Home Front

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

December 31, 2008
Channel 10: Natomas HOA boots renters from clubhouse
Channel 10 reporter George Warren has an interesting item here on the diminished status of Natomas renters governed by the Natomas Park Master Association.
 The HOA has voted not to offer club memberships to renters. Existing renters can keep going until their membership expires. Owners only, says the policy, and their families and guests.

There's never a dull moment in HOA politics.

December 31, 2008
Read 'em and weep: the top 10 real estate stories of '08
 Inman News weighs in here with its top 10 real estate stories of the year.

 Read about the Fannie/Freddie rescue, the Wall Street bailout and job losses leading to more forceclosures.

Editors mince no words. Their word for 2008: "Grim."

December 31, 2008
It's over with a rally: a look back at the 2008 stock market
2008-03-Wall-Street-frontal-flat-700.jpgTim Paradis of The AP just filed the definitive look at 2008 on the New York Stock Exchange.
It's a great summary of the "abysmal" year we've all come through.

"Wall Street's horrific performance has cast a new mold for modern bear markets, often defined as a decline of more than 20 percent, and made expectations for 2009 so low that any reduction in the economic bloodletting would be considered a victory."
It wasn't just the United States.

 The BBC has this wrapup on global stock markets in 2008.

Image courtesy of newyorkpanorama.com
December 30, 2008
2008: Now that was a year for the books
A few moments of quiet here to recall some memories of this year that's coming to an end.

- Waking up New Year's morning for the first year of my life with a feeling that was something along the lines of business reporter dread. I knew 2008 was going to be a long scary haul. It absolutely was. Now it's almost over.

- A Sunday night in March: My wife and I are waiting for the Asian markets open with a feeling that the world as we knew it was about to end. Honestly, that day brought such a serious, raw feeling of fear. Bear Stearns was about to implode and take down everything with it. And then....the Federal Reserve stepped in to help JPMorgan Chase buy the giant investment bank. It also cut interest rates and we backed away from the precipice. For the moment. We'd be back to that scary feeling time and time again, obsessively watching CNBC as the stock market opened in the mornings.

- The parade of bankruptcies. Dunmore Homes went out of business. Then John Reynen of Reynen & Bardis Communities filed for personal bankruptcy protection. So did C.C. Meyers, owner of Winchester Country Club. And then so did Christo Bardis of R&B. I doubt ever in their wildest imaginings did they imagine it would all some day come to this.

The phone calls: I listened for hours and hours this year as people called in looking for help with their mortgage troubles. Anytime there was a story about loan modifications, about banks, about foreclosures, they called, five and six a day, with stories of banks not working with them, of not sleeping at night, of wondering who would rent to them when their nightmare came to an end. They were looking for any kind of help. These were just stories in one region in one state in a nation filling up with this kind of trouble. Heartbreaking stories. From January through the end of September MDA DataQuick counted more than 19,000 foreclosures in the capital region. More than 180,000 across California. Now, with so many people losing jobs in an economy pulled down by foreclosures, the risk is growing for thousands and thousands more foreclosures, the Mortgage Bankers Association tells us.

Plumas Lake: When gasoline hit $4.19 early this summer I took a drive up to the Marysville and Linda area to see those subdivisions that became home to thousands of commuters priced out of Sacramento during the housing boom. They were really feeling it now in their pocketbooks with rising gas prices. I was also struck by the sense of desolation in some of these neighborhoods of Edgewater and Plumas Lake. I saw a project that looked like it opened yesterday and nearly all the lawns were already unmowed. There were literally thousands of lots with utility lines sticking out, awaiting houses that won't be built for years. I saw weeds and tall grass as far as I could see. Model homes with dead lawns. It was like a  vision of Texas in the 1980s oil collapse. All I could think at one point was this: you could gather every player in the real estate, government, home building and mortgage sector that contributed to this scene of extreme overbuilding and they might say: What have we done?

Texas: A bright sunny day in May, traveling the interstate between Dallas and Fort Worth. The billboards showed new homes for $170,000. What planet was this?

A foreclosure bus tour: I think it was March, riding around Elk Grove for an entire Saturday on one of the first foreclosure bus tours. I live in Elk Grove and that's not the way you want to see your city. Dead swimming pools. Crayon drawings on the bedroom walls. Stuff left behind like the occupants left in 30 seconds. There were so many three-year-old houses where the owners never put in a back yard. What a weird adventure.

A call from The New York Times: It was October and the caller was from the newspaper's Sunday Magazine, asking questions about Dunmore Homes' Monterey Village in Elk Grove. They were scouting locations for a national picture essay tentatively called "Ruins of the New Guilded Age" or something like that. Las Vegas was on their list, too. I wonder if they actually came out and shot those photos.

Who are you banking with? By late fall the American banking landscape was so altered  it was impossible to remember what bank belonged to who. All year they fell like flies and were absorbed by others: Bear Stearns, Merrill Lynch, Countrywide, Wachovia, Washington Mutual, IndyMac, Citigroup. I must be forgetting someone. All you needed to remember anymore was Bank of America, Wells Fargo and JPMorgan Chase owned them all.

Whew, it was that kind of year, all right. Fear of financial collapse. An endless rolling wave of defaults and foreclosures. Layoffs, downsizings, bankruptcies. Huge mood swings in the Dow Jones Industrial Average. Crossing familiar names off my list of real estate industry sources as they disappeared into unemployment. Sacramento County's median price falling back below $200,000. (On the other hand I talked with a lot of happy new homeowners this year. That was the really cool side of the free-falling home prices).

Looking  back today, it seems that we packed 10 years of emergencies, suspense, and drama into 2008. And that didn't count the presidential election. I think I am ready, more than ready, for that crystal ball to drop in downtown Sacramento and tell me we made it through. Then, let's try this again next year.

Image courtesy of www.thevicenarian.com/2008/02 

December 30, 2008
The building industry "buzzwords" of 2009
What's inventory overhang, under water and even Chapter 11 have in common? They're part of the building industry's buzzwords of 2009, as featured in this amusing little year-end article I just stumbled across in Builder Online.

December 30, 2008
The backstory on General Growth

    By now you're probably well aware of the financial crisis at General Growth Properties and its possible impact on the oft-delayed Elk Grove Promenade mall. The latest is a series of lawsuits filed against the developer by contractors seeking payment for work done at the Elk Grove site. 

    But you probably don't know the company's rich history. The Wall Street Journal had a nice piece a few weeks ago about General Growth's humble origins in the grocery business in eastern Iowa.

    I was drawn to the story in part because I covered the company's founders, Martin and Matthew Bucksbaum, while I was at the Des Moines Register. I think you'll find it interesting, too.

December 29, 2008
Calling all those considering a refinance....
I am just getting into a story about what the industry tells us is a REFI BOOM. Rates have fallen and many borrowers are checking into getting a better deal. I've talked with Bank of America, Tri-Counties Bank and mortgage broker Jim Paterson of Mortgage Consultants Group so far. They all tell me interest is high.

Part of the story will be about what you should know - first off, if you have enough equity in the house to do one - before you consider refinancing.

As always, I am looking for people who recently refinanced or those who are avidly checking rates waiting for the right time to make their move. If that's you, and you'd like your 15 minutes of fame in The Bee, you are invited to call me at (916) 321-1102 direct, or email me at jwasserman@sacbee.com.  As always, thank you.

December 29, 2008
Sacramento: among worst U.S. real estate markets of 2009
Our friends at Fortune Magazine have compiled a list of the nation's 10 worst real estate markets in 2009 - and Sacramento ranks 5th.

Eight of the 10 are in California.

But...lest we all turn to drink, Sacramento had one big thing going for it in these rankings.

Look closely- the capital region is the ONLY one with a projection of price increases in 2010.

I always take these magazine rankings with a grain of salt. But check it out.

December 26, 2008
You know things are bad...

    I got one of those loan-scam emails earlier today. Usually they tell you that they'll wire you millions of dollars (or British pounds) if you'll provide so-and-so with your bank account number, etc.

      This one promised me the grand sum of $31,300.

       Even the scammers are hurting.

December 26, 2008
Another Black Friday

    The post-Christmas discounting got under way early today, but the consensus among analysts was that there was little retailers could do to salvage the holiday shopping season.

    Macy's, Gottschalks and many other retailers were open by 6 a.m., and JC Penney had its "doorbusters" out at 5:30 a.m. Discounts of 50 to 80 percent were commonplace.

     Combined with the rush of folks eager to return their unwanted goodies or redeem their gift cards, it figures to be a busy weekend. But it won't save the season.

    "One or two days are not going to salvage the season," said George Whalin of Retail Management Consultants in San Marcos.

      The early statistics were dismal. The SpendingPulse division of MasterCard Advisors said retail sales fell 5.5 to 8 percent during the holiday season. Excluding gas and auto sales, they were down 2 to 4 pecent.

     One retailer, Bob Carlton of Merlo's Cutlery in Arden Fair mall, said his business dropped 30 to 35 percent. "Everybody in the mall I talked to is not doing well," he said. "Nobody had any kind of year." 

    My colleague Darrell Smith is out talking to shoppers right now, and we'll have plenty more in Saturday's paper.

December 24, 2008
More on shopping

     There was a bit of good news from the feds today. Consumer spending in November actually rose slightly, according to the Commerce Department.

    The numbers themselves are a little confusing. The actual number of dollars spent by consumers went down slightly, for the fifth straight month. But a big reason was the steep drop in fuel prices. Factor that out, and you get an increase in spending as the relief at the pump gave Americans extra dollars to spend on other things.

     Does that mean things are great? Not really. Most analysts believe we're still in a substantial recession with no quick recovery. (The government also said today that new claims for unemployment benefits have risen higher than expected).

     I spoke this morning to George Whalin, a former Sacramentan who's a retail consultant in San Marcos, and he said the holiday season has been brutal. What little oomph there's been in sales this season, he said, has been spurred by huge discounting.

     "Everything the retailers are doing right now is desperation stuff," he said. 

December 23, 2008
This time of year there's no place like home...
 Being nearly overdosed on the negativity of foreclosures and the economy I am going soft here, to rhapsodize a moment about the this time of year when our homes take center stage.
  I love a time of year when we wrap our houses in lights, like big colorful ornaments in themselves. We drag trees inside our houses and wrap them, too, with lights. Our kids come home to live again for a few days inside the houses where they grew up or lived awhile. The big holiday movies all stress the importance of houses and the families inside them. Outside it's cold and inside is  the warm glow of the house and the people who live there.

That's why they called it "Home for the holidays."
That's why, in the movie, "Home Alone," Kevin McAllister tells himself, "This is my home and I have to defend it."

Our houses become a focal point for parties. We invite our friends in. We make cookies. We eat, boy do we eat.

This is the season when our houses takes center stage. Enjoy yours and think about how lucky you are to have one.

December 23, 2008
Bringing back old capital houses to their period charm
 Not long ago in a Friday Home Front column I included an item on Jayne Ellen Woody, owner of Sacramento's Vintage Properties - and noted how she fixes up classic old homes in the city, one apartment at a time. Days before she had showed me an apartment restoration she was undertaking near the 16th Street Light Rail Station.
 If you recall her message to property owners is this: if you restore the place to period charm you can get higher rent.

Earlier today I had a chance to visit the same apartment which is nearing the end of restoration. The old oak floors were sanded and oiled. The broken windows were fixed. All the dull white paint was replaced with colors like Snip of Cannon and Wise Owl. Painter Dan Pinkham was on the job, spiffing up another house after nine years working with Woody.

"I like to see things the way they were. Especially, the old ones," he said, painting inside a apartment house built in 1910.
This historically restored individual apartment, which rented for $910 a month, will now command $1,225 in its restored state. But enough of the explaining.

Here is a very short video of the building exterior - also repainted and spiffed up. In the second
longer one, Woody explains the business of for-profit historic preservation in California's capital city.

December 23, 2008
The shopping news

    Greetings. I assume you're here because you've completed your online holiday shopping and you want to catch up on the economic news.

     And today the news is this: Online holiday shopping is down 1 percent from a year ago, as of last Friday. That's according to online market-research firm comScore.

     The firm said $24.03 billion has been spent online since Nov. 1, vs. $24.15 billion a year ago.

    Interestingly, folks are shopping later in the season than usual, which comScore took as a positive note. Still, it concluded that "retailers have their work cut out for them this season," thanks to a crummy economy and a compressed schedule (fewer days between Thanksgiving and Christmas than usual).

December 18, 2008
More about home sales

    Ah, you pesky readers.

   As a couple of you point out, in response to my earlier post, it's true that the decline in median home prices is due to the huge appetite for discounted bank-owned foreclosure properties. That's the segment of the market where the sales are taking place, and that's why prices keep tumbling.

    About 56 percent of resales last month in California were bank-owned properties, according to DataQuick's Andrew LePage. It was 69 percent in Sacramento - and a whopping 80 percent in San Joaquin County, where foreclosure rates have been off the charts for some time. (It was a mere 10 percent in San Francisco).

     The people I spoke to say upper-end houses remain difficult to sell, especially when sellers are having to compete against the banks' discounts.


December 18, 2008
Latest on home sales

     The new MDA DataQuick numbers are out, and they show the trends of 2008 are still with us: strong sales, fewer dollars.

      In Sacramento County, median prices fell to $185,000 in November. That's $10,000 below October and a whopping 36 percent below last year. But the volume of sales surged 61 percent, as 2,157 homes sold.

     Prices are down in each of the eight counties surveyed by DataQuick. They've held up the best in Placer County, where the $328,250 median is actually slightly higher than October's level and "only" 15 percent below last year.

     This all comes as mortgage rates plunge to historic lows, thanks to the generosity of the Federal Reserve. The Fed is overwhelming the system with money in an effort to revive the economy, as you may have heard. Freddie Mac says 30-year fixed rate mortgages are averaging 5.19 percent, but Sacramento area brokers can find loans below 5 percent.

     We'll have a lot more on this in Friday's paper.

December 16, 2008
A new homebuilding venture takes root at McClellan Park

What happens when a custom home builder from Ventura meets up with a software developer who lives in Idaho? They start talking and pretty soon they're looking at maps of the West Coast and select Sacramento to start building modular homes in a factory setting.

I had a chance to see their new digs this morning at McClellan Business Park. They call the business Homes by Details and bill themselves at the vanguard of an emerging pre-fab movement. It's a movement getting bigger among architects and builders, and isn't, as they say, "your grandma's mobile home."

 They opened in June and have 25-30 employees who have built upscale houses for people at Lake Tahoe, rural Shasta County and in Silicon Valley. We'll be profiling this business in Friday's Home Front column. Until then, here's president Mark Wintz providing an overview in this video taking during my tour today.

December 16, 2008
The view from Stockton

   Jeff Michael, the business forecaster from UOP, has a surprisingly upbeat forecast for San Joaquin County.

      He's well aware, of course, of the huge volume of foreclosures plaguing the county. But he believes the market recovery will be more robust than conventional wisdom would dictate.

     Excerpt: "After the market stabilizes over the next two years, the County will require a rapid increase in construction to satisfy the demand from new household formation."

December 16, 2008
A bit more about McClatchy

    I write, you respond. I'm thankful for that. But one of your comments to my posting Monday about McClatchy's problems cried out for a response from me.

     One of you argued that I was ignoring the effect of McClatchy's purchase of Knight Ridder; you even suggested the topic was "off limits" for me.

    Nothing's off limits. I've written extensively about the $2 billion debt remaining from that deal, and the continuing impact it's had on the company.

    The reason why I didn't mention it in Monday's Home Front post was that it didn't seem relevant to the argument I was making: That the downturn in revenue has nothing to do with a newspaper's editorial slant.

    Hope this clarifies. Thanks again for your comments.

December 15, 2008
Holiday memories at Sacramento's #1 House

 Saturday, my wife and I took a romp down memory lane at one of the most historical old houses in Sacramento - the old Victorian governor's mansion. The state parks department put on a festive extra called Christmas Memories 2008. We had been to the mansion about a decade ago while visiting Sacramento, but this was something else altogether.

 The volunteers, generous with information and gubernatorial lore, were dressed in period costumes from long ago. The dining room was decorated as if it was 1920 and the governor was about to stage a formal dinner. We strolled through the rooms with high ceilings, saw Santa Claus entertaining the kids and heard the Pine Grove Youth Conservation Corps belting out some holiday songs.

 It was great to see a 1950s TV and the kitchen with one of the first dishwashers ever manufactured by GE. In the breakfast nook was a black and white photo of Sen. John F. Kennedy having coffee with Gov. Pat Brown during the 1960 campaign.

It was a warm, memorable hour in a classic old monument of the capital. Hats off to the state parks department for a pleasant idea for the holidays.




December 15, 2008
A liberal plot?

The McClatchy Co. reported another big drop in monthly revenue today, so naturally the company's conservative critics are having a field day with it.

    As some of you out there see it, it's The Bee's liberal slant on things that is at the root of McClatchy's problems. The comments posted with my story on our Web site make that clear once again.

    If only it were that simple.

    The fact is, all newspapers are struggling, regardless of politics. The economy and the Internet are draining our ad dollars away. If it were all about liberal politics, then there wouldn't have been a bankruptcy filing last week by Tribune Co., whose flagship newspaper the Chicago Tribune is about as conservative as they come (hometown nominee Barack Obama was the first Democratic presidential candidate the Trib has ever endorsed).

    If it were all about politics, then A.H. Belo Corp. wouldn't be doing so poorly. (Belo's big paper, the Dallas Morning News, is probably more conservative than the Tribune).

    . And so on. I've been hearing from conservative folks about this for years (where are you today, Rich?) and I enjoy the give and take. I doubt I'm going to convince anyone with this post, but I thought I'd try.

    In the meantime, thanks for reading.

December 15, 2008
We bring you predictions for the new year

It's that time of year when all the economists, think tanks and prognosticators peer for the record into their crystal balls.

 Here's one of the newest to arrive from Global Insight. It's not pretty.

Here is the preamble:

"The U.S. and world economies are about to suffer through some of the worst recessions in the postwar period. Most measures of economic and financial activity look like they fell off a cliff in September and October, and have been deteriorating at an alarming rate ever since. The United States is now officially in a recession that started in December 2007. Japan and many European countries are in the same boat. At the same time, growth in most emerging markets is faltering. IHS Global Insight now believes that global growth next year will be in the 0.0-0.5% range during 2009, compared with 2.7% in 2008."       


December 15, 2008
For richer....and lately, poorer

This in, over the weekend from Seeking Alpha, that American households have lost $10 trillion in home equity and stock values so far in 2008. Is it any wonder people are holding tight to their wallets? Ouch!

December 12, 2008
Short and sweet

   Remember when it seemed like Krispy Kreme Doughnuts was taking over Sacramento?

    The doughnut chain closed its last Sacramento restaurant in August 2007, and the company continues to limp along. It reported a larger third quarter loss this week and warned that more stores might close.


December 12, 2008
Region's November sales: start of winter slowdown

 Winter has kicked in and has begun to slow down home sales in Sacramento County and the city of West Sacramento for the year, according to the  Sacramento Association of Realtors.

The same is true in  Placer County, according to the Placer County Association of Realtors.

Sales in the suburban county totaled 282 in November, down 23 percent from October.

                                          ---                    ---

In Sacramento County and in West Sacramento, SAR counted 1,716 escrow closings in November That was down 18.4 percent from October. But it's still more than double the 814 closings of November 2007.

Credit a continuing run on bank repos in the biggest sector of the region's real estate market. They accounted for seven of every 10 sales of existing homes in SAR territory.

SAR estimates it would take 3.9 months to sell all the homes on the market at today's pace. That's down dramatically from 12.2 months the same month last year.

The results by Sacramento County ZIP Code are here.

December 12, 2008
Beware of modification firms seeking money up front

  The state Department of Real Estate, citing an explosion of loan modification companies asking struggling desperate buyers for advance fees, has issued a consumer alert spelling out what the laws are. 

The Home Front print edition today featured a story on this.There were some problems earlier today with links to the DRE site. But we're getting them fixed.

Here they are, a link to the consumer alert and another to the list of modification firms that ARE allowed to ask for money up front providing they have cleared the contract with DRE.

The Nevada Department of Business and Industry has issued a similar consumer alert for our friends in Nevada. Its law also says that foreclosure consultants can't charge up front . But that's only if you are already in default (missed two or three payments and received a formal notice of default from the bank). Companies ARE allowed to charge you in advance in Nevada if you haven't defaulted.

I know this is a huge problem out there because I've had countless phone calls in recent weeks from borrowers. They also cite as part of their problem: the fact that they don't know who to trust. People call on the phone and offer to modify loans - usually for a big advance fee. Many say they've paid up and then seen the loan modification people disappear. It's just one more example of rogues in the real estate industry who are always adapting to the newest problems people are having. Honestly, this is an industry that is going to have years of an uphill fight to rebuild trust.

December 10, 2008
Workers to blame? Not so fast

   A fascinating element of the Detroit bailout drama has been the argument that the US automakers' problems are largely the result of bloated labor contracts. David Leonhardt of the New York Times has a terrific piece today analyzing the contracts. He concludes that the pay gap between Detroit and Japan isn't as big as some believe.

     He says eliminating the pay gap entirely wouldn't fix everything. Detroit would still have the pesky problem of having a fleet of cars that a lot of people don't want to buy.

     Looking ahead: We'll have a story in Thursday's paper about the quarterly economic forecast from UCLA. We can't give you a peek today because the report is embargoed.


December 9, 2008
Nothing funny about this forecast

   We appreciate a sense of humor here at the Front, and Jeff Michael of the University of the Pacific has a great line in his just-released quarterly economic forecast:

     "Oil prices have dropped below $50 in a few months (a decline more rapid than Stockton home prices."

     The rest of the report is pretty dismal. Unemployment will top 9 percent in Sacramento and California in 2009 and 2010, even though the recession is likely to end in late 2009. (That's if things go well).

     While the state has lost about 100,000 jobs so far, it's likely to lose another 300,000 jobs by next fall.

     Unemployment in the low teens is forecast for many parts of the San Joaquin Valley, such as Fresno. Things will be almost as bad as they were in the 1990s.

    You can read his report here.


December 9, 2008
The new new crash

Another lengthy read for you. Michael Lewis (Liar's Poker, Moneyball, The New New Thing) has an extensive piece in Conde Nast Portfolio about the collapse of Wall Street.

You can find it here.

   Thanks to reader Bob Garza for the heads-up on this one. It's worth your time.

December 8, 2008
Bubble trouble

   Here in California we've now lived through two massive asset bubbles in less than a decade: the Internet craze and the real estate boom. Both ended rather badly.

   Will we always have bubbles? Former stock analyst Henry Blodget says they're inevitable in this article for the Atlantic magazine.

     It's an interesting take from Blodget, who's reinvented himself as a journalist after being banned from the securities industry. You might recall that he was pursued on fraud charges by then-New York Attorney General Eliot Spitzer. (Remember him?)

    Blodget argues that bubbles can't be legislated or regulated out of business (although he does agree that tighter oversight of the markets is worthwhile).

December 8, 2008
What would you ask them if you were us?
Consider this an invitation to ask questions of a panel we're convening this Thursday to talk about the housing market.
  We've invited five people for a real estate roundtable at The Bee. The aim is to take the temperature of this market. We'll talk a bit about where it's been in this amazing, historical year. But more, we want to try and see where we're at in this cycle. Long way yet to go? More falling prices falling? More problem loans ahead, and now with a double whammy of unemployment as a stimulus for foreclosures? Is this a good time to buy? What's hot? What's not?
 Who is coming? We've invited an investor who bought 10 bank repos this year. We have the owner of a mortgage company who knows the credit markets. We're expecting a consultant to the struggling home building industry. We've invited a would-be buyer who has been looking at houses all year - and writing a blog about the search. Finally, we have a real estate broker who also teaches community college real estate classes.

If you were us what would you consider asking this group? We'd love to hear from you and bring your suggestions to the table. Comment below, email me at
jwasserman@sacbee.com or call me 916-321-1102. Thanks in advance for your ideas.


December 5, 2008
Not since 1974....

...have layoffs been this rampant. The national job figures for November are out this morning, and they're pretty bad. Employers eliminated 533,000 jobs, driving the US unemployment rate to 6.7 percent.

    Here are a few choice comments from Sun Won Sohn, an economist at CSU Channel Islands, from a report he circulated to the media  a little while ago:

     "The economy is headed downhill and the brakes are not working. There are so many layoff announcements that it is hard to keep track of."

    "Unfortunately, the job picture will get much worse. The unemployment rate will go over 8 percent in 2009."

   Of course, it's already 8.2 percent in California (and 7.9 percent in Sacramento), as of October. The November figures will be released in two weeks. Can't imagine they'll bring good news.

      Not scared yet? An investment analyst says Intel Corp. may cut its workforce  by 10 percent, which would undoubtedly hurt the chipmaker's Folsom campus.

 On the other hand, we do have this ray of sunshine to offer you: Hunter Douglas, the window shutters and blinds manufacturer, said today it plans to move jobs to its new West Sacramento plant.

       There was no immediate word on how many jobs are coming. Hunter Douglas is moving 166 jobs out of Renton, Wash., but some of those jobs are going to Salt Lake City. 

    Jim Wasserman and I will have more on this in Saturday's paper.

December 4, 2008
Black Friday, awful November

    Black Friday was something of a mixed bag for retailers, with good-sized crowds and surprisingly decent sales numbers but an onslaught of discounts that will likely cripple profits.

    What came out today was anything but mixed. Major retailers released their sales numbers for all of November, and the figures were bad.

    Same-store sales dropped 28 percent at Abercrombie & Fitch and 10 percent for discount darling Target. Kohl's was down 17 percent, Costco 5 percent.

   The only real gainer was Wal-Mart, whose same-store sales rose 3 percent.

   Same-store sales, by the way, is a measure of stores that have been open for at least one year. By measuring same-store sales, you don't get fooled by a retailer that's struggling but was able to grow its numbers by opening a bunch of new outlets.


December 4, 2008
Back to the fuel pump

   It's almost unworldly how cheap gasoline has become, compared to recent history.

       The statewide average is down to $1.90 a gallon, a drop of 87 cents in a month. It's less than half what it was in mid-June, when it hit a record $4.61.

    Hey, it's so cheap, the next thing you know, when you pull up to the pump, a group of attendants will greet you, wash your windshield and check your oil, like in "Back to the Future." Or maybe they'll give you free drinking glasses as premiums (Kids, ask your parents to explain that reference).

    Or maybe not. Anyway, in Sacramento, the price is a mere $1.81, the cheapest it's been since October 2003. It's dropped from a record $4.57 in mid-June.

     The latest numbers are in AAA's daily fuel gauge report. 

   The bad news, of course, is that the price drop is being caused by this recession you may have heard about. A weak economy kills the demand for energy, which kills the price. But I guess that's better than the 1970s, when we had the worst of all worlds: high fuel prices and a recession.

   Prices figure to keep falling. The price of oil has dropped below $46 a barrel, thanks to another round of crummy economic news.

    Speaking of crummy news...Mark Zandi of Moody's Economy.com and one of our favorite economists, just told a U.S. Senate hearing that the Big Three automakers really need $125 billion in government aid to avoid bankruptcy.

    Good luck with that.

December 3, 2008
California's home building industry revs up for AB32 rules

If you've been wondering how the California home building industry feels about new rules relating to AB32, the state's global warming law, this alert will provide some insight.


December 3, 2008
Let America's house prices fall

That's today's advice to the government from the Center for Economic and Policy Research in our nation's capital. It's released a seven-page study called "The Key to Stabilizing House Prices: Bring Them Down."

The point: Fannie Mae and Freddie Mac should restrict lending activity in bubble markets to bring prices down and just get this over with sooner than later. The thinking is that restricted credit would push prices down 20-30 percent in overvalued markets.

 Too bad this study doesn't have specific recomendations about specific markets. Prices have already fallen 30 percent in much of the Sacramento region. Does that mean we would be excluded from this? Are we already there?

Whatever, this is an interesting take. If we just got it over with, people would feel better about buying and that would put a floor under a market that is otherwise likely to "overcorrect."




December 3, 2008
Another area home builder is biting the dust

This just in: More bad news on the home building front:

By Jim Wasserman


kimball-hill-homes-anatolia-new-homes-sacramento-lennar-rancho-cordova-california-cambridge-homes-new.gifChicago-based Kimball Hill Homes, a significant home builder in the Sacramento region since 1995, announced Tuesday it will close its business in coming months. The announcement comes eight months after the builder, once among the nation's largest privately-held builders, filed for Chapter 11 bankruptcy.

Kimball Hill, founded in 1969, represents the newest business failure to rock a Sacramento-area building scene that has already seen numerous bankruptcies, closings and downsizings as the housing market worsened in 2008.

The builder sold 100 homes this year in the capital region, ranking 16th for sales among competitors. Kimball Hill has projects in Rancho Cordova, Natomas, Elk Grove, Galt and Stockton. It sold 92 homes in 2007 in the capital region, according to industry consultant Hanley Wood Market Intelligence of Costa Mesa. The firm has also built homes in Merced and Modesto.

Nationally, Kimball Hill builds homes in California, Nevada, Illinois and Texas. The announcement capped a harsh year for the firm, which filed bankruptcy and lost its founder, David Hill, to cancer in July.

Hill addressed the North State Building Industry in Nov. 2007, telling area builders that 2008 could be a deadly year for the industry if economic conditions did not improve.

The builder has about 40 employees in Northern California, though that number will shrink to 31 "during some or all of the wind-down," the company said.

In 2007, Kimball Hill ranked 20th nationally among builders for its 3,246 sales, according to Hanley Wood.

Call The Bee's Jim Wasserman, (916) 321-1102. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.

December 3, 2008
More car dealerships folding?


Another Sacramento-area car dealer has folded, my colleague Mark Glover reports. That could be a taste of things to come: Detroit's federal bailout, if it occurs, would be undertaken as part of a severe downsizing promised by the Big 3. 

   This downsizing would almost certainly translate into even fewer car dealerships in Sacramento and the rest of California.

     We'll have more in Thursday's Bee.

December 2, 2008
Fannie and Freddie's overseers tell how they'll help borrowers
 This is really getting into the nuts and bolts of what federal mortgage giants Fannie Mae and Freddie Mac plan to do for struggling borrowers.
  I figure somebody out there is obsessed enough to read the Federal Housing Finance Agency (Fannie and Freddie's new boss) first report to Congress today.
  It's just seven pages.

December 2, 2008
Still a recession - and will be for a while

  Some leftover thoughts from yesterday's news that we're officially in a recession:

    This is shaping up as a long one. It's a year old, which means it's already outlasted the eight-month-long contraction sparked by the dot-com debacle. The early-90s recession, which was terrible for California but fairly tolerable in many parts of the U.S., also petered out after eight months.

    You have to go back to the recession of 1981-82, which lasted 16 months, to find anything comparable to what we're living through now. Given the many predictions that things are still getting worse, it's pretty certain that this recession will match or top that one for duration. (National unemployment topped 10 percent in that one; the current U.S. rate is 6.5 percent). The 1973-75 recession also lasted 16 months and brings to mind fond memories of waiting in line for gasoline.

      Here's a list of recessions and expansions going back to the 1850s if you're interested, courtesy of the National Bureau of Economic Research. The NBER is the nonprofit group that actually tells us whether it's a recession or not.

     When the current recession will end is anyone's guess. Jeff Michael, of the University of the Pacific, told me he expects the recovery to begin next fall. Economist Joshua Shapiro

says the recession will last into 2010.  The latest decline in U.S. car sales tells me we're in for a long haul. Any thoughts? 

    It was interesting (for me and economists, anyway) to read the NBER's official declaration of the recession.. It's widely believed, and reported, that a recession consists of at least 2 straight quarters of shrinking Gross Domestic Product. Turns out it's more complicated than that. The NBER has a wide-ranging definition in which GDP is merely one factor.

   The GDP actually grew during the first 2 quarters of 2008, but the NBER says the recession was alive and well during that period because income and other key indicators were falling.

   So there.           

December 2, 2008
State employees steered toward Thursday Hope Now event

 Gov. Arnold Schwarzenegger's Task Force on Non-Traditional Home Loans is spreading the word among state employees about the big Hope Now foreclosure prevention workshop scheduled Thursday at the Sacramento Convention Center on J Street.

The task force is sending out  this flyer in English and Spanish to managers and asking them to share it with employees. The message: don't presume that all your employees are OK with their home loans just because they have regular jobs and paychecks from the state.

Organizers say they expect 500 borrowers or more to attend the event, which runs from 3 p.m. to 6 p.m. It's free. And it's a chance for one-on-one face time with a lender rep or nonprofit loan counselor. In other words, much easier than being on hold on the phone and then getting dropped or transferred, as so many borrowers seem to say.


December 2, 2008
Investors sue BofA, Countrywide for loan modification plan

 It had to happen eventually. Now it has.

 An investment group has sued BofA and Countrywide for plans to rewrite 400,000 loans, including many in Sacramento. The Housing Wire has details and a copy of the complaint. BofA and Countrywide agreed to rewrite the loans as part of a legal settlement with Cailfornia Attorney General Jerry Brown and the AG in Illinois. Both had accused Countrywide of fraud and deception in making many of the loans it agreed to modify starting Dec. 1.

Business Week had its own story about the lawsuit.

The investors certainly have their objections to that deal.

 According to the Housing Wire:

"The case highlights the investor pushback often involved in implementing massive loan modifications, as well as the surprisingly vague language that was used in some critical contracts that guide the management of hundreds of billions of dollars' worth of mortgages sent through the securitization process and into the capital markets."

December 1, 2008
Florida halts foreclosures for 45 days
 The governor of Florida and the state's banks will halt foreclosures for the next month and a half.
  Speculation abounds about how much difference it will make. But it gets a lot of people through the holidays, doesn't it?

''This is to help people in a time of need,'' Gov. Charlie Crist said. ``This is not for somebody who went and bought a bunch of condos in South Florida on the spec market.''

December 1, 2008
It's now a recession

   This won't come as any surprise to people living around Sacramento, but it's now official. The recession is under way.

   In fact, it started one year ago.

    The National Bureau of Economic Research, a nonpartisan group in charge of determining when recessions start, made the call this morning. It said the economy began declining in December 2007, ending 73 months of expansion.

   The big 1990s boom, by contrast, lasted 120 months.


December 1, 2008
Boos for column on October foreclosure slowdow
Reaction so far to Friday's Home Front column noting that foreclosures dropped rather significantly in October in Sacramento and California has been quite negative.

The consensus among those who have called or written has been this: it's irresponsible for The Bee to be lulling people into a notion that foreclosures may have peaked. And irresponsible to suggest any hint that we are nearing bottom of this real estate cycle (which incidentally, the article did not declare).
Says one writer in an email:
"No doubt filings and foreclosures are declining but it's not a sign that the Bush Disaster has been mitigated.  Your columnists, and editors, should be much more aware of the reason than we who must work for a living and do not have the luxury of reading news all day.

Foreclosures are declining because Countrywide, Fannie Mae, Freddie Mac and others declared a moratorium until Jan 1 and are trying to rewrite or transfer the toxic mortgages to one of the federal programs, or an insurer.  Not because the market is improving.

A secon wave of foreclosures is beginning.  While the first wave of toxic loans by the predatory brokers, lenders and assessors Pirate Association is beginning to taper off there are still 3 years of adjustable mortgages which may fail.  Then there was the 2nd wave which hasn't yet peaked, homeowners who are being laid off, having their hours cut, or were previously on the brink of disaster, who are now defaulting due to a rapidly disintegrating economy.

You cannot talk America out of this disaster and raising false hopes of worried families is worse than the bad news we receive on a daily basis.  The Bee loses credibility when people realize your articles are false."

Adds Ruben Ramos, a real estate broker who teaches real estate classes at Yuba College:
"I don't see it bottoming out. Instead of putting something out there for a lay person to hang their hat on maybe do some more research. You can quote me. I am 100 percent certain prices will fall for another year. That's for the Sacramento area and all of California."

And this from a caller in Elk Grove, who is having troubles dealing the lender and is already two months behind on payments:
I think the banks are waiting for what the bailout will mean to them and waiting to see what the new president will do. Or that it's sooooo bad with so many foreclosures in process that they simply cannot move fast enough on them.


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