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.
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.
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.
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.
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.
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).
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.
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.
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.
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."
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.
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.
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.
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:
Here is the preamble:
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.
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 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.
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.
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.
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.
Thanks to reader Bob Garza for the heads-up on this one. It's worth your time.
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).
...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.
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.
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.
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.
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."
This just in: More bad news on the home building front:
By Jim Wasserman
Chicago-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.
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.
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
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.
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.
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."
''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.''
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.