David Lereah Leaving NAR, Blames Weather

(OK, I made-up that second part.) From Inman News:

David Lereah, the chief economist for the National Association of Realtors trade group, is moving on from this position to assist a secretive project at Move Inc., a company that operates the NAR-affiliated Realtor.com property-search site.

Lereah, who critics have said tends to view the real estate market with rose-colored glasses, will join Move in mid-May to serve as an executive vice president and as chairman and partner with Allan Dalton in a "transformational" new business entity, Move announced today.
...
"David Lereah has established himself as the ultimate expert for the real estate industry," Dalton said in a statement. "Having David partner with me on this new venture will ensure that consumers and the industry will benefit from his unparalleled knowledge of financial issues and the real estate marketplace."
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As the Realtor group's chief economist for the past seven years, Lereah has often been quoted in the media for his market forecasts and commentary. He has authored several books, including "The Rules for Growing Rich: Making Money in the New Information Economy" (2000); "Why the Real Estate Boom Will Not Bust -- And How You Can Profit from It: How to Build Wealth in Today's Expanding Real Estate Market" (2006); and "All Real Estate is Local: What You Need to Know to Profit in Real Estate -- in a Buyer's and a Seller's Market" (2007).

Don't forget: "Are You Missing the Real Estate Boom?: Why Home Values and Other Real Estate Investments Will Climb Through The End of The Decade—And How to Profit From Them" (2005).

"David is an expert on real estate and the economy, and his stature and expertise enhanced NAR's position as the most credible source on economic and policy issues affecting the housing industry in the United States and abroad," said Dale Stinton, NAR executive vice president and CEO, in a statement. "We wish him the greatest success in his new endeavor."

UPDATE - More news

From Reuters:

The economist who prodded investors into the U.S. housing boom and has been skewered by bloggers during the bust is leaving a top real estate trade association, the group said Monday. David Lereah, the author of 'Are You Missing the Real Estate Boom?', will leave the the National Association of Realtors' by the middle of next month after serving as the head economist for seven years, a spokesman said.
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[O]thers excoriate the former bank regulator and economist with the Federal Deposit Insurance Corp. for maintaining a rosy outlook on the home market even while the demand for homes has evaporated.

One blog, David Lereah Watch, cites passages from Lereah's books and his encouraging words about the housing market and asks him to "admit he cheerleaded this destructive housing bubble."

In October, Lereah said that he expected "sales activity to pick up early next year." In recent months, Lereah has pushed his expectations for recovery deeper into 2007 and has trimmed his forecast for home sales for the year.

From The Motley Fool:

His ability to make bad predictions was, to my mind, only surpassed by the magnitude of his bombast, or perhaps his ill timing.

This is a guy who looked at dwindling numbers from the likes of Hovnanian Enterprises and KB Home, saw subprimes melt down at New Century Financial, watched Alt-A get worse for the likes of Indymac and Motley Fool Income Investor pick Washington Mutual, yet consistently told the press that all was well. I still have no idea how self-respecting business journalists anywhere could have parroted his biased misinformation for so long.

Blogosphere reaction:

• David Lereah Watch Blog
• Marin Real Estate Bubble
• SoCal Bubble
• Piggington
• Housing Panic
• Housing Doom

This Time It's Different

From Business Week:

Why This Slump Is Different

Don't call them bill collectors. Today, the industry has a softer term, "debt counselors," for the swelling ranks of people who are pounding the pavement trying to stem the tide of mortgage foreclosures. Says Steve Bailey, senior managing director at mortgage giant Countrywide Financial Corp. (CFC ), who oversees the company's $1.4 trillion portfolio: "You need to keep the revenue stream flowing and keep hope alive."

As the housing downturn grinds on, that has become the mantra for everyone from homeowners and lenders to agents and investors. There have been previous busts, but this one is markedly different. Never before have home prices fallen so broadly: Median national home prices slipped 0.3% in March from a year earlier, and the National Association of Realtors predicts a fall of 0.7% for 2007, which would mark the first annual drop since the Great Depression era.

Foreclosure is never an attractive option, but now it's even less appealing. With prices falling nationwide, lenders are wary of holding on to properties whose values could sink further. And unlike in previous cycles, a big chunk of the loans made recently are held not by federally insured thrifts or banks but by hard-charging hedge funds and other big investors that are aggressively pushing lenders to stop the bleeding. What's more, the steep rise in second mortgages that accompanied the boom means lenders in foreclosure proceedings are increasingly fighting one another for the scraps.
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For the first time in years, houses are hitting the market with asking prices below the value of their mortgages. Stretched owners are hoping for a so-called short sale, in which the lenders forgive the difference. National statistics are scarce, but according to a study performed for BusinessWeek by the online agency ZipRealty, there are 1,100 such listings in Miami, nearly 1,000 in Atlanta, and 700 in the Washington area. In Sacramento, real estate agent Patrick Hake counts 1,079, more than 10% of the total homes on the market.

SL's Water Cooler - April 2007 (Part 4)

Post off-topic links, observations, and stories here. Please read the comment policy before posting.

Foreclosures - 'We Don’t See Any Signs of a Peak at this Point'

From Sunpost.net:

Foreclosures have picked up speed in San Joaquin County, where the number of homes to hit the auction block has reached more than 12 times last year’s levels. Through March 2007, 539 homes were sold in the county’s courthouse auctions. Compare that with just 44 in the same period in 2006, according to Foreclosure Radar, a tracking service based in Discovery Bay. And with the biggest rise of the past two years coming in March — when auctioned homes jumped from 172 to 234 per month — a trend expected to continue.

"We don’t see any signs of a peak at this point," said Sean O’Toole, head of Foreclosure Radar, a real estate consultant who has followed the foreclosure market the past five years.
...
[W]hen prices stopped climbing last year, many buyers found themselves stuck with loans they could never afford in the long term. It’s a situation some lenders had ignored the past several years because the housing market was able to satisfy everyone, [local mortgage broker Deborah] Romero said. "A lot of common sense went out the window when real estate became so valuable," she said.
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Judy Thompson, a housing counselor in Stockton, said that lack of common sense has meant that a lot more people show up at her office in a disastrous financial state.
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Some of her clients face mortgage payments nearly equal to their income, while at the same time, their houses have gone down in value. At that point, there’s very little that can stop the property from going to auction, Thompson said.

Sacramento Real Estate Market - 'Nothing Positive to Report About'

From Roseville and Rocklin Today:

No March flowers for Sacramento real estate

There is nothing positive to report about the Sacramento real estate market in March. Sales volumes are down, prices are not showing any strength, and inventory of available homes continues to grow. Slice it and dice it anyway you want and I’m not sure who you are to find anything to feel good about. Well, I suppose there are a few “bubblers” out there who seem to take delight in seeing the Sacramento real estate market in trouble.
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For many of us who follow and work in the Sacramento real estate market the March results are disappointing, especially from where we were a few months ago, starting to think that 2007 might be a rebound year. Mike Lyon, head of Lyon Real Estate, and President of Trendgraphix said, "Information on market conditions has become the brass ring for sellers who need to sell and buyers who want a deal." He also went on to say, "There seems to be a new round of sellers who will miss their opportunity in this market because they have priced their homes at 20% more than buyers are willing to pay."

Trendgraphix March 2007 Sacramento Real Estate Market Report

Wall Street Journal: Sacramento Inventory Up 22%

U.S. House Prices Slide As Property Glut Grows

Hat tip: Average Buyer

Sacramento Home Sales Slump Hits 2 Year Mark

California Association of Realtors - March 2007 Statistics:

• Change in median price from 2006: -3.5% (price decline streak: 9 months)
  
• Change in median price from peak: -8.0%
  
• Change in home sales from 2006: -26.4% (sales decline streak: 2 years)
  

Based on MLS single-family homes sales in the Sacramento region.

To compare with other price indexes, click here.

'We're Not Trying to Bail Out Lenders and Speculators'

From the SF Chronicle:

In an effort to stem potential mass foreclosures of homes financed with controversial subprime loans, a state Assembly committee on Monday approved a bill intended to create a pool of money for homeowners to refinance their mortgages.

"We're not trying to bail out lenders and speculators," said Assemblyman Ted Lieu, D-Torrance (Los Angeles County). "The idea is to assist first-time homeowners who may face foreclosure due to bad loan products."

The bill, AB1538, would create a fund by tapping into the housing bond that voters approved in November, floating bonds in the future and asking banks that have large numbers of subprime customers who face foreclosures to pitch in, Lieu said.
...
Critics of the proposal questioned whether the state should be in the business of refinancing mortgages or bailing out people who may have made bad financial decisions.

They also say it would be wrong to use funds from November's Proposition 1C -- $2.85 billion housing bond measure that in part would be used for down-payment assistance for low-income families -- when voters weren't told that the money might be used to help troubled subprime borrowers.
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But Lieu argued before the Assembly Banking and Finance Committee that the subprime crisis will cause ripple effects far beyond the individual borrower. "A rash of unmitigated foreclosures could drag down the California economy and create a shock wave of asset losses," he said, who also chairs the committee.

Still Waiting....

From the Sacramento Bee:

The developer of the proposed Aura Condominiums, still working out his financing for the downtown project, has asked for more time to purchase land for the job.

Developer Craig Nassi wants to build a 39-story luxury condominium tower at 601 Capitol Mall but does not own the property. He had until Friday to exercise his option to buy the land.

The owner of the site, developer David Taylor, said Monday that Nassi has asked for an extension. Before that request is granted, Taylor said, he wants to speak with Nassi's lenders and equity partners this week.

Hat tip: Gywn

Not So Soft Landing: Sacramento Median Price Down By Double-Digits YOY

March 2007 median price statistics from DataQuick's dqnews.com (and archived here):

• El Dorado: -13.72%
  
• Placer: -7.79%
  
• Sacramento: -10.53%
  
• Yolo: -12.59%
  

Statistics are for resale single-family residences and condos as well as new homes. Percent change is from the same month last year or "year-over-year" (yoy).

Significantly, this was the first time Sacramento County's median price breached the negative double-digit threshold for this particular price measurement. It was also the 10th consecutive month of yoy price declines.

Click here to compare with other Sacramento housing market price indexes.

The Central Coast Housing Bubble Blog & Average Buyer Blog

The latest additions to SL's blogroll:

• The Central Coast Housing Bubble Blog -Examining housing price inflation and it's effect on the economy from Santa Maria to Paso Robles.
  

• Average Buyer - A blog dedicated to my obsession with buying in the Sacramento housing market
  

'Pretty Close to the Bottom' in Davis

From the Davis Enterprise:

...Davis average home prices are down from the market peak in late 2005. Depending on the property and the neighborhood, prices have dropped by 7 to 12 percent. Currently, the median home price in Davis is about $525,000. During the first 14 weeks of 2006, the median price was $564,500. And during the fall of 2005, it flirted with the high $500,000s.
...
Just about everyone agrees what's happening now is a market correction, the almost inevitable follow-up to the heady run-up in home prices from 2001 to 2005.

But to [Herb] Cross [vice president and manager of the Davis office of Lyon Real Estate], it doesn't look like the last market correction - the drawn-out downturn that lasted from 1990 through 1997.
...
That's led several observers to predict that the current cyclical downturn won't be as prolonged as the market correction in the early 1990s. Some say Davis prices might recover sooner rather than later, and they might even be starting to rise now.

“I think we're pretty close to the bottom,” said Doug Arnold, co-owner of Coldwell Banker-Doug Arnold Real Estate. “We saw some numbers in February and March that we hadn't seen in a long time. We're having more interest, more action than we've had in a year.”
...
Some categories of buyers who were once keen to buy in Davis have largely disappeared. Five or six years ago, open houses would attract out-of-town families with a son or daughter enrolling at UC Davis. In a market where home prices were increasing by 10 or even 20 percent each year; some families were able to cover the cost of college education through the appreciation of owning a house over a four- or five-year span. But now, with home values dropping, “we're not selling many homes to families of college students anymore,” Arnold said.

SL's Water Cooler - April 2007 (part 3)

Post off-topic links, observations, and stories here. Please read the comment policy before posting.

Property Tax RollBacks "Signal a Repeat of the 1990s"

From the Sacramento Bee:

A housing slump that has wiped out countless millions of dollars in Sacramento-area home equity is soon to give a few million back.

Letters to 50,000 Sacramento County homeowners are being mailed today announcing cuts of up to 10 percent in their fall property tax bills, said Sacramento County Assessor Kenneth Stieger.

The rollback will erase about $15 million in revenue for schools, the county of Sacramento, its seven cities and numerous special districts, Stieger said. It affects 12.8 percent of the county's 390,000 residential parcels.
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Prices for homes have dropped as the housing market slowed. In Sacramento County, for example, median sales prices for all new and existing homes are at December 2004 levels, according to La Jolla-based DataQuick Information Systems.
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The rollbacks signal a repeat of the 1990s when recession and job losses pushed down area housing values and 30 percent of Sacramento County homeowners received property tax relief. State finance officials call the re-evaluations a significant indicator of stresses ahead on state revenue.

"This is one of the biggest, if not the most significant, channels through which current real estate conditions affect property tax receipts," said Marcus Stanley, an economist with the Legislative Analyst's Office.

Stieger said nearly two years of falling prices have pushed many home values below their purchase prices..."We're probably going to see instances of market value deterioration from a few percent to, it's possible, 10 to 15 percent," he [Placer County Assessor Bruce Dear] said.
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With home prices still falling, next year likely will be worse, said Geoff Davey, [Sacramento] county's chief financial officer. "A year ago we were starting to see signs of it. Now we're really into it," he said. "I'm afraid many entities in this region that get the majority of revenue from property taxes have been reliant on growth that's not sustainable."

Sacramento Association of Realtors - March 2007 Statistics

Sales of existing single-family homes in March dropped 26.4% from the previous year, according to the Sacramento Association of Realtors. March marked the 22nd consecutive month that closed escrows in Sacramento County and West Sacramento have declined on a yearly basis. Sales have fallen by double-digit percentages in each of the last 19 months. The number of new escrows also declined 26.2% compared to March 2006 and 10.4% versus February.



Meanwhile, the median sales price hit its lowest point since peaking in August 2005. The median has dropped $42,750 or 10.9% since its high point. It was the first time this measurement has registered a double-digit percentage drop. Year-over-year, the median fell 6.5%, the largest monthly decline since appreciation went negative last July.



For a comparison to other Sacramento housing price indexes, click here.

'Struggling to Find Qualified Buyers' in Sacramento

From Reuters:

D.R. Horton Inc., the largest U.S. home builder, said on Thursday quarterly earnings fell 85 percent, in part due to charges related to the lower value of land.
...
The results included charges totaling $81.2 million, or 16 cents per share for land options forfeited and for the lower value of inventory of land and houses it owns.

"We believe that there will be continued softness in '08, and I would expect that we'll continue to adjust our inventories downward in the first two quarters of '08," Tomnitz said.

About 80 percent of the impairment charges were related to California projects, particularly in Sacramento.

From the Associated Press:

The weak market will linger into 2008 and could get worse before it improves, he said, blaming some of the company's troubles on high home prices and high costs for builders in California.

"We're struggling to find qualified buyers" in Sacramento and San Diego, Tomnitz said. "The only way we can increase that pool of affordable buyers is to make a product more affordable and lower average sales prices."

Tomnitz said the company had cut prices in California in the past month after trying to hold them steady.

"Amid a Sea of Vacancies"

From the Sacramento Bee:

Paying the rent remained a largely unchanged chore for Sacramento-area residents during the first quarter of 2007 as apartment owners kept rent stable amid a sea of vacancies.

Average rent in the region's large apartment communities was $949 early this year, nearly unchanged from the last quarter of 2006 -- and up only 2 percent from the same time a year ago, according to Novato-based RealFacts, which tracks apartment industry trends. The rise was one of the state's lowest increases and compared with a 12 percent annual hike in San Jose and 7 percent in the Los Angeles region.
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Occupancy rates also remained largely unchanged from a year ago. An estimated 92.8 percent of the region's 346 larger rental communities and 77,000 apartments surveyed were occupied in January, February and March, according to RealFacts. Low occupancy rates are a critical ingredient for stable rents. Rents typically rise faster when occupancy reaches 95 percent and creates more competition for units.

Analysts say renters will continue to rule the market in the near term even as few new apartments are built. Some say the rental supply is increasing as several former condo conversions return to the market as rentals and more people rent out their empty homes while trying to sell them.

Stockton #1, Modesto #5, Sacramento #6, Bakersfield #10

From RealtyTrac's Press Release:

California reported 31,434 foreclosure filings in March, the most of any state and an increase of 36 percent from the previous month. The state's total was nearly triple the number reported a year ago and accounted for 21 percent of the nation's total. The surge in foreclosure activity pushed California's foreclosure rate to one foreclosure filing for every 389 households -- third highest among all the states and nearly twice the national average.
...
Six out of the 10 cities with the nation's highest metro foreclosure rates were located in California. A 137 percent spike in foreclosure activity boosted the foreclosure rate in Stockton, Calif., to one foreclosure filing for every 128 households -- the highest metro foreclosure rate in the nation and more than six times the national average. Other California cities with foreclosure rates in the top 10 included Vallejo-Fairfield at No. 3, Modesto at No. 5, Sacramento at No. 6, Riverside-San Bernardino at No. 7 and Bakersfield at No. 10.

More Lender Layoffs Hit Sacramento

From the Sacramento Business Journal:

Aegis Lending Corp. shut its Sacramento lending office on April 6 letting about 25 employees go. The move by the Houston-based company was part of an overall repositioning of the company, said a company spokesman.
...
As recently as February, the Sacramento office had been seeking new employees. The Sacramento Aegis office, which was in South Natomas, focused on subprime lending.

Hat tip: Bakersfield Bubble

Sacramento Housing Market - Notices of Default

FYI - The graph incorporates revised figures for Q3 and Q4 of 2006.

January's Sacramento Bee foreclosure story included this blurb by DataQuick's John Karevoll:

DataQuick analyst John Karevoll said most homeowners who find themselves in trouble do so within 18 months of purchasing the home. The slowing rate of growth in default notices reflects an increasing number of loans moving beyond that time frame, Karevoll said. He said the region "may have seen most of the surge it's going to have in (notices of) default activity."

So what was this "slowing rate of growth" Karevoll thought significant? For Sacramento County, default notices had increased 153% in the third quarter versus the prior year, while the fourth quarter showed a mere 127% annual rise to 1,927 notices. However, with the most recent report, we learn that the fourth quarter figure was upwardly revised to 2,635, an increase of over 700 notices! So apparently the rate of annual growth actually increased from 127% (Q3) to 210% (Q4). But not to worry, since the most recent increase was a mere 185% (for now).

Sacramento Area Foreclosures At Record Highs, 922% Jump in Sacramento County

From the Sacramento Bee:

Foreclosures in full boom
In ominous sign of more to come, capital region default notices also hit record highs during first quarter of 2007.

There's a new kind of "For Sale" sign appearing in the region's neighborhoods -- offering property repossessed by the banks -- and there will be more, according to the newest round of statistics.

Both notices of default, the first sign that homeowners are having trouble making payments, and foreclosures reached historic highs across much of the Sacramento area during January, February and March, a property research firm reported Monday.
...
"You can't party that hard and not have a hangover. You just can't do it," said Keith McLane, who watches the market as principal of Carmichael-based West Coast Home Auctions, which offers sellers a quick sale for a lower price.

Notices of default -- issued after a homeowner misses at least two monthly mortgage payments -- reached their highest levels ever during this year's first quarter in Amador, El Dorado, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported.
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First-quarter foreclosure numbers also reached highs across much of the region -- in Sacramento, Placer, El Dorado, Yolo and Sutter counties -- according to DataQuick, which tracks county property records.

DataQuick said 1,505 homeowners in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties lost their houses to foreclosure during January, February and March. That's up from 865 the previous three months.
...
"A lot of these lenders are going to end up with an awful lot of properties," said Pam Canada, executive director of Sacramento-based NeighborWorks HomeOwnership Center, which counsels people with mortgage trouble. "It's been difficult these past weeks particularly. There's more of a tone of desperation from people we're finding now. They have very few alternatives."
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"It makes all the sense in the world," said Andrew LePage, DataQuick analyst. "This is probably the weakest (housing) market in the state, and showing some of the biggest year-over-year declines in home prices and some of the slowest sales."
...
Nationally, Yuba County ranked ninth and Sacramento 16th among more than 1,000 counties for the percentage increase of defaults from the first quarter of 2006, according to ForeclosureS.com, a Fair Oaks-based Web site that tracks them for investors. Placer and El Dorado counties ranked 19th and 20th.

Q1 2007 foreclosures per SacBee chart:

• Sacramento County: 1,104, +922% YoY (previous high Q2 1997: 703)
• Placer County: 154, +927% YoY (previous high Q2 1996: 90)

From the Stockton Record:

Foreclosure activity continues to soar, with the number of default notices sent to homeowners in San Joaquin County last quarter hitting the highest level in the past 15 years.
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"We're seeing the tip of the foreclosures," said Jerry Abbott, president and co-owner of Coldwell Banker Grupe. It will take up to two years for foreclosure properties to work through the market, where at the current sales pace, it would take 11 months for all homes currently on the market to sell if no other properties went up for sale, he said.

That will further push down prices, which in San Joaquin County have sagged by more than 5 percent over 12 months, Abbott said. Expect that trend to continue into 2009, he said.

From CBS 13:

From Natomas, to Elk Grove, to Roseville, the signs are everywhere - for sale, bank owned, and foreclosure. Sacramento's chilly real estate market is creating problems in neighborhoods across Northern California.

Homes at Roseville's Morgan Creek Country Club often sell for more than a million dollars. When Matt and Elena Arney bought a new home here, they figured they were buying the luxury lifestyle the builder advertised. "We wanted a country club setting with other families. We have 2 young children," says Elena. The Arney’s were glad to see the community had what seemed to be a strong homeowners association to help protect their investment.
...
The Arney’s and their neighbors say they've watched as their community's lawns have begun to turn brown, weeds have taken hold and uncared-for swimming pools have begun to slime over.

The Arney's say the house right next door shows clearly what's happening. "When we had 500 frogs in our backyard, we wanted to find out where they were coming from,” says Matt.

The $850,000 home went into foreclosure. The weeds began to grow, and water and electricity were cut off. Then the pool was drained, it has since refilled with rain water.

A block away, the dying lawn and spreading weeds mark another empty house. Directly down the hill from the Arney’s, is an enormous house neighbors say was stripped of fixtures and flooring by renters, before falling into foreclosure. The Arney’s and some of their neighbors say they understand what's happening. What they say they don't understand is why their homeowners association isn't doing more to clean up the blight.
...
[H]omeowners fees usually go to maintain and improve common areas and facilities, not neglected private property.
...
Matt says sometimes he breaks down and mows the lawn next door. Merit Company says there's really nobody to assess for maintenance after a foreclosure, banks have no budget for that and apparently no interest - and the home's original owner is no longer a member of the association.

That attorney for Merit Company says he's working on new ground rules for a number of homeowners associations now facing these problems.

"Casualties of America’s Housing Bust"

From the NY Times:

Some of the casualties of America’s housing bust are easy to spot up and down California’s Central Valley.

From Fresno to Sacramento, big tangles of wire and PVC pipes clutter vacant lots in silent subdivisions, waiting for houses to be built — some day. Dozens of “For Sale” signs already dot the lawns across new residential communities. And right next to the ubiquitous billboards from builders are fresh signs offering homeowners help to avoid foreclosure.

But another set of losers is less visible: the immigrant workers, mostly illegal, who rode the construction boom while it lasted and now find jobs on building sites few and far between.

Offering more than $10 an hour as well as new skills and a shot at upward mobility, construction provided many illegal immigrants the best job they ever had, a step up from the backbreaking work reserved for those toiling without legal authorization, which in the Central Valley mostly meant pruning and picking in fruit and vegetable fields.

The growing presence of illegal immigrants in home building, mostly working for small labor contractors, might help explain why government statistics have recorded only a small decline in construction employment, despite the collapse in residential investment.

“Technically they don’t fire them,” said Myrna Martínez, coordinator for the Fresno office of the American Friends Service Committee, a nonprofit organization working on social assistance projects for immigrant workers. “They just tell them that there is no more work.”

As building jobs have grown scarce, many of the workers who left farm labor a few years ago are returning to where they came from. They can be seen once again hunched in clusters under the unremitting sun, cutting heads of lettuce or slicing off spears of asparagus for minimum wage, clinging to the hope that home building will resume again.
...
“There are quite a few in this situation,” Ms. Martínez said. “This construction boom that started five or six years ago just suddenly started to fall apart.”
...
Adrián L. and José Manuel J. have resisted going back into the fields, making do with piecemeal work: putting up a roof here, re-tiling a bathroom there. But they are near the end of the line. “If work doesn’t pick up,” José Manuel J. said, “in May I am going to have to go to pick in the cherry crop.”
...
José Carlos J., José Manuel’s nephew, has not formally lost his job as a roofer. But the contractor he works for has hardly called him in recent months. “Since November I’ve laid only four roofs,” he said.

Most of the workers disgorged back into the fields are in a similar situation. Milling about in a park near downtown Stockton after work on a recent afternoon, José Manuel’s brother, Raymundo J., who is the foreman of a crew picking asparagus near Stockton, pointed to several former construction workers from his hometown in Mexico who are now in the field.

There was his other nephew, Roberto, who used to tear roofs down for $15 an hour, and Manuel S., who used to spray stucco on houses in the San Francisco Bay Area. Antonio R. lost a $14-an-hour job cutting wood last October. Chuy R., who got a job wiring homes immediately after arriving in the United States in May 2006, lost it at the end of the year.

They all hang on to the hope that construction will rebound. Most fear, however, that times will never again be as good. Said José Manuel J., “I don’t think building houses will pick up for several years.”
...
[T]he lull in construction, combined with the frosts this year that devastated the state’s citrus crop and part of the nut crop, are freeing workers for other farms...“There are too many people for too little field work,” José Manuel J. complained. “People are scattering up to Oregon and further north because there is little work here.”

'I didn't figure they'd go up this fast.'

Sacramento County Default Notices, Q1 2007 per DataQuick: 3,234

• Change from Q1 2006: +185%

From the LATimes:

The number of Californians losing their homes to foreclosure rose in the first three months of the year to the highest level in a decade, a real estate information service said today, providing grim evidence that the shake-out in real estate is nowhere near over. Foreclosures totaled 11,033, up 802% from the placid levels of early 2006, according to DataQuick Information Services in La Jolla.
...
"I figured they'd go up," said DataQuick analyst John Karevoll. "I didn't figure they'd go up this fast."

The default and foreclosure totals varied widely by area. Generally, the places with the cheapest housing--such as the Inland Empire and Central Valley--fared the worst.

From News10:

Some 3,400 Sacramento County property owners faced foreclosure in the first quarter of 2007, up nearly 200 percent from the same period last year. In sheer volume of defaults, Sacramento County is in the top ten nationwide. The figures from Fair Oaks-based Foreclosures.com represent filings from lenders against homeowners who've defaulted on their loans. A notice of default is the first step before the homes can be sold at auction.

The hardest-hit county in California based on percentage was Yolo, with a nearly 400-percent increase from the year before. San Joaquin, Solano and Yuba counties all experienced at least a 200-percent increase in defaults.

Sacramento Housing Market: Inventory

Sacramento Area Inventory Growth per SacBee/TrendGraphix:

Month-over-Month (March v. February)

2005: +6.9%
2006: +4.5%
2007: +9.6%

Year-over-Year (2007 v. 2006)
January: +18.4%
February: +15.5%
March: +20.6%

As always, you can get the latest Sacramento housing inventory statistics at these sites (also available on the right sidebar): BMIT, SacRealStats, Hardtack, and Housing Tracker (and here).

"No Worse Place than the Sacramento Region"

From Fox 40:

Home foreclosures are rising across the country and there is no worse place than the Sacramento region. The latest figures show four of the top ten metro areas in the nation are right here. Those locations are Sacramento, Stockton/Lodi, Modesto and Yuba City. These cities have the highest incidents of sub-prime loan delinquencies in the country.
...
And one local retired woman fears she'll lose her home because of a mortgage loan she says she was scammed into. Netta Savage worked nearly 40 years in Oakland, raised her children there and is in now in her late 60s. Now living in this retirement community in Rio Vista, she believes she was scammed into her home loan, and that she is not alone. Savage said, "Under duress, you do dumb things. So I accept my responsibility. I should have said, 'I'm not signing nothing. We need to take this home, and let me get with someone.' But he's saying sign it, sign it. It's what we agreed on. It's what we agreed on. Sign it, sign it, sign it. And I'm like...okay."

Now into the second year of her loan, which got her this Rio Vista home in the Trilogy retirement community, Savage's mortgage payments exceed her monthly fixed income of $2,000. When her flexible interest rate went up, her monthly payment went from $1,300 to close $3,000 in less than 2-years.

Condo Conversion Flops

From News10 (video here):

Owners who bought "luxury" condo conversions at the peak of the market now complain their complexes still feel like apartments.

At Somerfield in Elk Grove, the developer boasts of a resort-style community. But just a year ago Somerfield was an apartment complex. Signs and banners in front of the complex advertise "luxury" condominiums for sale from $190,000. But ads in housing rental publications offer the same units as apartments from $925 per month. Property records show just 13 of the 280 units at Somerfield have been sold since sales began last December.

A retired painter from Southern California was the eighth owner to buy at Somerfield and told News10 the sales staff was upfront about the difficult housing market. "They explained they're trying very hard to sell but they still need revenue, so they're still renting them out," said Bill Bearss.

But owners at another former apartment complex converted by the same developer are not so understanding. "They were hoping to have this place fill up within about four months," said Jim Colvin, who was among the first to buy at Rollingwood in Fair Oaks in October 2005.
...
Apparently anticipating strong sales, Pismo Beach developer Al Nevis moved tenants out of the former apartment complex during the conversion. Now more than half of the 272 units are vacant....
...
Some condo owners at Rollingwood said they would reluctantly welcome tenants in the vacant units to raise money for the homeowners association. But owner Jim Colvin doesn't agree. "Then it becomes a rental property again," said Colvin. "And our value is gone."

SL's Water Cooler - April 2007 (part 2)

Post off-topic links, observations, and stories here. Please read the comment policy before posting.

'Nobody Expected it to Turn Down this Far'

The Stockton Record reports on existing home sales in San Jouquin County.

Year-to-year, sales countywide dipped to 354 last month from 589 the previous March, according to figures from the latest Coldwell Banker Grupe-TrendGraphix monthly sales report, based on Multiple Listing Service data. Prices were down more than 5 percent over the year to a median sales price of $383,000 in March.

The number of houses for sale jumped, likely because of foreclosure listings, from 4,119 in February to 4,580 last month.

"It's been disappointing when comparing to the year before - and last year was a bad year," [Jerry] Abbott [president and co-owner of Coldwell Banker Grupe] said. "Nobody expected it to turn down this far."
...
"I see the market continuing to worsen, and most of are looking at 2009 before we see any improvement at all," he said.

'It's Kind of a Tough Market'

From the Sacramento Bee:

For two months, it looked like Sacramento might finally be climbing out of its housing slump. Then the bottom fell out of the subprime loan market and threw home sellers a curve.

"It's kind of a tough market," said Pradeep Gosai, who relisted his $529,000 house in Natomas this week after turning down offers last year that were "different from what we wanted." "Now it's a lower price than last year. I hope we make it," he said.
...
Builders and real estate agents attribute the unexpected March slowdown to negative publicity from the subprime lending industry meltdown and tightening of lending standards that eliminated would-be buyers.

Sacramento real estate agent Carey Covey said many first-time buyers no longer qualify for today's more demanding loans. Across the nation, lenders battered by rising defaults and foreclosures are again requiring down payments from buyers and detailed proof of income.

"They actually wanted the buyers to have a pretty good credit history and a job and some income coming in," said Covey, who now is trying to sell 42 properties repossessed by the banks.
...
March closings represent sales started in December, January and February before extensive publicity about imploding subprime lending firms and tougher new lending rules.
...
DataQuick Information Systems reported this week that the median price of [all] homes fell from February to March in five of eight area counties -- dropping by $20,000, to $460,000 [-13.4% yoy], in El Dorado County, for example, and by $15,250, to $340,000 [-9.3% yoy], in Sacramento County....[M]edian sales prices of existing homes remain about 6 percent lower than last year in Yolo and Sacramento counties and about 7 percent lower in Placer.
...
The inventory of resale homes on the market continued its seasonal rise in March, according to Sacramento-based TrendGraphix, raising the specter of further price declines and fierce seller competition ahead. TrendGraphix reported 12,500 listings -- 1,090 more than last month -- in El Dorado, Placer, Sacramento and Yolo counties, while the Gregory Group showed new home builders have 4,268 houses in their unsold inventory, a 15-week supply.

"Inventory is still the elephant in the living room," said Gold River real estate agent Randy Dunham. "That's why we've had an almost 1 percent drop in values each of the last six months."

Price/sales chart
Inventory graphs
Price by zip chart

From the Sacramento Business Journal:

New-home sales rose 30 percent in the first three months of the year compared with the same period in 2006, a sign that aggressive pricing might be continuing to lift Sacramento homebuilders out of the depths of the slump.

New-home inventories, however, crept up after falling last quarter for the first time in two years, according to a report released today. And homebuilders aren't certain what the fallout will be from the subprime mortgage meltdown as lenders are floating fewer loans to homebuyers with questionable credit.

"Pricing is down, and that's part of the reason why sales are up," said Greg Paquin, president of the new-home analyst The Gregory Group, which tracked the first quarter new-home sales figures for the six-county Sacramento region.

The average new home in the region sold for $465,100, down 6.3 percent from a year ago. His figures show the median home price has dropped even more -- 9 percent to $423,900. Homebuilders have dropped those prices to compete for buyers.
...
He noted there were a record 390 separate new-home projects within the six-county area selling homes and competing for buyers. So while sales numbers were up, the overall sales rate for the region has stayed level for the past six months. The region's new-home inventory -- everything from a completed home to a lot ready for construction -- increased by 8.7 percent. Analysts believe inventory is key to a turnaround because a large supply gives buyers plenty of options and increases competition, further dropping prices.
...
What does all this mean for the rest of 2007? "That's anybody's guess," [Doug] Pautsch [Sacramento division president for Centex] said. "This year should be similar to last year. It's not going to skyrocket."

Sacramento Home Sales Fall 32%

From the Sacramento Bee:

The biggest year-over-year decline occurred in Sacramento County, which reported 1,749 closings last month compared to 2,587 in March 2006.

March median sales prices also remained 6 percent to 14 percent below the same time last year in most area counties.
...
"The hope in the (real estate) industry was that the data would begin to show the market was stabilizing without a doubt, and now there's some lingering doubts, particularly in the Sacramento area and across the Central Valley," said DataQuick analyst Andrew LePage.

Area home builders and real estate agents also reported a marked slowdown of escrow openings in March. Many blamed both negative publicity from a subprime lending industry meltdown last month and simultaneous tightening of lending standards that eliminated would-be buyers.

Bubble Sitters: 1 NAR: 0

From the NY Times:

A Word of Advice During a Housing Slump: Rent

A promotional spot for the National Association of Realtors came on the radio the other day. The spot, introduced as something called “Newsmakers,” was supposed to sound like a news report, with the association’s president offering real estate advice.

“This is the best time to buy,” Pat Vredevoogd Combs, the president, said cheerfully. “There’s a lot of inventory in the marketplace. Interest rates are low. It’s a wonderful tax deduction.”

By the Realtors’ way of thinking, it’s always a good time to buy. Homeownership, they argue, is a way to achieve the American dream, save on taxes and earn a solid investment return all at the same time.

That’s how it has worked out for much of the last 15 years. But in a stark reversal, it’s now clear that people who chose renting over buying in the last two years made the right move. In much of the country, including large parts of the Northeast, California, Florida and the Southwest, recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime. It’s almost as if they have thrown money away, an insult once reserved for renters.

Most striking, perhaps, is the fact that prices may not yet have fallen far enough for buying to look better than renting today, except for people who plan to stay in a home for many years.
...
Over the next five years, which is about the average amount of time recent buyers have remained in their homes, prices in the Los Angeles area would have to rise more than 5 percent a year for a typical buyer there to do better than a renter. The same is true in Phoenix, Las Vegas, the New York region, Northern California and South Florida.
...
[T]here are two big reasons to doubt the real estate boosters who insist that it’s once again a great time to buy.

The first is history. After the last big run-up in house prices, in the 1980s, a long slump followed...Keep in mind that the 2000-5 boom was even bigger than the ’80s boom and that house prices on the coasts, according to the official numbers at least, have fallen only slightly so far. So it is hard to imagine that prices will rise 5 percent a year, or another 28 percent in all, over the next five years.

The second reason for skepticism is that buying has never been quite as beneficial as Realtors — and mortgage brokers, home builders and everybody else who makes money off home purchases — have made it out to be. Buyers have to pay property taxes on top of their mortgage, while renters have the taxes included in their monthly rent bill. Buyers also face thousands of dollars in closing costs....

Rent v. Buy Tool

From CNNMoney:

The National Association of Realtors said Wednesday it expects its measure of home prices to fall this year for the first time since the group began tracking sales nearly 40 years ago. In its latest monthly forecast, the group said it expects a 0.7 percent decline in the median price of an existing home sold in 2007. A month ago it had been projecting a 1.2 percent increase.
...
Slower sales have already produced year-over-year decline in prices in eight of the last nine months through February, according to the group's numbers. The median price in February was 1.3 percent below year-earlier levels, and was 7.6 percent below the record high price set last July.
...
The subprime mortgage mess led the group to cut its sales forecast as well. It said problems some buyers may have getting financing reduced its forecast for sales of existing homes this year by 100,000 homes to 6.34 million. That sales pace would be 2 percent below the 6.48 million sold in 2006.

'There Goes the Property Value'

George Warren reports for News10 (video here):

More than 100 units in a Sacramento-area condominium complex are headed into foreclosure in what appears to be a case of bad timing. A development group called Rollingwood North LLC purchased the former Rollingwood Commons apartment complex in Fair Oaks and Orangevale in 2004 when the housing market was near an all-time high.

The company began converting the 242 units to "luxury" condominiums. According to county records, sales started strong in late 2005 with 76 units sold in the final three months. But sales tapered off in 2006 and in the first three months of 2007 the group sold just one unit.
...
Rollingwood North apparently stopped paying dues to the homeowners association, which has begun foreclosure proceedings...[T]he collection agency handling the foreclosures told News10 it is still filing the paperwork and the total will be 188 units in default.
...
"There goes the property value," said Sharon Morton, who paid $239,000 for her two-bedroom condo last fall.

Inland Suffering

From the Marin Independent Journal:

[Leslie] Appleton-Young [chief economist for the California Association of Realtors], while expecting a continuing contraction through 2007, said the brunt will be borne by the inland markets of Southern California, the Central Valley and areas north of Sacramento. In those areas, she said, agents are coping with a growing inventory of unsold homes because of new construction in the suburbs and rising foreclosures on strapped lenders with riskier subprime mortgages, she said.
...
You [Marin] have, like, no inventory compared to Southern California," Appleton-Young said. "And Southern California's inventory is moderate compared to the Central Valley.
...
Appleton-Young said California's housing sector will continue to suffer for some time from a wave of foreclosures on homeowners with subprime loans. But she said the areas most affected will be inland areas, where many residents bought new homes with zero down payment loans during the price peak of 2005-06, only to see values plummet.

Housing Bust Consequence #874

From the Sacramento Bee:

Kings fans have been grousing about the team's win-loss record, the failed arena talks, the difficulty reselling tickets and the lack of excitement at Arco Arena. Now ticket brokers are predicting the team's front office will see an unprecedented number of season ticket holders pass on renewal.

Before the worst could happen, the front office swung into action: Kings owners Joe and Gavin Maloof made a push to retain as many current holders as they could before the April 2 deadline for renewal.
...
The Kings' sales push couldn't come at a worse time. The downturn in California's housing market coupled with a predicted downshift in job growth this year could find Sacramento fans being more judicious about spending.

"I can guarantee that Arco Arena will have a lot of (season) tickets on their hands," said Lakota Verberne, sales manager at All Events Tickets in Roseville.

'Feeling the Effects of the Slowdown in the Subprime Market'

From the Sacramento Business Journal:

National homebuilding giant D.R. Horton Inc. on Tuesday announced its second-quarter new-home sales dropped by 37 percent -- or almost 5,800 fewer homes than a year ago, with much of the slow down in California and the Southwest.
...
D.R. Horton was the Sacramento region's leading homebuilder last year, selling 1,168 homes -- almost 12 percent of the market share. But the company's sales in the area have slowed in recent weeks, after an impressive 100 homes in January, but only seven in February, according to Hanley Wood Market Intelligence. D.R. Horton has 5.6 percent of the new-home market for the first two months of the year.

From the Stockton Record:

New-home sales jumped by nearly 20 percent in the first quarter in San Joaquin County, up from the previous quarter as well as from the first quarter of 2006, when a housing slowdown was settling in.

Prices, though, continued to slide, from an average $519,350 at the end of last year to $507,115 in the most recent quarter, a decline of 2.4 percent, according to the latest sales numbers from the Gregory Group, a real estate information and consulting service in Folsom.

That's down from a high of well above $550,000 in the third quarter of 2006.
...
Even with the sales-numbers growth, the first quarter was mixed, said Joe Anfuso, president of Stockton-based Florsheim Homes.

The number of people out looking at home models significantly increased beginning in mid-January, he said, but that dried up again several weeks ago with the implosion of the subprime market, which either took many potential buyers out of the market or scared them off for now with reports of tightening credit standards.

"I certainly think all the builders are going to be feeling the effects of the slowdown in the subprime market," Anfuso said. "It will take some time to flush out of the system."

Gregory Group president Greg Paquin said builders have been lowering the presence of incentives in the sales market because these days, would-be buyers are responding better to lower sales prices, rather than to higher base prices with incentive packages thrown in.

"Crash Landing"

From the Sacramento Business Journal:

The once high-flying subprime mortgage industry is crash landing all through the Central Valley.

The three-county Sacramento metro area -- Sacramento, Placer and El Dorado counties -- saw its rate of subprime mortgage defaults more than triple from December 2005 to December 2006. The subprime default rate climbed by 10.7 percentage points, from 3.4 percent at the end of 2005 to 14.1 percent at the end of last year, the biggest increase among all metro areas in the nation, according to research by First American LoanPerformance in San Francisco.
...
"A lot of the California MSAs saw a huge increase," said Bob Visini, head of marketing for First American LoanPerformance. The default rates climbed by 9 or 10 percentage points almost across the state, translating to increases of 200 or 300 percent, he said.
...
When appreciation stopped, the loans started going bad with a vengeance through the Central Valley..."This was one of the hottest markets in the state for a very long time, and now it is not," said Dustin Hobbs, spokesman with the California Mortgage Bankers Association in Sacramento. "It is one of those areas where home pricing had no business going up like it was."

Easier access to subprime loans helped extend the housing boom by months or years beyond the typical cycle of buyers' and sellers' markets. That could extend the correction, some in the industry say.

Floplords

From the Modesto Bee:

Kenneth Spencer hadn't planned on being a landlord. He and a partner thought they would make a tidy profit buying an older Modesto home, fixing it up, then quickly reselling. "But we bought at the wrong time," lamented Spencer, who lives in Martinez. "We put a lot of money and a lot of time into that house."

After spending $309,000 for the Elm Avenue home in 2005, plus $80,000 more remodeling it in 2006, they haven't been able to sell it for enough to break even. So they're trying to rent it for $1,650 a month. Even if they get that price, they'll still be short $1,000 a month on their mortgage payment. "It's all about trying to survive on the mortgage right now," Spencer said.
...
Many people are trying to hold onto houses they purchased as investments by becoming landlords. That has flooded the Northern San Joaquin Valley rental market with houses, pushing down rents and forcing landlords to compete for tenants.

Many rental properties originally were bought by speculators who got caught in the real estate downturn, explained Paula Leffler Zagaris, whose Liberty Property Management company manages 1,500 rental houses.

"They were gambling," Zagaris said of investors who intended to quickly sell — or "flip" — houses to cash in on rising property values. "Anybody who did that before October 2005 was a genius and made a lot of money. … But if they bought after that, they're stuck."
...
Many good-quality homes are on the rental market now, said Deborah Naylor, owner of Parkside Management Co., which manages 300 rental houses. "Tenants can really rent very nice houses for really nice prices," Naylor said.
...
"Owners are just so desperate because they can't stand to take that mortgage hit every month (without renting to cover part of their cost)," Naylor said. Often, owners ask her to seek higher rents, say $2,000 a month, but Naylor tells them, "We're not miracle workers." Zagaris agreed an owner's costs have no bearing on what they can recoup in rent.
...
"My house has been empty for four months," [landlord Darrell] Bye said. "I've been renting out houses since the 1970s, and this is the worst I've seen the market. I've even lowered the rent $200 … but I haven't found tenants I'd rent the house to."

SL's Water Cooler - April 2007

Post off-topic links, observations, and stories here. Please read the comment policy before posting.

UOP Predicts Market Bottom in 2007

From CBS 5:

Dr. Chuck Williams, the Dean of the University of Pacific School of Business believes 2007 will mark rock bottom for the housing market.

"We don't see a bubble bursting," William said. "Prices have dropped 5 to 10 percent compared to two years ago. Interest rates are low; there's a tremendous amount of inventory from which to choose. And if you're a buyer those are the three conditions that you want."

Sacramento: The Foreclosure Leader

From the Central Valley Business Times:

With the Central Valley leading the way, 5,316 homes were lost to foreclosure sales in March in California, according to figures compiled by Foreclosure Radar, a Discovery Bay-based foreclosure listings and software company.

The homes sold at auction last month represented a 27 percent increase from February and a 264 percent increase in the last six months, the company says. Of the $2 billion worth of properties sold in March, 4,796 went back to the lender after receiving no bids, representing $1.82 billion, it says.
...
The real foreclosure leaders are in the Central Valley, the company says. Four of the state’s top five counties for foreclosure sales last month, on a per capita basis, are in the Valley.

Sacramento County ranks first with 2,605 residents for every sale. Neighboring San Joaquin County is third, one sale for every 2,872 residents. Yuba County is fourth, at 2,909 residents per sale and Stanislaus County is fifth with 3,597 residents per sale.
...
"Foreclosures sold at auction now account for 15 percent of all home sales in California and continue to rise," says Sean O'Toole, CEO and founder of Foreclosure Radar. “This isn’t just a story about failing subprime lenders and their customers. At the current pace, foreclosures will be a significant part of the real estate economy.

Mortgage Lender Implode-O-Meter Hits 50

On January 3, 2007, this blog first mentioned the Mortgage Lender Implode-O-Meter website. At the time, only a handful or so companies were listed. Now it looks like 50 lenders have "gone kaput." How many more will go down this year?

'You Don't Want to Test the Market Anymore'

From the Sacramento Bee:

The spring home sales season is under way, and pros say this year you'll need every trick in the book to sell your house.

So take the mounted deer head off the wall, roll on a coat of cheery yellow paint and bring out the vanilla spray, say real estate agents. With nearly 11,500 homes for sale in the capital region -- and hundreds, perhaps thousands, of additional homeowners considering the same -- 2007 is going to be more competitive than ever for sellers.

"Price it right and present it right, and hope you get lucky," says Yuba City broker associate Doug Bryan.
...
"That's all good," Bryan says, referring to aromas, colors and welcomes. "But the price is what does it. If the buyer feels it's reasonable for them, they'll make the leap."

Adds [Sacramento real estate agent Patrick] Lieuw: "If you price a property right, it's still moving. Pricing is critical nowadays. You don't want to test the market anymore. You want to be proactive instead of reactive. Pricing is really the key for the 'wow' factor."

Sacramento Price Watch

Source	Change (peak)	Change (yoy)	Prior Year	As of
ASKING
HT Median	n/a	-9.8%	-21.5%	Mar 2010
$/SF
Radar Logic	-53.2%	-3.3%	-26.1%	Jan 2010
MEDIAN
DataQuick All	-53.5%	-14.3%	-35.2%	Jul 2009
DataQuick New	[-45.9%]	8.8%	-32.1%	Jul 2009
DataQuick Ex	-52.7%	-15.2%	-34.8%	Jul 2009
SAR	-56.7%	0.6%	-33.7%	Jan 2010
NAHB	-49.6%	0.5%	-31.6%	Q4 2009
OTHER
FHFA HPI	-37.6%	-7.4%	-19.5%	Q4 2009

The statistics above are all derived from publicly available information on the Internet. The DQ statistics cover Sacramento County only. SAR data is for Sacramento County + West Sacramento. FHFA, NAHB, HT, and Radar Logic figures are based on regional coverage. Numbers in red indicate record price changes (excluding HT). For more information about what each price statistic measures, please see the price peaks post or click on the links above.

________________________________
[] The peak median price for new homes has not been published by the Sacramento Bee. In December 2006, a San Francisco Chronicle article stated that the new homes median peaked in December 2005 at $476,500. However, shortly after, DataQuick revised all its data back to 1988. Therefore, the figure above is derived from comparing a unrevised figure to a revised figure. Note however, that DataQuick has said that its revised figures from the new homes category saw only slight changes.

Ride the Shiller Roller Coaster

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"Desperately Holding on to a Lifestyle" in Placer

From a Roseville Press-Tribune editorial:

The Placer County Board of Supervisors' decision to approve two new $1 fees on registered vehicle owners should be greeted with alarm by taxpayers. The money - about $740,000 yearly but with room to grow as more vehicles are registered in the county - goes directly to law enforcement.
...
That's all well and good - in a scenario based on the Placer County of say two years ago. But things have changed and the move can only be viewed as bad timing.

The new-home market is in a slump. The latest quarterly results from national real estate development companies - and projections over the next year - are far from the rosy picture painted in 2004. Interest rates are financially killing the little guy.

That's the Placer County resident who scrimped and saved to buy a home in this county and now fearing the American Dream will vanish in foreclosure as that adjustable-rate mortgage or second mortgage squeezes the family finances.

Perhaps supervisors may have missed some hard realities. The county's own revenues are slipping because of a cooling housing market that has left many homeowners watching their dollars more carefully as their equity drops and mortgage payments continue.

Perhaps they missed the most recent projections showing that revenue growth this fiscal year won't offset the $28 million forecasters say will be needed to sustain county operations at current levels.
...
They've found a way to put more money in government and take away from residents at a time when many are desperately holding on to a lifestyle they came to the county to enjoy.
...
The fee increase is symptomatic of a collective denial of the realities of the current economic climate. Adding more fees or taxes will only squeeze taxpayers even more.

Sacramento Home Price/Sales Results - March 2007

Agent Bubble has kindly provided some March statistics for Sacramento County.

• Change in average price per sq. ft. since last year: -8.4%
• Change in average price per sq. ft. since 2005 peak: -10.9%
• Change in # of homes sold since last year: -32.6%

To compare with previous months, simply click on the topic "Monthly Reports: AB MLS" below the post.

Max has it all graphed here.

Red, Bluff(ing) Realtors

From the Red Bluff Daily News:

No surprise, but there's a reluctance among real estate professionals and developers to acknowledge that in a short two years the housing market has gone from red hot to tepid. But 2006 figures statewide and nationwide showed drastic drops in homes sold over 2005, and clearly the California boom of earlier years has turned into a dull thud.

It wasn't as apparent in Tehama County, where even into late summer last year it looked like homes by the hundreds would soon be under construction and many more hundreds - no, thousands - of people would be heading here to enjoy life under whichever oaks the developers didn't cut down.
...
Members of the Tehama County Association of Realtors concede the obvious, that sales are flat or in decline. But it appears most want you to believe that the market has bottomed out and will soon start back up.

Homes aren't selling very well and several hundred of them are on the market right now, and a large number of others are for rent, some of those brand new.

Those who sell real estate for a living are reluctant to concede that the bloom is off, not only in California, but in most of the United States. But the headlines and the signs have been and still are there for all to see.

Early last winter, Rich Henley, then the president of the Tehama County Association of Realtors, attempted to put a better face on what was happening. An article in the Daily News on Nov. 13 has as its lead:

"Ignore the reports you've heard about the real estate market crashing ." Henley said that according to figures the association keeps, the market hasn't fallen drastically; it's merely decreased from the record year of 2005.

"In fact," he said, "it has stabilized.'" "The growth in 2005 was not sustainable," he said, and now, instead of collapsing, it's simply going back to normal."

Lee McLeod, president of the Tehama County Association of Realtors, also used the word "stabilized" in a recent interview with the Redding newspaper. In a conversation with the Daily News, she also expressed cautious optimism that things may soon turn around.
...
You need only to look around at all the homes with "For Sale" signs on them to make it clear to even the casual observer that it's a down time for home sales.
...
Willow Creek Estates, off Luther Road near the airport has many brand new homes sitting unoccupied, many of which have been completed and ready for occupancy for close to a year.

All in the third-of-a-million dollar range, "For Sale" signs abound for both new and already occupied dwellings. A drive down one of the streets a recent day showed a dozen houses in a row all on the market.
...
None of this would appear to mean that Red Bluff, Corning and environs are about to go back to the sleepy little towns of just a couple of decades ago. But there's no way you can spin what is happening. The county's growth is going to be slower than many thought as recently as 12 months ago.

Maybe the Red Bluff Realtors could learn from those crafty Marin Realtors:

The Marin Association of Realtors Monday pronounced a rosy outlook for the Marin real estate market - especially in the long view.

In a presentation to the San Rafael City Council - the first of its kind before a municipal body in Marin - the association said newspaper headlines announcing Marin's recent real estate highs and lows are accurate, but not a true measure of the market's rock-solid history in Marin as a steady climber.

Association officials, concerned about the media's recent portrayal of the market as weak based on "snapshot" data, are making the rounds to Rotary clubs, chambers of commerce, community groups and others across Marin hoping to spread the word that business is good. About a dozen association officers have undergone training as part of the "proactive" public education campaign, Segal said. Officials expect to appear before all of Marin's local councils before the end of the year.

Read more at the Marin Independent [sic] Journal.
Hat tip: anon1137.

Spring Dud?

SacRealStats

'Where's the Fuel That's Going to Keep the Fire Going?

From Inman News:

The quarterly Anderson Forecast, produced by the Anderson School of Management at University of California, Los Angeles, reports, "Put bluntly, the credit crunch in the subprime mortgage market will likely trigger a second leg down in the housing market in terms of output and prices."

Edward Leamer, forecast director and a professor of economics and statistics at UCLA, said the severity of the subprime meltdown was a surprise since the last forecast was produced.

"This thing started in the Midwest, where jobs were weak and prices were weak," he said, and has since mushroomed to national scale. Foreclosures are on the rise, but the more critical issue for the economy is the ability for consumers to purchase homes.

"There are sad individual stories about people who got into homes they couldn't afford. I think the real story is not what's happening to the people who own homes -- it's what happens to prospective buyers who might be buying a home soon. The energy of the market, a lot of it is in the subprime, low-income homes. You need new money in the market in order to fuel the price appreciation. A lot of the new home buyers have been at the lower end -- start-up, entry homes. If you pull that out of the market, where's the fuel that's going to keep the fire going?"

He added, "The economy overall is going to be impacted by the inability to provide fuel to drive housing forward."
...
Shulman's report states that the housing market may take many years to recover, and "will look like the protracted decline that took place in Southern California from 1989-96."
...
"Although we continue to believe that our no-recession, soft-landing thesis for the economy remains intact, we are becoming increasingly nervous about the economic outlook as the period of below-trend growth grinds on," Shulman states.

A separate report that tracks the California economy predicts "a significant slowing of the California economy in 2007, as the double whammy from construction and mortgage finance creates a drag on the rest of the economy."

Foreclosure notices have been on the increase in California, with the biggest increases in the San Francisco East Bay area and in the Sacramento, Bakersfield, Ventura and Riverside areas. "This list ... may sound familiar from previous California reports: these are the counties where new homes account for a substantial share of total home sales and also the counties which have seen the most weakness in median sales prices," according to the report by Ryan Ratcliff, an economist for the forecast.

This may be due to "a combination of overextended first-time buyers and builders offering overly aggressive financing in order to close deals," according to Ratcliff's report.

From the AP:

"We suspect the problem in the subprime area is just the tip of the iceberg for the mortgage market as a whole," Shulman wrote. "For all practical purposes, the subprime market is in the process of shutting down."

From the Sacramento Bee:

"We still expect to see the pattern of deepening real estate losses combined with a slowdown in the rest of the economy -- now it's just the first half of 2007 instead of the second half of 2006."

The main culprit: the recent meltdown in subprime lending.

"The drying up of subprime credit suggests that home sales in California will be stagnant for some time to come," he [Ratcliff] wrote.

Construction employment will turn negative this year, he said in an interview, and the financial sector will become a drag on the economy as well. And while the rest of the economy is likely to remain fairly healthy, "there's no sector that's all of a sudden going to shift into overdrive" to compensate for construction losses, he said.

Stockton in Great Shape, Next Boom Right Around the Corner

From the Stockton Record:

Mortgage default notices are up across the country, and that's true here in San Joaquin County.

Real-estate brokers, financial experts and economists say the fallout has repercussions but won't rout the sales market or the economy.
...
The market is showing signs of picking up, said David DiDio, mortgage broker and real-estate agent at Greene Dream Homes and Loans in Stockton. If buyers indeed are moving into the market, foreclosure homes could be bought up by fall.
...
Gregory Paquin, president of the Gregory Group, a real-estate information and consulting service in Folsom, said he doesn't anticipate a housing-market bubble because regional employment numbers are strong enough.
...
The overall impact on foreclosures won't slam the economy, which overall tends to continue to be employment-strong although growth is slowing. "This is the latest bout of housing hysteria for those desperate to have housing the center of an economic apocalypse," said Sean Snaith, director of University of Central Florida's Institute for Economic Competitiveness and consultant to UOP's Business Forecasting Center.

California's economy continues to fare well, though fast-rising prices indeed pushed many buyers in over their heads. Other areas of the country, such as parts of the economically troubled Midwest and South, will actually suffer deeper foreclosure pain because of employment woes.

Although late buyers could suffer, many buyers were able to build a lot of equity, that will prop up consumer spending and later buying in the housing market. The demographics trend in the Central Valley is bullish, and the economic growth outlook for the state is strong, Snaith said.

Take that you bubble-heads!