Home Front

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

July 26, 2008
Congress finally acts in big way on the housing crisis
 It's being called the biggest housing bill in decades - and it's on its way to President Bush after U.S. Senate passage this afternoon.

What's in it? The Associated Press has a definitive guide.

The New York Times has this story about the Senate action.

Being in Sacramento, it feels like a lot of floodwater has gone under the bridge before Congress has finally gotten around to shoring up the levees. But it's done now.
 Let's hope this helps so we don't have 21,000 more foreclosures like the past 18 months in Amador, El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.

Then again, I just found this AP analysis on the Huffington Post that  says  it won't  address the deep-rooted nature of the housing crisis.

And fiinally, since this is the hometown of down payment assistance giant Nehemiah Corp. of America, here's what happened in the bill: It bans down payment assistance on Oct. 1.

July 25, 2008
A street or cul de sac already in recovery from foreclosures
I had this blinding flash the other day.  I was thinking about this region's foreclosure crisis and the sales bursts we've been seeing the past few months. The blinding flash was that somewhere there is a great story about  a street or cul de sac once blasted out by foreclosures that has been stabilized by new occupants.
 It may well be that  it's too early for this. But whether now - or eventually - some tortured street wrecked by subprime loans or other ARMs  is going to have a bunch of new owners buying with 30-year fixed rate loans.

That a return of stability - or in the case of new neighborhoods, maybe the first stability at all. That's the kind of story I am looking for. So please keep your eyes peeled for me. It would be nice to tell that kind of tale somewhere in this region.

July 24, 2008
A video viewpoint on California's mortgage-foreclosure crisis

This video on the mortgage and foreclosure crisis just arrived from the California Reinvestment Coalition, a San Francisco-based umbrella group for consumer organizations. The point, I am told, is to put pressure on state and federal lawmakers to do more to help people save their homes. You can decide if it succeeds in that or not. It's nine minutes. FYI: There aren't any Sacramento stories here. It's mostly Bay Area and LA interviews.

July 24, 2008
Capital's housing woes rattle commercial real estate
This blog is mostly about residential real estate, but we've gotten a couple extensive reports the last two days from the brokerage firm Colliers International about trends in the region's industrial  and office real estate markets. Good hometown stuff here.

It all ties back to housing in some ways as this introduction to the office market states:

"The real story of 2008 has been the reaction of the marketplace to an uncertain economy in which the existing housing and mortgage lending crises have now been joined by the specter of inflation driven by soaring energy and food costs."
July 24, 2008
San Diego bids to become a "foreclosure sanctuary"
 San Diego and Sacramento counties had the distinct honors in the summer of 2006 to be the first in California to see sales prices dip below the same time a year earlier.
  Now here's a wild story out of San Diego, where City Attorney Michael Aguirre is suing Bank of America to stop its new acquisition, Countrywide, from foreclosing on any more homes in the city. He's expanding the lawsuit to other lenders, as well.
Image: Hillquest.com

July 24, 2008
Legal troubles for Roseville's Paramount Equity Mortgage
 Deadlines and commitments...now back to posting as the housing avalanche continues with one development after another.

 First, the story this morning by my colleague Mark Glover about Washington State revoking the business license of Roseville's Paramount Equity Mortgage, Inc. Mark jumped in because I had another story in motion about homeowner associations feeling the weight of foreclosures and rising energy prices. It's set to run Sunday.

CA509700.gifThe e-mail IN box just lit up yesterday when this news broke in Washington State. Thanks to all who passed it along. Here is the official news release from the Washington State Department of Financial Institutions. It has a link to the official complaint.

Paramount, by the way, denies the allegation. Its statement is in Glover's story.
Image: yellowpages.com

July 22, 2008
Foreclosures: still rising in Sacramento and California
 It's getting harder to remember when foreclosures weren't an everyday thing in Sacramento and California. But DataQuick Information Systems released its 2nd Quarter report today.

 Here's our online version of the story. A full story will appear in print tomorrow.

July 22, 2008
Nehemiah expects ban on program, will focus on development
Nonprofit giant Nehemiah Corp. of America says in today's Sacramento Bee that it expects Congress to ban down payment assistance "gifts" this week and shut down the decade-old program. The Washington Post also tells the story this morning.

July 21, 2008
Is this the end of down payment assistance?
 I had coffee this afternoon with Nehemiah Corp. of America President and CEO Scott Syphax, who earlier told his board and staff that the end of down-payment assistance seems iminent.

 Syphax, always well wired to Washington, D.C., says he's told the House version of the big housing bill will copy the Senate's July 11 version. That means both will write into law a ban on the decade-old down payment assistance pioneered here in Sacramento at Antioch Progressive Baptist Church. It started as a way to help church members buy houses, spread natiionally and ignited a decade-old war with the federal government, which has never liked it.

 Now it appears the feds are going to prevail. I'll have the full story on tomorrow's business page.
July 21, 2008
$200 million to help people buy foreclosed homes

"Under the program, first-time homebuyers will be eligible for below-market interest rate loans to purchase foreclosed homes in ZIP codes with some of the state's highest foreclosure rates."  

Gov. Arnold Schwarzenegger announced a new program this morning through the California Housing Finance Agency to help more people qualify to buy foreclosed homes. The news release is here.


July 21, 2008
Behind the story of Pautsch's departure from Centex
 Well, it turns out there's quite a bit more to the story about Doug Pautsch's departure from Centex Corp. after running its Sacramento division for more than two years.
  After running an item here a couple of weeks ago about it (Centex said it was part of a consolidation of three divisions into one), people in the know asked if I knew about the lawsuit.
  We've finally gotten a copy of it and  some comment in this story just published online.
  Centex, asked for a comment, said, as a matter of policy, it doesn't comment on litigation.

July 18, 2008
How real estate agents can ease their pain at the pump
 One of the enduring images of real estate agents is the ceaseless driving around in roomy cars to show houses to clients.That's gotta hurt these days with some agents reportedly driving 20,000 miles a year doing this.
  Sure enough, here is an article in Inman News on 12 ways for agents to cut down on gasoline. 
July 17, 2008
A closer look at Sacramento-area sales (by ZIP Code)

And finally, here is a more intensely local view of June sales in most Sacramento area ZIP Codes. There's great close-to-home data in this one.

July 17, 2008
A final thought on the extreme depreciation in sales prices


house_cliff.jpgWhen the median sales price of a single-family resale home in Sacramento County slips to $214,000 - as it did in June - it's easy to think the entire market is a crashing mess.

Should we all just jump off a cliff?

 Well, true. It isn't pretty out there for sellers and homeowners. But there's some nuance in this kind of a median price that should be pointed out. It's really a reflection of the abundance of bank-owned homes. They're the ones really setting the pace now, ruling the market.

 I asked DataQuick's Andrew Lepage about this today. Here's what he said:

"Not to belittle the widespread depreciation out there. But it's clear to me that the median is down sharply as it is because so much of what is selling is distressed in areas that saw a lot of depreciation and foreclosure activity. Those areas account for a great percentage of sales."

 Photo: marketoracle.co.uk







July 17, 2008
A few more June stats from DataQuick

 There are so many numbers, so little space in the print edition. Here's more that I couldn't fit in to the main story about June sales in the capital region and elsewhere:

First off, are June sales and prices from the Bay Area and from Southern California.

I always like to put the capital region in context with other parts of California  - and noticed that Solano, Riverside and San Bernardino counties are also seeing the year-over-year increases that have pushed up the Sacramento market now for three straight months.
  Primarily, this is an inland California phenomenon. It's happening where there was the most construction,  the fastest rise in prices and then the fastest fall in prices.

  As DataQuick analyst Andrew Lepage said earlier today on the phone: "Wherever prices have come down, sales have gained traction."

Four capital-area counties saw the year-over-year sales jumps of new and existing homes combined in June:

Sacramento: 45.7%
Yolo: 17.7%
Yuba: 14.4%
Sutter: 9.2%

Down Highway 99:
San Joaquin: 74.3%
Stanislaus: 57.4%
Merced: 63.1%

Bay Area:
Solano: 2.2% (It's the only one of six counties to see a rise from same time last year)

Southern California:
Riverside: 11.8%
San Bernardino: 1.1%

Central California:
Monterey: 46.8% (the Salinas factor)

Here's what percent of June sales in some inland counties were bank repos:
Sacramento: 63.3%
San Joaquin: 65.9%
Stanislaus: 71.7%
Riverside: 62.3%

Source for all this: DataQuick Information Systems

July 17, 2008
Capital-area home sales reach near two-year high in June
We will have a full online story posted on sacbee.com very soon about the new June numbers from DataQuick.  In the meantime here is a quick snapshot. Bottom line, the year-over-year rises continued for a third straight month, showing a solid upward trend.
The reason is pretty simple: It's getting affordable around here for a lot more people.

The full chart can be found here.

Arrow Up.png
Some highlights in the meantime:

  • Sacramento County's 2,053 sales of existing homes was the highest since Oct. 2005. Sales of new and existing homes combined were the highest since June 2006. They were up 45.7 percent from the same time last year. That was the highest rate of increase yet since April revealed a 26.3 percent gain over the same time in 2007.

Falling prices tell much of the story. With repos dominating sales activity, June's median resale home price of $214,000 is the lowest since $210,000 in Feb. 2003. Median prices for new and existing homes combined slipped to $220,000 - a level last seen in Aug. 2002, DataQuick reported.

Median is that point where half cost more and half less.

  • Placer County reported 610 sales of new and existing homes combined, 9.9 percent fewer than the same time last year. It was the county's fewest sales since June 1996, DataQuick reported.

Median prices of all homes declined to $335,000, same as Aug. 2003. Prices of existing homes at $341,5000 were the lowest since March 2004.

  • El Dorado County, with 210 sales, was down 9.5 percent from the same time last. It's median price of $380,000 is back to levels seen in July 2004.
  • Yolo County reported 293 sales, up 17.7 percent from the same time last year. It's median price, $310,250, is back to levels seen in Feb. 2004.
  • Sutter County had 107 June sales, according to DataQuick, 9.2 percent more than June 2007. Its median price is $208,000, is the lowest since Jan. 2004.
  • Yuba County saw a 14.4 percent gain in sales from the same month last year, with 135 sales, DataQuick reported. Repeating a pattern started in March and April, its median price of $195,000 was below $200,000 for the first time since Jan. 2004.

July 16, 2008
Bank of America aims for builder John Reynen's home
Attorneys for Bank of America have filed a request with the U.S. Bankruptcy Court, Eastern District, asking for a "motion for relief from the automatic stay" on a Sacramento home owned by Reynen & Bardis Communities co-founder John Reynen and his wife, Judith.

Translated: they are initiating a process aiming to get the house in exchange for $1.5 million in debts allegedly owed the Charlotte-based bank. The house was reportedly valued at $3.6 million in an earlier bankruptcy filing.

Reynen spokeswoman Michele McCormick says the BofA request is not about the larger financial problems of the company. She says Reyen has missed some payments on a home loan made by the Charlotte bank.

The filing was July 10. A hearing on the request is set for Aug. 12.

A May 30 Home Front posting here provides some background.

July 16, 2008
'90s flashback: Builders - again - will extend subdvision maps
 California's home builders say they've realized their top legislative priority for 2008 with the signing of a bill allowing them to extend their subdivision maps. While that may sound arcane, it gives subdivisions already approved by cities an extra year before expiring.

It takes effect immediately. What it means is builders who got approvals and then saw the market slow their timeframe won't have to spend money to their projects reauthorized.

Gov. Schwarzenegger signed the bill, SB11285 carried by Sen. Alan Lowenthal, D-Long Beach, late Tuesday, the CBIA said. Similar legislation passed during the 1990s housing downturn.

July 16, 2008
A novel idea for housing displaced Marshall Hotel residents
2446473388_68a2d5a676.jpg Here's an interesting news release just in from UC Davis. A student team there has designed a
 solar- and wind-powered housing proposal for residents of downtown Sacramento's Marshall Hotel. It's set to become a boutique hotel, dislodging more than 100 single-room-occupancy residents.
The proposal, picked up Denver-based nonprofit developer Mercy Housing, would on a half-acre of city land on I Street, across from the Sacramento County Jail.

Image: Flickr.com

July 15, 2008
California's homebuilders still getting hammered on sales
newhomephotos.jpgYear-over-year existing home sales have been growing in the capital region for three straight months, but homebuilders are seeing their year-over-year sales still declining.

This new May report from the California Building Industry Association shows May sales in the capital region (El Dorado, Placer, Sacramento, Yolo) are down 28.5 percent from May, 2007.

New home sales in Yuba and Sutter counties are down 60 percent from May 2007.
Statewide, year-over-year sales are down 51 percent.
Image: hbisononline.com

July 15, 2008
Sacramento County: 42 percent of June sales below $200K
house_sold_sign.jpgThe Sacramento Association of Realtors has just released its June numbers, showing that closed escrows for existing homes are up 95 percent over June 2007.
 That's 1,883 sales last month compared to 965 the same month last year.
 Bank repos continue to be center stage - 67 percent of June sales.

Check out this feast of data for yourselves:

Here is the news release summarizing it all.

The main overall county report is here.

And, here are the details by ZIP Code.

Image: fasttrackbuyers.co.uk

July 14, 2008
Washington Mutual: lots of loans in troubled Sacramento
Washington Mutual took a drubbing today in the stock market for fear that it's sitting on a lot of troubled loans. The Housing Wire summarizes WAMU's bad day here.
I saw all the speculation about troubled loans and looked up its market share in Sacramento. DataQuick Information Systems says WAMU was the fourth biggest lender in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties from mid-2005 to mid-2007.

It did 22,784 puchase loans and refinancings worth $4.6 billion, according to DataQuick.That was a 5.14% market share, behind Countrywide, Wells Fargo and Bank of America.

Seeing how it's gone in Sacramento, I'd guess a lot of borrowers here are a part of WAMU's problems.

July 14, 2008
Rocklin labeled Top 10 U.S. town to raise a family
400px-Whitney_HS_Rocklin_CA.jpgFinally, something cheerful!
 Rocklin is named one of the top 10 U.S. towns to raise a family in this Family Circle ranking.

It's the only town in California to make the list.

Meanwhile, its neighbor Roseville placed 90th on Money Magazine's new 100 best towns to live.  Elsewhere in California, Irvine placed fourth, Fountain Valley made 91 and Sunnyvale came in at 94.

fr975.pngImages: Wikipedia, city-data.com

July 14, 2008
The "core problem" of the housing market

Brad Inman, publisher of the real estate news service, Inman News, offers this perspective today on a real industry that he says has too many secrets. The public gets some blame, too.

It's a good read.

"Fundamental rules of real estate have been dismissed, such as requirements around good credit, full disclosure, transparency, a meaningful down payment, rational fees, common-sense loans and personal responsibility."

July 14, 2008
Placer County: June closings up 15 percent over June 2007

 The Placer County Association of Realtors here reports a 15 percent rise in escrow closings in June over the same month last year. This applies to existing homes.

  The new median price is $330,000 - down 21 percent from a year ago.


July 14, 2008
Got home loan trouble? Here's a another free workshop



SACRAMENTO, CALIF.  The Sacramento Housing and Redevelopment Agency (SHRA) in conjunction with the Sacramento Regional Partners in Homeownership and Sen. Darrell Steinberg will sponsor a free consumer workshop on mortgage default and foreclosure prevention on Wednesday, July 23, 2008, from 6:30 - 8:30 p.m., at the Sacramento Association of Realtors Auditorium, 2003 Howe Avenue, Sacramento, 95825.

Home loan and credit counselors, along with representatives from local and national banks and lending institutions will provide one-on-one advice and important information on preventing mortgage default and foreclosure.

Homeowners may bring their loan documents and financial information for review by loan counselors or lenders.  Counselors specializing in senior issues will be available to talk with elderly homeowners.

July 14, 2008
There is opportunity when banks have troubles
With banks going down and struggling with their bad construction and land developmentTHC-John.jpg loans, long-time Sacramento development industry rep John Hodgson is among those seeing opportunity knocking. His new venture, RCH Group, is finding a niche advising and partnering with banks that have taken back builders' land and partially built subdivisions.

I had a cup of coffee with him recently. He said RCH is a new blend of his local Hodgson Co., which most recently guided development of Elk Grove's 1,900-acre Laguna Ridge project, and the Milwaukee-based Towne Group, also known as Zilber Ltd.
The Towne Group is the umbrella organization for Towne Investments, Homes by Towne, Towne Consulting and now, RCH.

Hodgson, managing principal at RCH, said the new entity will do it all for banks sitting on repossessed land: land entitlement, planning, consulting and home building. It can also tap Towne's deep pockets to buy it outright or get into a partnership.

Hodgson, who chairs the Sacramento district council of the Urban Land Institute, a research arm of the development industry, also sees promise in guiding builders through California's unfolding global warming rules.
"Nobody has the slightest idea what that means," he said. But he's sure of one thing about going green. It's a "megatrend."

Now this is really inside baseball, but the new venture also recently snagged a pair of big names in the capital's development scene. RCH has tapped, for one, Ardie Zahedani, well known in the region's city halls as political director and lobbyist for the North State Building Industry Association. And it's also hired Jeff Ray, a planner with the Irvine-based development giant SunCal Cos.

 Image: The Hodgson Co.

July 14, 2008
The June sales numbers start rolling in
"Bank-owned properties continue to flood the market under $200,000 while tight credit is really hurting sales above $400,000."

TrendGraphix has released here the first of several June sales reports expected to arrive in coming days. The research arm of Sacramento's Lyon Real Estate shows that sales of existing homes (not new ones) continue be well up over the same time last year. That's now a three-month trend. But much of the action remains in the repo end of the market.

For-sale inventory in El Dorado, Placer, Sacramento and Yolo counties is 11,854 - lowest since early 2007. (22 percent, about one in five are bank repos). The official thinking is this: most people who can wait won't even try to sell in a market where they'll compete against cheaper bank repos. It also reflects a pickup in sales.

Lyon's Assistant Controller Sara Veliz said that repos are selling on average, after 69 days on the market. Individual sellers trying to compete take a little longer: 81 days.

Here is a look at recent historical Trendgraphix for-sale inventory numbers  for those four counties. The peak was Aug. 2007 at 16,262. (The peak during the '90s downtown was a little over 13,000 in April 1992).

Jan.  10,971
Feb.   11,410
March 12,500
April    14,026
May    14,704
June    15,566
July     15,927
Aug.    16,262 (record high)
Sept.  16,081
Oct.   15,7126
Nov.   14,904
Dec.   13,994

Jan.     13,445
Feb.     13,351
March   13,116
April      12,601
May      12,366
June      11,854

July 13, 2008
Sunday suspense and new criticism of Fannie/Freddie
Friday's Wall Street drama over Freddie Mac and Fannie Mae was only 48 hours ago, and the saga continues through the weekend.

 A couple of updates:
This from The Los Angeles Times housing blog, L.A.Land about one report of a possible $15 billion federal rescue today or tomorrow.

The New York Times also has a rather harshly critical story of the two mortgage giants and how we got to this point.

  Many people still don't know what the heck either of these two institutions are or what they do. I refer you here to a Q& A that I put together for Saturday's Bee:

Q: What are Fannie Mae and Freddie Mac?

A: Fannie Mae is the Federal National Mortgage Corp., founded in 1938. Freddie Mac is the Federal Home Loan Mortgage Corp., founded in 1970. Congress established both corporations to help make homeownership more affordable to low- and middle-income Americans. Both are publicly traded corporations backed by the U.S. government.

Q: What do they do?

A: The two firms buy mortgages from lenders, who use the money to make more home loans. In essence, this keeps money flowing into the home loan market. After buying the mortgages, Freddie Mac and Fannie Mae bundle many of them into securities that they then sell to global investors. But they also hold many in their own portfolio. It's estimated the two firms buy about half the mortgages in the United States. They own or guarantee about $5 trillion worth of mortgages, about half the outstanding U.S. mortgage debt. They don't buy risky subprime loans or loans above $729,0000.

Q: Then what's the problem?

A: As more people default on even standard mortgages, the two corporations are facing an unknown level of financial losses on mortgages they've bought and guaranteed to investors. Despite official assurances that the two have enough money to keep making loans - and reports that the government and Federal Reserve will back them - the financial markets have been jittery about their financial condition.

Q: What would happen if they fail?

A: That's the unthinkable event. It would remove the single largest source of money for home loans at the very time a struggling housing market needs buyers.

Q: If I have a home loan, does this affect me?

A: No.

Sources: Fannie Mae, Freddie Mac, Bee research

July 10, 2008
Don't count on that house paying for your retirement needs

I'm housecleaning a little this afternoon. This report came in yesterday during a deadline frenzy. I haven't had a chance to look at it, but it makes a BIG point about many of us who have thought our home's equity would be a big comfort to us in retirement. As in: forget it.

Here is the nut of it all in one paragraph. I'd be interesting in seeing thoughts from people who do take a look at this. 

As Senators McCain and Obama fine-tune their plans for Social Security in preparation for the 2008 presidential election, a new report from the Center for Economic and Policy Research (CEPR) shows that, due to the collapse of the housing bubble, the vast majority of Americans have accumulated little or no wealth. This means that they will be almost completely reliant on Social Security and Medicare to support them in their retirement years.




July 10, 2008
Everything you ever wanted to know about hotel rates
 This is a report I get every month and seldom seem to have much time to check out. It's a PKF Consulting look at hotel rates in California. This month's scoop: average room rates are down a bit from a year ago at Sacramento hotels.
If you like hotel minutiae there's plenty for you here.
July 9, 2008
Don't count out the suburbs just yet
 In a time when gas is $4.50 a gallon or more it's become popular to write off the suburbs as doomed. The Atlantic Magazine recently had a story with Elk Grove as a poster child for the phenomenon. Not to so fast, says California urban theorist Joel Kotkin in this essay published in The Los Angeles Times and titled: "Suburbia's Not Dead Yet."

July 8, 2008
Pautsch is out, Wyatt is in at Centex Sacramento
This just in from the ever-fluid homebuilder arena:
Centex Homes, the Sacramento region's leading homebuilder, confirmed this afternoon it has named a new division president, Mike Wyatt, to replace former president Doug Pautsch (pictured at right).

The big Dallas builder says the move is part of a consolidation move, folding its Central Valley and Reno divisions into one based in Sacramento.

Pautsch has left the company after heading the Sacramento division since early 2006, said Centex spokesman Eric S. Bruner. In a statement Brunner said, "Doug has been a dedicated and valuable leader at Centex and we wish him the best."

Pautsch declined comment Tuesday. He said in a brief phone conversation only that he plans to stay in the Sacramento region and work in the building industry.

Wyatt is an old pro at Centex. He most recently headed the Dallas builder's Visalia-based Central Valley division. He has also headed Centex divisions in Las Vegas and Myrtle Beach, S.C. In 2005 he was named by Home Builder Executive Magazine one of the "Top 200 Home Builder Division Presidents in the nation." The award recognizes presidents who had the most closings in the previous year.
Centex, under Pautsch, ranked number one among the capital region's builders, with 313 sales from January through May, according to consultant Hanley Wood Market Intelligence of Costa Mesa. Hanley Wood also ranked Centex first for sales under Pautsch in the region in 2007 and second in 2006.

It's the second builder consolidation announced in recent days. Irvine-based John Laing Homes has folded its Bay Area and Central Valley divisions into one based in Sacramento.

Home Front will miss Pautsch at Centex.  He could grouse and complain about negative real estate coverage, but he answered the hard questions straight up.
Photo credit: Building Industry Association
July 8, 2008
Sometimes, buying a house is a long, long story


Someday, archeologists will dig up this little bit of oral history and share it at conferences about California real estate at the dawn of the 21st Century. Roseville residents Ed and Petra Campos sent it recently by email, then agreed to share it online. It's the long, long story of buying a house - and their story isn't over yet. Bear in mind, this is their viewpoint. The builder - unnamed - probably sees it differently.

From Ed and Petra Campos: A timeline of the last two years of our real estate journey.


September 2006 - The landlord of our Roseville townhouse gives us informal notice that he intends to sell the unit we are renting. We discuss purchasing the unit but aren't financially ready after the birth of our son in 2004 and decide to move.

October 2006 - We find an ad on craigslist and rent a home in Roseville from an out of state owner who has his nephew show us the property and collect rent. The owner has had the property up for sale three times in the previous two years with no luck. We discuss the mutual merits of a lease option but discussions never become fruitful. The nephew collects rent for November and December and then moves out of state himself.

January 2007 - Our phone calls are no longer returned and nobody picks up the rent check. We begin receiving an enormous amount of offers to "help avoid foreclosure" and a county tax authority knocks on our door looking for the owner of the property.

February 2007 - Still no return phone calls and another month without the rent check being picked up. This month a representative from Wells Fargo knocks on our door but won't provide any details. We decide to move out to avoid any headaches. We decide we don't want to ever rent again. We spend our next few days moving and trying to forecast the real estate market.

March 2007 - We've decided to live with family members so we can save as much money as possible to take advantage of what we hope is a sizable drop in home prices. We drive by the rental house to see if anything has happened. Sure enough, foreclosure stickers are on the front door and windows.

January 2008 - Our deposit money is saved, we've chosen an FHA loan, saved most of our 3% down and begin looking at homes. We decide to focus on new homes because the price per square foot is so much cheaper and all new homes come with a warranty.

March 2008 - We put a deposit on a home in Roseville that is built by a well established home builder. We choose the builder for their solid reputation, excellent pricing, (the market had really tanked) and because they were offering contracts on homes that were scheduled to be built as late as March 2009. We chose to go under contract on a March 2009 home so we could have six months of mortgage saved, still put 5% down and it gave us a year to lock in an interest rate.

May 2008 - The builder calls to tell us that home sales have been brisk and that build dates will be moving forward. Our home will now be completed in October 2008! This is a major issue as our loan savings plan didn't exactly account for a potential loss of five months time and rates are still hovering around 7%. Moving the build date forward is a real one-sided deal. What a way to take advantage of a couple that went under contract when many sellers couldn't draw buyers with deep discounts, prizes and free hot dogs. The builder is sticking to the "estimated build date" as verbiage indicating the date is subject to change.

We're currently in a state of flux. We're waiting to hear if the home builder will make good in some way or we can breathe deep and take the new timeline in stride or we may our business elsewhere. In any case, I thought you might enjoy yet another view of this insane real estate market.

(Wasserman P.S....The Campos' sent this update today: "We are in the process of terminating our contract and purchasing a home across the street that is built by a competing company."

July 8, 2008
Governor signs foreclosure bill this morning

For those interested in watching: Note  live Webcast at 10:30 a.m.

Monday, July 7, 2008                                                   


Gov. Schwarzenegger's Schedule for July 8


10:30 a.m.       Press Conference

                      The Unity Council
1900 Fruitvale Avenue, Suite 2A

Oakland, CA


Gov. Schwarzenegger, joined by Senate President pro Tem Don Perata (D-Oakland), will hold a press conference to sign SB 1137, which will help protect homeowners by requiring a mortgage holder to provide a 30-day notice to a borrower prior to filing any default notice leading to the foreclosure.


On Wednesday, the Governor released a statement in support of SB 1137.  


The press conference will be webcast live at www.gov.ca.gov.


Note: Press Secretary Aaron McLear will hold a media briefing at 11 a.m. in room 1190 at the State Capitol.


July 8, 2008
San Francisco Fed's Yellen: This may be a long haul
"The ongoing fall in house prices has important implications for the financial markets, and it is one reason that we may continue to get troubling news from that part of the economy."

frm_yellen.jpgWhen Janet Yellen speaks, people listen. The president and chief executive officer of the Federal Reserve Bank of San Francisco spoke in San Diego yesterday about rising oil and food prices, the falling values in the housing market and the backlash in a "fragile" financial markets.

If you're looking for a sobering good overall look at where all this mess stands at this moment, this is a good speech for it. Photo credit: UC Berkeley

July 7, 2008
The Rancho Cordova origins of IndyMac's Michael Perry

In a scramble just minutes ago to track down information about struggling IndyMac's local operations, I phoned Gold River mortgage broker Jim Paterson who is always plugged in. He turned out to be an old pal of IndyMac's embattled Chairman and CEO Michael W. Perry. (See today's previous post about a tailspin at IndyMac).

  blog_m_perry.jpgWhat luck. I stumbled onto a story behind the big story.

 Paterson, partner at Mortgage Consultants Group, said Perry was born and raised in Rancho Cordova. He believes that Perry's parents still live in the suburban Sacramento city.

Perry, he said, won early respect as chief financial officer for the now-defunct Commerce Security Bank, which once had offices in Sacramento and Grass Valley.

Eventually, the bank put Perry in charge of its mortgage division, where he supervised all its residential lending operations.

Apparently, he was some rising star.

Paterson said Perry built the bank's wholesale mortgage lending division into one of the biggest in Sacramento, and possibly California. Paterson was a little hazy on that one.

 But his success caught the eye of Countrywide Financial chief Angelo Mozilo. Mozilo in the 1990s recruited Perry to Southern California where the two started IndyMac. (Indeed, in his letter to shareholders today, Perry recalls building up IndyMac from four employees in 1993).

Paterson described Perry as an "intelligent guy, very well respected in mortgage banking circles."

Now you know, as old Paul Harvey used to say on the radio, the rest of the story.

 Perry photo credit: Los Angeles Times





July 7, 2008
The tradeoff: skyrocketing sales vs. a region awash in rentals
BigRedQuestionMark_op.jpgI confess I still don't know the answer to this. It's more of a concept that has been swirling around in my head as I think about this region's explosion of sales - especially in Sacramento County. In journalism the most interesting thing is to always to find out what's being born.
So what is being born? I have had moments when I think it's neighborhood stability. I've seen it a couple of times in my own neighborhood in Elk Grove: a pot house is suddenly bought by a young couple. The day they move in there are a couple of families helping them. That is stability.

 If it happens often enough I think it adds up to community and a stronger neighborhood, then a stronger city. That's what you get when - one house at a time - a well-qualified owner with a 30-year fixed loan replaces one who couldn't afford the tricky mortgage they got for one reason or another.

So that's one theory.

The other is that many of these homes are being snapped up by investors with the idea of renting them out. So what does that mean? Does it means that an improving  sales market is actually creating even more destabilized neighborhoods?
Sunday, on the  KFBK Real Estate show, Scott Thompson, partner at Mortgage Resolution Services in Citrus Heights, said not to worry too much. He said landlords in this market can be choosy, can screen and that many renters are people who moved here from another state or some reason and make excellent neighbors.

Well, this is all a windy way of saying that the Rental Housing Association of the Sacramento Valley has been hearing some of these same questions from city officials around the region. Some cities are wondering if a huge investor class coming into to swoop up foreclosure properties will be a benefit in the long run for their neighborhoods.

With some of this in mind, the association - which represents a lot of property managers who  handle rents in houses (not apartment complexes so much) has decided to put on a seminar for investors. The aim is to give those who think they can get rich buying rental properties a proper view of what being a landlord means.

Enough said: here is the program, Saturday, July 19 at the Sacramento Hilton, 2200 Harvard St.
Image: courtesy of wabashfirstumc.org

July 7, 2008
Here goes another one: IndyMac in a tailspin


 Now it's IndyMac on the ropes. This just in from MSN about the company cutting 3,800 jobs and almost entirely shutting down its mortgage lending.

A letter to investors posted today on its corporate blog is here.

The company ranked 12th in lending in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties from mid-2005 to mid-2007, according to DataQuick Information Systems. It originated more than 5,000 loans in the region during that time - when some of the riskiest lending was done.

Just days ago the Center for Responsible Lending sent out a report on IndyMac, which you'll find access to here. The center's report, which alleges a pattern of "unsound" lending,  is titled "IndyMac: What Went Wrong?"

IndyMac called the report a "hit piece" and "shoddy journalism."


Image: www.ark-inc.com

July 7, 2008
Wall Street Journal: Sacramento's "Blueprint" a national model

"....with gasoline hurtling past $4 a gallon, Sacramento has become one of the nation's most watched experiments in whether urban planning can help solve everything from high fuel prices to the housing bust to the global warming."

 Check out this front-page story  in this morning's Wall Street Journal about the Sacramento Council of Governments' 2050 growth plan for housing and other development.

The message: a growth vision that seemed controversial when oil was $2 a gallon now looks - in a time of $4.50 gasoline - like a very important guide how we'll live from now on.


July 6, 2008
The Zero emissions house: Japan shows one to the world

Twice today on the national news I heard references to a zero-emissions home being unveiled at the economic summit being held in Japan. This may be similar to what's being planned in California. If I recall correctly, this is one of California's goals by 2020 - that new houses consume no more energy than they produce.

Heaven knows there is plenty of interest in these green houses around here. When I wrote about a SMUD and private builder collaboration for a Leed Platinum house in Folsom recently people came out of the woodwork to say they, too, are working on green houses.

I did a little googling and found some details about the Japanese house here. There is a better diagram on this site.

I am guessing we'll be hearing more about this the next couple of days during the summit. More and more I also keep hearing that home builders are really going to find their styles of building changed in California by the state's big climate bill: AB32.

It's a great subject and we're going to be tracking it here. All thoughts welcome.

July 5, 2008
"This is unchartered territory"

An Associated Press report out today says home foreclosures are likely to keep rising no matter who wins the presidential election this November. As if about 22,000 in the eight-county capital region the past 18 months isn't enough already.

The story offers more on how the two candidates want to address the issue. Sacramento has a lot on the line regarding the outcome. 


July 4, 2008
Happy 4th on your home front
There's no place like home. Happy 4th!
Image: www.terragalleria.com

July 2, 2008
Reinvestment coalition: lenders still not helping borrowers
As promised earlier today, the debate continues over lenders performance with borrowers to avoid foreclosure. The California Reinvestment Coalition, a group of consumer advocates and nonprofit groups, just released this third version of "The Continuing Chasm Between Words and Deeds."

 It alleges that for all the public relations efforts of lenders to tout their willingness to work with struggling borrowers to head off foreclosures, the end result in most cases is foreclosure.

This report names names.  There are names of lenders considered the hardest to work with, the ones that do least to modify loans and those that allegedly lose the most faxes. It also names those that try their hardest and do better than others.

July 2, 2008
Schwarzenegger's 90 Days of Hope campaign
The Schwarzenegger Administration has kicked off a pretty massive statewide ad blitz urging people who are having trouble with their loans to call their lenders.

That's 10 billboards in the Bay Area, ads on city buses and radio spots across California. The ads feature a Sacramento woman and a Stockton couple who got their loans modified and kept their houses - by being persistent about it. The Sacramento woman, Chiara Truel, was a Home Front success story way back in January.

Anyway, here is a link to the Web site with more. Click on the 90 Days of Hope tab on the top row of green buttons. You can see the billboards, hear the ads in English and Spanish.

This promises to be a big day of dueling about how effective all this has been when it comes to actually helping people. At 11 a.m. a consumer advocate, the California Reinvestment Coalition, has a news conference in Stockton to release its third survey of non-profit groups that are dealing with lenders on behalf of borrowers. It is expected to say that foreclosures are still the leading way that most of these conversations with lenders end.

I hope to post that promptly at 11 a.m. when the embargo is lifted.

July 1, 2008
State says number of loan modifications rise in April, May
The state Department of Corporations, which oversees Gov. Arnold Schwarzenegger's  agreement with 10 subprime loan servicers to help struggling borrowers stay in their homes, has released "encouraging" new numbers for April and May.

 They do show an increased willingness by lenders and servicers to modify loans. The state, while acknowledging that foreclosures continue to rise sharply, hopes it is a trend to build on. It certainly is an improvement over results earlier this year.

The memo by Department of Corporations Commissioner Preston DuFauchard giving his interpretation of the data is here.
And here is the actual survey data.

July 1, 2008
Ouch! We're still number 10 for risk of declining prices
"Given the magnitude of the inventory overhang, we expect national home price declines to continue into at least 2009."
   David Berson, chief economist, PMI Mortgage Insurance Inc. (based in Walnut Creek)

 So here it is again, PMI Mortgage Insurance's newest quarterly report on declining home values. Not suprisingly, it  predicts that prices in the Sacramento metro area - El Dorado, Placer, Sacramento and Yolo counties - have an 82.2 percent likelihood of being lower two years from now.

The list of #1's on this list - cities most likely to see declines - is up to 15 now. Sacramento, at least is 10th on that list. For awhile in 2006 and into 2007 our dear capital was in the top five. Leading the pack now is Riverside-San Bernardino-Ontario, with a 95.5 percent chance of prices being less two years from now.

The complete report is here. Go to the bottom for the PDF files with all the statistics.

PMI (PMI US) is a subsidiary of the PMI Group Inc. (NYSE: PMI), which provides residential mortgage insurance to lenders, capital market participants and investors.
July 1, 2008
All foreclosures, all the time

The eight-county Sacramento region has seen approximately 20,000 homeowners lose their homes to foreclosure in the last 18 months. We can argue all day long about how many of them brought it on themselves or how many were unfairly targeted by lenders. But there's no doubt about the economic upheaval that's resulted.

The New York Times weighed in on the subject today in an editorial saying another 55,000 American homes will have entered the foreclosure process by this Monday. That's when the U.S. Senate returns to work after leaving town last Friday without having passed a foreclosure prevention bill. The Times is among many increasingly worried about the larger economic implications of so many foreclosures.

Says The Times: "The foreclosure prevention bill is not a cure-all, by any means, but is a way to try to break the cycle."

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