Home Front

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

June 30, 2009
Still in the slow lane

    Welcome back. I missed you. Nothing like two weeks' vacation to bring you a fresh perspective on the economy.

    Unless, of course, it's the same old perspective on the economy.

    The state Board of Equalization released figures today on gasoline and diesel consumption for the first quarter, and they reflect an economy stuck in neutral. Consumption fell 5.6 percent in the quarter compared to a year ago - a drop of 213 million gallons.

     It's one thing for consumption to drop when prices spike. In this case, prices have been pretty moderate compared to a year ago, even with the runup since New Year's.  Californians are staying home more because of economic reasons, simply put.


June 29, 2009
Down to wire for California's new-home buyer tax credit

 In less than three months California has almost run through its $100 million allocation for new home buyer tax credits. The California Franchise Tax Board is now posting updated tallies of applications daily.

 As of the moment it is past 11,000 applications and will accept 838 more before turning off the fax machine. Efforts continue in the Legislature to find another $200 million to extend it. Don't be surprised if this again becomes part of the deal-making to close a $24 billion budget gap.

The first $100 million was part of a deal to win a yes vote from Republican Sen. Roy Ashburn of Bakersfield to close a $42 billion gap last February.

The Wall Street Journal ran a story today about the tax credit running out:

Here's what it does (while it lasts):

* It applies to new California houses or condos bought as primary residences between March 1, 2009, and March 1, 2010.

* It's for 5 percent of the purchase price or $10,000, whichever is lower.

* The state will take $3,333 off a buyer's state taxes starting in the year of purchase and for two following years.

* The owner must live in the new home or condo for two years or lose the break.

* Collectively, the state tax break is limited to $100 million. At $10,000 per tax break that's 10,000 new dwellings.





June 29, 2009
Why the Obama plan to modify your mortgage is bogged down
Here is another of those stories documenting the difficulties that struggling borrowers and their reps are having when they deal with overwhelmed lenders. It makes your head spin to read this and wonder how we are ever going to get out of this mess if these banks can't get their act together. 

An excerpt:
"She endures a Muzak-scored purgatory while on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns that the documents her company sent in have simply vanished -- for the third time since November."
June 26, 2009
Good blog sites where borrowers share advice, stories?
I got a call this morning from a guy who has friends who are struggling with their home loans, trying to decide the pros and cons of a short sale versus walking away. They have the usual questions: what option is better in the long run? Can the owner of my second come after me in years ahead for repayment? If it's a refinance loan I am defaulting on will they come after me for that down the line?

The big question was: are there any good Web sites or blog sites where borrowers with troubles share their war stories and helpful information?

I didn't have a good answer for him? Any suggestions? 
June 24, 2009
Coldwell Banker takes its real estate game to YouTube
We got this announcement today from Coldwell Banker that its new YouTube channel, "On Location," drew 200,000 visitors in its first month. I poked around it a little and see videos on how to inspect a house and find the history of your house. There are lots of individual listing videos that the company's agents are uploading.
It has a feature where you can find videos from your area. What I saw so far was little two-minute productions capturing the flavor of Lincoln, Loomis, Rocklin, Roseville and Auburn.

I am guessing there is a lot more coming from what's been started here.

Here is Coldwell Banker's news release sent earlier today.
June 24, 2009
Brown to Pleasanton: build more houses or else
Attorney General Jerry Brown announced an unusual lawsuit today on the housing front. He's sued the Bay Area city of Pleasanton, saying its limit of 29,000 homes is "draconian and illegal."
Why is that? The city wants to create 45,000 new jobs but have people commute in from elsewhere while it keeps its 29,000-home limit.  Brown says the city has plenty of room for housing near the city's BART station. Interesting story about the mix of housing and jobs that makes a city tick.

Here is a copy of the suit. And here's a photo of the city's job base. I am seeing lots more jobs than homes. Thanks to Scottyphotos.com.
Pleasant 068.JPG

June 24, 2009
Still too few loan modifications, says reinvestment coalition

The California Reinvestment Coalition's newest survey of nonprofit mortgage counselors continues to show foreclosure as the leading outcome and only 18 percent of counselors reporting actual loan modifications as a common outcome.

Here is thenews release issued earlier today, summarizing the report.

From the CRC: This fifth report in our two-year series focuses on loan counselors' experiences in March 2009, after the release of the Obama Administration's Home Affordable Plan. After a series of voluntary foreclosure moratoria and new federal and state initiatives, this latest survey demonstrates that the banking industry continues to fail to adequately address the crisis, with dire consequences for homeowners, tenants, and communities.


June 24, 2009
800,000 jobs lost in California, 200,000 more yet to go

"The state budget crisis is a dangerous aftershock to a region still reeling from the foreclosure earthquake"  - Jeff Michael, director of the Business Forecasting Center, University of the Pacific.

 The University of the Pacific released its newest look at the state and regional economy today, predicting 1 million or more layoffs before this recession finally ends in the fourth quarter of 2009. It's not pretty. The full report, being released next week, says the Central Valley will take some of the hardest blows because of recent tax hikes and thousands of layoffs coming as state and local governments downsize.

Unemployment will peak at 12.3 percent early next year and double-digit joblessness will persist through the end of 2011, it says. Look for Sacramento to bet back to its pre-recession employment levels at the end of 2013, says the report.  Details all in the release above.



June 23, 2009
Harvard: Housing's long row yet to hoe
The new annual look at housing from Harvard University's Joint Center on Housing is out today and Big Builder Magazine takes a look at its wary conclusions. There is a link to the study itself inside this item.

From Builder:

"Any talk of a housing recovery is moot until foreclosed inventory shrinks, unemployment rates abate and banks make mortgages available for more buyers. But despite all of the negative factors and influences it cites, the Joint Center's report still finds room for some guarded optimism, if not necessarily for this year but beyond. "While it is too soon to tell whether housing markets will stabilize in 2009, conditions that could support a recovery are taking shape," it states. For one thing, deep production cuts by builders reduced inventories of new homes "to near parity with long-run demand entering 2009." And based on today's median home prices, conservative lending standards, and a conventional 30-year fixed-rate mortgage, "affordability for home buyers has returned at the national level and in many metro areas."
June 23, 2009
Can't sell the house to move to assisted living?
Here at Home Front we're hearing that assisted living centers and nursing homes are seeing more vacancies because prospective move-ins can't sell their houses.

This was confirmed today in a part of colleague Anita Creamer's story about elders moving in with their kids.

We plan a story on the can't-sell phenomenon, and would like to talk with some older homeowners in that predicament. Or maybe you're the children trying to sell a parent's home to pay their assisted living costs. Or a real estate agent trying to help them sell it. If any of these are you, Bee writer Jim Wasserman at jwasserman@sacbee.com or 916-321-1102 would welcome your call or message.

June 23, 2009
Foreclosures: The poor pets getting left behind
The Bee has a done a couple of heartbreaking stories in past months on pets left behind in foreclosure situations. But the problem continues. Sacramento-based Coldwell Banker real estate agent Donald Stitt has been seeing plenty of it and recently wrote into Home Front with what he's encountered personally Some excerpts:

1) "Out on Hazel Ave. in the backyard of a foreclosed home was a caged extra furry black bunny. The metal cage (it looked like something you would trap a raccoon in) was sitting directly on the ground in the middle of a large weed-infested backyard, out in the direct sunlight, with no food and no water. I was so perplexed at this situation I did not know what to do first.

2) "On Cottage Way, close to Cottage Park, on the side patio of a vacant home, I came across a poor 5" diameter box turtle in a 2 foot long aquarium with about 3 inches of the dirtiest water you've ever seen. This aquarium was sitting diagonally right on the concrete ground, under a Pergola but with no food, no toys, just trapped in this dirty aquarium lonely, hungry and obviously abandoned.

3) "In a vacant "short sale" home in Greenhaven, where supposedly the seller was still coming over every day to take care of the property he was about to abandon, he had also left his dog in a small crate in the hot garage. No water, no food, all day (and night presumably) and despite my pleas, the owner did not take the dog to be with him, but persisted in leaving him in this garage where he barked incessantly when someone was viewing the house. It broke my heart.

"And I can't tell you how many Koi ponds and backyard "water features" that have lovely fish living in them appear to be abandoned with little or no care in the backyards of these foreclosed properties. I'm not sure what the answer is, but getting the word out can't hurt. A Realtor can do very little about these sad situations except for making frantic phone calls because we do not own the property."

"I want people to think about it," he said a few minutes ago. "It's just heartbreaking."

June 22, 2009
New home buyer tax credit will be gone soon
 That's the announcement in this news release just sent out by California's Franchise Tax Board.
 The $100 million allocated for credits is almost entirely requested now.
  They're cutting off applications at 12,000, though, considering that many are duplicates or invalid, says the FTB.
June 22, 2009
Shouldn't home insurance be getting cheaper by now?
If home values have fallen so much shouldn't the price of home insurance fall as well?
Most people think so.
But it's not that simple.
Here's an explainer from InsWeb, an online insurance marketplace based in Gold River.

P.S. This is probably not what you were hoping to hear.

Also, here is a list of ways to cut your homeowners insurance costs from the Insurance Information Network of California.
June 22, 2009
May sales and prices in capital region by ZIP Code
Apologies for not getting this out sooner. Here is MDA Datquick's monthly ZIP Code chart of sales and prices for the eight-county capital region.
June 22, 2009
Senior Co-housing authority speaking next month in Sacramento
senior-cohousing-handbook-2.jpgNot long ago, Home Front noted the publication of a Senior Co-Housing book by Nevada City architect Charles Durrett.

Durrett is coming to Sacramento for a book event and lecture on Thursday, July 9.
The event is at Time Tested Books, 1114 21st St in Sacramento.
 7 p.m. No charge
Here is a Durrett_letter.doc in which the architect explains the benefits of the concept. 
Image: newsociety.org

June 22, 2009
"We're in a slow, but definite recovery mode"
So says Alexis McGee, president of Fair Oaks-based Foreclosures.com, which tracks the nation's foreclosure markets for real estate investors. Here's McGee's new national roundup:

           SACRAMENTO, Calif. -While President Obama, Congress, and the American people debate financial regulatory reform, foreclosures continue to mount as embattled housing markets bump along the bottom.

But amid much talk about problems, many areas of the country are now experiencing rebounds, with declining foreclosures, increasing home sales and even increased average sale prices, according to ForeclosureS.com, a leading real estate information provider.

           "We're in a slow, but definite recovery mode," says Alexis McGee, foreclosure expert, educator, author, and president of ForeclosureS.com. "While foreclosures persist and unemployment still worsens, there are positives in the market that give a strong indication that housing markets have bottomed. Even some interest rate increases have failed to put a damper on prospective home buyers and investors who wisely recognize that buying a home today is more affordable than it has been in decades."

           In Southern California, for example, home sales rose for the 11th consecutive month in May, powered in part by a market shift as sales of mid- to high-end home sales (those $500,000 and over homes) actually rose. The median home price ($249,000) also increased for the first time since July 2007, according to San Diego-based MDA DataQuick. The data aggregator showed a total of 20,775 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside, and San Bernardino counties last month. That was the most since May 2006, up 1.3 % from April, and up 22.8 % from a year ago.

           "Affordability is the prime driver," adds McGee. May's median home price in Southern California was the second-lowest for any month since it was $242,000 in February 2002, and it stood 50.7 % below the peak $505,000 median reached in spring and summer of 2007, according to DataQuick numbers.

           "In the nation's mid-section, housing markets are heating up, too, as buyers get off the fence and take advantage of today's affordability," adds McGee. "Despite ongoing foreclosures, especially in the Chicago area, for the third consecutive month home sales climbed in Illinois--up 9% in April over March. The median home price of $150,000 was little changed from March, too, according to Illinois Association of Realtors."

Among other telling positive economic indicators:

  • Housing starts nationwide climbed 17.2% in May, with building permits up 4%, according to Commerce Department numbers.
  • Pending home sales shot up, too. The National Association of Realtors' forward-looking Pending Home Sales Index based on contracts signed in April was up 6.7% in April, and is up 3.2% from a year ago.
  • Existing home sales - including single-family, townhomes, condominiums and co-ops - increased 2.9 % to 4.68 million units in April from 4.55 million units in March.
  • Housing affordability is at record levels. The National Association of Realtor's Housing Affordability Index for April was the second highest on record. A median-income family with a $60,900 income could afford a $296,800 home in April, assuming a 20% down payment and that 25% of gross income is devoted to mortgage principal and interest. That buying power far exceeds the $169,800 April median single-family home price.

Around the Nation ... What's Really Happening?

           Looking beyond the national numbers to what's happening in some of the nation's hardest-hit real estate markets across the country:

            California:  Existing single-family home sales soared 49.2% statewide in April compared with a year ago. The median home price was up 1.4% compared with March, but down 36.5% from a year ago, according to the California Association of Realtors. Markets tightened, too, with an unsold inventory of just 4.6 months compared with more than double that a year ago.

           Florida: Like California, home sales are up, and so are foreclosures and defaults. For the eighth month in a row, existing home sales rose--18%--in April, with existing condo sales up to--21%, according to Florida Association of Realtors numbers. The state, along with California, Arizona, and Nevada, powers the nation's foreclosure abyss--10.6% of the mortgages in Florida are "somewhere in the process of foreclosure," according to the Mortgage Bankers' newest Delinquency Survey.

           Georgia: As of June 1, the state of Georgia began offering a $1,800 tax credit to homebuyers through November 30 of this year. The credit, available to buyers of eligible single-family residences, is not limited to first-time homebuyers and has no income limits, according to the Georgia Association of Realtors.

           North Carolina: Despite brighter national numbers, this manufacturing state has seen existing home sales decline nearly 32% over the past year, with the average home price off 9% April 2008 to April 2009, according to the North Carolina Association of Realtors.

           Michigan: As the auto industry has unraveled, foreclosures in the motor state have soared. Yet the Michigan Association of Realtors reports residential home sales as reported by 41 of its local associations are up more than 8.5% YTD as of April over year-ago numbers. The Detroit Board of Realtors reports sales up a whopping more than 23%. Affordability is the name of the game. At least 15 Michigan local Realtor associations report average home prices statewide off more than 30% over year ago numbers in April.

           Massachusetts: Home sales and home prices climbed here in the Northeast. Detached single-family home sales were up 9.6% in April over March, with median home prices up nearly 8%, according to data from the Massachusetts Association of Realtors.


June 19, 2009
Lenders winning exemptions from new Calif. foreclosure law
Seven lenders have already received immunity this week from the state's new foreclosure prevention law that went into effect Monday. Another 35 received temporary immunity while their applications are processed. The new law makes lenders prove to the state that they have a comprehensive loan modification program that helps borrowers stay in their homes. Those that can't prove it to the state's satisfaction must wait an extra 90 days before foreclosing on borrowers.

Here's last week's Bee story on the law. We'll update in Saturday paper on Week One.

Lenders Approved this week: (as of Friday)
Bank of America
BAC Home Loans Servicing
Carrington Mortgage Services
EMC Mortgage
Kondaur Capital
Select Portfolio Servicing

Applied and received temporary 30-day approval:
American Home Mortgage Servicing
Beneficial California
Beneficial Financial
Capital Financial Services
Champion Mortgage
Chase Home Financing
Christian Community Credit Union
Clifford Douglas Property Assets
Fay Servicing
First California Mortgage
First Entertainment Credit Union
First Federal Bank of California
Fresno County Federal Credit Union
GMAC Mortgage
Homecomings Financial
Household Finance
HSBC Credit Center
HSBC Mortgage
HSBC Mortgage Services
HSBC Mortgage Services
JPMorgan Chase
Kinecta Federal Credit Union
Litton Loan Servicing
OneWest Bank
PennyMac Loan Services
Provident Credit Union
Residential Credit Solutions
Saxon Mortgage Services
Selene Finance
U.S. Bank National Association
Vericrest Financial
Walter Mortgage
Wells Fargo Bank

Web sites to check for newest listings:



Source: California departments of Corporations, Financial Institutions and Real Estate

Photo: weblogs.newsday.com

June 19, 2009
USA TODAY: Banks falling short on modification efforts
Here is another report on the Obama loan modification plan not making much headway yet because banks are so overwhelmed and the system is so chaotic.Everything in this story is what I have heard countless times over and over from borrowers who can't get going on a modification because the system is so disorganized. Banks have been promising for two years that they are staffing up and getting better. Maybe they are, but here is one more big national story about the nightmare it is dealing with them.
June 18, 2009
Prices rise in Sacramento County and four others here, too
Here's a first draft of a story on MDA DataQuick's May numbers for the capital region.
It's possible after a rise in median prices across the region that we've seen the low.

A problem: slightly more notices of default in the eight-county region than sales.(Photo: z.about.com)

June 18, 2009
Bay Area's May median price rises 12.3% from April

MDA DataQuick says higher-priced homes have begun selling again in the Bay Area pulling up the median price

for the second month in a row in the nine-county region.

Foreclosures still represented 42 percent of all sales - and 65 percent in outlying Solano Co.

 Photo: Infohostels.org

June 17, 2009
Two sue KB Home-Countrywide, alleging artificial price inflation

A Seattle law firm filed a lawsuit earlier today in U.S. District Court in Los Angeles, alleging that the LA-based building giant (always in the top five for sales here in Sacramento) illegally conspired to inflate values of its homes for sale as the market began to tumble in California in 2006 and 2007. Countrywide was KB's in-house lender.


Here's a copy of the lawsuit filed today.

A similar suit has been filed in Arizona. Both KB and Bank of America, which has since bought Countrywide, say the suit is "without merit."

The plaintiffs are from Mentone in San Bernardino County and Tehachapi in Kern County. The law firm aims to make this a class action suit, saying KB built 15,000 houses in California during the time specified in the lawsuit. Almost 1,700 of those homes were here in the six-county Sacramento region.

Here's also a story that ran in The Las Vegas Sun last month saying that a laborers' union aiming to organize residential construction workers provided the research to the Seattle law firm.  (Thursday update: June 18):  I also just got off the phone with Dawn Page, spokeswoman for the International Laborers' Union of North America, who confirmed the union and its affiliate, the Alliance for Home Buyer Justice, provided the research for the California suit to the Seattle firm.

 Photo: blog.redfin.com

June 17, 2009
If priced to sell, homes are selling in 60 days

That's the view from Lyon Real Estate's TrendGraphix research arm in its May sales report just out this afternoon. 

"There are more buyers than sellers right now for inventory at the right price," says Mike Lyon, head of Lyon Real Estate.

The Sacramento firm says listed inventory in El Dorado, Placer, Sacramento and Yolo counties is down to 6,761. Of that 899 are bank repos.

 That's the lowest for inventory since July 2005.

June 17, 2009
Growing trouble with prime loans
I was going through the state Department of Corporation's newest quarterly report (Q1-2009) for lenders' loan modification activities and this jumped out at me: The number of workouts initiated for prime loans is rising fast, mirroring rising unemployment in California.

The data come from lenders that report to the state as part of Gov. Arnold Schwarzenegger's Nov. 2007 Subprime agreement. These lenders service about 3.3. million loans in California, about half the state's total.

Here is a look at prime workouts initiated since last July. (All these charts are available here).

July             20,779
Aug.            22,069
Sept.           20,017
Oct.            25,758
Nov.            30,632
Dec.             39,963

Jan.             34,700
Feb.             38,748
March           42,383

Alt-A trouble is also rising. Here's a look at those numbers. Alt-A's were commonly given to people who were self-employed and didn't state their income. They're a loan somewhere between subprime and prime on the risk scale. Number of workouts initiated by lenders:

July      4,017
Aug.     4,554
Sept.    4,631
Oct.     5,094
Nov.     5,151
Dec.    6,658
Jan.     9,156
Feb.    10,005
March   11,920

Subprime, by the way, seems to be leveling off in the number of workouts initiated.

July          52,892
Aug.         51,018
Sept.        50,688
Oct.         57,180
Nov.         56,787
Dec.         64,642
Jan.          74,28
Feb.         80,044
March       57,665
June 17, 2009
Where to get free help with your mortgage issues

We've had a lot of new calls from people struggling with their mortgages in the wake of stories about the state's new 90-day foreclosure moratorium. Many mistakenly believe that means they have 90 more days to deal with their problems. The law - outlined in an earlier posting here on Home Front - doesn't always do that.

If you're having trouble here are some local places to get help for free.

The Sacramento region has several nonprofit loan counseling agencies that can steer struggling borrowers toward free help under the new Obama administration program.

* The federal government advises those needing urgent help to call the Homeowner's HOPE Hotline at (888) 995-HOPE. The nonprofit venture offers free advice and counseling and can help negotiate with lenders.

* NeighborWorks Homeownership Center, Sacramento Region: (916) 452-5356; nwsac.org

* Home Loan Counseling Center of Sacramento: (916) 646-2005; hlcc.net

* ByDesign Financial Solutions, Sacramento (formerly Consumer Credit Counseling Service): (800) 750-2227; bydesignsolutions.org

* Sacramento Mutual Housing Association: (916) 453-8400, ext. 43. Staffers can accommodate those who speak Russian, Hmong, Vietnamese and Mien.

* California Senior Legal Hotline: (916) 551-2140 or (800) 222-1753; seniorlegalhotline.org. Staffers specialize in free loan counseling for senior citizens.

June 17, 2009
Median price rises in Southern Calif. - first time since July '07

355e763e734_widec.jpgMDADataQuick has begun to roll out its May sales numbers, starting with  this one from Southern California. 

Bottom line: the region's median started rising again for the first time since July 2007 as "sales of deeply discounted foerclosures waned and mid-to-high-end purchases rose."

 Sales also rose from the same time last year for an 11th straight month.

Bay Area and Sacramento reports expected later this week.

Photo: MSNBC

June 16, 2009
SAR: May median sales price jumps 7.7 percent from April

Median sales prices in Sacramento County and the city of West Sacramento climbed 7.7 percent from April to May - from $167,5000 to $180,000 - the Sacramento Association of Realtors reports in this news release sent just minutes ago. The association called it "an unexpected move" and said "this increase marks the largest month-to-month median sales price increase recorded by the association."

 Analysts I've talked with have been careful to note that a rise in median prices means a lot of things, but probably not a big turnaround for the market. It likely reflects lessening of really really cheap bank repos in the mix and some of the bank-owned trouble moving into higher-end homes. Yet it's hard to not cheer a little for once.

Sales of existing homes have remained the same- just above 1,700 a months - for the past three months as you'll see in this may2009.pdf of summary statistics.

Bank repos were about 60 percent of of sales, down from a high of 70 percent earlier this year as the supply has dwindled. Sales are still running ahead of the same time last year and the SAR says there aer 2.9 months of inventory - the time it would take to sell all the listings at today's sales pace.

Here is a detailed look at sales trends and prices by ZIP Code.


June 16, 2009
Lights out in the move-up market

I've just finished a story on a huge dead zone in the middle of the Sacramento-area real estate market - the move-up scene that is traditionally the bedrock of any market.

 The move-up market is largely gone - and the market can't really revive until it comes back. That's the summary of the story that's scheduled to run Thursday.

In short, we've become  a market in the past 18 months in which first-time buyers and investors become the majority of buyers - accounting for two-thirds of sales.

In a normal market the majority is usually the people who sell one house and buy another. Now that category is really in the minority. Why? Most sales transactions now are distress sales: they pay off a bank and that's where it stops. Nobody moves up. Most people also have no equity or a lot less to carry to the next house. So they're sitting. And those who do have equity are scared for their jobs. So as you can see: it's all frozen.

    We found lots of statistics about how this affects move-up neighborhoods. Three move-up ZIP Codes - Land Park's 95818, East Sacramento's 95819 and Arden Park's 95825 - are seeing their collective market share fall because of the lack of move-up buyers. DataQuick says the three have seen their sales fall by more than half from the 10-year average.

Here's a chart from MDA DataQuick that will run with the story:



Number 1,500+sqft houses resold in 3-zip area

% countwide resales































YTD 2009*





June 16, 2009
We top the "troubled list" in a new book
Bloomberg Press sent over a new book titled: "The Cul De Sac Syndrome," which is about the housing crisis and where we go from here. I haven't started it yet, but did see in the index there was a watch list about which cities will prosper.

 Sacramento isn't on it.

 In the book author John Wasik runs a list of cities to watch. Here's a look:

Most Troubled Areas
These areas may experience the longest recovery period:

Inland Empire, Calif. Riverside-San Bernardino counties
Sacramento, Stockton, Lodi, Merced and Modesto
Las Vegas and Phoenix
Cleveland (and industrial cities throughout Ohio)
San Diego

Less troubled areas
In these places price declines will be offset in a shorter period by growth in jobs and population:

Baltimore - Washington, D.C.
Los Angeles County
Tampa-St. Petersburg

Bargain Cities

In these areas housing prices will be lower relative to major adjacent population areas

Baton Rouge
Colorado Springs
El Paso
Springfield-Eugene, Ore.
Davenport, Iowa
Rock Island-Dover, Ill.
Dover, Del.
Louisville, Lexington, Ky.
Oklahoma City
June 16, 2009
Record May for foreclosures, says ForeclosureRadar

A first look at May on the foreclosure front reveals a record 41,959 Notices of Trustee sales filed during the month in California. It's a record, says Contra Costa County-based ForeclosureRadar.com in this May 2009 California Foreclosure Report released today to the press.

Nonetheless, the firm says this: despite perceptions that lenders are foreclosing like mad, they "are doing everything possible to delay foreclosure. The reality is we have very few homeowenrs being foreclosed on when viewed as a percentage of those scheduled to be foreclosed on, in default, delinquent, or upside down in their mortgage."

More details, including county totals for May, are in the release above.

June 16, 2009
Two lenders get first exemptions from 90-day moratorium
Carrington Mortgage Services LLC and Select Portfolio Service are the first two mortgage lenders to receive a temporary 30-day exemption from California's new 90-day foreclosure moratorium.

The Department of Corporations has begun posting updates on who has applied and who has received approval. Ten others, including Wells Fargo, BofA, Chase and GMAC have also applied.
June 15, 2009
Today's start to California's 90-day foreclosure moratorium

 Lots of questions this morning on the real meaning of California's new 90-day foreclosure moratorium beginning today - which got plenty of attention on national TV yesterday.

Here is a link to the California Department of Corporations site and on the official regulations that spell out the program in detail.

A Bee story Saturday explaining the moratorium is here.

And here is

Gov. Arnold Schwarzenegger's anouncement today on the moratorium.

Here, too, is San Clemente attorney David Gibbs with a posting providing a good explainer on details and timelines now:

What's most important to remember: this does NOT stop foreclosures effective today.

So says Sean O'Toole, head of Contra Costa County-based ForeclosureRadar.com in this analysis expecting little impact as a result of the new law.

 It begins a process in which lenders must apply to the state for an exemption from the 90-day moratorium. Lenders must show the state they have an aggressive loan modification program in place to receive the exemption.

If the state approves it they are exempt from the moratorium - unless it's later discovered that they are falling down on the job of modifying loans.

Bottom line: Lenders that do not have aggressive loan modification programs in place will have to wait 90 days longer than usual to foreclose.

Essentially, an aggressive modification gets the amount owed down to 38 percent or less of a borrower's income.One of the worries, though, as this goes into effect: most of the new waves of borrower trouble is related to losing jobs. One wonders if any lender can get a loan modified to 38 percent of monthly income if most of the income is unemployment benefits.


June 12, 2009
Bottoming out (or not)

    The latest conventional wisdom is that the avalanche of layoffs seems to be tapering off. Job losses are still heavy, nationwide and in California, but not as bad as a few months ago.

     But the New York Times' economics writers came across an interesting blog written by Jeffrey Frankel, a Harvard economist, that casts things in a gloomier light.

     Frankel says payroll jobs statistics make a nice economic indicator, but the number of hours worked is better. And in that regard, things are still slipping badly. He notes that the total hours worked by Americans in May fell 0.7 percent. What's more, the average work week fell to its lowest level since 1964.

     When demand starts to improve, companies end furloughs, pile on the overtime, etc., long before they get up nerve to re-hire, he says.

   Bottom line? We might not be that close to bottoming out, after all, he says.

    You can read the blog here.

    Speaking of work weeks, this half of Home Front is taking a couple of weeks off. See you in late June. Be nice to Wasserman.

June 11, 2009
Sacramento's Township 9 is off and running
High-fives all around - with bricks:

Here is Township 9 executive Scott Syphax (CEO, Nehemiah Corp. of America) and Sacramento City Councilman Ray Tretheway celebrating the launch of Township 9 north of downtown Sacramento: 


Undoubtedly, it was the oddest groundbreaking you've ever seen.

 Before 300 invited guests, Sacramento Mayor Kevin Johnson and officials of Township 9 counted down from 10 and let the wall fly, as you'll see in this next video.

The groundbreaking kicks off construction of Township 9, expected to place 2,900 new residences, as well as stores, offices and entertainment on 65 acres north of downtown Sacramento. It's near another big project that broke ground in April: the 240-acre Railyards project that will be home eventually to 12,000 new downtown residences.

Regional Transit will open a light rail station in October 2010 on Richards Boulevard to serve an estimated 7,600 new residents of Township 9. It will likely take 10 to 15 years before they're all there, but hopes ran high for a fresh vision of urban living in Sacramento Thursday night.
June 11, 2009

    The Federal Reserve says Americans' net worth fell by a combined $1.3 trillion during the first quarter.

     Read the AP story here.

June 10, 2009
Second thoughts about refinancing?
Home Front's Friday edition will lead off with a story about fast-rising interest rates and their impact on the market here in Sacramento. I have talked with a couple of mortgage brokers who say the phones are going silent as rates rise - especially for refinancing. A Realtor also says people are still buying homes, but rising rates are limiting the buyer pool.

Have you decided against refinancing? Stopped hunting for a house because of rising rates? Plowing ahead? I am looking for a couple of views from the street on rates and how they are impacting behavior. Deadline is about noon Thursday. If you'd like to share your thoughts with the world for this Home Front lead item please call me at 916-321-1102 or email: jwasserman@sacbee.com. Thanks.

June 10, 2009
Harsh April for Sacramento-area homebuilders

wassimage.jpgLarge numbers of distressed - and discounted - homes on the market continued to punish Sacramento-area homebuilders in April, making the capital region one of the state's weakest markets this spring, the California Building Industry Association announced Wednesday in a statewide report.

Builders in El Dorado, Placer, Sacramento and Yolo counties reported to their statewide industry trade group that they sold 290 houses in April.

But that was down from 297 in March, and it was 48 percent fewer than the same time in 2008, the CBIA said.

The sales numbers put the capital region's builders on track for an even worse year than 2008, when they sold just 4,847 homes, according to Hanley Wood Market Intelligence of Costa Mesa. Most in the industry believe last year had to be the worst for builders in at least two decades.

Sales in previous years: (Hanley Wood numbers for El Dorado, Placer, Sacramento, Sutter, Yolo, Yuba counties)

2007: 7,174
2006: 9,778
2005: 15,004
2004: 17,491
2003: 16,689
2002: 16,747
2001: 11,736

 This hard fall - blame now the abundance of cheap bank repos and short sales on the market  as many of the homes sold in recent years are sold again - has led to widespread downsizing of the industry and numerous builder bankruptcies.

The median price for a new home in the four-county area was $292,900 in April. And that, too, was down 10 percent from the same time last year - the CBIA reported.

Fairfield-Vacaville, too, is in the same boat. Its sales were down more than 10 percent from March and down 53 percent from April 2008.

Statewide trends were a little better in April. Builders reported a 6.7 percent increase in sales over March, though sales were down almost 31 percent from April 2008.

But the industry said it's noticing that the severity of year-over-year declines is lessening in recent months.

Builders in Yuba and Sutter counties reported 33 sales in April, up from 19 in March. But sales were down 25 percent from the same time last year.

The median April sales price in the two counties: $237,000.

Photo: Sacramento Bee 

June 10, 2009
When will the job market recover?

        Great question. No one really knows. Someone who does a lot of thinking about this topic - Michael Bernick, former director of the California Employment Development Department - just dropped by the office to chat and he offered a few observations:

         - California's post-World War II history says some industries will be permanently downsized by the recession, but other industries will flourish, including industries we've never heard of. "You know that the jobs lost in auto dealerships aren't coming back," said Bernick, a San Francisco lawyer and senior fellow with the Milken Institute. The question is, will history repeat itself? Will new industries arise to pick up the slack? He thinks so but has his fingers crossed.

         - A few months ago, Bernick said information technology has progressed to the point that employers are quicker to spot trends - and adjust payrolls accordingly. In his view, we saw a slew of layoffs much earlier in the recession cycle than normal, and he believes this means they'll be quicker to rehire. He still thinks that's true, but he was dismayed that the April job figures weren't better. In April, some 64,000 jobs disappeared in California - slightly more than in March.

         "The numbers last month were sobering," Bernick said. "Hiring has not at all picked up."

         The May numbers will be released next Friday, June 19.

June 10, 2009
Deeper in debt

    We talk a lot about the state's fiscal crisis, we tend to forget that the US government is expected to run a $1 trillion deficit this year.

      The New York Times carried an interesting piece today about the federal budget deficit and how it got so huge.

June 10, 2009
Rising mortgage rates are putting a new scare into market

 A couple of years ago people would have loved to pay 5.6 percent for a 30-year-fixed home loan. But now, after months of rates below 5 percent,there is a growing scare in the market that rising rates will - again - put a damper on the housing party.

Mortgage Bankers Association says here today that refinance applications are down sharply as rates rise.

And there have been a handful of good national stories lately about the new scare and why rates continue to rise.

Here is a good one from Reuters this morning about a slowdown in mortgage demand.

The AP's Rachel Beck also recently explained the link between rising rates and investor worries about inflation in this great background story.

And finally, here's from one this morning's Wall Street Journal about a push by home builders and top U.S. business executives for a new $15,000 homebuyer tax credit to compensate for rising rates and put new spark in the housing engine.

June 10, 2009
More confident, but willing to spend?

          California consumers have regained some of their swagger. But it's not clear if they will back that up by actually consuming.

         We've written before about the ''paradox of thrift," in which the propensity to save hurts the economy by taking money out of circulation. Now comes a new survey by Chapman University in Orange County that says California consumer confidence is back up to levels from the fourth quarter of 2007, before the recession began.

         Problem is, confidence doesn't automatically translate into spending. For the past couple of months, national surveys have shown improvements in consumer confidence but there hasn't been a corresponding increase in consumer spending. Americans continue to hunker down - not a bad thing on an individual level, but it will stall the recovery if everyone does it.

        Anyway, the Chapman survey has consumer confidence in California rising sharply in the second quarter.

June 10, 2009
Exports keep falling...

        ....and falling and falling. Shipments from California's ports dropped a whopping 25.5 percent in April from a year earlier. That's according to Sacramento's trade guru, Jock O'Connell of UC Center Sacramento.

         That's a sign of a lousy economy, of course. Imports that passed through California's ports also fell in April, by 28.5 percent.

          The numbers are getting worse; the dropoff earlier this year was about 20 percent or so.

         Does that mean the economy's getting worse? Not necessarily. O'Connell says trade figures tend to lag the economy. Cargo shipped today was bought (or sold) months ago. So the dismal April figures are a reflection of the economy several months prior.

        So even as the economy shows signs of bottoming out, it'll be quite a while before we see an improvement in those trade figures.

June 9, 2009
Feng Shui at home: How to bring wealth into your life
We get the greatest advice by email. Here's a unique take on how to bring more wealth into your life by tapping Feng Shui at home. Credit to New York real estate professional Debra Duneier:
 - "The burners on your stove represent wealth. Keep them clean and alternate your use of the burners when cooking ... The refrigerator should be filled with healthy food. A full refrigerator brings in abundance.

- "The indoor plants that are wealth enhancers are bamboo and jade plants.

- "Take three lucky Chinese coins and tape them to the back of a rug. Every time someone walks in (your home's entry point) they symbolically are bringing money into your property and into your life.

- "Keep toilet seats down when not in use. Keep them up and money will disappear.

- "Goldfish ... are also magnets for wealth. Fill your tank with eight goldfish for luck and one black fish to keep away bad luck."

June 9, 2009
Gas prices: up, up and up

     Gas prices were creeping up steadily the past few months, and now they're doing a lot more than that. The statewide average jumped 47 cents in the past month, to $2.92, AAA said today.

      The Sacramento average of $2.90 is 45 cents higher than a month ago.

      The state's priciest gas, at least among the cities surveyed by AAA: Eureka, at $3.16.


June 9, 2009
203 foreclosure filings every day the past year in capital area

That's the report from First American CoreLogic in this April 2009 update of foreclosure activity in El Dorado, Placer, Sacramento and Yolo counties - and California and the nation as a whole. The report tallies 74,348 foreclosure filings - from first warnings to repossessions - from May 2008 through April 2009.


  •   The number of mortgages more than 90 days late is up from same time last year.
  • The rate of foreclosures was down from April 2008. But industry people say banks have started to ramp up the foreclosure machine again. So figures in coming months might be back up there again.     

June 8, 2009
A bloated budget?

    It's increasingly typical for people to think of California's budget crisis as a product of wreckless overspending. Even legislative Democrats seem to have given up on further tax increases and will focus on spending cuts.

     The other day Steve Levy, director of the Center for Continuing Study of the California Economy, sent out a five-page white paper attempting to put California's spending habits in perspective.

     Keep in mind that Levy is something of a lefty, and his paper begins with a warning against "destroying our safety net and putting our future prosperity in danger by cutting investments in education."  He argues that the deficit is "100% the result of the deepening national recession."

     Whether you agree with his perspective or not, he makes a couple of interesting points.

    Such as:

      - State spending is growing more slowly than it really should, once inflation and population growth are considered.

      - The state bureacracy isn't as bloated as you might think. California has the second lowest ratio of state workers to general population among the states. California had 103 employees per 10,000 residents in 2007, the latest figures available. The average was 143.



June 5, 2009
Joel Singer's take on California's foreclosure crisis
Here is a video of Joel Singer, executive vice president of the California Association of Realtors, explaining his take on the state's foreclosure scenarios.

  Singer, addressing hundreds of California real estate agents gathered in Sacramento on Thursday, June 4,said he's not a big fan of loan modifications, believing that most don't work, and that half of those needing modifications have already walked away from their houses.

Singer says there's another big wave of bank repos coming, but he believes it won't be "too much" that will "set us back" statewide. Finally, he believes repos originating from risky loans will end in about six months. Then will come a wave of repos resulting from people losing their jobs - which he thinks will be gone by 2011.  Here's the outlook in his words:

June 5, 2009
The good and the bad

    At first glance, the national unemployment report today was a disaster, with the unemployment rate shooting up to 9.4 percent. That's the highest in 25 years.

     But economists reminded us that the payroll job figure is the more reliable statistic, and this was somewhat more encouraging. The nation lost 345,000 jobs in April, or about half  as many as in previous months.

     Sung Won Sohn, economist at CSU Channel Islands in Southern California, put it this way in his monthly report: "The massive hemorhaging of the past few months has abated." Still, he said the national unemployment rate will rise to about 10.5 percent in the coming months before subsiding.


June 4, 2009
A little cold water

    The Web site Politico.com says Austan Goolsbee, White House economic advisor, gave a rather bleak preview of Friday's May unemployment report.

     "I fully expect it's going to be a terrible jobs report," he said. "We're not anywhere out of this."

     The report comes out first thing Friday morning.

June 3, 2009
It can always be worse

  Once again we get the surprising news that, by some measures, other states are suffering through the recession in rougher shape than California.

   This week the U.S. Bureau of Economic released state-by-state figures for 2008 gross domestic product. In simpler language, it's a report on whether each state's economy grew or shrank last year.

    The results: California's economy actually grew in 2008, albeit by a modest 0.4 percent. That's a sliver of the 1.8 pecent growth recorded in 2007, and 3.1 percent the year before.

     It's also below the U.S. average of 0.7 percent.

     Twelve states saw their economies shrink last year. The biggest loser was Alaska, whose economic output fell by 2 percent. That's probably a reflection of the steep slide in oil prices during the second half of the year.

    If you care to read the full report, click here.   

June 3, 2009
Swimming in debt

    Forbes magazine did an interesting study last month on the cities where consumers are carrying the heaviest credit card debts. The results probably won't shock you: California and Florida, the twin hubs of the foreclosure crisis, are also the capitals of credit card debt.

     The magazine says Miami is No. 1, with credit card debt amounting to 22.61 percent of household income. The top ten is dominated by California and Florida, with little old Sacramento coming in No. 10. (Forbes says credit card debt totals 15.11 percent of the area's household income).

      You can find the story here. When you're done reading, click on the link at the bottom that says "Where Americans are Overspending" and you'll get a slide show counting down the top 20 cities.

June 3, 2009
Rep. Matsui, too, trying to rein in foreclosure consultants

U.S. Rep. Doris Matsui of Sacramento, a Democrat representing one of the nation's hardest hit cities and regions for foreclosures, has inserted her legislation to crack down on "foreclosure consultants" into H.R. 2309, the Consumer Credit and Debt Protection Act now making its way through the House. Details: H.R. 2309.

What it does:

       Require the homeowner and the foreclosure consultant to enter into a written agreement;

       Allow the homeowner the right to cancel the contract within a set number of business days as determined by the FTC; and

       Ban so-called advanced fees that homeowners pay foreclosure consultant in advance for a foreclosure rescue service or loan modification.  This will stop the practice of homeowners being tricked into paying up to $7,500 for a service never rendered to save their home.

June 2, 2009
Foreclosure consultants: post $100,000 bond or quit the biz

Attorney General Jerry Brown says foreclosure rescue consultants must register with his office by July 1 and post a $100,000 bond to continue doing business in California.

This might help separate some wheat from chaff in a business that has proved quite predatory in many instances for people who already have enough trouble. 

In a telephone interview, Brown spokesman Scott Gerber said, "It's not a cure-all for the problem. But it does give homeowners an ability to arm themselves with a little bit of information. You know somebody who is not on this list is someone to steer clear of."

I also asked Gerber what exactly it means to post a $100,000 bond. The answer: the consultant must pay about $10,000 to an insurance company to do the $100,000 bond. That way if someone sues the consultant and fails to collect they can go to the insurance company.

"Bonds are a form of insurance to make sure the company has money to pay claims against it," Gerber said.


June 2, 2009
Short sales: revisiting the phenomenon

Way back in the late summer of 2006 I wrote my first big story about the reappearance of "short sales," a compromise kind of transaction that swept over Texas in the 1980s oil bust and California during the 1990s military base closings, defense cutbacks and recession.

At the time there were 264 short sale listings in El Dorado, Placer and Sacramento counties. Today, there must be that many in most area ZIP Codes.

People tell me that half the listings that aren't bank-owned are short sales.

So we are revisiting short sales for a story to run soon. Are banks doing more of them after a couple years dragging their feet? Is this finally an emerging alternative to foreclosures? BofA just had a big conference call with reporters to say they are gearing up to do more of them as an alternative to foreclosing. The Obama Administration has some new guidelines and financial incentives to encourage more of them, too.

I'd like to talk with a couple of people who have been through the short sale process - buying and selling, successfully, or otherwise - for inclusion in the story.

I'm also hearing that people are short-selling to investors who let them stay in the home as renters - paying half in rent what they paid for a mortgage. I'd love to get someone who has done this into the story, too.

As always, 916-321-1102 or jwasserman@sacbee.com
June 2, 2009
Renters can stay longer after the bank forecloses
small for rent.pngHere's a story that slipped by me just before a vacation last week (nephews graduating from high schools in Ohio).  A new federal law says renters can stay in their homes, foreclosure or not, until their lease ends - and then 90 days beyond that. Renters without leases will have 90 days to move out.

That's plenty more time than they had until recently - and many renters in the capital region have found out the hard way the last two years.

Of course, there's a flip side. One real estate agent tells me that most tenants stop paying the rent as soon as they hear the house is in the foreclosure process. He says this will just enable more people to live in these houses longer for free.

We'll monitor this to see how it works out.

Image courtesy of dailypundit.com
June 1, 2009
Computer chips and bankrupt automakers

   I've written about this before, so forgive me. I'm still struck by the weird dual track of the economy.

    Today the stock market soared on news of encouraging economic data.

     Yet this was the very same day of the bankruptcy filing of General Motors (You remember GM, right? As in, "What's good for General Motors is good for the country," and all that). Not that the bankruptcy was a shock, but still - it's a staggering symbol of the pain confronting this economy.

     And on the local front, we had another small example of the continued downward drift of the economy today: NEC Electronics is imposing two all-factory furloughs this summer. The furloughs will close the plant for two weeks at a time, idling 750 workers.

    This is the same plant that's preparing to permanently downsize next spring.

    We'll have more on both of these stories in Tuesday's paper.


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