Home Front

A blog about the economy and the Sacramento-area real estate market.

March 31, 2008
The Home Equity Theft Reporter Blog

I was just having a phone conversation with a man who is out beating the bushes for a rental in Elk Grove. The bank has foreclosed and it is just a matter of time before it gives him 30 days to leave.

He suggested reading the Home Equity Theft Reporter.

Type Sacramento into the upper left hand corner for regional stories and more from elsewhere in California.

March 31, 2008
Nehemiah Corp. waves goodbye to Alphonso Jackson

The abrupt resignation this morning of Alphonso Jackson as U.S. Secretary of Housing and Urban Development certainly inspired no regrets from Sacramento-based housing giant Nehemiah Corp. of America.

Nehemiah issued a somewhat terse statement a few minutes ago, hoping the next HUD chief will be more constructive about down payment assistance gifts. Nehemiah says the controversial program has helped 250,000 households buy homes across the past decade.

Jackson headed HUD at a time when a department subsidiary, The Federal Housing Administration, tried to ban the Nehemiah down payment assistance program.

Nehemiah sued HUD to overturn the ban and recently prevailed when a federal court ruled that HUD was out of line with the proposal.

Here is the statement from Nehemiah President and Chief Executive Officer Scott Syphax:

Secretary Jackson's resignation, announced today, provides HUD with an opportunity to constructively move closer to its mission of increasing access to housing void of discrimination.

Private down payment assistance programs such as the Nehemiah Program have been instrumental in carrying the HUD message and mission into the low and moderate income communities.

We look forward to working with another designee of the Administration, who will hopefully take a more constructive role in supporting programs that today, are the only option available to hundreds of thousands of Americans seeking home ownership.

It is incredible that in the end, Nehemiah bore the enormous costs of litigating a clearly unfair, biased and ultimately illegal rule that HUD tried to promulgate.

Nehemiah is delighted to welcome the opportunity to rebuild a stronger relationship with HUD under a new Secretary, revisiting the role down payment assistance plays in working toward the mutually shared goal of enabling working class Americans to move away from financial oppression and into their own homes.

March 29, 2008
A rescue plan gains steam

The Sunday New York Times takes an interesting look at a rescue plan being advocated for homeowners who owe more than their home is worth. This has potential as a way out of trouble for several thousand Sacramento-area homeowners.

March 29, 2008
Like a tourist looking at houses

We all know people who buy field guides to get out and identify a million kind of birds, trees and insects. Then there are those diehards who like to walk around the city and suburbs, pointing out Tudors, Cape Cods and Bungalows.

Real estate agents do this all the time. They talk about Split-levels, Shingles, Georgians and Colonials the way regular people dissect a lunch menu.

For a long time covering the real estate beat I carried this guide to residential styles in my briefcase, pulling it out here and there on walks to see the differences between, say, the Queen Anne, Victorian and Italianate styles. It got rumpled into oblivion, banging around in there with manila folders and umbrellas.

Even better than that guide, for people who like identifying home styles in great Sacramento-area neighborhoods, is a book some helpful reader recommended early last year, A Field Guide to American Houses.
Driving through neighborhoods with this tome is like visiting the Consumnes Nature Preserve south of Sacramento with the definitive guide to ducks.

I recall being most surprised at how many houses, even today and even in the suburbs, still take some of their design elements from ancient Greek temples. Buying the book is a bit steep, but the Sacramento Public Library has six copies on its shelves right now. It can make you see your surroundings a whole new way.

- Image courtesy of Stephanie Baker Thomas, East of the Sun Publishing.

March 28, 2008
The poetic swimming pools of Sacramento County

Some day when the housing market is roaring again and all is well, you can count on visiting a big-city art museum and seeing a photo exhibit documenting the green pools of our current housing era. Madison County has its bridges, as the movie goes. Sacramento has its signature swimming pools.

I am not making this up. I just now received an inquiry from an artist in Los Angeles who is very interested in making a photo archive of the lovely (my words) green swimming pools that dot the Sacramento region. This artist has been investigating and researching effects of foreclosures in Southern California - and has noticed that we have a few of those up here.

The artist is interested in going on foreclosure tours and I have provided some phone numbers. It could be a really poetic, compelling project, says the artist.

These are the moments it is wonderful to be a Californian.

March 28, 2008
A mild proposal to jump start construction, banking and housing

I heard a really interesting keynote address this morning in Sacramento about how retrofitting houses to become more energy efficient can prevent global warming from flooding our coastal cities, rev the construction and banking sectors back into high gear and create a million jobs in five years. Talk about a lot of benefit from one idea!

New Mexico architect Edward Mazria was in town, arguing that the U.S. government ought to invest $21.6 billion a year for five years into making buildings more energy efficient.
Mazria is a global crusader for making houses and other buildings carbon neutral by 2030, which means their construction and operation will not add to global warming. He has founded a group called Architecture 2030 to make your house part of the solution instead of the problem.

Said Mazria: stopping the seas from rising and submerging Oakland International Airport (oh no) is not just putting in the right light bulbs, planting trees and having Wal-Mart cut its energy consumption by 20 percent over 7 years. The answer is not nuclear power and it sure as heck is not clean coal, he said, which does not exist.

The big answer is in energy-efficient houses, office buildings and stores.
Mazria said almost half the energy used in the U.S. is consumed by buildings, most of them houses. So going in and redoing them and investing in making the new ones better would pretty much save the world. Who would have thought it is so easy?

It was a message that could have warmed the heart of every environmental lobbyist in a capital town crawling with them. But that crowd was nowhere in sight. The room was filled with people who generate money putting up houses and other buildings: architects, planners, builders, local elected officials, all of them members of the Sacramento chapter of the Urban Land Institute. That is the research arm of the development industry in the United States.

You want to talk about an economic stimulus with some punch, asked Mazria? Just invest $21.6 billion in energy-efficient buildings every year for five years. Hands down, it would beat the $160 billion federal government economic stimulus plan, which begins in May by mailing out $600 and $1,200 checks.

A million new jobs in the construction industry: You better believe that drew some big applause in a town full of companies holding on by their fingernails.

March 27, 2008
2008: The housing election

For several days now U.S. Senators Hillary Clinton, John McCain and Barak Obama have been talking about what they will do about housing when they become the next president of the United States.
Clearly, this election is becoming less about Iraq and more about what is happening - literally - inside the millions of places in America that we call home.
This may be a rare election in which housing is a leading campaign issue.

Here are three video clips of the candidates in recent days addressing some of the issues dearest to our hearts, minds and wallets: our housing values, our neighborhoods increasingly marked with for-sale signs and the people we know who are losing homes to foreclosure and what all that means in the larger economy.

March 27, 2008
Obsessed with interest rates

A lot of people in real estate say consumers are not really motivated by interest rates. But I still overhear a lot of conversations among would-be buyers who are watching them. At least one with his eye on a house started getting agitated a few weeks ago when 30-year fixed rates went back above 6 percent. He thought he missed the boat for the best time to buy. That made him in my eyes a barometer of the market.

Anyway, that is a very long introduction to the newest weekly survey today from Freddie Mac.

downward_arrow_red.gif Rates fell, ever so
slightly, for a second straight week as a lot of economic indicators remained weak.
Bottom line, if you are obsessed by interest rates, bookmark this Freddie Mac site. It has everything you could possibly want to know about interest rates, including what they averaged in January 1975. You never know when just such a fact will make you the life of the party.

March 26, 2008
FHA: It's going to bail us out

Many are saying that a loosening of restrictions for traditional Federal Housing Administration home loans will be a major stimulus for the Sacramento-area housing market. John Arvanitis, president of Citrus Heights-based Sunrise Vista Mortgage Co. says flat out: FHA is our savior.

These government loans, which have long helped lower- and moderate-income people buy houses with low down payments, virtually disappeared during the housing boom. The government had capped them at $362,790 and few homes were selling for under that. Besides, anyone could get a risky adjustable loan with no money down and not stating your income so who needed them?

Now that risky behavior has mostly disappeared and the old dependable FHA loan is back. For the rest of this year the government is allowing FHA loans up to $580,000. That means more options for people with blemished credit scores and homes that have lost value. Most FHA loans require only a 3 percent down payment in a time when regular banks are requiring 5-10 percent down.

Bottom line: It means more people can borrow and buy, a critical ingredient in getting the housing market moving.

Incidentally, Arvanitis said the capital-area market has found its floor in the $200,000 price range. The proof is multiple offers. He believes the next 60 to 90 days will tell whether that begins to hold true for houses up to $400,000.

I asked Arvanitis what the new FHA changes mean for the Sacramento market. Here is what he had to say Wednesday:

March 26, 2008
Sacramento builders pulling way back

Home builders in El Dorado, Placer, Sacramento and Yolo counties are obviously not feeling terribly confident in prospects for selling a lot of homes in 2008, according to the new California Building Industry Association statistics for February.
They show that builders in the four-county area filed for 343 building permits for single-family homes, condos and apartments during February, down 61 percent from the same month last year when they got 888 permits.

March 25, 2008
More real estate scams

Everything that is old is new again, say those who track scams in the real estate market. I have been talking to a few today for a story running soon on the new scams for a down market. What I am hearing is that the kind of scams that have been making headlines recently - stealing the home equity of people having trouble with their mortgages - are crimes from years ago.

Now, after three years of falling home values there is no equity left in many homes. So scammers have turned to a couple of old schemes popular in the 1990s and revived them for a new generation of conning.

The rent skimmers: These are con artists who approach struggling borrowers and ask them to deed the house to them. They promise to let the borrowers stay and rent from them. Scammers do collect the rent, but they never pay the mortgage. When the lender forecloses after a few months they have already collected an easy $5,000 to $8,000 in rent.

A variation on this theme: just before the bank forecloses the scam artists advise their renters to file for bankruptcy. That stops the foreclosure process for awhile and bags a few more months of rent payments. Be wary, the experts say, of anyone advising you to file for bankruptcy.

Foreclosure consultants are knocking on doors telling struggling borrowers they can save the place for them - but they need money up front. That is the first red flag. Just say no. If they ask you for the deed to the property that is even worse. There is no telling all the shenanigans that can happen under the guise of smooth talkers who say they are here to help.

Here is a short video from federally-backed mortgage giant Freddie Mac on how to avoid being scammed by these people.

E-mail me or drop a comment here if there are others you think I should know about. I aim to write the story Thursday for the Friday newspaper. Thanks.

March 25, 2008
State Senate foreclosure bill on the move

SB1137, which makes mortgage lenders and servicers meet, at least by phone, with struggling borrowers before initiating foreclosure, passed the state Senate Judiciary Committee this afternoon. The bill would also make lenders maintain properties after they foreclose to minimize impacts on neighborhoods. The original version of the bill made lenders meet in person with struggling borrowers, but it failed to pass the Senate by a single vote.
The new bill compromises on the personal meeting to ensure, as its author, Senate President Don Perata says, that the measure is workable. It also has to pass the Assembly and be signed by the governor to become law.

March 24, 2008
Seriously: How to move your valuable art

I confess: learning how to move my valuable art is not at the leading edge of my mind today. But I get all kinds of things in the e-mail. Maybe you, my dear cultivated readers of the federal Sacramento-Arden Arcade-Roseville Metropolitan Statistical Area, are moving to new homes this week and can use this advice from the Chubb Group of Insurance Companies.

Use your Sharpie wisely -Do not advertise the contents of each box. Labels should not describe contents, i.e., van Gogh.
Your art needs a seat belt too - All pieces should be strapped snugly to the walls of the truck with at least two straps, which should not touch the surface of the art.
White glove service - Clean gloves should be worn when handling your artwork.
Avoid snags - Remove excess jewelry and watches. Ask movers to remove tool belts, i.d. tags and turn belt buckles to the side.
Seal of approval - Seal all bins, boxes and edges with tape and make a tab so it is easy to remove. Don't use too much tape, which requires too much pulling and manipulation of the work.
Any truck won't do - Moving trucks must be lockable, have two drivers, a working climate control system and an air ride suspension system to ensure a smooth ride.
Movers in a rush to leave? If you are unable to see the condition of your art prior to their departure, write uninspected on the receipt or waybill.
Maintain proper orientation - Write FACE and TOP clearly using an up arrow. It is always best to transport artwork in the orientation in which it is shown.
Blanket wrapping - Often the best protection for heavy works where all elements are stable and the surface is not delicate.

March 24, 2008
The newest Sacramento real estate scam

I thought I had heard it all and then I heard this: Con artists are re-keying vacant houses that have been for sale for awhile, running ads to rent them and then making off with security deposits and a first month of rent.
Sacramento real estate agent Carey Covey of Cook Realty tells us today that a misled renter lost $2,000 in a scheme at one of his Sacramento bank-owned listings that is now in escrow.

This trend popped up during the 1990s downturn in the capital region, Covey says. It is back and growing stronger. Offenders might work with a locksmith to change the key on the lock or break into the house and change the locks, he says.

He says the victim told him he was dealing with a so-called landlord, about 35 years old, who called herself Marie Roberts. He says she had a rental contract, offered a post office box for an address and her cell phone number. Her story was she had just bought the house, he says.

Says Covey: We have had one other instance of this, and I know there are other people who are having it. I think people are embarrassed about it and they just do not report it so they just keep doing it.

How do you protect yourself? Covey is not convinced you can if the person has the right keys and a standard rental contract. The red flags, he says, is a landlord offering a post office box instead of a real address and a cell phone number. Be careful out there.

March 23, 2008
The sunny side of Repomania

bankowned.jpg The one satisfying thing about chronicling the growing California pileup of bank-owned homes (see our Sunday story about what you should know when shopping for one) is talking with people who buy them. Not the investors. But first-time buyers who see this market correction as not the end of the world, but the beginning.
It is infectious to hear enthusiasm of people who just bought a first house - for a price that they still can hardly believe.

I have had three of these feel-good conversations recently with people who bought bank repos. I vividly remember their sales prices - $215,000, $230,00 and $170,000. Miraculous all.

All three couples in their 20s, 30s and straddling the line around age 40 felt that the dream of owning a house had passed them by.
So I love their stories of banks paying closing costs and throwing in money for an air conditioner stolen while the house sat vacant.
Mostly, I just love the excitement in their voices over the sheer luck of it all. There are clearly two stories out there as the Sacramento-area market loses value - and one of them always puts a smile on your face.

March 22, 2008
The Deepening Malaise

"The Home building industry is not in a recession. It's in a depression."
- John Hodgson, project manager for 1,900-acre Madeira development in Elk Grove.

The Saturday morning paper carries another
alarming story
about a Sacramento-area builder that is apparently losing its shirt and taking down suburban finances along with it. Reynen and Bardis risks foreclosure on some of its land in Madeira because it has stopped paying property taxes. That means City Hall (i.e. taxpayers) are having to help make payments on Mello Roos bonds for roads and parks in the 1,900-acre area that is considered Elk Grove's crown jewel residential development.

Rynen and Bardis: Another prominent local home apparently dancing near the grave that has already claimed Dunmore Homes of Granite Bay.
By all accounts, R&B went on an optimistic land-buying spree at the height of the housing boom, with full blessings of banks that eagerly loaned it the money. And now, just like many struggling home owners who bought a house in 2005, it is upside down. It has high monthly debt payments while the value of what it owns - acres and acres of land for residential development - has collapsed.

I shudder to think of what it must be like now in meetings with those banks. The builder cannot make payments. The banks are stuck with collateral (the land) that I would guess is worth spit compared to what is owed on it.
The malaise is firmly digging in at City Hall. Banks can only be next on the list of many business stories still to be written.

March 21, 2008
The House of Caen

Nostalgia Friday: An early spring shout-out to San Franciscans who remember mornings waking to the three-dot musings of late Chronicle columnist Herb Caen. Here is a short video of 1631 26th Street, the house that Caen called home as a kid in Sacramento. Listen for the crows at the end.

Caen wrote about returning to this corner in a 1983 Christmas column for the Sacramento Bee: As I near 26th and Q - No. 1631 26th St. was the scene of my childhood haunts and traumas - my pulse quickens. I can hardly wait to park and walk slowly around the neighborhood that has changed so little in 60 years. The memories return with such a rush that even my family's phone numbers pop back into my mind.

March 21, 2008
Former subprime lender getting his 15 minutes of fame

A couple of months ago a guy in Texas named Richard Bitner sent me a copy of his self-published book, Greed, Fraud and Ignorance: A Subprime Insider's Look at the Mortgage Collapse.
I read parts of the paperback on light rail coming and going to work - and laughed a few times and learned a few things from his irreverent asides on the industry and its practices.

Bitner had a loan business in the subprime world, but sold it just before the industry - according to him - abandoned all traces of common sense and ethics.
Anyway, you might enjoy his 15 minutes of fame and some of his views of the current, ahem, mortgage situation.

March 21, 2008
Pushing the rock back up the mountain


In January it failed by a single vote to win a two-thirds majority in the California Senate. That was SB926, a bill that would make lenders meet for a personal face to face workout session with their struggling borrowers before they could begin the foreclosure process.
The bill also aimed to make banks maintain their repossessed properties to minimize impacts on state neighborhoods. As a foreclosure prevention measure it was a favorite of housing activists and Democrats and disliked immensely by the lending industry. The lenders prevailed.

Now the bill is back as SB1137 and has a first hearing before the Senate Judiciary Committee on Tuesday, March 25, at 1 p.m., Room 112.

This bill, too, would force lenders and loan servicers to meet with borrowers to try and work things out, at least by phone, and not begin foreclosure proceedings until 30 days after that meeting. (Or, not begin foreclosure until 30 days after showing that they seriously tried to find the borrower and failed).

The requirement to maintain properties is again in the bill, introduced by Senate President Don Perata of hard-hit Oakland, Sen. Ellen Corbett of San Leandro, who chairs the Judiciary Committee, and Sen. Mike Machado, who represents one of the hardest-hit regions for foreclosures in the U.S., San Joaquin County. All are part of the Senate's ruling Democratic majority.

So again, as foreclosures continue to rise, the Democrats will try to outmanuever the lending industry inside the Capitol. The bill is once more an ugency measure that would take effect immediately upon winning two-thirds majorities in the Senate and Assembly and a signature from Gov. Arnold Schwarzenegger.

It is a long way back up the mountain. It is possible it will be months before it takes effect if it passes at all. The bill has to clear the Senate by May 30, the Assembly by Aug. 31 and get a green light from the governor by Sept. 30.

March 21, 2008
Lyon Real Estate: we are nearing bottom at the low end of market


The Lyon Real Estate report for February sales is in.
Chief market watcher Mike Lyon describes a tale of two markets: slow at the high end and nearing bottom amid multiple offers in the $200,000 range. Here is the news, directly.

Lyon Real Estate
Sacramento, CA 95864

The Story of Two Markets

For those relying on closed sales figures from the County Recorders Office, standing inventory for homes $750,000+ is ranging from 2 years in Sacramento and up to 5 years in El Dorado County; dismal by any definition, said Michael Lyon, CEO of Lyon Real Estate. Yet pended sales have cut those inventories in half, most likely a result of sellers dropping their prices as much as 30%.

For homes below $200,000 it is a different story. We are seeing high inventory levels not seen since the mid 90s: 24% of homes pending sale in the Four County region are under $200,000. Prices have dropped to an average of $125 per square foot with some homes selling for under $100 per square foot. In this price range, you will find yourself competing with 5 or more bona-fide offers within days of the home coming on the market. FHA loan limits are up to $580,000 with a 3% down payment - no maximum income levels and no credit scores required equates to a modern day gold rush of investors and first time home buyers.

It has become evident that the bottom of the market for homes under $200,000 is near but for homes over $750,000, it is still far off. Exceptions still remain homes close to the major job centers.

March 21, 2008
Prices are falling - bring on the moving vans

An interesting e-mail from Texas:

At present I am planning to move to Sacramento in the near future from Dallas. Almost three years ago, real estate prices convinced me to cancel a Sactown move - a pervading atmosphere that reminded to of pre-oil bust Houston and pre-tech bust Austin (needless to say that was a close call).

That WAS a close call. But that was then....

March 20, 2008
3,500 sales of bank-owned homes in four months


I was just doing some calculations for a story being published this weekend on what consumers should know about buying bank-owned homes. The numbers show that buyers snapped up more than 3,500 bank repos in November, December, January and February in the eight-county capital region.

That is roughly equal to the 3,500 new foreclosures in January and February in the region. Banks are obviously still foreclosing on more homes that they are clearing off their books.

To drill a little deeper, about 2,000 of the region's 4,300 closed escrows in January and February were for people buying bank-owned homes. That is almost half of all closings.

The same two months in 2007 showed that of 5,000 closed escrows in the region about 200 involved bank-owned homes.

Think about next year at this time. Will these 2008 repo sales look like the good old days before nearly ALL sales were bank repos?

The information is a mix of numbers from DataQuick Information Systems and foreclosures.com.

March 19, 2008
A second chance for foreclosure refugees

Somebody had to think of this: Golden 1 Credit Union is touting a new mortgage repair loan to put subprime borrowers who lost homes back into new ones within 18 months. The Sacramento-based credit union has set aside $20 million to steer 50 or more foreclosed households into new 30-year fixed-rate loans for a second chance at home ownership.
Typically, your post-foreclosure credit is ruined for years and even then, the only home loan you might get is the higher-cost variety that got you into trouble in the first place. Golden 1 says it is part of the solution to this lending mess - none of which it contributed to with its conservative lending standards - to get people back into houses as soon as possible.

The program will not be for everyone. It requires a job, a 20 percent down payment, debt counseling, full documentation of income and a credit score of at least 600. Investors need not apply. The maximum loan amount is $417,000.

It is only $20 million. But this is an indicator that some in the financial world are thinking about what comes after this mess. Good people will need a second chance. The biggest credit union in California is offering one.

March 19, 2008
In praise of paint

Working in Midtown Sacramento I like to go for lunch walks and look at interesting old houses that line the neighborhood streets. These two houses on 22nd Street between N and O streets are irresistible with new ongoing paint jobs. I am a big believer that fresh house paint is key to a better world. This little movie helps explain why.

March 18, 2008
After the real estate boom comes the prosecutions


California Attorney General Jerry Brown is going after several Southern California mortgage companies, shutting them down, freezing their financial assets and seizing expensive cars and real estate owned by a 25-year-old defendant. It is one of the biggest prosecution efforts to target the state mortgage industry since the real estate market went south and made California the leading state for foreclosures.
Brown is charging the lending companies of pushing homeowners into what he called illegal and unconscionable loans.
Many have since lost their homes, he said.

Here is a detailed news release and an attached copy of the complaint.

All the firms and alleged victims are in Southern California. But Brown said in coming weeks he will bring more civil and criminal actions against other lenders and foreclosure consultants that he said are taking advantage of homeowners throughout the state.

March 18, 2008
Bernanke makes his move


The Federal Reserve just announced that it has cut the federal funds rate - the rate which banks charge when borrowing from one another - by three fourths of a percentage point to 2.25 percent.

Here is the official announcement.

OK, so what does this mean here in Sacramento?
The Fed cut will have no immediate or major effect on the Sacramento-area real estate market. It WILL bring a nice drop in monthly payments for people with home equity lines of credit (plenty of those in the Sacramento area) and probably cause less severe monthly hikes when adjustable-rate loans reset to newer interest rates.
Mostly, if it calms financial markets it lessens some of the economic instability that is only making things worse for the housing market.

Above all, remember: what the Fed has done is not the same as lowering interest rates on mortgages. Home loan officials say they always get a deluge of calls after a Fed interest rate cut from people who want to refinance.

Mortgage rates do tend eventually to follow the direction of Fed cuts. But they are unpredictable and subject to a lot of bigger economic and global forces. They are also affected by the supply of money to lend, which has been limited as banks and Wall Street plow through this financial upheaval. Limited supply can equal higher prices for mortgages.

Lately, indeed, mortgage rates have been going up, even as Fed rates have been lowered. Mortgage giant Freddie Mac reported a national average of 6.13 percent last week for the 30-year fixed-rate mortgage, up significantly from a low of 5.48 percent the week of Jan. 24. That was the week the Fed cut rates by three quarters of a percentage point to 3.50. A week later it cut rates to 3.0 percent and mortgage rates have largely risen since.

As a general rule, rates fall on fears of economic weakness and rise on fears of inflation. Right now we have some of both, which reminds me of what Jeff Tarbell, managing director of Sacramento-based Comstock Mortgage said on his AM 1140 radio show last Saturday: What are rates today? What time is it?
- MSNBC Photo

March 18, 2008
Big Fed cut on deck

In The Bee business newsroom the TV is tuned to CNBC, which is running a small clock in the bottom right hand corner: 1:30 minutes to Fed decision. The morning Bee carries a front page headline: Worried Fed may slash rate, and adds: But even a big drop will not resolve U.S. economic woes, analysts fear.
Will it be three fourths of a percentage point or a full point? That is the question as people continue to lose their homes in the Sacramento region and values keep falling. On my voice mail this morning is a 10 p.m. caller from Citrus Heights last night, looking for a phone number to find help with his mortgage.

March 17, 2008
Filling the streets with foreclosure bus tours

Is there no end to these foreclosure tours? Ever since I started noting their arrival on the real estate scene about a month ago I get one or two invitations a week to go for a Saturday ride. I just got another a few minutes ago. I know now of eight ongoing bus tours and a limo foreclosure tour running in Placer County. Heaven only knows how many more are ramping up.
There are still some real estate agents who think it is all in bad taste. But I also get a call a day from someone looking for phone numbers for these tours.

They certainly have plenty of houses to visit. Word is there is a deluge of bank-owned properties coming onto the market soon. That might be because banks repossessed another 3,495 houses in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties in January and February. That is the tally from Foreclosures.com., the Fair Oaks Web sit for real estate investors.
Seriously, if this was a car lot all those houses would be the new model year - with loads of 2007 inventory still sitting on the lot.
So I am working on a consumer story to explain what you should know if you want to buy one. Rule number one, many say, is get yourself prequalified for financing. Second, is don't expect banks to roll over for lowball offers just because it is a foreclosure. Also, remember these two words: As is.

March 17, 2008
A winner at CalHFA

Sometimes when you work in the state capital trenches long enough, people sit up and notice nationally. That just happened to Theresa Parker, who runs the faceless government bureaucracy known as CalHFA.
Parker, who has run the state affordable housing bank for a decade, just won the 2008 National Public Service Award from the American Society for Public Administration and the National Academy of Public Administration.
Her agency, well known inside the California real estate industry, provides special home buyer financing to teachers, police officers and others with regular salaries in a high-cost state.
Parker was one of two people to win the national award, given to individuals who have made a difference in public administration over a sustained period of time. She has been at it for 33 years in Sacramento.

March 16, 2008
Rough Seas


All nervous eyes turn this week toward the stock market and the Federal Reserve.
I am already hearing speculation on television that the Fed may cut its Federal funds rate - the key one that banks charge each other for loans - by up to 1 percent on Tuesday. If it happens we will be seeing something none of us have seen before.
To launch a new week, the Fed has also cut its discount rate - what it charges banks that borrow from the Fed - to 3.25 percent.

I see now on TV that JP Morgan Chase & Co. bought Bear Stearns, the big investment bank that almost collapsed over its bad bets in mortgage-backed securities. In the end, the $2 a share Bear Stearns fetched was just another version of the meltdown that has seen land for residential development in the Sacramento region plunge from $100,000 an acre to $20,000.

As a real estate reporter I never expected in a thousand years to pay much attention to Wall Street and global credit markets. Discount rate? Mortgage-backed securities? Say what? I thought this was a beat about selling the house when you move to Austin and how kitchen designs attract buyers. But this housing crisis - in which the abrupt Sacramento slowdown in 2005 proved an ominous warning of what was coming nationally - has turned into a subprime loan crisis and now into a full-fledged financial crisis.

March 16, 2008
Where going to work means never having to buy gasoline

Prospects for $4-a-gallon gasoline have a lot of people lately questioning their commutes. Some people are even starting to talk and write about the long-term viability of the suburbs with oil trading well over $100 a barrel and heading up by the day.
In Sacramento, traffic congestion alone has pushed growing numbers of suburban residents to live closer to downtown. This avoidance of pain is one reason that property values stay strongest in older Sacramento neighborhoods. Now, expensive gasoline may cause more commuters to rethink where they live.

One alternative to settling suburbanites in downtown lofts is building more houses near transit lines. We are starting to see a little more of that lately in Sacramento. One of the newest examples is Hampton Station, rising within shouting distance of the Meadowview light rail station in South Sacramento. Woodside Homes, a national builder based in Salt Lake City, plans 177 houses on its site near the Regional Transit line and has already sold nine.

Sunday, senior sales agent Jamie Comer was writing up a 10th sales contract when I stopped by a little after 11 a.m. Comer said most of the buyers are from the surrounding neighborhoods. But three buyers bought there specifically because they can walk to light rail and take it downtown to work, she said.
There are only about a dozen homes built so far. But the place has a very nice new city park and prices as of today ranged from $221,000 to $317,000.

Sacramento is still a long way from building the variety of transit-oriented housing that exists in the Bay Area. But one by one it is starting here, too. Hampton Station is a major development where going to work downtown never involves stopping to buy gas.

OK, I confess this video is rough. It's my first on this blog. But you can see the downtown-bound Regional Transit train out the second-story bedroom window near the Meadowview Station. I promise: videos will improve. You get the point.

March 16, 2008
Government handout coming your way

Sunday musings: The check that the housing crisis wrought may not be in the mail, but the letter saying it will be has arrived. We got one from the IRS yesterday, bright red letters in a headline saying: Economic Stimulus Payment Notice. Dear Taxpayer: We are sending this notice to let you know that based on the new law the IRS will begin sending the one-time payments starting in May.
To paraphrase a speech of former President John F. Kennedy: what you can do for your country is to spend every dime.


Reading the weekend papers it is obvious that some home builders are taking a new advertising approach to the housing slump. K. Hovnanian Homes, the big New Jersey builder, says there is Blood In The Streets. And, according to the late oil baron John D. Rockefeller, that is always the time to buy.
Hometown builder JTS Communities is advertising what it calls foreclosure pricing. That comes after a couple of months of auction pricing. A couple of weeks ago Reno condo builders Pacific West Cos. ran ads saying flat out that the market stinks- and here is why you should buy one of our condos.
Sacramento is a capital town where it is easy to take lessons from politics: when it gets tough out there try going negative. It often works.

March 15, 2008
Solar Saturday

My wife wanted to get ideas for tile in the bathroom so we took a road trip today to the new Madeira neighborhood in Elk Grove to look at model homes.
We dropped first into Amberleigh, being built by Tim Lewis Communities of Roseville. The place was having a solar fair to promote what a lot of Sacramento-area builders are doing now to differentiate themselves in a tough market. The public utilities, Roseville Electric and SMUD, have been especially aggressive in partnering with builders to do solar. I have not tracked the numbers of new solar houses in the region in awhile because there are just so many builders doing them now. But for awhile there about a year ago - and maybe it is still true today - utilities and builders in the Sacramento region were frontrunners nationally for building new solar-powered homes.
It makes sense with 320 days of sunshine a year here.

Anyway, we got to the models around 1 p.m. and saw a steady stream of browsers - proof that people are looking as the weather warms up. It did not hurt that there were free hot dogs and chips and soda.
If you have been through the models at Amberleigh you know it is like a civics course in being green. The rooms have all these little green signs telling visitors how to save energy:
- Remember to turn off the water faucet while shaving or brushing your teeth.
- Ceiling fans improve heat and cool air conditioning to keep energy costs down.
- Guest rooms not in use? Adjust the vents to direct air to other rooms until needed.

They really get your attention with one sign in particular: it says that buying a house with a solar package like this cuts your energy bill by 60 percent.

IMERYS2.jpg There must be hundreds of people by now who have bought these houses in the last couple of years here. Do they really save their owners that much? Do these solar panels really work? What do you do in winter? What is it like living in these houses?
If you own a solar home and have a minute drop a line here and give us a quick opinion.
I have heard plenty the past year from solar installers, environmentalists, builders and utility reps with agendas and financial interest in saying solar is great. But I have not heard much from real people who have lived under a solar roof for a year. A lot of us would like to know: Do they really make a difference?
Photo courtesy of Solar Energy Alliance

March 14, 2008


It is almost closing time at hundreds of big-box suburban hardware stores all over California. At this one in the suburbs of Sacramento, 21 lawnmowers fill the sidewalk out front, parked near a dozen bags of ready-to-use potting soil. These are final quiet moments before a big spring weekend for homeowners who have been cooped up all winter letting their list of jobs pile up.
I am in quick for a half gallon of paint, a pleasant white semi gloss called moonrise, to touch up a few last baseboards at home. The store is filled with patio furniture, tent-like gazebos and seeds to feed bright butterflies and hummingbirds. The Tiki torches are in for the season and so are yellow marigolds and pink verbena.
The cashier expects a mad house on Saturday. It is March, with trees blooming in the streets and back yards, a weekend when homeowners love the smell of lawn fertilizer in the morning.

March 14, 2008
A few words about short sales

The last year or so I have started getting calls and e-mails about short sales and how they are driving many people involved in them crazy.
Buyers who are seeking a great short-sale price often report being seriously frustrated. They ask: does it always takes this long to make a deal?
Real estate agents say they make offers and two or three months will go by without a response from the bank that has the final say. (Who knows, maybe they are really lousy offers). Some agents say they will not even consider short sales for their buyers.
On the seller side, people complain they are being forced into foreclosure - while having a buyer and waiting for a response from the bank that does not come in time.
And yet for all these hassles there are still thousands of houses on the market trying to be short sales. Maybe this is because people don't know they are so difficult.

What is a short sale exactly? This is where the bank agrees to accept less than owed to avoid the even higher costs of foreclosing and reselling in a declining market. Here is an example: A buyer agrees to pay $350,000 for your house. But you owe the bank $390,000. Under the best scenario the bank says yes to the offer, takes the loss and you both move on.

This sounds good, but truth is it is not happening that often. That much is clear from
state data that is now tracking lender moves to keep
people in homes instead of foreclosing on them. (See line 10).
Ten big lenders that service about half of the subprime loans in California reported they did only 872 short sales in January. (line 10). That compared to 5,630 loan modifications - everything from freezing interest rates to reducing the amount of the principal.
The data gathered by the Department of Corporations say short sales totaled just 5.4 percent of lifeline solutions offered to thousands of struggling California borrowers in January. A year earlier short sales were only 2.5 percent of the alternatives.
So if you are wondering why short sales are such a frustrating way to get a great deal, those numbers should tell you plenty. Lenders obviously see them as a lower priority in their workout efforts and just are not doing very many.
The word now, especially for buyers, is wait until the house gets repossessed by the bank. Then everything gets easier - and usually cheaper.

March 14, 2008
Return of the $200,000 house

Last September I started watching an obscure corner of the monthly sales report generated by the Sacramento Association of Realtors. It was the part telling what percentage of homes sold in the county and in West Sacramento were priced below $200,000.
In September that percentage was 9.5 percent.
I remember thinking that seemed like a lot.
The newest association report for February arrived via e-mail a few minutes ago. Last month 29.7 percent of single-family homes sold in the county and in West Sacramento were priced below $200,000.
Even the category under $140,000 is now making a splash. They were 13.4 percent of sales.

I checked out the same for Placer County. Only four houses in the entire county - 1.6 percent of all sales - were below $200,000.

March 14, 2008
Is that light at the end of the tunnel?

One of the things I most enjoy about covering real estate in Sacramento is the fact that no one knows for sure what exactly is going on. People and experts are always simply speculating: is this the bottom? Is now a good time to buy? Is this or that statistic the light at the end of the tunnel?

Our Friday story on the DataQuick February surprise for Sacramento County is certainly prime for new speculation. It is a sure sign of this long regional housing slump that 7.7 percent home fewer sales than the same time a year ago can look like great news. But as the statistics tell the story, it really is the first time since Aug. 2005 that sales declines for Sacramento County – the biggest single sector of the regional housing market - have dropped to single digits.
My first reaction seeing that yesterday was to see some kind of faint light at the end of the tunnel. It was even more interesting to hear that investors are back and snapping up houses to rent out. Investors are key.

For months I have been told by real estate agents and builders that investors always set the bottom of a market. The conventional industry wisdom is that when you start hearing people at parties talking about the bottom of the market it is already over. Naturally, much of that talk was always aimed at persuading people that the region was near bottom and that now was a good time to buy.
I heard 17 months ago at a local builders conference that the eyes of the nation were on Sacramento and Washington D.C., seeking signs that the first markets into the tank would be the first to lead the way out. That turned out to be wishful thinking. Nine months ago again I heard Sacramento-area home builders say we were already scraping along the bottom. That, too, was a little premature.
Now again there is a lot of buzz in the real estate industry that we’re approaching bottom in Sacramento.
Maybe we are. Maybe that is the significance of one month of surprising sales statistics. Maybe, indeed, this capital region that fell into the tank far earlier than most metro areas is showing a sign of climbing out, even perhaps leading the nation back out.
I could, of course, be wrong. And I would not be the first. But February sales numbers in Sacramento County have pushed the speculation game now to a whole new level. March will tell more.

March 13, 2008
No more unpaid contractors suing home buyers

It is hard to forget that story of a dozen people in Elk Grove who bought new houses last year from now-bankrupt Dunmore Homes of Granite Bay and then became the target of liens from unpaid contractors and suppliers.
California homebuilders are not forgetting, either. What can be worse for an industry image than selling people new houses and seeing them fighting off liens before the paint dries?
The California Building Industry Association, a trade group that represents 1,200 builders and 1,800 contractors, is sponsoring a bill to make sure this does not happen again.
Robert Rivinius, president and chief executive officer of the CBIA, said Thursday he has seen four recessions and never before seen people chased so by unpaid contractors after buying a new house. The industry bill, AB2683, will require that title insurance policies sold with new homes protect buyers from claims made against builders.
It has to pass both houses of the Legislature this year and be signed by Gov. Arnold Schwarzenegger to become law.

March 13, 2008
How banks now rule in many real estate markets

One more tidbit from the DataQuick report Thursday on February home sales:
In many capital-area counties a huge percentage of the homes that closed escrow in February were sold to buyers by banks that repossessed them from others. Here is the percentage of existing homes sold in counties regionally and across California in February that a bank had repossessed since Jan. 2007:

Sacramento - 56.2 percent
Placer - 39.5 percent
El Dorado - 25.5 percent
Yolo - 31.9 percent
Yuba - 65.4 percent

Nevada - 13.9 percent
Amador - 26.7 percent

Elsewhere in inland California foreclosure zones:
Solano - 46 percent
Contra Costa - 40.4 percent
Riverside - 48.1 percent
San Bernardino - 44.5 percent

Southern California:
San Diego - 37.6 percent
Los Angeles - 26 percent

Bay Area:
Marin - 11.6 percent
San Francisco - 6.1 percent

March 13, 2008
Investors are back in the game

Here is my online version of the new DataQuick numbers for February.

Since the last post I talked with DataQuick analyst Andrew LePage and learned that there is a surge of investor activity behind that flattening curve in the slowdown in sales. DataQuick reported that investors accounted for 18.6 percent of the escrow closings in Sacramento County in February.

That is up from 12.7 percent of closings in the county in November and December. Investor activity started ticking up in January, DataQuick reported, when it accounted for 16.5 percent of closed escrows. Look for the complete story in Friday's Bee.

The high for investor buys was May 2004 when they accounted for 25 percent of sales, the company said. This is how it counts investors: those are sales where the property tax bill goes somewhere other than the address of the home that was sold.

March 13, 2008
A Sacramento County sales surprise

The February sales numbers for the capital region are in from DataQuick and there is an unexpected surprise in Sacramento County. For the time since the summer of 2005 the sales slide in the biggest sector of the region's housing market is back to single digits.
Sales of new and existing homes were down just 7.7 percent from Feb. 2007. Almost forever now those year-over-year declines have been somewhere between 20 percent and 40 percent.

Even more suprising, sales of existing homes alone were almost tied with the same month of last year. The year-over-year decline was less than 1 percent.

Do not bet the bank on one month of data. February is not considered very reliable for making predictions or spotting trends. But something different happened, at least in February, for the first time since this long slowdown began.
A first version of the story will be online shortly. The full story runs in the Friday Bee.

March 12, 2008
When worried homeowners gather for help

Sounds of the city: It is 6 p.m. on a recent Wednesday, and time for the weekly worried homeowner session at NeighborWorks HomeOwnership Center of Sacramento. In a conference room on Alhambra Boulevard there are sweets in a jar from Citibank and an old Billy Joel song coming from the ceiling speakers: I Love You Just the Way You Are.
I am sitting in for a story about nonprofit counselors trying to help people avoid foreclosure. There are about 20 worried homeowners here, all with some kind of problem mortgages. They sit on folding chairs and listen as Marysville banker Robert Wenger Jr. tries to explain all the possible alternatives to losing their houses.

It is obvious that many of the people are having trouble following him. It is easy to get into a mortgage. You just sign where some someone tells you to sign. Dealing with it afterward requires sitting here and listening to words like deed in lieu of foreclosure and amortization. It can make your head spin. It feels like being in school or a hard economics class after you have been at work all day.

There is a lot of complaining in the room about not being treated well when they call their banks. The banks always tell them to call if they are having trouble and when they do call they get put on hold or dropped or their paperwork gets lost. A woman gripes about always getting some 20-year-old in customer service who will not transfer her to the person with 20 years experience that she needs to find.
Good luck, they tell each other, if you are still current with payments, but headed for the cliff in four or five months. If you are current it is hard to get the bank to pay attention to you at all, they say.

Near the end of their 90 minutes in the seats, a man asks the banker: How long do we think this storm is going to last? The answer has quite a few twists and turns because, of course, it is all just guessing.
An older woman asks the banker in all sincerity: What happened to the American dream with two kids and a little dog?
Answers a woman sitting nearby: The fence blew down and the dog died.
It is a small remark as traffic goes by on Alhambra Boulevard, but a big look at real life inside the U.S. housing crisis.

March 12, 2008
February home sales statistics

DataQuick Information Systems says it will release its new February tally of closed escrows for new and resale homes Thursday morning. There's been a lot of talk in the region about a surge of pending sales on their way to closing escrow. The February numbers might offer some insight into this. March will likely be a better indicator. I'll get the statistics online as soon as we get them and have the full story in Friday's newspaper.

March 12, 2008
A new housing blog

And so it begins, a new housing and real estate blog for the capital region of California. I promise here a wide-ranging look at where and how we live in Sacramento and its suburbs. I will drive and ride transit to the neighborhoods, bring you the statistics and post news and analysis as it happens.

This blog opens in the midst of huge drama in the Sacramento-area housing market. I hope you will be a big part of what unfolds in this online space, bringing debate and personal insights into the times we inhabit and these places that we call home.

Jim Wasserman

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