Home Front

    It's not like we sit around the office and place bets on this type of stuff, but several of us figured the statewide unemployment rate for January would top 10 percent.

   We were right. The number came in at 10.1 percent. That's the first time since 1983 that California has been at 10 percent or worse.

    Here's a link to our brief online story; we'll have much more in Saturday's paper.

The California Senior Legal Hotline is looking for volunteers in the legal community to help seniors with their troubled mortgages. It's scheduled a training session Friday, March 6 for advising senior citizens on foreclosure prevention.

The session runs from 2-5 p.m at the Sierra Health Foundation, 1321 Garden Highway, Sacramento.

The Sacramento-based hotline is seeking volunteers among attorneys, paralegals and students with a basic knowledge of real estate to help seniors seeking help with their loans. Volunteers will take calls at the hotline, advise clients on options and negotiate with loan servicers on their behalf. Information: 916-551-2145.

Details are in this notice from the hotline people.

   We're still waiting for the California unemployment numbers for January to roll in, but in the meantime, chew on this:

     The economy shrank at a whopping 6.2 percent rate in the fourth quarter of 2008, the government reported this morning.

     That's the worst showing in 26 years.

     Read the story here.

     The state and local unemployment numbers are a big story each month, as you can probably imagine. They're released on Friday mornings, usually around 10 or 11, and we wait with anticipation. (My fellow Home Fronter Jim Wasserman has lately taken to cringing before the numbers come out).

   This time we'll get fix in two doses. Tomorrow the Employment Development Department will release the January figures for the state and Los Angeles only. The rest of the local statistics won't come out until next Thursday.

    The reason has to do with the annual "benchmarking," in which the previous year's numbers are recalculated. EDD says the process is taking more time than expected.

 With the Obama Administration's $275 billion housing plan starting early next month, we are  wondering here at Home Front if this will lessen the number of people walking away from their homes. The plan has received a lot of criticism in California for only helping people who are less than 5 percent "underwater" - this is having homes that are worth 5 percent less than they owe on the mortgage. In California, millions are now 20, 30 and even 40 percent underwater.

The other part of the plan subsidizes lenders to get monthly payments of struggling borrowers down to 31 percent of their incomes. But that's just the monthly payment, goes the criticism. It won't, for the most part, cut the amount owed - the principal.

So the question is: If you're more than 5 percent underwater and can't get help, and you can't get your principal lowered - what's the incentive to stay with your house?

That leads to my question for a story I am just starting on about the current state of walking away - and whether it might or might not subside given the Obama plan:

Are you thinking about walking away? Have you already done so? I realize this might be the one thing you'd like least to talk about publicly in a newspaper. But we are looking for some people who are willing to be interviewed and quoted by name. If you're game, please call me at 916-321-1102 or send an email to jwasserman@sacbee.com. Thank you.

 

    Nobody's been spared the impacts of the real estate collapse, it seems. Including the wealthy.

     You may recall a story I had three weeks ago about the sharp drop in sales for million-dollar homes. Now Chase International, a Lake Tahoe real estate brokerage that specializes in high-end properties, is offering a community workshop for stressed homeowners.

    The workshop is Saturday, March 7, from 10 a.m. to 2 p.m at Chase's office at 917 Tahoe Boulevard in Incline Village, Nev.

    Speakers will include brokers and lenders. Among the topics: foreclosures and short sales.

     If you're interested in attending, Chase wants you to RSVP at (775) 831-7300.

California home builders just announced their permit numbers for January - and it shows a huge lack of confidence in anything getting better soon.

Locally - El Dorado, Placer, Sacramento and Yolo counties - the declines aren't as bad as statewide.

But apparently, building has all but ceased in Yuba and Sutter counties. Just one permit in January.

Here's the overall look: Builders obtained permits to start just 2,007 homes statewide.
That was 1,283 single-family home permits and 724 permits for condominiums and apartments. Building permits obtained from cities and counties are an indicator of planned construction starts.

Statewide permits were down 57 percent from December and down 57 percent from Jan. 2008, as well. That means the state is already down from last year, which saw the fewest housing starts since the state began keeping records in 1954.

The year-over-year decline was less sharp in El Dorado, Placer, Sacramento and Yolo counties. Builders there obtained permits to start 179 new homes in January, down 27 percent from the same month last year.

Details for Yuba and Sutter counties: Builders saw one of the worst declines in California. Their one permit in January was a 95 percent reduction from 20 permits in Jan. 2008. Builders in Merced also got one permit in January, a 98 percent drop from 45 in Jan. 2008.

The California Building Industry Association expressed hope that a recently enacted $8,000 federal tax credit for first-time home buyers and a $10,000 state tax credit for new-home buyers in California will boost sales and starts.

Home Front has noted this a couple times before, but it's so blatant that here's one more warning not to pay to adjust your property taxes downward.

In case you didn't see the earlier warnings, here is Bee reporter Stan Oklobdzija's story over the weekend advising caution with all things in the mail.

It's been a long time seeing the false hopes of subprime lending in the region's inner-city neighborhoods and the suburbs, to boot. We've come through that and now we've come through all the foreclosures that followed. The newest stage: federal money - $34.2 million here in Sacramento County, almost $4 billion in total - being invested by the federal government in the hardest-hit neighborhoods left behind.

I have a story in tomorrow's paper about specific plans by suburban Elk Grove and the Sacramento Housing and Redevelopment Agency to spend the federal money. It's a big day Tuesday as the SHRA plans go before the Sacramento City Council and the Sacramento County Board of Supervisors. 

We have all the details in three staff reports regarding the foreclosure money. The big question is: will this help? Time will tell on that one. An easier question is: how will it be spent? Here are the staff reports with answers:

• The $13.2 million plan for city of Sacramento neighborhoods.
• The $18.6 million plan for Sacramento County unincorporated neighborhoods.
• The $2.4 million plan for the city of Elk Grove. 

 

    The Atlantic magazine has an interesting piece this month on what the economic landscape (literally) will look like when the economy recovers.

    The story, by a University of Toronto management professor named Richard Florida, tries to predict economic winners and losers among various cities and regions. Among the losers: old-line manufacturing hubs, because they always do poorly in recessions, and Sun Belt cities that subsisted largely on the housing bubble. Among the winners: places like Silicon Valley and Los Angeles, which will continue to be supported by their creative/entrepreneurial classes.

    No mention of Sacramento. But it seems like Florida is arguing that cities that have something going for them other than manufacturing and real estate development will do OK. In that respect, Sacramento's traditional strength in state government should continue to serve the region well economically.

    Any thoughts?

MDA DataQuick sent along  this ZIP Code chart for a closer look at the neighborhoods in January. How's yours doing?

 

Two big mortgage cases, with charges related to properties in Nevada City and elsewhere in the region, went to a new level this afternoon:

The U.S. Attorney's office issued this report about an indictment of five people, including one from Olivehurst, on charges of bank fraud.

State Attorney General Jerry Brown has also weighed in with charges against Nevada County broker Thomas Hastert, alleging he "brazenly deceived" investors and borrowers, embezzled fees, and filed false paperwork. The charges say Hastert raised $20 million from investors.

   Here's something I've been wondering about lately: Supposedly we got ourselves into this economic mess by spending ourselves into oblivion. Everyone's telling us we should behave more intelligently with our money.

   But the federal stimulus package will shower us with billions in tax cuts so we can, you know, stimulate the economy.

    Can you see why I'm a little confused here?

    Michael Kinsley in the Washington Post had a terrific column on this today. Please give it a read.

    If you live in the Sacramento area and would be willing to be interviewed about what you plan to do with your tax cut, please contact me. I plan to do a story about this in the next week or so. I'm at dkasler@sacbee.com

Home Front has a story tomorrow about the $10,000 state tax break that buyers of new homes will get starting March 1 - and running through March 1, 2010.
 
The deal is this: you buy a new house in that time frame and live in it for two years - and for the next three years you get your state taxes reduced by $3,333 a year for three years. It was part of the budget deal finished this morning.

Nice deal. But we are wondering about people who are about to close on a new house before March 1. Can you delay your closing to get the tax credit? Will your builder work with you on that? Is there a complication with your interest rate if you try to extend your escrow?

We're assuming anybody who is about to buy now will somehow try to get the deal to close after March 1 to get a $10,000 tax credit. If you're in this pickle please call me at 916-321-1102 or drop an email: jwasserman@sacbee.com. Thank you. If we can nail it, the story would run Saturday.

    Everyone agrees there isn't much to like in the new state budget. Taxes are going up, spending is coming down (And for those you who despise government spending, you should understand that reducing government spending does take dollars out of the economy).

     Then again, it could have been worse.

      One of our favorites, Jack Kyser, chief economist at the LA County Economic Development Corp., summed up the prevailing mood this way:

      "As ugly as it is, we'll take it. The alternative was really bad."

     Meaning, having the state go broke would have brought substantial state-worker layoffs (not good for Sacramento's economy) and cancellation of billions in public-works projects (not good for California's economy).

    We'll take a closer look in Friday's Bee on the economic impact of the higher sales tax (an extra penny) and personal income tax (an extra 0.25 percent, although that could shrink).

The capital region has now seen 10 straight months of sales that outstripped the month time a year earlier. That set us at Home Front to wondering if businesses that sell drapes, blinds, furniture and mattresses might be seeing a bit of an upward bump, as well.

Apparently not, a series of telephone calls indicated this week.

 Owners of a half dozen Sacramento-area businesses - all in the business of selling home goods - said people are still scared and holding tight to their hard-earned money. That's especially if they just bought a house, they said.

Ask us again in six months, several said. Quipped Larry Eldridge, manager of Big Al's Furniture in Sacramento, "If they are I hope they come my way."

This just in: Orange County-based John Laing Homes files for Chapter 11 Bankruptcy protection, says this dispatch from Builder Magazine.

DataQuick has just released its January sales figures. January's 2,806 sales was the highest since Jan. 2006. The median price fell to $165,000 in Sacramento County - lowest since May 2001. Here is the story with county-by-county tallies and prices.

    President Obama is unveiling his plan to help up to 9 million Americans avoid foreclosure later this morning.

   We'd like your comments. Specifically, if you're a Sacramento-area homeowner in danger of foreclosure, and would be willing to be quoted by name in Thursday's Bee, please call me at (916) 321-1066 or email me at dkasler@sacbee.com

   Thanks.

The White House has unveiled its proposal to help nine million American households with their mortgage troubles. What's it about? The government has put out a great series of fact sheets and explainers here.

 About two hours after President Obama signed the stimulus bill in Denver, the National Association of Home Builders already unveiled this web site answering all your questions about the new credit.

P.S. The real estate industry hoped to make the tax credit good for $15,000, but lawmakers shaved it in final negotiations.

The tax credit at a glance, according to the NAHB:

• For first-time buyers only.
• The tax credit does not have to be repaid.
• It's equal to 10 percent of your purchase price - up to max of $8,000.
• It's available for homes purchased on or after Jan. 1, 2009 and before Dec. 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

Earth to business reporters: market still dead.

I got a kick out of this story, having long followed the Sacramento market down, down and down some more - while always looking for that elusive light at the end of the tunnel.

"The news media in this country are often accused of being contrary and pessimistic, but rarely is that the case. Amid carnage, economic or otherwise, reporters are trained to look for "glimmers of hope," "signs that the worst is behind us" and "miraculous tales of survival," especially those that involve a baby -- or in this case, a 401(k) -- somehow making it through a hurricane, tornado or mudslide."

 

    We usually don't use space in the Front to give publicity for someone's promotional offer, but this one caught our fancy. It's as if they're starting to feel sorry for us because we live in California.

      An Arizona resort is offering "Free Furlough Fridays" for California residents, a promotion inspired by the unpaid furloughs imposed on state workers.

       The Sheraton Wild Horse Pass Resort & Spa in Chandler, Ariz., will let California residents stay free on Friday night if they book a two-night stay. The offer is valid through Dec. 31. The offer is good to anyone, not just state workers, carrying a valid California identification.

      For information, call (602) 225-0100 or visit www.WildHorsePassResourt.com and use the CALI2009 promotional code.

      

  This morning's Bee brings the story of Loretto High School going on the market for $10.3 million after being scheduled to close this June.

  Commercial real estate broker John Banchero of Sacramento has the listing for the 54-year-old school.

 His 17-page preliminary document with details about the 9-acre property on El Camino Avenue is  here. And here is a two-page  color brochure.  You can also see a lot of the school itself in this Loretto campus tour video.

It will be interesting to see how this plays out. As a couple of other brokers testify in the story it can take quite a long time to sell such a "special purpose" property. Banchero is upbeat and said he's already heard from other private and charter schools.

 

Here is a wonderful tribute to a man who loved Sacramento's wonderful old houses, the obituary for Roger Lathe written by Bee writer Robert Davila.



"Roger Lathe, a contractor, architectural historian and writer who restored Victorian homes and championed Sacramento's rich heritage of vintage housing, died Wednesday at age 75."

    Several of you asked about our story in Sunday's paper about the new Home Depot opening in Auburn. It seems a certain reporter neglected to include the address. So here it is:

   11755 Willow Creek Drive, just off Highway 49 heading toward Grass Valley.

Just minutes ago the Sacramento Housing and Redevelopment Agency released this fourth quarter 2008 look at foreclosure activity in Sacramento County. 

 These reports are worth it just for the maps.

 Highlights of the report include:

·       Both NOD and REO filings countywide dropped significantly from the third to the fourth quarter of 2008.  We believe this is partly due to the continued effect of SB 1137 to delay foreclosure filings, as well as a voluntary moratorium on foreclosures by some lenders.

·       Even though NODs declined in total from the third to the fourth quarter, weekly filings of NODs have in fact been rising steadily from their low in early September.  Also, the prospect of variable loans resetting and a continued economic downturn suggest that the recent downward trend in foreclosure filings will reverse in the near future.

·       Foreclosure filings have declined everywhere in the County.  The County's lowest-income communities continue to have the highest foreclosure rates.  However, foreclosure filing declines in some areas of North Natomas have not been as rapid as declines elsewhere, causing several North Natomas neighborhoods to rise in the foreclosure rankings.

Who is sitting on the most bank-owned property? The top five owners of foreclosed properties in the county, in order, were US Bank, Indymac, Deutsche Bank, Wells Fargo and Wachovia.

 

 

 

 The Sacramento Association of Realtors is in with the January numbers for Sacramento County and the City of West Sacramento - and says 1,542 closed escrows breaks all records for this first decade of the 21st Century.

The report says 75 percent of sales were bank repos - pushing the median price for existing home sales to $169,000.

That's lowest since May 2001.

Sixty percent of sales were for less than $200,000.

Here is the news release with details and an overview. Here are  statistics and a ZIP Code report with the close-in details.

Meanwhile, the  Placer County Association of Realtors reported a more sedate January.

 Placer County doesn't have all the repo action that characterizes the Sacramento County market. Only 15.4 percent of its sales were under $200,000.

PCAR reported 253 closed escrows, down 20 percent from 319 in January.

The median price (where half cost more and half less) was $270,000. That's the fourth straight month under $300,000 and lowest since April 2002.

 

 

 

 

 

That's the title of a big and very revealing Business Week feature on the nation's inability to get a grip on the foreclosure crisis.

It blames the banks for denial and obstruction - and blunting government efforts to do something about foreclosures.

Reading this tells me what's behind the calls I get every day from people who say they can't get the banks to work with them. It's not the callers' imaginations. The banks are set up, according to this article, to keep denying the problem while the economy worsens and worsens as a result.

If you read anything about the foreclosure crisis, read this.

   It's like a kind of tug of war. Congress is on the verge of passing President Obama's economic stimulus plan at the same time the California Legislature is preparing to vote on a budget deal that would partly offset the impact of the Obama plan.

    In its simplest terms, these two bills work out this way: The state budget would take $30 billion out of the economy via higher taxes and reduced spending. The federal stimulus would ship California something on the order of $80 billion of economic benefit, through increased spending and lower taxes.

     The bottom line is a net gain to the state, economists tell me. But it would be a lot better if the state didn't have to undertake its deficit-reduction plan.

      The one good thing for Sacramento is that if the budget passes, Gov. Schwarzenegger will put away his threat to lay off 10,000 state workers - a move that would have hit especially hard here.

 I have truly heard it all now: Farmers are defaulting on mortgages for their chicken houses.

  The Wall Street Journal has this weird look at yet another corner of the foreclosure crisis.

"There's no way we'll make the chicken house payments."

"A chicken housing crisis has cropped up in the U.S., and it's producing some of the same bleak results as the human one -- foreclosures, lawsuits and devastated homeowners."

   Exports remained a strong segment of California's economy long after real estate, construction and other industries fell apart.

    Now exports are faltering, too.

    New data from the U.S. census shows exports from California dropped the last two months of 2008 (6.3 percent in November and 13.7 percent in December). Although the full-year numbers were up, those last two months show how the recession is spreading around the globe, said Sacramento international trade expert Jock O'Connell.

    "It really started to fall off the ledge in November and continued in December," he said. It didn't help that the dollar began strengthening in late 2008, which made US goods costlier on world markets.

After three years now covering real estate I am completely overwhelmed by people and companies taking every opportunity to scam homeowners. For all the hallowed talk we hear about home ownership and the importance of home, for home being the most important thing after food, it sure attracts an active and inventive rip-off element.

This week two county assessors got in touch, complaining about the newest scam: companies doing mass mailings with offers to help homeowners lower their property taxes.

Just like last week's story on loan modification scams, they're offering services for a big fee that can be gotten for free.

Sacramento County Assessor Ken Stieger said he got a mailed solicitation seeking $179 to remedy what he said was a bogus claim, that his house was worth $100,000 less than the county's assessment. Act fast, his letter said. After Feb. 26, the fee would go up another $39.

"The way they're scamming the public is terrible," he said.

Amador County Assessor Jim Rooney said they're working his county, too.

"There is a letter that has apparently been mailed out to thousands of property owners in this county that looks like an official document that is charging $179 for a reassessment request that we provide for free," he said.

Rooney sent out this advisory: Don't be taken advantage of for unneeded service.

Home Front says: Be careful out there. Times are tough and the sharks are active.

The U.S. Government plans a $50 billion rescue plan for people facing foreclosure, but as we learn in this AP story about today's announcement there's a long road yet to finding out how it will work exactly. And as usual, there's already large-scale speculation it won't be enough to make a big difference. A sneak peak:

"(WASHINGTON) To those on the front lines of the housing crisis, the Obama administration's pledge to spend $50 billion to combat foreclosures was a welcome change in the government's approach. But the actual plan won't be unveiled for at least a week and might not be enough to prevent the housing market's troubles from mushrooming further."

       Having covered the Tower liquidation in 2006, we're always interested in music-industry news. Here's something today from the Associated Press:

         Muzak Holdings LLC, the maker of elevator music, filed for Chapter 11 bankruptcy protection Tuesday.

         The company had heavy debt load, and it filed to try to refinance some of its debt. Its total debt is between $100 million and $500 million and it has assets of less than $50,000, Muzak said in a court filing.

       While the company is known as the creator of elevator music, its business is now more focused on creating playlists for use in retail stores, installing professional sound systems and other services.

    We often talk around the office about keeping an eye on those companies that are taking advantage of hard times by making bold acquisitions. The conversation is usually about real estate, but today we got a reminder that it applies to other industries, too.

     The company is Folsom trash firm Waste Connections, and it announced a major acquisition this afternoon. The company won't divulge the price until it makes a Securities and Exchange Commission filing Tuesday, but it's looking big. Last November it wrapped up a similarsized acquisition (as measured by revenue of the acquired assets) that cost $303 million.

    Waste Connections also announced higher fourth-quarter earnings and said it topped the $1 billion mark in revenue for 2008.

    UPDATE: The company's SEC filing this morning said it's spending $313 million on the latest acquisition. So Waste Connections has now committed more than $600 million in a few months to expansion.

    

How many times have we asked this question - where is bottom of this housing market - and seen it pushed farther into the future?

 One more time today, comes Moody's Economy.com, pushing it out until the fourth quarter of this year for El Dorado, Placer, Sacramento and Yolo counties. And the second quarter of 2010 for Yuba and Sutter counties.

It's all here in this sobering report just in from Moody's.

"The Bubble is now deflating with a veangeance," it says. 

By the end of this year, the report said, home prices will have fallen 54.2 percent in the four-county capital region from a fourth quarter 2005 peak.

Prices will have fallen 49.6 percent from a first quarter 2006 peak in Yuba and Sutter counties, it said.

Probably it's because this region took such drastic hits last year in home values, but Sacramento appears to be closer to bottom than most big housing boom players.

 Los Angeles, Riverside, San Bernardino, Phoenix and Las Vegas aren't expected to reach bottom until 2010, the report said. Much of Florida won't see bottom until 2011, it added.

Others reaching bottom alongside Sacramento in the fourth quarter of 2009 include Stockton, Merced, Fresno and Bakersfield, Moody's predicted. Modesto will follow in the second quarter of 2010, it said.

Building industry consultant Hanley Wood has compiled its final list of 2008 sales among home builders in the capital region - and the winner is Dallas-based Centex Homes.
It's the second year in a row for the Texas builder in this market.

Centex captured a 10.4 percent market share with 503 sales last year in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, reported Costa Mesa-based Hanley Wood.
Centex also led area builders in 2007 with 669 sales, a 9.3 percent market share.

It was a hard year for all that showed in the final combined 2008 sales tally: 4,847 homes sold in the six-county region

 That compared to 7,174 in 2007 and 9,778 in 2006, Hanley Wood reported.

Others in the top 10 in the Sacramento region for 2008 sales:
2) Atlanta-based Beazer Homes, with 390 homes and an 8 percent market share.
3) Fort Worth-based D.R. Horton Inc., with 293 sales and 6 percent market share. (It last ranked first in the region in 2006).
4) Los Angeles-based KB Home, with 283 sales and 5.8 percent market share.
5) Arizona-based Taylor Morrison Inc. with 277 sales and 5.7 percent market share.
6) Miami-based Lennar Corp., with 276 sales and 5.7 percent share.
7) Roseville-based JMC Homes, with 212 sales 4.4 percent market share.
8) New Jersey-based K. Hovnanian Homes,with 208 and 4.3 percent share.
9) Reno-based Pacific West Cos., with 190 sales and 3.9 percent share.
10) Michigan-based Del Webb Corp., a Pulte Homes division with 168 sales and 3.5 percent market share.
 

    Not every state agency is furloughling employees today. Here's an excerpt from a press release from the Employment Development Department:

Providing a variety of vital job search assistance to an increasing number of unemployed workers, nearly 250 state Employment Development Department (EDD) field offices will remain open on their regular five-day-a-week schedule, the parent Labor Workforce Development Agency (LWDA) announced today. As previously released, EDD's Unemployment Insurance (UI) Branch will also remain open five-days-a-week.

    One of the things that struck me Thursday, as I was scrambling to write the story in today's paper about the problems at The Bee's parent, The McClatchy Co.: what a lousy month January was.

     Company officials told me they saw some modest signs of stability in the advertising market in December. But things took a nosedive in January. Now, keep in mind that the advertising business always slows in January compared with December, but this was significantly worse than expected.

     The point was driven home today, with the announcement that US unemployment jumped to 7.6 percent in January. Nearly 600,000 jobs disappeared, the worst one-month showing since 1974 (What a year that was - I got my driver's license and spent half the time waiting in line to buy gas, courtesy of the first oil embargo. Ah, the memories).

     Meanwhile, February is off to quite a start, at least around here: Today is the first day of state-worker furloughs.  My colleague Jon Ortiz reports that one of the unions filed a last-ditch bid to block the furloughs, but it was denied by the 3rd District Court of Appeal.

     Downtown and midtown Sacramento were fairly quiet at lunchtime today, although not quite the ghost town that some had predicted. The streets were fairly empty during my morning commute, but some of the restaurants were doing a decent business.

    We'll have plenty more about the furloughs, and the national unemployment numbers, in Saturday's paper.

    Here are some ugly new home-equity statistics from Zillow.com, the online real estate researcher:

    Almost 34 percent of all Sacramento area homeowners had negative equity at year end.

    Some 62 percent of all home sales in 2008 in Sacramento were at a loss; 39 percent were foreclosures.

    Home values in the region dropped a combined $40.8 billion in 2008.

    Want more? Go here for the report  and scroll down the left side until you find Sacramento.   

    I did a phone interview Tuesday with Joseph Dear, the incoming chief investment officer at CalPERS. Excerpts will run in a Question-and-Answer format in the paper sometime in the next few days, but I wanted to give you a preview.

     First and foremost, it doesn't sound like he's contemplating big, quick changes in the CalPERS portfolio. The fund is undergoing a regular strategic review of its asset allocation this spring, and he isn't willing to pre-judge that. He seems like more of a stay-the-course guy and told me:

      "When your portfolio is under stress, you need to be extra careful not to make changes just because you're under pressure."

     I asked him several times about CalPERS' well-publicized real estate problems, but he wouldn't talk about the issue much. But he does believe that real estate will be an essential part of CalPERS' portfolio going forward. The Washington State Investment Board, which he now runs, invests in real estate, too.

    Anyhow, look for the full interview coming up in the paper soon.

...and Incline Village, Granite Bay and everywhere else where million-dollar homes are the norm. A new report by MDA DataQuick shows a 42 percent decline in sales of $1 million-plus homes in California last year.

    The drop was 51 percent in Sacramento County, where a mere 105 homes changed hands at $1 million or higher. In Placer County, the decline was 45 percent, to a volume of 245 homes.

    LA County had more million-dollar sales than anywhere else: 6,046.Several counties had no million-dollar sales, including Yuba, Colusa and many of the counties in the northern reaches of the state (Trinity, Del Norte, etc.)

     Experts tell me the drop goes beyond the collapse in the housing market. The lack of available credit has been a huge factor.

   Got some feedback from readers about my story in Saturday's paper. I wrote about the big drop in fourth-quarter gross domestic output and quoted some economists talking about the increasing likelihood that the recovery won't begin until 2010 (instead of late 2009 as previously forecast).

   I was struck by the number of people who complained about us piling on the bad news. I certainly understand your criticism: Spreading doom and gloom just makes things worse because it will frighten people and businesses into hunkering down instead of spending or investing. That's a valid statement, and it's no doubt true to a certain extent.

   But that doesn't mean we can ignore the bad news. Or try to put a positive shine on it. This is what we're here for - to present the hard truth (as best and as honestly as we can) even if it makes folks uncomfortable at times.

    Some of you will probably find that defense self-serving or self-righteous. But that's how I feel about things.

    Again, thanks as always for your comments, whether they're sent directly to me, posted here or posted at the bottom of individual stories.

    Ouch. More layoffs, this time at Macy's. The department store chain plans to eliminte 7,000 jobs, including 1,400 by closing the regional headquarters in San Francisco.

    No word on any more store closings, however.