Home Front

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

October 30, 2009
Why more people don't "walk away" from their mortgages

A fellow business writer here at the paper received this report today from a University of Arizona associate law professor he's interviewed in the past. It a full-scale look at why people stay in their homes even when they are way underwater - when the sensible business decision might be to walk away.

I haven't yet read most of it. But I think it's very relevant here in Sacramento.

The 54-page study by Professor Brent T. White, titled, "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis" is at this link.

Here is the summary: 

 "Despite reports that homeowners are increasingly "walking away" from their mortgages, most homeowners continue to make their payments even when they are significantly underwater.

 This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure's perceived consequences.

 Moreover, these emotional constraints are actively cultivated by the government and other social control agents in order to encourage homeowners to follow social and moral norms related to the honoring of financial obligations - and to ignore market and legal norms under which strategic default might be both viable and the wisest financial decision.

Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse."

October 30, 2009
About that recovery...

Hi again. Sorry I've been out of touch the past week.

Anyhow, it's time to resume talking about the economy. If you missed it, please read my colleagues Darrell Smith and Mark Glover's story today about the apparent end of the recession.

The story crackles with sarcasm from Sacramentans about how dismal things still feel around here. In short, if this is a recovery, it sure doesn't feel like one.

Of course, it seems all recoveries start out slowly. The recession of the early 90s had been officially over for 20 months when voters tossed the first President Bush out of the White House mostly out of anger over the economy. Similarly, the dot-com recession was over by November 2001, but we spent the next couple of years talking about the "jobless recovery."

So get ready for another slow recovery. Little wonder the stock market did so poorly today, as new economic statistics spread a wave of gloom over Wall Street.

October 30, 2009
Calif. AG to banks: how will you avert Option ARM armageddon?

 California Attorney General Jerry Brown's office has picked up on paranoia that a round of resetting Option ARM loans is going to derail a fragile housing recovery.Yesterday, he asked 10 big banks and loan servicers to tell him their plans to avoid a new round of widespread defaults.

Here's a news story out of New York about it from Reuters.

The AG's link has the letter to servicers from Deputy AG Bejamin Diehl. And he wants details from banks in three weeks. It also has a number and link to register complaints about your pay-option loan. Those are the ones with four payment options each month. Most people make the minimum payment, which makes the size of the loan grow even as the borrower is trying to pay it down. They were really popular in California - and especially popular in the Sacramento region as housing prices skyrocketed in 2004-2005 and remained high through much of 2006.

Here is what Diehl wants to know from Bank of America Home Loans & Insurance; Wells Fargo & Company; JP Morgan Chase & Co.; Litton Loan Servicing; ResCap, LLC; Ocwen Financial Corporation; OneWest Bank; American Home Mortgage Servicing; Saxon Mortgage Services, Inc.; and Select Portfolio Servicing.

1. The number of Pay Option ARM loans secured by residential real property
located in California that you are servicing (regardless of whether you own the loans).

2. Of the number of Pay Option ARM loans identified above, the number that have negatively amortized, and the average dollar amount of that negative amortization.

3. A detailed explanation of all efforts you have taken to handle customer service concerns of borrowers with Pay Option ARM loans, including any increased staffing and a description of any notices you send or are planning to send to borrowers whose loans are about to reset. For advance notices sent to borrowers, please specify how far in advance of the reset date you send, or plan to send, those notices.

4. A detailed explanation of the loan modification plans you have developed for Pay Option ARM loans. Please state the circumstances under which your plans allow for the reduction of principal, and the possible amounts of principal reduction. If you are not willing to consider principal reduction as part of your plan, please explain why. Please also specify whether you have already implemented your modification plans for Pay Option ARMs or, if not, the time frame within which you expect to do so.

5. To the extent your approach for considering whether and how to modify Pay Option ARM loans has changed since the beginning of the foreclosure crisis, please explain the changes and the reasons for those changes.




October 28, 2009
A huge stimulus win for Sacramento homeowners, business

 A $3.4 billion stimulus grant announced yesterday in Florida has turned into an amazing score for Sacramento. The region's public utility, the Sacramento Municipal Utility District, has received $127.5 million - 63 percent of all the money steered to California - to install 600,000 smart meters and set up a smart grid. And that's just the beginning of what the bounty will bring - and how it will help homeowners and business save energy and money in the long run.

The first meters will be installed this fall, and then early next year it starts with 60,000 meters a month until every residence and business in SMUD's territory (Sacramento County and a slice of Placer County) has one. Sacramento State is also going to install smart meters in 50 campus buildings and the state is doing the same with 24 office buildings in downtown Sacramento.

  Here is the story explaining what may be the largest federal grant ever received in Sacramento - in this morning's Bee.

Here is SMUD's announcement issued yesterday.

 And here is the announcement from the U.S. Department of Energy. (Search it for links to all the awardees nationally. Other cities, other utilities, makers of appliances and systems control technology).

   Our congressional reps were ecstatic at this big deal. Here is the announcement of the grant from Rep. Doris Matsui, D-Sacramento. Here's an announcement of the stimulus award  from Rep. Dan Lungren, R-Gold River.

Gov. Arnold Schwarzenegger also had a reaction with this statement.

  I'm somewhat of a newcomer to this smart grid business. I've seen what's possible in SMUD's "houses of the future," which it tricks up with all the newest energy efficiency technology to show contractors how it's done. But I was really struck by a phone conversation yesterday with Emir Macari, a Sacramento State dean and authority on this as head of the university's year-old California Smart Grid Center. He said it's the biggest revolution in the electrical grid in the century that it's existed. And I expect his is a name that will become very familiar in Sacramento as this money hits the ground.

  Sacramento State is poised to really benefit from this. It never got rid of its power engineering studies program and today supplies 60 percent of California's utility engineers.

What it all seems to mean is jobs - lots of jobs - for a region that sorely needs them, a real kick finally for this struggling economy. Good news at last.

  

October 27, 2009
Class-action lawsuit targets Pulte Home over housing crash

 A Seattle law firm has filed suit against Michigan-based Pulte Homes on behalf of a Lathrop buyer, alleging that the firm propped up home prices by recruiting buyers - even as it could see the market was shifting and values would fall. The suit is seeking plaintiffs who bought between Jan. 1, 2005 andf March 1, 2007. 

Pulte denies the allegations and said it will vigorously defend itself.

A copy of the lawsuit is  here.

 

October 26, 2009
K. Hovnanian's statement on the Natomas permits issue

In the rush of things last week I forgot to post this online: It's a statement from K. Hovnanian's Sacramento attorney Courtney McAlister outlining the homebuilder's position on the permit issues at Westshore that got so much attention last week.

The K. Hovnanian statement is  here.

October 26, 2009
California on track for 530,000 existing home sales in 2009
The California Association of Realtors released its September sales and price numbers a few minutes ago.  The details are here.
October 26, 2009
Homebuilding's crash is worsening
 The newest September statistic for California home starts has led the Construction Industry Research Board to again revise its 2009 forecast downward - to 37,700 new homes, condos and apartments in a state approaching a population of 40 million.

 The Sacramento region may see sales ewer than 3,000 new single-family homes this year.

The new numbers show that builders have taken out only 2,309 building permits the first nine months of 2009 in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. That's about half last year's tally at the same time - 4,790.

It's all here in the new release from the California Building Industry.

If you want to see how lousy 37,700 housing starts also look check out this chart. Just five years ago in 2004, builders did 212,960 housing starts.

Builders, naturally, are pushing for an extension of the state's $10K tax credit for buyers of new unoccupied houses.  The Assembly is expected to take that up this afternoon. If it passes it's up to Gov. Arnold Schwarzenegger to sign or veto. Most expect him to sign it.

October 26, 2009
Most underwater borrowers getting no help
 Here's an weekend article from The Washington Post surely recounting the experiences that thousands of borrowers here in the capital region are having. As in promises, but too little help. This will explain why.
October 23, 2009
A sobering outlook for Sacramento office market

MONDAY UPDATE: Here's how office markets are faring in cities across the nation.

"We were the last to feel the pain and we will be the last to feel the recovery."

Natomas-East5.jpgSo ends this sobering third-quarter look at the capital region's office market published in recent days by commercial real estate brokers at Colliers International in Sacramento.

 As went the residential market and then the stores and shopping centers, now goes offices into the giant sucking sound of this Great Recession.

  Office developers just opened a brand new beautiful Gateway Towers alongside I-5 in Natomas. But it opened without tenants. (Leases are in the works, says the report). Yes, the  new LEED-certified tower boasts a great carbon footprint. But people now are more interested in cheap rent, says the report.

A few highlights: Downtown Sacrament remains the best off in terms of the office market, having the state as a major player. But the suburbs are apparently getting killed. There's a 42 percent vacancy rate now in the Roseville-Rocklin corridor for the best Class A office space. Folsom has a lot of empty space and so does Natomas.

Altogether, Colliers counts 14.4 million square feet of vacant office space in the region - with rents falling and that putting pressure on bottom lines and bank loans. That's going to spark more defaults and foreclosed office buildings as the economy in this region continues to remain very soft, possibly well into 2012.

 Last into the tank and last out. That's the short version for office space. To read 14 pages of the long version click on the link above.

- Natomas Gateway Towers photo courtesy of Aguer Havelock Associates


 

October 22, 2009
Here's how your apartment rent stacks up in CA's capital region
Rent is still falling in the capital region, according to these numbers released Wednesday by Novato apartment industry tracker RealFacts. We got a little behind on getting them to you,  but here they are. We'll also have a mention of this in the Home Front print edition column in Friday's Sacramento Bee.

-----------------------------------------------------------------------------
Average rental rates at large Sacramento-area apartment complexes fell for a fourth straight quarter in July, August and September to $946. Economic uncertainty and unemployment have also driven occupancy rates down 1.9 percent the past year. Here is a report from capital-area cities:

City                          Average             Percent                  Average     Percent              
                                Occupancy        Change From         Rent           Change From
                                Rate                  One Year Ago                          One Year Ago

Sacramento                   92.4%               -1.3                   $892              -2.8
Citrus Heights                92.1%                -0.8                   $850              -1.7
Davis                            96.4%                -0.7                    $1,354           1.9
Roseville                        92.9%               -3.7                    $1,066           -5.2
Rocklin                          93.0%               -2.5                    $1,047           -3.2
Rancho Cordova             93.5%                0.3                     $814             -7.1   
Carmichael                     92.0%               -2.0                    $741             -4.6
Folsom                          90.4%               -1.0                    $1,138           -3.6  
Elk Grove                       88.9%               -6.2                    $1,098           -2.7
Fair Oaks                       93.0%               7.8                     $1,005          1.5
Woodland                       91.8%               -4.3                    $902             -2.3
West Sacramento           93.8%               17.1                    $751            -3.5
Yuba City                       94.0%              -2.5                      $796             -0.7

Average                          Studio                   $719
monthly rent by            1BR, 1BA                 $822
Apartment type             2BR, 1BA                $871
in four-county               2BR, 2BA                 $1,062
Region                           3BR, 2BA               $1,346

Source: RealFacts

October 22, 2009
Another setback on big CalPERS real estate deal

A troubled $500 million CalPERS investment was dealt another serious blow today, courtesy of a major court decision in New York.

The New York Court of Appeals, the state's highest court, ruled that the owners of a big Manhattan apartment complex overcharged tenants by improperly converting their rent-controlled units to free-market prices. The tenants are seeking $215 million in damages.

CalPERS invested $500 million in the mostly rent-controlled Peter Cooper Village and Stuyvesant Town apartment complex in 2006, when the project was sold for an eye-popping $5.4 billion.

 The plan was to convert as many of the units as possible to market-rate apartments, with the idea of jacking up rents. That fell apart when the economy collapsed and tenants began fighting back in court. The apartment complex might soon go into default.

California's other big public pension fund, CalSTRS, has already written off its $100 million investment in the deal.

The New York court ruled that the owners of the apartment complex couldn't raise rents beyond a certain level as long as they were receiving certain tax breaks.

To read the court's decision, click here.

October 20, 2009
Brown vs. State Street

Attorney General Jerry Brown is suing giant Boston investment bank State Street Corp. for more than $200 million, claiming it overcharged CalPERS and CalSTRS on foreign currency trades.

Here's a link to our early-bird story on this case.

Here also is a link to Brown's press release. At the bottom of the press release is a link to the lawsuit itself. 

October 20, 2009
Q3: Number of CA defaults decline, foreclosures rise slightly

WEDNESDAY UPDATE: Here is the full story appearing in today's Bee.

Details are

here in this news release from MDA DataQuick.

Quick early read shows 9,299 mortgage defaults in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.

Here's a

county-by-county look at the numbers.

 And here is a little initial perspective in this first online version of the story in today's Bee.

 

October 19, 2009
All you need to to know about your new property tax bill

Thousands of property tax bills landed in mailboxes of Sacramento County homeowners on Saturday. More than 170,000 of them contained reductions from last year - because of falling home values.

 Looking for more illumination on that? Curt Caldwell, chief appraiser in the the Sacramento County Assessor's office explains many of the details  here.

 

October 19, 2009
We're expecting Sac-area Q3 foreclosure statistics Tuesday

 Just a public heads-up here. We are hoping to get third quarter 2009 foreclosure and mortgage default statistics sometime Tuesday from La-Jolla researcher MDA DataQuick.

 This is usually a pretty big story with the newest quarterly numbers. We're hoping, as usual, to talk with a couple of people who have actually lost their homes to foreclosure in July, August or September - or received a notice of default.

We know this is nothing pleasant to talk about, especially publicly. But if you are interested in a telephone interview today (Monday) or tomorrow (Tuesday) please call Jim Wasserman at 916-321-1102 direct or email: jwasserman@sacbee.com. Thank you for considering.

Meanwhile here are new August default and foreclosure numbers from FirstAmerican CoreLogic.

A stunning 10.5 percent of area mortgages were moer than 90 days late in El Dorado, Placer, Sacramento and Yolo conties. But the percentage of homes becoming bank-owned and listed on the market for sale is less than half the same time a year earlier.

 

October 19, 2009
Big guns ask for 1-year extension of $8K homebuyer tax credit

Please, please give us another year of the $8,000 federal tax credit for first-time homebuyers, goes this plea to the Obama Administration from U.S. real estate heavyweights: the  Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors.

The letter, addressed to Treasury Secretary Geithner, HUD Secretary Donovan and National Economic Council Chair Summers, outlines why the three organizations believe that tax credit has had a stimulative effect on not only the housing market, but on the U.S. economy as a whole.

 

The letter is here.

October 16, 2009
Capital-area homebuilders weather another harsh quarter

The Folsom-based Gregory Group released its third quarter sales numbers today, showing the worst sales quarter yet during this housing bust.

Here for the first time in Home Front is a link to the full Gregory Group report with city-by-city sales and price figures for the capital region.

 

October 16, 2009
California, Sacramento unemployment fall

California and Sacramento's unemployment rates fell last month, even though the state was hit with another discouraging round of job losses.

The statewide unemployment rate fell to 12.2 percent in September, the Employment Development Department said today. That was a tenth of a point below the revised August rate of 12.3 percent.

The state lost 39,300 payroll jobs during September - a disappointing result after a relatively miniscule 7,200 jobs disappeared in August. Many economists say the payroll numbers are more reliable indicators than the unemployment rate, which is based on a smaller survey.

Sacramento's unemployment rate fell to 11.8 percent in September, down two-tenths of a point.

The region added 200 jobs during the month.

The job market got a boost when school started. Some 3,900 jobs were added at area school districts.

But the construction sector lost 1,600 jobs in Sacramento.

Howard Roth, chief economist at the state Department of Finance, called the report "mixed." Job losses are still lower than earlier this year - when 60,000 or more jobs were disappearing per month - but "apparently they're not moderating as much as I thought," he said.

To keep reading this post, click on the "Continue Reading" link below:

 

October 15, 2009
New September home sales data from MDA DataQuick

We've received September sales and price numbers from MDA DataQuick, showing that 3,454 homes changed hands in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.

That's up slightly from August, but down from 4,369 the same month in 2008.

The median price for new and existing homes combined fell slightly in Sacramento County - to $176,000. It was $180,000 in August.


September regional highlights for new and existing homes combined:

 Sacramento County: 2,068 sales with a median price of $176,000. That price is down 12.4 percent from September 2008.

Placer County: 581 sales with a median price of $292,000. Prices are down 11.5 percent from the same time last year.

Yolo County: 196 sales with a median price of $250,000. It's down 8.9 percent from September 2008.

 E Dorado County: 229 sales at a median price of $288,000. Prices are 23.2 percent lower than the same time last year.

 Yuba County: 114 sales with a median price of $155,000. It's down 11.4 percent from a year earlier.

 Nevada County: 137 sales with a median price of $350,000. That's 2.4 percent less than September 2008.

Sutter County: 96 sales with a median price of $160,000. Prices are down 15.8 percent from September 2008.

Amador County: 33 sales at a median price of $200,000. That's down 21.6 percent from September 2008.

Here is what the property researcher posted for the Los Angeles area.

And here is the same for the 

Bay Area.

 

October 14, 2009
CA Senate votes to extend $10K tax credit for new-home buyers
Shortly after noon today, the California State Senate voted 35-1 to extend a popular $10,000 tax credit for buyers of new unoccupied homes in California to another 4,300 buyers. It goes back to the Assembly now for a second vote. But the near-unanimous approval of the idea - heavily favored all year by the Legislature - gives it a good shot. The governor has also long liked the tax credit as a boost for the construction sector of the economy.

The bill had long been carried by Assemblywoman Anna Caballero,  D-Salinas, as AB765. But as part of budget machinations in the Senate, it was folded into SBX3 37 with Sen. Roy Ashburn, R-Bakersfield as the new author and Caballero as a co-author.

Essentially the legislation, if it clears all the hurdles and receives final approval, will start the clock running again and giving people who close escrow on new unoccupied homes after its effective date a shot at receiving the credit - up to $10,0000 over three years.
 
But it shuts out people who have closed escrow since the Franchise Tax Board cut off applications on July 2. Already, more than 10,600 California buyers have been approved to get the cut.

 Home builders called it a key sales tool during the spring and summer - and cited its absence as a key reason for slumping sales during the third quarter.
October 14, 2009
Two upcoming foreclosure prevention workshops
The Sacramento Mutual Housing Association is conducting a pair of free foreclosure prevention workshops next week for people struggling with mortgages.
The workshops will explain the federal government's Making Home Affordable loan modification program and other  workout options to keep your house. It will also explain steps of the foreclosure process and how to avoid  scams. During  sessions, people can  schedule  a free individual session with a foreclosure prevention specialist.

First date: Monday, Oct. 19 at 6 p.m. at Mutual Housing at Lemon Hill, South Sacramento. Address: 6000 Lemon Hill Ave.

 Second date: Thursday, Oct. 22 at 6 p.m. at the Sacramento Association of Realtors. Address: 2003 Howe Ave., Sacramento.

Pre-registration is required. Call Tara at Sacramento Mutual Housing Association, 916-923-2233, or   email:tara@mutualhousing.com.

October 13, 2009
O'Toole: There IS no shadow inventory of bank-owned homes

There is no massive shadow inventory of bank-owned repos - and banks aren't intentionally holding them off the market. So says ForeclosureRadar's Sean O'toole.

Read his analysis here.

 
Here's a Wall Street Journal blog item about O'Toole's contention and my story in the Sacramento Bee on Friday, Oct. 16 about his arguments as it relates to the Sacramento market.


October 13, 2009
Management change at Red Hawk Casino

Red Hawk Casino, which is off to a disappointing start, has changed general managers.

Peter Fordham has left the casino, according to an announcement by Lakes Entertainment Inc., the Minneapolis company that manages Red Hawk for the Shingle Springs Band of Miwok Indians.

The casino's assistant general manager, Terry Contreras, will run the Shingle Springs casino until a replacement is named.

Since Red Hawk opened in late 2008, Lakes Entertainment has said the financial results have been disappointing. More than 250 full-time equivalent jobs have been eliminated since the opening.

October 12, 2009
Sales dip in September, median price falls, too

The Sacramento Association of Realtors report the customary seasonal autumn dip for home sales in Sacramento County and West Sacramento: 1,631 single-family homes changing hands. It's down 3.1 percent from August - and down 19 percent from the same time last year.

  • Median price: $183,000, down from $190,000 in August. It's down just 6.1 percent from $194,950 in Sept. 2008. 
  • Bank repos were 45.4 percent of sales.
  • Short sales were 19.3 percent of sales.
  • Through September, sales this year are running 12 percent above 2008.

Here's the details from SAR:

The press release. 

The summary of statistics

A detailed look by ZIP Codes.

October 12, 2009
A new president for AKT

Kyriakos Tsakopoulos has replaced his sister as president of AKT Development Corp., the powerhouse Sacramento real estate firm founded by their father.

The new president, 39, has been with the company for years and has been heavily involved in the family's negotiations with Drexel University, the Philadelphia university that wants to build a West Coast campus on Tsakopoulous-owned land in Placer County.

"I am pleased and the family is happy that Kyriakos has worked his way up the company ranks to this position of leadeship and trust," his father Angelo K. Tsakopoulos said in a press release.

Kyriakos replaces his sister, Eleni Tsakopoulos-Kounalakis, who was nominated by President Obama last week to become U.S. ambassador to Hungary.

October 12, 2009
New law regulates pension fund agents

Among the bills signed over the weekend by Gov. Arnold Schwarzenegger is a series of new regulations on "placement agents," the marketers at the heart of the bi-coastal inquiry into pension fund corruption.

Schwarzenegger signed AB 1584, which requires placement agents to disclose any campaign contributions they've made to elected board members of public pension funds. It also requires disclosure of whether a money manager has hired placement agents to make a pitch to the pension funds.

The law follows indictments involving placement agents doing business with New York State's public pension fund and disclosures of placement agent activity at CalPERS and CalSTRS.

The law "does do the obvious - it makes that kind of play-to-pay...transparent," said James Hawley, a business professor and pension fund expert at St. Mary's College of California in Moraga.

October 8, 2009
What park maintenance is coming to in Sacramento?

Home Front's "Aesthetics Police" subsidiary was out visiting North Sacramento's Del Paso Nuevo neighborhood recently and was rather taken back by the maintenance of the neighborhood park, Nuevo Park.

Everybody knows that local governments are having money issues, but people who buy homes in neighborhoods should have some confidence that the public investment will be kept up, too. I wouldn't be happy if my neighborhood parks looked like this. Granted this serves as a soccer field and festival lawn, but one has to think the city can do better than this. 

 

 

And this is how they're trimming around the park trees now?

 

Would you appreciate it if you bought a new home in this neighborhood and this was the best a city mowing crew could do in a neighborhood park?

October 8, 2009
Horror stories about servicers from a front-line loan counselor

Dropped phone calls, lost materials, different stories from different people, chaos and confusion inside the cubicles of mortgage services. It isn't often we get such a revealing and candid view from the front lines of nonprofit loan counseling about dealing with loan servicers. But

here now is an astonishing inside look from Manny Randhawa, housing counselor for the California Senior Legal Hotline in Sacramento. (Don't be distracted by the deleted markings in the piece; the text is all there).

 
Randhawa recently wrote it as an op-ed piece.
The chaotic nature of what he deals with is his opinion and based entirely on his own experiences. We have not sought feedback from the institutions he mentions.

But I can say that his experiences match the tortured stories I have been hearing generally from borrowers - and some counselors - for well over two years. Home Front has to speculate that what Randhawa explains above is among the many reasons this California economy is in its current state, and a key factor in the high numbers of foreclosures. 

 

 

 

 

 

October 8, 2009
GenCorp earnings rebound

GenCorp Inc. reported a return to profitability in the third quarter today.

The parent of Aerojet said it earned $12.1 million vs. a $2.7 million loss a year earlier. It earned 20 cents a share, compared to a 5 cent loss last year.

The improvement came as GenCorp said revenue jumped to $201.4 million vs. $172.5 million a year earlier. The increase in revenue was driven largely by growth in its standard missile programs and its Patriot and Atlas V programs.

The company also benefited from lower retirement costs.

 

October 7, 2009
California housing in 2010: key trade group makes forecast
Thursday update: Here is the full story published today. JW.

What's next year bringing to California's housing market?
The California Association of Realtors just released its 2010 forecast in front of several hundred real estate agents gathered in San Jose - but don't be surprised if it changes.
 Given all the "wild cards" that may - or may not happen - who knows for sure.

But first a couple foundations:

  • 2010 sales will likely fall below this year, when they were fueled by an explosion of relatively cheap bank repos attractive to first-time buyers and investors. CAR, the trade group for  172,000 real estate agents, predicts sales of 527,500 homes in 2010 - 2.3 percent fewer than this year. 
  • Median prices will rise slightly. CAR  estimates a 2010 median price of $280,000. That's 3.3 percent higher than this year's current estimate of $271,000.


     Beyond that we get to the wild cards: the state budget crisis that has cut hundreds of thousands of salaries across California, whether a new round of expected loan resets among Option ARMS and Alt-A loans will drive a new stream of foreclosures and whether rising joblessness will do the same. What will the federal government do? Will it extend, or even expand, its $8,000 tax credit for first-time buyers?
 
 Like other baffled analysts, CAR isn't sure what the banks are doing, either, as they continue to drag out foreclosure schedules and remain slow to put their thousands of repo listings on the market. A heavier-than-expected wave of foreclosures, if it happens, would drive prices back down, said CAR's Chief Economist Leslie Appleton-Young.

 Yet, in a phone conversation this morning with Home Front, she said, " I don't see a tsunami of foreclosures. I see an elevated level of foreclosures over the next couple of years, and an acceleration in the rate of foreclosures at the upper end of the market."

 Problems in the upper end of the market are also part of the reason for expectations of fewer sales next year. Buyers are still finding it harder to get loans for those houses, and are especially skittish about buying in that segment for fear that prices are going to fall. Much of the joblessness now is hitting in the higher end of the market, and a stream of foreclosures there could cause the same deflation that first struck the lower end,said Appleton-Young.

Bottom line: "distress sale" properties that have this year accounted for slightly over half of existing homes sales across the Golden State are likely to be close to one-third of sales next year, said Appleton-Young. We'll have a full print version of all this in Thursday's Bee

October 6, 2009
California's top real estate agents increasingly "wired"

For real estate agents in a wired world it's as simple as this: get on the train or get left behind. And more are getting on the technology train, says this newest technology survey of Realtors by their trade group, the California Association of Realtors.

Some highlights: (check for more in the media release above)

  • 45 percent use a laptop or tablet computer in the field, up from 33 percent last year. The main reason: to check e-mail.
  • 39 percent have a hand-held wireless Intenet device compared to 22 percent a year ago. The reason: to check e-mail.
  • Seventy percent promote their listings on search engines and classified Web sites. 
  • Fifty-five percent of Realtor business came from the Internet in 2009, a rise from 48 percent last year. 
October 2, 2009
The economy: One step forward, two steps back?

The recovery of the US economy seems to be sputtering a bit. The job losses in September reached 263,000, significantly higher than August's and worse than economists had been expecting.

The national unemployment rate ticked up a tenth of a point, to 9.8 percent.

Sung Won Sohn, economist at CSU's Channel Islands campus in Camarillo, called the report "dismal and disappointing" and added, "Technically, the economy may have bottomed but the job market is lagging behind and struggling."

Where does this leave California? The state and local unemployment figures for September won't come out until Oct. 16. The last couple of monthly reports have been encouraging, with job losses totalling a relatively paltry 12,300 in August even though the statewide unemployment rate rose to 12.2 percent.

We saw another glimmer of hope earlier this week, when the state Board of Equalization reported that gasoline usage has ticked back up for the first time in three years.

Look for California unemployment rate to keep climbing. In a forecast released this week, Los Angeles economic consultant Chris Thornberg said the rate will peak at 12.8 percent later this year.

Thornberg, head of Beacon Economics, said the job losses will continue until the second quarter of 2010.

Nevertheless, Thornberg maintains a pretty positive long-term outlook.

"The fundamentals for growth remain strong," he wrote. "Once this cycle has been worked through, not only will growth return, it will return with a vengeance."

 



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