Home Front

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

April 30, 2009
Before the fall

    This feels like ancient history. Incomes in California were on the rise...in 2007.

     The statewide median incomes on joint returns jumped nearly 3 percent that year, to $68,797, according to figures released late Wednesday by the Franchise Tax Board. The median income on individual returns increased 0.72 percent to $35,646.

      Sacramento County incomes were slightly below the state, at $68,394. Placer and El Dorado counties had among the highest incomes in the state; both came in at more than $81,400.


April 30, 2009
Watch the tax dollars trickle in

    Wish I'd seen this sooner. The State Controller's Office has a nifty link on its Web site showing the daily personal income tax receipts for April.

    Follow it here and see for yourself: The money isn't flowing in like it did last year.

     We'll have more on the state's tax and budget situation in Friday's paper.

April 30, 2009
The Chrysler bankruptcy, and an old Sacramento story

    It sounds more than a little counter-intuitive. President Obama today said the imminent bankruptcy filing by Chrysler LLC, with government support, was a step toward self-sufficiency. The head of Chrysler, Bob Nardelli, just told CNBC the whole thing can be wrapped in a tidy package in a couple of months.

     But there is precedent for this, right here in Sacramento. Back in 2003, Tower Records had a deal in place with the vast majority of its bondholders to keep the struggling music retailer going. The creditors were going to forgive much of Tower's debt in exchange for a big ownership stake.

    But a few bondholders didn't like the deal. So Tower in 2004 filed a "pre-packaged" Chapter 11 bankruptcy. The company was able to use the bankruptcy laws to cram the deal down the throats of the dissident bondholders. The case lasted barely a month.

    That's similar to what's happening with Chrysler: The plan is that the holdouts among the bondholders will be forced in bankruptcy court to accept Chrysler's terms.

    Of course, the parallels aren't exact. Along with an alliance with Fiat, Chrysler is getting about $8 billion in government aid. Tower was left pretty much to struggle on its own.

    For Chrysler's sake, hopefully the automaker will meet a better fate than Tower. Two years after emerging from the first bankruptcy, Tower fell on hard times again and had to file a second time. It wound up being liquidated.

April 29, 2009
Builders honor Eskaton's national demo home in Roseville

 Last year Carmichael-based senior housing provider Eskaton opened a national demonstration home at its Roseville Eskaton Village community - and now it's won top honors for the best detached home in an Active Adult Community from the National Association of Home Builders.

 The NAHB's 50+ Housing Council announced it and other winners in this news release.

Eskaton touted its award with  its own announcement here a few minutes ago.

 Home Front filed this report after visiting the house last October.  



April 29, 2009
Big Chill thaws at CalHFA
Steve Spears acting executive director of California Housing Finance Agency, let the cat out of the bag about 90 minutes ago while addressing a luncheon crowd at Housing California's annual convention: We're back, he said.
CalHFA - the state's affordable housing bank and lender of last resort for many buyers - shut down key assistance programs for home buyers in December due to the state's crippling budget standoff. Spears told the crowd of affordable housing specialists that the agency has now restarted a key grant program to help buyers of new homes pay mandatory school facility fees. Formally, it's known as the School Facility Fee Down Payment Assistance Program.

The next announcement drew a round of applause at the convention center. In May, CalHFA will bring back its popular down payment assistance loans for first-time home buyers. (That's called the California Homebuyers Downpayment Assistance program, the one where homeowners don't have to pay back the loan until the house is sold, refinanced or paid off.).

"We're able to do this following last week's sale of general obligation bonds," Spears said.

 Last week the state sold $6.85 billion in bonds that officials said will jump-start 5,000 public works projects and several housing programs.

The CalHFA programs being restarted are funded by the $2.1 billion Proposition 46 passed by voters in 2002 and the $2.85 billion Proposition 1C passed in 2006. Both fund affordable housing and development in existing neighborhoods.

Spears said "in the near future" the agency also aims to bring back a fixed-rate 30-year mortgage product. "We are tired of being on the sidelines," he said. "We want to be back in the game."

April 28, 2009
Really, really, really not so crazy

     This just in from the California New Car Dealers Association:

     New car sales in California fell 43 percent in the first quarter vs. a year ago.

     Only 231,726 new cars were registered with the state during the quarter. The association says California's on pace to sell fewer than 1 million new cars this year. That hasn't happened since 1975.

     More in Wednesday's paper.

April 28, 2009
Not so crazy after all

   Ah, you readers. You catch everything.

   In my story last week about the state's new "low carbon fuel standard," I made a reference to "car-crazy California." Seemed like a clever way to lead the story, and you know how much I like clever.

    But alert reader Peter Jacobsen points out that Californians aren't as wedded to the automobile as we tend to think. Did you know that we only drive about half as much as people in Wyoming? It's true. According to the US Department of Transportation, Californians drove only 8,982 miles per capita in 2006. That was just 44th highest. Motorists in Wyoming were the biggest road hogs, logging 18,281 miles.

    Obviously, all those wide-open spaces in Wyoming had something to do with this.

      So, even with California's long-standing devotion to cars, there are lots of places that rely on motor vehicles more than we do.


April 27, 2009
Who's doing most of the mortgage lending in Sacramento?
MDA DataQuick ran us a list of top mortgage lenders in Sacramento the past year for the story on BofA retiring the Countrywide name today. Data is from March 2008 through Feb. 2009 for El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.

Here's a Top Five: (Actually, BofA ranks first when you combine it and Countrywide)

Lender                                 Amount                #of loans             Market share
1) Wells Fargo                    $1.94 billion            8,669                   12.4%
2) Bank of America               $1.27 billion          6,594                    8.17%
3) Countrywide                      $965.4 million       4,521                   6.18%
4) JPMorgan Chase               $514.3 million       2,177                   3.29%
5) Sierra Pacific Mortgage      $501.7 million       2,170                   3.21%

Source: MDA DataQuick
April 24, 2009
Should homebuilders be banned from using "in-house" lending?

Definitely, says this

new report by the Laborers International Union of North America, which represents many of the workers involved in new-home construction.

  The report has a lot of interesting charts about the high percentages of adjustable-rate mortgages and subprime loans big publicly-traded homebuilders turned to to sell homes as prices peaked and buyers began to dwindle in 2006. It blames much of the market mania and subsequent crash on builders who had in-house mortgage operations. A lot of it has to do with sales in Riverside and San Bernardino counties, but it all has a very familiar ring to it, with many of the same builders being big up here in Sacramento.

A new bill by Assemblyman V. Manuel Perez, D-Coachella, would ban homebuilders from having mortgage centers used by their buyers.   The hearing is set for 9 a.m. Tuesday, April 28, before the Assembly Business and Professions Committee. Here's the bill, AB1534.


April 24, 2009
Over one-fifth of U.S. housing wealth has vanished

U.S. housing prices fell collectively 12.2 percent from the same time in 2008 during February, says this newly released home price report  from  First American CoreLogic. The firm's monthly Home Price Index says prices have fallen nationally now for 24 straight months and seems to be picking up speed. Especially in Washington, Illinois, Maryland, Oregon, Massachusetts and Virginia.

Not here, though. Prices in El Dorado, Placer, Sacramento and Yolo counties are declining now at a slower pace, says the firm. That's because so much of the decline has already taken place.

  Prices in the region collectively declined 23 percent in February from the same time last year, compared to last month when the year-over-year decline was 25 percent.

Here's the cheerful synopsis from the firm's chief economist:

 "Over one-fifth of U.S. housing wealth has vanished and home prices continue to decline. Decreases are now being driven by rising unemployment and a high volume of distressed home sales. Given that home prices are generally a lagging indicator of market health, we believe the largest declines have already taken place, but we expect home prices to continue to decline into 2010 as economic conditions and excess housing inventories dampen prices," said Mark Fleming, chief economist for First American CoreLogic.





April 24, 2009
Nevada City architect pens definitive guide to senior cohousing
Home Front isn't terribly familiar with this cohousing concept that seems sprinkled here and there inside the Sacramento-area landscape. But we have been hearing occasionally about a Nevada City architect named Charles Durrett, who has become an authority on this cohousing concept for older people.

  Now he's written a second edition of The Senior Cohousing Handbook just out in print from New Society Publishers. A quick scan of the book touts it as a way for seniors to live rather communally and separately at the same time in cohousing communities. As a Baby Boomer, I've joked for a few years that we'll all end up living communally again because Social Security will be broke - and now many Boomer 401(k) accounts are in tatters, as well.
 This is one of the better ways to envision it.

April 24, 2009
More on newspapers

    In case you missed it, here's my story from today's paper on the dismal first quarter results at The Bee's parent, The McClatchy Co. of Sacramento.

    And in case you can't get enough about the industry's troubles - because you either hate us or love us, or you're just curious - the Wall Street Journal has put together an easily digested chart that summarizes the cutbacks and other problems at the nation's 100 largest papers. (You can find The Bee at No. 25).

     Of course, newspapers aren't the only media institutions suffering through this downturn. Radio, TV and magazines are hurting, too, and you should look for a story I'm doing on that topic in the next week or so.

April 24, 2009
Calling all wonks
    If you're an economic policy junkie - admit it, you are - you might want to bookmark The Hearing,a new blog on the Washington Post's Web site. It's all about federal policy making as it relates to the economy.
April 22, 2009
Slamming the brakes at GM

   We try to keep things mostly local here at Home Front. But occasionally a national business-news story leave us slack-jawed, and we have to share it with you.

    This is one of those. The Associated Press is reporting that General Motors is working on a plan to close most of its plants for nine weeks. The idea is to give the company a chance to clear out some of its unwanted inventory.

    Chrysler closed its plants for a month earlier this year, but this is amazing. Nine weeks. 

     It's unclear whether this would include the NUMMI plant in Fremont, a joint venture between GM and Toyota.

April 21, 2009
Silver Lining Dep't

    Always looking to accentuate the positive here at Home Front, we bring you this tidbit about the impact of the recession and the financial crisis in New York: scores of expensive seats going unfilled at the new Yankee Stadium. 

    Of course, expensive really means expensive in this case. The priciest seats go for an astonishing $2,650; even my friend Doug, one of the world's biggest Yankee fans, calls the new stadium a monument to greed and excess.

    Meanwhile, my beloved Fenway Park in Boston continues to sell out...

April 21, 2009
HGTV's "House Hunters" features Auburn couple on Friday
The Auburn Journal has a great story about a local couple who moved to town from Southern California, doing their house search in front of the TV cameras of HGTV.

Meet Marissa and Dan Heflin. They'll be on HGTV's "House Hunters" at 9 p.m. Friday.
April 21, 2009
So you want to build a warehouse?

    In Sacramento, you'd have the field to yourself these days.

    Colliers International real estate, in a report on Sacramento's industrial market, said there were no new industrial buildings built during the first quarter. That was a first in the 25 years Colliers has been keeping these records, said research director Garrick Brown.

    In fact, development of warehouse and manufacturing space has been slow for quite some time, in part because high land costs drove developers to places like Reno and Stockton.

    Colliers said the lack of new supply has kept vacancy rates fairly low - just 11.2 percent, up from 9.9 percent a year earlier. The rate will continue to rise, but it's nothing compared with the retail sector. Developers of shopping centers went overboard, and vacancies have soared into the teens from around 7 percent two years ago.

    In industrial space, "there was no bubble at all," Brown said.


April 21, 2009
As the media world turns...

  The New York Times Co. this morning reported big first quarter losses and a 27 percent drop in revenue, which leads me to a story I'm working on - namely, the fact that the big advertising slump goes beyond newspapers. Magazines, TV, radio are affected, although it seems as though newspapers are getting the worst of it during this recession.

   Interestingly, people I've talked to in the Sacramento media market are somewhat upbeat. They're not minimizing the effect of the downturn, but they say they're seeing some of the glimmers of hope the president keeps mentioning. So we'll see.

    The Bee's parent, The McClatchy Co., reports its Q1 results Thursday morning.

April 20, 2009
Metrostudy's look at Q1 2009: still an excess of supply

Houston-based Metrostudy, a long-time consultant to the home building industry, has released its First Quarter 2009 summary of the Sacramento-area market for builders.

There are two bottom lines: There are only 821 finished, but vacant new houses for builders to sell off in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. That's a two-month supply, lowest since 2005. 

"New home inventory seems to be much less of a liability than it was a year ago, and homebuilders are waiting for demand to return to the market. Don't expect a quick turnaround anytime soon. Closings will likely remain flat or fall slightly for the first half of 2009 as the weak economy continues."

Secondly, there is a 64-month supply of developed lots in the six-county region. That is 16,985 lots ready to build on today. Metrostudy considers that "oversupplied."

"This supply dictates lot values and effectively reduces the value of raw land as the cost of land development exceeds the cost of purchasing finished lots. This loss of land value has greatly contributed to a rash of bankruptcy filings by local homebuilders with significant land holdings."

April 20, 2009
Auction giants clear out 190 more houses Sunday

Reports came in today that Irvine-based auction giant Real Estate Disposition Corp. auctioned 162 capital-area houses Sunday at Cal Expo for $17.1 million. That's about $106,000 apiece. That was its ninth Sacramento event since mid-2007  and part of another big swing through Northern California to put 650 more houses on the block.
 Dallas-based Hudson & Marshall also cleared out about 30 Sacramento-area houses for $4 million - about $133,000 each. It was its eighth time in Sacramento and part of a Northern California tour that earned about $40 million for lenders who repossessed houses for lack of mortgage payments.

REDC provided the following recap of its events,saying it has auctioned 1,912 Sacramento-area foreclosed homes for $261.4 million since mid-2007. Details:


June 23 - 107 homes, $26.5 million

Sept. 29 -144 homes, $22.4 million

Sept. 30 -134 homes, $18 million



Feb. 16 - 174 homes, $28.7 million

Feb. 17 -125 homes, $23.6 million

April 19 - 169 homes, $20.7 million

April 20- 147 homes, $21.6 million

July 12 - 197 homes, $23.4 million

Sept. 20 - 183 homes, $21.6 million

Dec. 6 -  191 homes, $19.1 million



Feb. 14 - 179 homes, $18.7 million

April 18 - 162 homes, $17.1 million


Source: Real Estate Disposition Corp.



April 20, 2009
More on walking away or staying put - and paying
I got an interesting e-mail over the weekend related to the Web sites I offered in Sunday's should you rent or buy story. It was from a Sacramento-area resident who has owned his house for almost three decades but works with a lot of younger people who talk about walking away from their homes. They're far "underwater" - owing more than their homes are worth -and have "teaser rates" set to expire.
He asked the simple question: Are there calculators online to help a person make this decision - whether to walk or stay? He confessed to not liking the idea of walking away, but had to admit he might think about it if he was in a bad position at their ages.

So I Googled "walk or stay" and found two of these online calculators, indeed, in a recent Wall Street Journal blog on the same issue. One is this Youwalkaway.com online calculator. The other is this one at payorgo.com.

We aren't advising anyone here at Home Front, but there you have it, a couple of tools to consider.

April 17, 2009
Can San Diego lead us out of the housing quagmire?

This sounds so familiar it could almost be Sacramento - which slid into the tank right alongside San Diego back in 2006.

It's the Sullivan Group Market Observer asking if the big city that went in first will be first to lead us all back out.

Note: San Diego has had nine months of year-over-year gains while Sacramento has 12 now as of March. 

The Sullivan Group advises home builders.



April 17, 2009
Unemployment: 11% and worse

   In case you missed it earlier today, the state and local unemployment rates came out.

    They were (brace yourself) pretty bad.

    Unemployment has now crossed the 11 percent threshold in California and the Sacramento region. The March rate for California is the worst since 1940, at 11.2 percent, although going that far back in time is a little dicey because the methods for calculating the rate were much different then. If you go back as far as 1976, when modern record keeping began, this is the worst ever.

    Some other notes:

     The state lost 62,100 jobs, the fifth straight month at 60,000 or more. But it's only half as bad as February, which the state's chief economist Howard Roth took as a glimmer of good news.

    The health care industry might not be immune to the recession after all. It lost 100 jobs in Sacramento last month - not a lot, but worrisome when you consider what an engine of growth it's been.

     The construction industry keeps bleeding. Some 1,700 jobs were cut in Sacramento last month. Usually in March the industry expands.

    More in Saturday's paper.

April 17, 2009
March sales and prices by ZIP Code
Faithful market watchers have asked about the customary ZIP Code charts that MDA DataQuick provides for prices and sales in the Sacramento market. They will be on the DataQuick Web site from now on and updated monthly.

  The first of these- for March is here.

Here, by the way, is today's analysis of the Sacramento housing market based on new March sales and pricing statistics.
April 17, 2009
Still spinning

   I called up the folks at Dimple Records in Sacramento for a story and wound up getting a good-natured earful from the chain's co-owner, Dilyn Radakovitz.

    She assumed I was calling about Record Store Day and was delighted to talk about that. I actually needed her help for a story about the recession, and she was willing to discuss that, too. (The story is scheduled to run Sunday and will cover those businesses, like Dimple, that are expanding during a downturn).

     But since Record Store Day is coming up Saturday, let's take a minute and talk about it. It's the second annual event aimed at promoting independent record stores. Dimple, R5 Records and other indies are planning special sales and promotions.

     Sacramento suffered an enormous loss when Tower Records folded in 2006, so let's hear it for the survivors - the merchants working to keep music retailing alive.


April 16, 2009
Sacramento Co. median price rises first time in a year

Here at Home Front we confess not to knowing what it means exactly: But the new MDA DataQuick numbers released earlier today show that the median sales price in Sacramento County - for new and existing homes combined - rose $5,000 from February to March.

 The new $165,000 median represents the first upward movement in the "all home" category from one month to the next in more than a year. And it's happened only a handful of times since the Sacramento County median peaked in Aug. 2005 at $387,000.

The first thing anybody tells you is never make too much of one month's data. But along this line, the median sales price in Southern California has held stready for three months, prompting even DataQuick to suggest the market "may be exploring price floor levels."

We also note in the story that March makes 12 straight months of sales numbers that are higher than the same time a year earlier. That comes after 37 months of year-over-year declines in the region. Patrick Newport, economist for Massachusetts-based IHS Global Insight said 45 states are still seeing sales decline from last year.

A couple other extra nuggets regarding Sacramento County from the DataQuick March report: (Sac County represents about 66 percent of sales in the eight-county region).

- FHA-insured loans usually given to first-time buyers were 42.2 percent of loans behind the March buys.

- People believed to be investors accounted for 25 percent of sales - same level as at the height of the buying frenzy in 2004.

- Bank repos were 66.5 percent of all sales. That's down from a peak of 71.2 percent in January.








April 16, 2009
General Growth in Chapter 11

     The status of the Elk Grove Promenade mall got even shakier, if that's possible.

       The long-delayed mall's developer, General Growth Properties, filed for Chapter 11 bankruptcy protection today.

        The partly built mall is already in limbo, and General Growth has been trying to unload the property. We'll have more updates in Friday's paper.

April 15, 2009
Tax Credits 101
The California Association of Realtors has put together this easy fact sheet on the $8,000 federal tax credit for first-time home buyers and a $10,000 state tax credit for buyers of new houses in California. There's plenty of interest in both.
April 15, 2009
Banks step up the foreclosures
Thanks to a reader who forwarded this Wall Street Journal story saying that banks are moving out of their moratoriums and stepping up foreclosures again.
April 15, 2009
Southern California March home sales 52% above last year
MDA DataQuick is in with the March sales numbers from Southern California - 19,486 in all, a 52 percent increase from March 2008. DataQuick also noted three straight months of a median price at $250,000, "indicating that the market may be exploring price floor levels."

55 percent of all sales were foreclosure resales, says DataQuick.

Bay Area numbers and Sacramento are coming later this week.

April 14, 2009
Home sales slow at Lake Tahoe, but sales prices are up

Chase International reports the "Lake Tahoe prices are coming back to life" with some price increases for high-end living. Here is Chase's  news release with round-the-lake details.

Here is a more detailed look with charts and graphs.


April 14, 2009
On to Nevada, where life is, uh, less than perfect

    Over the years, we've written about the economic interplay between California and Nevada. Business lobbyists will tell you that Nevada's low-tax climate is a constant threat to California's well-being, luring companies and wealthy individuals eager to flee California's high costs of doing business. Some economists say that idea is overblown.

   Now a group of California Republican lawmakers will hold a big public forum - in Reno - to call attention to the differences between the two states.

     The point of the April 24 forum is obvious: California is self-destructing with its high taxes and heavy regulation. The Republicans are hoping to spotlight ex-California companies that have relocated to Nevada. Nevada legislators and Nevada Gov. Jim Gibbons, a Republican, will participate, according to a press release issued by California Republican lawmakers. 

    Now, you know that Home Front is relentless nonpartisan. But I wonder if the Republicans will discuss just how bad Nevada's economy has become.

    True, its unemployment rate is still lower than California's (10.4 percent vs. 11.2 percent). But according to Palo Alto economist Stephen Levy, Nevada is third-worst in the United States for job loss over the past year, at 5.4 percent.

    California is ranked tenth on that scale, having lost 4.2 percent of its jobs.

    (Note: I've updated these numbers from my earlier blog post to reflect the March figures, released April 17)


April 14, 2009
Placer County reports spring uptick in home sales
The Placer County Association of Realtors just released its March sales numbers: 319 closed escrows for existing homes compared to 224 in Feb. and 298 in March. 2008.

The median price for those closings was $280,000 - where half cost more and half less.

That was down 3.1 percent from $289,000 in February.

 The same time last year the median sales price was $345,000.

Here is the full report.

April 13, 2009
Should I rent or should I buy?

I am preparing a Sunday story about what people should consider when deciding whether to buy a house or keep renting. It has everything to do with renting's easy mobility to owning's sense of security.

Think of questions like: Are you ready to fix the toilet yourself? Will you miss the tennis courts and the gym you had at your apartment complex? Are you ready to stay at least two years? What if you decide to have a baby in two years. Can you afford the mortgage on one income? Is your job secure now?

As there seems to be a bit of buying frenzy again at these prices, we decided to explore the major questions and the pros and cons people should consider while deciding.

If you're personally at the crossroads of this important decision, weighing options and open to talking about it for the story, please call me direct at (916) 321-1102 or email me at jwasserman@sacbee.com

April 13, 2009
Sacramento County median price makes another little jump

We sure don't want to make too big a deal of this, but the median sales price in Sacramento County rose .3 percent from February to March.

 That's a jump of $500, from February's $167,000 to March's $167,500. Median is the point where half cost more and half less.

 I called the Sacramento Association of Realtors to see if this - however, small - was a first since prices last stopped climbing in the summer of 2005. A check of records showed at least two recent slight increases:

- Last October, up $150 from September, to $195,100.

- Last August, up $1,500  from July, to $218,000 in August.

Both turned some heads, but proved just blips. Prices fell much much farther from there. We'll see this time if it has any more staying power.

Overall, the newest monthly statistics from SAR show 1,725 closed escrows in March, up slightly from February and 61 percent more than March 2008. That makes a year now of higher monthly sales than a year earlier. Repos accounted for 70.5 percent of all closings.

Here are the documents and statistics from SAR: 

April 13, 2009
Why are banks holding repos off the market?
More and more, Sacramento-area real estate brokers are talking about a dwindling number of repo listings being offered by banks - just as buyers are looking for them. It's all pretty mysterious and prone to lots of theories about what the banks are thinking.

So thanks to an alert reader who forwarded this link to a San Francisco Chronicle analysis of the issue last week. It's a good read. But the reasons for what banks appear to be doing is still a mystery at the end.

April 13, 2009
Congestion ahead

   We went for a Sunday afternoon drive to Sutter Creek and got a bracing reminder of the problems that continue to plague the real estate market and the economy in general.

    Heading east on Jackson Road toward Rancho Murieta and beyond, I lost track of the signs advertising bank repos and - more telling - "new homes at foreclosure prices." There was a "For Lease" sign in front of the Sloughhouse Inn. (I guess it's been a while since we'd made this trek; it turns out the place closed in 2006).

    Sutter Creek was quieter than we'd seen it in years. One merchant said it's always like this on Easter Sunday, and I suppose that's true. But the whole afternoon left me thinking that while there appear to be signs of life in the economy, as President Obama said, we're still facing significant problems.

    Tonight I'll be testing that theory some more by counting the empty seats as Home Front's beloved Red Sox visit Oakland. The things I do to keep you guys informed....

April 10, 2009
For sale signs continue a long fall
Too many For Sale signs has long been a huge sword hanging over this capital-area housing market. But they've fallen back to July 2005 levels in El Dorado, Placer, Sacramento and Yolo counties, according to the newest March report from Sacramento property researcher TrendGraphix.

March ended with 8,189 homes for sale in the four county area - 19 percent of them bank repos.

Home builders, too, in the capital region have also whittled exceess inventory - houses already built or almost built without buyers - to levels last seen in early 2005.

So available inventory, bottom line, is back to a time when there was a buying frenzy going on. It's a good indicator on both fronts for the market to reach equilibrium. Of course, there's the big question of the "shadow inventory," those homes inhabited by people who aren't paying the mortgage. No one seems to have a good grip on how many are those are headed onto the market in coming months - or what it might mean for the market.

Nonetheless, inventory is falling as prices fall.

 From TrendGraphix, here are the numbers of For Sale signs in the four-county area over the past year:

March  13,116
April     12,601
May     12,366
June     11,854
July       11,644
August  11,369
September 11,022
October   10,879
November 10,093
December 9,526

January   8,951
February  8,629
March     8,189

April 9, 2009
Free loan modification workshop in North Higlands
Homeowners behind on mortgage payments or threatened with foreclosure can talk with loan modification specialists at a free workshop, Mon., April 20, from 2 p.m. to 8 p.m in North Highlands.

The free event aims to help people with primary loans from IndyMac, JP Morgan Chase, EMC, Washington Mutual, Wells Fargo, Wachovia, ASC, Freddie Mac and Fannie Mae. But those with loans from other banks can discuss their options with nonprofit loan counselors from By Design Financial Solutions.
The workshop will feature one-on-one sessions to try and start loan modifications or set up repayment plans for eligible borrowers. Homeowners should bring loan documents and proof of income.

The event, sponsored by the Sacramento Housing and Redevelopment Agency, will be held at the North Highlands Recreation & Park District Community Center, 6040 North Watt Avenue. Details: (916) 440-1399. Extension 1226.

April 9, 2009
Brush up on your Cal Neva history

    In putting together my blog post yesterday afternoon on the Cal Neva (see below), I got so worked up trying to find a clever Sinatra musical reference that I forgot to mention a book I just received in the mail.

    It's called "Cal Neva Revealed," and it's buy a fellow in Arizona named Philip J. Weiss who's something of a Cal Neva nut. Actually, he started out as a Frank Sinatra nut, and he eventually became a Cal Neva nut. He's written an incredibly detailed history of the ailing casino on Tahoe's north shore, and you can read more about it at his Web site, www.CalNevaRevealed.com.

      Meantime, we'll continue to keep an eye on the troubling developments at the Cal Neva.

April 9, 2009
The good and the bad

    Some days you don't know whether things are brightening or getting worse. This is one of them.

    First off, Wells Fargo reported record profits, which sent the stock market up a quick 160 points or so. The message was that the credit markets may be loosening up, a good sign for the economy.

    Then comes a report from our friend Jock O'Connell, international trade advisor at the University of California Center Sacramento, who looked at the latest export numbers from the U.S. Department of Commerce.

    O'Connell's figures are in direct contrast to Wells Fargo's. He says California exports fell nearly 20 percent in February from a year earlier.

   "California's export trade is showing few symptoms of imminent recovery," he said in a press release. This was the fourth straight month of declining exports.

    He said the figures show the effects of the recession spreading around the globe.

April 8, 2009
The biggest homebuilder deal ever
Thursday update: Builder Online analyzes the deal on region-by-region basis, including Sacramento.  Also here is our story in the Bee this morning.
"Surprise" hardly catches the moment of hearing it. Like others, I have heard for a year rumors about this big builder going under or firms that might merge for the next round of home building. But everyone I talked with did not expect it would be Pulte Homes of suburban Detroit (Bloomfield Hills, stock ticker PHM) and Centex Corp. of Dallas (stock ticker CTX).

Chances are high if you bought a house anywhere in Sacramento, the East Bay, or the San Joaquin Valley from Bakersfield it was a Centex or Pulte deal. The two builders combined built 15.1 percent of all the homes sold in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties since the start of 2005. That's from Hanley Wood Market Intelligence and so is the following breakdown by year:

               Pulte*                   Centex
2009**      58                          35
2008        259                        503
2007        499                        669 
2006        550                        768                       
2005       1,289                       606  

* Includes Del Webb sales
**January and February

That was then. When the deal is closed as expected by the third quarter of this year, the two will be one company - the biggest home builder in Northern California, says the Folsom group's Greg Paquin. Paquin puts forth a theory that this is a big sign of emerging stability in the housing market. "It means Pulte feels confident in the asset value of Centex. We're at a point in the market where you can value those assets and make a fair estimate the company as a whole.A year ago you coudln't do that because the value of the land was still in free fall."

The new combined company will be named Pulte.

Both came to the capital region in the early 1990s and reaped that huge boom that began slowly about 1998. They concentrated on the region's fastest-growing markets - which turned out to be some of the fastest growth spots in California - Lincoln, Elk Grove, Roseville, Natomas, Rancho Cordova. Both made money like no tomorrow until the market crashed. They lost billions the last two years, erasing all the previous profits. So one day a couple months ago, according to the AP report, the Centex CEO picked up the phone and called Pulte's CEO to talk. The rest is history. More on the two in tomorrow's Bee.
April 8, 2009
The sad, unwanted Cal Neva casino

    There's probably an appropriate Frank Sinatra song for this, something sad and lonely sounding. Maybe "One for My Baby,"   

     Anyway, the Cal Neva, the Lake Tahoe casino Sinatra owned in the early 1960s, went up for auction today, but no one bid.

     That means Canyon Partners, an LA real estate firm that foreclosed on the Cal Neva last month, has to keep the troubled resort.

      A Canyon Partners spokesman just told me the plan is to keep the Cal Neva open, although University of Nevada gaming expert Bill Eadington says the property's future is questionable.

April 8, 2009
Things could be worse (see Iceland)

    Michael Lewis, author of the best sellers "Liar's Poker" and "Moneyball," writes as authoritatively about business as anyone, and his piece in Vanity Fair on the rise and fall of Iceland's economy is worth your time.

     Iceland, you might recall, was a tidy, prosperous nation before it decided to turn itself into a miniature Wall Street. Now it's a complete shipwreck.

    Lewis' story can be found here. Enjoy.

April 6, 2009
The early days of the recession

      There was a time when the economy was bad but not yet awful. Let's take a look back to those relatively sunny days.

     I'm talking about the first quarter of 2008. The Board of Equalization today released taxable sales statistics from that quarter. They offer a portrait of the economy in the early days of the recession (which began officially in December 2007).

     California's taxable sales fell 3.7 percent in that quarter vs. a year earlier. It was the third straight quarter of decline - providing additional evidence that the recession began in California before it began nationally.

    Not surprisingly, things were worse in the Sacramento area than the state overall. Sacramento County taxable sales were down 5.3 percent. In the shopper's paradise known as Placer County, sales fell 7.3 percent.

     God knows how bad things got last fall, when panic hit Wall Street and the bottom really dropped out of the economy. We'll find out sometime later this year.

     That's the frustration with these Board of Equalization numbers, of course: the enormous time lag. Still, the stats are interesting.

April 3, 2009
Back to reality?


     After some cautiously good news on the economic front recently, the new national unemployment statistics landed with a thud: 8.5 percent, the highest in a quarter century.

      Some 663,000 jobs disappeared in March, the government said.

      The news interrupted the stock market's recent rally, although Wall Street wasn't going into complete panic.

       The story from the NY Times is here.

April 3, 2009
Map 2.0

    Thanks to our colleague Mitchell Brooks, the interactive economic map in the right hand column of this page has been updated.

     We now have fresh forecasts from Jeff Michael, friend of the blog (and the head of the business forecasting center at the University of the Pacific). 

      Further down the page, we provide links to various economics sites, including the UOP forecasting center and Jeff's own  Central Valley economic blog.    

April 2, 2009
We'll pay your mortgage for six months if you're laid off
There's a first time for everything and that's the case for this new enticement for anxious first-time home buyers offered by the California Association of Realtors. It's meant to counter that question so big on their minds these days: What if I lose my job?

 The CAR has set aside $1 million to offer up to $1,500 a month for six months to help buyers who get laid off to make their mortgage payments.

I didn't have time today to write much about it, but colleague Carolyn Said of The San Francisco Chronicle had this report earlier today.
April 2, 2009
The forecast for Sacramento: 12.1%

   Jeff Michael at the University of the Pacific says Sacramento area unemployment will hit 12 percent this fall. It will nudge up to 12.1 percent in early 2010 before starting to ease downward.

    The current rate in Sacramento is 10.8 percent.

     We'll have more on Michael's latest UOP forecast in Friday's paper.

     Also, keep an eye on that interactive economy map in the right-hand column of Home Front; we'll be updating it in the next day or so, thanks to Michael and his team.

April 2, 2009
Is this for real?

   So now the economy isn't so completely awful, after all.

    At least that's what the stock market is telling us.

    The market's tentative rally went into full flower today. The Dow is up 270 points as I write this, with investors reacting to some good news on factory orders and (more importantly) the relaxation of mark-to-market accounting rules. With those rules relaxed, banks have more leeway in assigning value to distressed loans and other assets. That could unclog the credit markets.

      There also was some encouraging news from the G-20 summit, including a $1.1 trillion infusion into the International Monetary Fund.

     The whole thing makes you wonder, though. Unemployment is about to crack 11 percent in California and the Sacramento region, and nobody with any sense thinks the recession is anywhere near over. But the stock market is often a leading indicator of where people believe things are heading....

April 1, 2009
Worse and worse for capital-area homebuilders
Sacramento-area home builders had a terrible February, as this online story on Hanley Wood Market Intelligence statistics shows.
 Just 211 sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, down from 591 last year. Last year ended with 4,847 sales and proved one of the worst for area builders in two decades That's the bad news. The good news, I suppose, is that it's keeping inventory down, which is critical to recovery.

 That's not much comfort to an industry which has been decimated in terms of layoffs and office closings in the past two years.

Still leading the pack is Atlanta-based Beazer Homes.

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