyout, but the site will remain in business as a large-scale used car lot.

Forbes: America's Worst Bang For The Buck Cities - #10 Sacramento

From the Mercury News (hat tip HBB):

[CAR chief economist Leslie Appleton-Young] predicts the median price of the houses sold statewide next year will be $358,000, down 6.0 percent from $381,000, which is CAR's estimated median price for all of 2008.
...
She acknowledges that her calculations for 2008 turned out to be wrong by a longshot...[F]or the median price, it was forecast to drop just 4 percent. Now, Appleton-Young estimates the state's median house price for 2008 will be 31.7 percent lower than in 2007.

Why such a big gap in forecast versus reality? "What we missed was the credit crunch at the high end in the jumbo market," Appleton-Young said. She noted that she was working on last year's forecast just as financing for jumbo loans began to tighten, but the full effects weren't yet evident in September 2007.

Stephen Levy, an economist at the Center for Continuing Study of the California Economy, in Palo Alto, said the Realtors' forecast for 2009 is "at the optimistic end of plausible. Last year they were clearly wrong," he said, and he questioned Appleton-Young's prediction in CAR's report Wednesday that a California recession could end by the second half of 2009.

Perfect Storm - Sacramento Median 50% Off Peak, Drops Below 200K

We're right on track for a 50% decline by 2009 2008.




Source: Sacramento Association of Realtors

MLS Inventory "Not a Realistic Picture of the Market"

From the Sacramento Bee:

The number of for-sale signs in El Dorado, Placer, Sacramento and Yolo counties fell in September to a 19-month low of 11,022, Sacramento property researcher TrendGraphix reported [pdf] Monday. The newest tally is down from 11,369 in August – and off sharply from a record high of 16,081 homes for sale in September 2007.

From the Sacramento Business Journal:

[T]here might not be a quick end to those foreclosures, said Mike Lyon, chief executive at Lyon Real Estate. He offered a grim forecast that foreclosed homes might clog the market for an additional four years, a result of adjustable-rate mortgages resetting at much higher rates, further erosion of homeowners’ equity and surrenders by “early adopter” investors who have bought within the past year.

He said at current buying levels there’s about an eight-month supply of owner-occupied resale homes on the market, while there’s less than a two-month supply of bank-owned homes listed. That doesn’t tell the entire story, however, as there’s a large backlog of foreclosed homes that haven’t yet been put to market, he said. So while the inventory of homes for sale is down compared with last year, it’s not a realistic picture of the market.

From the Sacramento Bee:

[Robert] Shiller offers no sunny forecast. The Yale finance professor, and creator of the Case-Shiller Index that tracks home prices, says the subprime crisis that appeared last year may be "the first act of a long and complex tragedy." "We may well experience several years of a bad economy, as occurred, for example, after the profligate mortgage lending booms in both Sweden and Mexico in the early 1990s," Shiller writes. "There could even be another 'lost decade,' like that suffered by Mexico in the 1980s after its spending spree during the oil price boom, or by Japan in the 1990s after the bursting of the 1980s bubble in its stock and housing markets."
...
[Shiller:] I think we've learned some very elementary lessons. Don't think that because something didn't happen for the last 30 years it won't happen. It's amazing how people thought home prices can only go up. One thing people haven't learned very well is home prices can stay down for 30 years, too. I'm not saying it will. It certainly can happen. Most people still think this is just a temporary interruption and real estate prices are going to soar soon. The real estate market is not cheap yet. It's not to where this bubble started (in late 1998).
...
[Shiller's] book is at its best when explaining how so few in authority imagined what has come to pass. Schiller says they were filled with same housing boom faith held by the public.

From Florida Today:

"I wish I wasn't upside-down on my house. But I am," said economist Sean Snaith, who bought his Orlando-area home in 2006 when he joined the University of Central Florida faculty as director of the Institute for Economic Competitiveness. "But I'm fine. I'm not going anywhere."

From the Mercury News:

Dave Cantrell considered loading the U-Haul in the middle of the night and leaving while his neighbors were asleep. He couldn't bear to face them. He had become a community leader here, rallying his neighbors to stand up to the builder that was planning to auction off one-third of their new Paseo West subdivision at 40 percent discounts.
...
As much as he worried about his neighbors, Cantrell never thought he would become a casualty of the housing crunch. He was a retired Navy man with a solid pension. He had a job in construction management and, with his impressive work ethic, was making $250,000 a year, plus a hefty bonus. His credit rating was in the 700s. So in 2006, he bought a $670,000 house, then spent $100,000 to add a pool and miniature golf course in the back. It seemed sensible enough at the time.
...
In March, just five months after the auction, he lost his construction job. He kept up his mortgage payments for a couple of months, but it became obvious that no matter how many résumés he sent out, he wasn't getting any offers. He stopped paying his mortgage and he and his wife, Darleada, moved north...His grown daughter and son-in-law, who live in the tiny town of Seabeck, Wash., took them in. The Cantrells have been married for 34 years and now live in the one-bedroom, 985-square-foot apartment over a garage. He hasn't lived this way since he was a teenager.

Paquin: 'I think we are at, or very near the bottom'

From the Sacramento Bee:

Sacramento-area homebuilders are still in a tailspin, having to compete with banks that are slashing prices on thousands of foreclosed properties. During the just-finished third quarter, builders sold 1,204 homes, the lowest quarter since the Folsom-based Gregory Group began tracking numbers in 1999. The firm counts sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties...Sales were off 24 percent from the same quarter in 2007.
...
For the first nine months of 2008, new-home sales totaled 3,990, [Gregory Group President Greg] Paquin said. That's a hefty tumble from 6,087 sales the same time last year. And it's a huge fall from 13,535 sales for the same period in 2004. Paquin estimates the year will end with maximum sales of 5,500 new homes in the capital region.
...
"I think we are at, or very near the bottom, in terms of sales and pricing," he said.

One day Paquin will be right. Here's his new home sales forecasts from the last three years:

2006 Forecast: about 14,094
2006 Reality: 9,588

2007 Forecast: 9,500 to 10,000
2007 Reality: 7,407

2008 Forecast: 7,700
2008 Reality: 3,990 (as of Q3)

From the Sacramento Business Journal:

Auto dealers are hurting all over the United States, but Greater Sacramento’s new-car franchises have disappeared at a rate two-and-a-half times greater than the national average. The number of new-car franchises operating in the Sacramento region shrunk by 13.3 percent from December 2004 to August 2008, compared to 5 percent for the national average, according to Urban Science Applications Inc., a Detroit-based retail consulting firm.
...
Greater Sacramento has lost a higher proportion of new-car franchises than much of the state and nation because all the broader economic problems — rising gas prices, credit crisis and declining home values — were amplified by the region’s surge in population and accompanying supercharged housing boom. “The housing market cratered here first,” said [Brian] Maas, from the California car dealers’ group.

Sacramento Bee real estate reporter Jim Wasserman on his blog Home Front:

A lot of people think everyone who got in over their heads with a bad loan should go down with the ship, lose the house, let the market flush them out. There's a case for that, sure. It seems to be the outcome that's happening most often.

But it's sure hard imagining yourself in these peoples' shoes. These are real people who regret not looking at the details of loan papers set in front of them. They could kick themselves.
...
Bottom line, I can't tell who is innocent or guilty, who should have been smarter or who foolishly refinanced to buy a boat and other toys.

"Why didn't they see this coming?"

From the Sacramento Bee:

Restrictions in a homeowner rescue plan proposed by Sen. John McCain would likely block thousands of struggling Sacramento-area borrowers from participating, analysts say...The proposal would exclude borrowers who used 100 percent financing during the housing boom and possibly all who received loans without documenting their incomes. It also prohibits investors.

In the Sacramento area, such restrictions will rule out massive numbers of borrowers who need help, some said Wednesday. "I would say there's not going to be a lot of homes in that basket," said Scott Thompson, partner at Mortgage Resolution Services in Carmichael.

From the Sacramento Bee:

[I]t's hard competing against the collapsing Dow, rising unemployment and a financial crisis that appears resistent to bailouts. Anxious consumers are increasingly tight-fisted, putting off purchases and staying away from stores. "People are just scared," said Paul Atwal, a sales associate at Aquamarine Jewelers on Marconi Avenue. "They have money, but they don't want to spend the big bucks. They say, 'I may lose my job.' "
...
In a sign of tough times, he said, more people are coming in to sell their jewelry for scrap gold than buy it.

From the Wall Street Journal:

All of you who rent -- a respectable American tradition -- can look forward to buying more cheaply in the future. Take your time.

The housing disaster-in-motion was widely reported, complete with warnings, before the crash. But every word fell on deaf ears, because bubbles are never about reason, cool calculation and courageous politicians willing to risk defeat.
...
To the extent that the bailout shores up existing home prices and its paper, it delays the inevitable. It does not assure the early return of buyers.

From the Washington Post:

[A]s news organizations chase exclusives about the Wall Street meltdown, they also are grappling with a troubling question: Why didn't they see this coming? "We all failed," says [Charlie] Gasparino, a former Wall Street Journal and Newsweek reporter. "What we didn't understand was that this was building up. We all bear responsibility to a certain extent."
...
[T]he business press never conveyed a real sense of alarm until institutions began to collapse...It is not easy for journalists to take on the masters of the financial universe, especially when the market is going up and everyone is happy...PBS's David Brancaccio says that "we journalists have had a long history with accepting what the smart people hand down to us, especially on complicated stuff. . . . When I would cover these very issues about problems with regulation, problems with 'is this a disaster waiting to happen?' people would say: 'Well, young man, you don't have an MBA like I do. Trust us. We went to business school.' "
...
[J]ournalists are reluctant to target those who are guzzling the punch: the overstretched folks who bought houses they couldn't afford and second homes they wanted to flip, all based on the presumption of endlessly rising prices.

'Nobody else is paying, so why should I?'

From the Sacramento Bee:

Across the Sacramento region, businesses and governments fretted over a credit crunch that showed no signs of improvement, even though Congress had approved the $700 billion rescue plan for the financial markets on Friday. Analysts said the message was that the rescue plan might eventually unclog the credit markets but probably won't provide instant relief.
...
Of all the nervous borrowers out there, perhaps the most visible is the state of California. The state is looking at backup plans in case it is unable to conduct a crucial $7 billion bond sale next week...Looking for alternate sources of cash, the state is exploring loans from the U.S. Treasury or the state's two public pension funds, CalPERS and CalSTRS.

From the Sacramento Bee:

The provisions for struggling homeowners in the Wall Street rescue bill signed into law Friday are largely voluntary and not enough to curb foreclosures in regions such as Sacramento, some analysts say...Without unilateral authority to modify loans, they say, the rising tide of foreclosures – 500 or more every week in the Sacramento area alone – won't soon subside. More bank-owned homes on the market mean home values will continue to fall.

"If you don't firm up the bottom of the housing market, the bottom of the pyramid will be like quicksand that will keep pulling down the structure," said Timothy Canova, economics professor at Southern California's Chapman University School of Law. "I think in six months to a year they will be back asking for another enormous bailout because it didn't deal with the root causes of the problem."
...
Steven Krohn, a real estate broker and economist with Sacramento-based Real Estate Group, said the best way to get through the housing crisis is to let market forces re-price homes. "I've had friends go through foreclosures, and it's awful," he said. "The sooner the market adjusts the better off we are."

From the Sacramento Bee:

There may be a way out of trouble, after all, for thousands of Sacramento-area borrowers struggling with risky housing-boom mortgages from Countrywide Financial Corp. A legal settlement announced Monday by Countrywide parent Bank of America and California Attorney General Jerry Brown promises an $8.4 billion rescue operation to save an estimated 125,000 California borrowers – among 400,000 households nationally – from losing their homes. Bank of America agreed to freeze and lower interest rates, suspend foreclosures and waive late fees for live-in homeowners who took Countrywide loans from 2004 through 2007.

From the Sacramento Business Journal:

Confident the housing market will recover within three years, a local development company has bought a stalled 100-acre subdivision in North Natomas at a deeply discounted price. The project had been slated as Pardee Homes’ debut in the Sacramento market. Terms weren’t disclosed but several real estate sources said privately held Granite Bay Development Co. paid about $25 million — or 20 cents on the dollar after factoring in the millions of dollars Pardee pumped in for streets and utilities.
...
The land is well-known among the real estate community because Pardee established a high-water mark for land values when it bought the property. “We all kind of scratched our heads,” said Jim Glickman, an appraiser with Clark-Wolcott Company Inc. of Rancho Cordova. He said the industry had started to realize the market was turning by that point.

From the Sacramento Bee:

Sacramento-based banks haven't been immune to the impact of the housing market crash and the weak economy. The five largest community banks in the area earned a combined $17.6 million in the first half of this year, down 10 percent from a year earlier.

But that doesn't tell the whole story. The volume of troubled loans on their books has skyrocketed, which could translate into significant losses down the road. For the 11 banks based in the four-county region, noncurrent loans – generally, those on which borrowers are at least 90 days late on payments – totaled $39 million at midyear, according to a Bee analysis of FDIC data. That's up from $1 million a year earlier.
...
[B]ankers say plenty of less-prominent borrowers are simply walking away from loans. The attitude for many is, "Nobody else is paying, so why should I?" said John A. DiMichele, president and CEO of Community Business Bank of West Sacramento.

From the Associated Press:

Dr. Patrick McMenamin, president-elect of the American Academy of Cosmetic Surgery, said he's in regular contact with cosmetic surgeons who complain that business continued to slide through the summer - even before Wall Street's recent nosedive. "With this latest fiasco, many are probably down closer to 40 percent," said McMenamin, a Sacramento, Calif., cosmetic surgeon who specializes in faces, breasts and liposuction. For him, August "was terrible. I just did a lot less surgery."
...
To attract patients, "We've reworked our mailing list and Web site, all facets of the business," McMenamin said. He hasn't lowered prices for procedures but says some doctors have.

From the Modesto Bee:

Generation Motors in Modesto shut its doors Friday morning, an apparent victim of the sluggish economy that has toppled auto dealerships nationwide...Owner Curt Hughes said through an associate that he also would close Friendly Chevrolet in Escalon..."It's been a difficult market this year, and the valley has been hit the hardest," said John Gardner, owner of Central Valley Automotive in Modesto. "With the local real estate market, the gas spike and bank failures, it has been the perfect storm."
...
The real estate collapse means that customers can no longer take equity from their homes to buy cars, [Jeff] Steves [an owner of Steves Chevrolet] said. Gas prices are less of a factor, Steves said. "People still need their Tahoes and Suburbans," he said. Gardner said once people got over the initial gas price panic, the sales rebounded. Central Valley sold 30 Dodge trucks last month, he said. "People will buy if the price is right."

From the Stockton Record:

LODI - City budget writers will consider everything from closing City Hall one day a week to laying off workers as officials begin looking for ways to cover a nearly $1.9 million deficit projected for city operations and services. The worsening economy that is hammering most local governments means there is less tax revenue flowing into coffers than city leaders anticipated when they approved a spending plan in May, City Manager Blair King said Monday.
...
[A]lmost a quarter of the city's projected deficit can be attributed to an anticipated $416,000 drop in property taxes, King said. Most of the projected losses, however - more than $900,000 - come from an anticipated dip in sales taxes. Much of that drop is attributed to slumping auto sales, King said.

From the Sacramento Real Estate Blog:

In September, the average sold price per square foot was $130.50, down 7.4% from the August average of $140.87, and 35.2% from a year ago, when the average sold price per square foot was $201.35...The median sale price in September was $185,800, down 40.6% from last year’s median sale price of $313,000.

From the Sacramento Bee:

The question now is will they buy? Many have apparently stopped looking recently, said Folsom building industry consultant Greg Paquin. He noted reports from homebuilders that visits at model home sites have dropped seriously the past two weeks as the White House, Wall Street and Congress raise threats of economic calamity during negotiations on a rescue package.

From the Lodi News:

"Housing is the ultimate commodity. Every home is a basket of materials like steel, wood, and copper wiring that, when combined with the cost of land and labor, becomes a store of value for every commodity that's gone into the home's construction. The current oversupply of homes on the market may be keeping prices low, but because home prices are grounded in hard costs, the long-term home price equilibrium will adjust at some point to reflect the price of production and the cost of land. Investing in commodities is a time-tested way to turn inflation's lemons into lemonade. Purchasing homes is a time tested way to buy commodities. If commodity prices continue to go up, as many experts anticipate, today's home buyers will, over the long term, see their home prices go up," said NAR economist Lawrence Yun.

From the Sacramento Bee:

Shelly Smith-McClure endured a modern-day economic nightmare on Monday, losing a 15-month bid to avoid foreclosure and forestall eviction on her Herald home and property.
...
She said she moved into the house 10 years ago. Over time, she refinanced the mortgage, pulling out about $250,000 for improvements to the property...She and McClure married about three years ago. During the peak of the real estate market, McClure's work as a real estate appraiser was profitable. After the downturn, his business fell by 80 percent, McClure said.

SNL Bailout Video

Pardee's Over

From Home Front:

In 2004, the firm [Pardee Homes] plunked down more than $150 million for land and improvements at the very height of the land boom then sweeping the Central Valley. It bought land to build more than 600 homes in Natomas, 1,100 in Rancho Cordova's Sunrise Douglas area and 2,200 homes on the north side of Stockton. It also started up a new Sacramento division.
...
The market here in Sacramento then soured so quickly that Pardee decided it couldn't sell at prices good enough to recoup the boom-era price it paid for land. So it fenced off Natomas Meadows and shut it all down...Last week it sold 637 lots on 100 acres north of downtown Sacramento at its first big project in the capital city: Natomas Meadows.

Related Posts:
-Pardee Time in Sacramento?
-Moths to the Flame

From Bloomberg:

Las Vegas had the biggest drop on a per-square foot basis, falling 33 percent in July from a year earlier, New York-based real estate data company Radar Logic Inc. said in a report today. Los Angeles, Phoenix, Sacramento and San ["We're Immune"] Francisco each dropped about 28 percent. Three of the five worst-performing markets were in California.

PMI on Sacramento: 96% Chance of Lower Home Prices in 2010

From the CVBT:

Increases in foreclosures and unemployment have heightened the risk of further home price declines over the next two years in the Central Valley, according to a report Wednesday from Walnut Creek-based PMI Mortgage Insurance Co....PMI’s risk scores translate directly into its estimated percentage risk that home prices will be lower in two years.
...
The risk of future price declines rose across the Central Valley...Sacramento is...at 96.3 percent, compared to a first quarter risk index of 84.4 percent.

From the Merced Sun-Star:

"Our entire industry is fraught with rumor and innuendo," [bank spokesman Thomas] Smith said. "Rumors are pretty much rumors until it becomes action." Though County Bank, much like all other lenders, has been dealing with bad loans, he said he intends to be at his desk next year talking about how the housing market has recovered.

From the Sacramento Bee:

Call it another casualty of the Wall Street bailout. A hotly debated down payment assistance program that started in Sacramento and helped fuel thousands of home sales nationwide came to an end Tuesday. Last-ditch efforts this week in Washington by Sacramento housing giant Nehemiah Corp. of America and others failed to save the program, which needed congressional approval.
...
In a region where some say up to 40 percent of first-time buyers are using the down payment assistance program, its demise raised alarms that it will trigger a noticeable slowdown in the capital region's real estate market. "I think we're going to see a dramatic difference in sales next month," said Jeff Johnson, Citrus Heights branch manager of Platinum Home Mortgage.

Others said it might not be huge, but "it will be meaningful and noticeable in the Sacramento market," said Andrew LePage, analyst for La Jolla-based property researcher MDA DataQuick.

From Globe and Mail:

Wyatt Kenoly doesn't have a lot of time to watch politicians haggle over the $700-billion (U.S.) rescue package for Wall Street or follow the stock market gyrations. He's too busy trying to stave off foreclosure of his home in Stockton, Calif. The monthly payment on his $425,000 mortgage is about to double to slightly more than $4,000. He and his wife bought the house in 2004, taking an interest-only loan that has been resetting at higher rates for the past couple of years. While the loan payments have soared, the value of the house has sunk and it's now worth about $240,000. The couple just can't pay the mortgage any more. “It is grim,” Mr. Kenoly said Tuesday after spending the morning negotiating with his bank, HSBC Bank. “We can only hope and pray.”

Mr. Kenoly's predicament reflects growing concern about the U.S. housing market and whether the problems that have plagued the sector are getting worse. Housing is at the root of the turmoil on Wall Street and at the heart of the proposed bailout package. Treasury Secretary Henry Paulson has said that even if the bailout is passed by Congress, everything depends on a recovery in housing. Experts say that recovery is far off.

From BusinessWeek:

American savers, take a bow. This is your moment of vindication. Your hour of glory. And you earned it (in a manner of speaking). You resisted the siren call of plastic teaser APRs, dutifully living within your means to store money for a rainy day. You never took out an interest-only mortgage. Never had to pawn the copper pipes from your exurban McMansion to pay the reset on your liar loan. Your credit score would have gotten you into Harvard at age 12.

Good for you! Your reward: injurious savings yields, inflationary rot, and election-season neglect, all served up with a dollop of institutional insecurity...All of which might be tolerable to the lonely and beleaguered saver if he weren't taunted daily by lopsidedly pro-spending, pro-creditor news stories. Forget about moral hazard. Forget about rewarding profligacy. Washington is hell bent on putting a floor beneath the housing market.
...
Maybe savers' ultimate vindication will arrive when and if every asset is so deflated, credit is so choked off, and misery is so prevalent that only those with cold hard cash can lob in lowball offers for homes, cars, and everything else.