Home Front

The hits keep coming for the weak Sacramento area economy.

Gov. Arnold Schwarzenegger's decision to revive Furlough Fridays will lower state payrolls $147 million a month statewide. About a third of the loss will come in Sacramento, home to 84,000 workers.

The order will cut into "a substantial amount of consumer spending," said economist Jeff Michael of the University of the Pacific.

Jon Ortiz of The Bee's Capitol bureau has plenty of details on the governor's order, which will last until he signs a new state budget.

We'll have lots of coverage in Thursday's Bee about the order and its economic impact.

New York real estate folks are buzzing about CalSTRS, the California State Teachers' Retirement System.

The pension fund is trying to sell its equity stake in a 40-story Manhattan office tower, according to reports by Bloomberg and other news services.

The potential sale is seen as important because the market has been so quiet the past two years. Only five office buildings have been sold in lower Manhattan since fall 2008, Bloomberg reported.

While quite a few real estate deals have turned out poorly for CalSTRS and its sister fund, CalPERS, this one could be a winner. CalSTRS "has decided to harvest some of the gains," broker CB Richard Ellis Investors said in a statement to Bloomberg.

CalSTRS spokesman Pat Hill said CalSTRS paid $70.4 million for its stake in 2004. He wouldn't comment further as the "property is not yet on the market."

Vacancies in Sacramento area shopping centers are declining for the first time in three years.

Colliers International real estate brokerage reports that the second-quarter retail vacancy rate fell to 13.4 percent from 13.7 percent in the first quarter.

Garrick Brown, research director in Colliers' Sacramento office, said a couple of factors are at work. First, discounters are swooping into the market. Second, there are terrific cut-rate deals to be had as a result of the real estate meltdown.

He said vacancies will likely fall as low as 11 percent by the middle of next year, but then the recovery will stall out because of the weak economy.

"We still have major issues," he said.

California home builders started 4,238 houses, apartments, condos and townhouses in June, beating the same time last year by 19 percent, the California Building Industry Association announced this morning. The number adds up to the most permits since Dec. 2008, the CBIA reported.

The same didn't hold true for Sacramento. Builders in the capital region - Sacramento, Placer, El Dorado and Yolo counties - started 298 residential dwellings in June - 22 percent fewer than a year ago.

But both Sacramento and the state as a whole beat May numbers.

Driving the statewide surge were starts of multifamily units such as condos, apartments and townhouses. Permits for single-family homes were actually down 9 percent statewide from a year ago. Sacramento had no new starts of multifamily units in June. That's why it bucked the statewide trend and reported fewer overall starts than last year.

The June numbers provided a good look at the first half of 2010. Sacramento's 1,538 housing starts from January through June are 3.6 percent fewer than the same time in 2009. The 72 housing starts in Yuba and Sutter counties are down 1.4 percent from the same time last year.

Statewide, builders reported the opposite - a 17 percent increase in housing starts over the same time in 2009.

But bottom line, the industry is in a serious funk. All these numbers are the lowest in a couple of generations.

We've written a lot about the housing market and the degree to which it's recovering. Here's some encouraging news on commercial real estate in Sacramento.

Vacancies fell in Sacramento's office and industrial markets in the second quarter, according to a report today from Grubb & Ellis real estate.

On the office front, the vacancy rate in the region fell 0.4 percent, to 20.2 percent. Among the major sub-markets, downtown Sacramento remains the tightest, with an 11.7 percent vacancy rate. Vacancies above 30 percent remain in markets like South Placer and Elk Grove.

The industrial vacancy rate dropped a full percentage point, Grubb & Ellis said.

Home sales dropped in June in California, but the prices continued to increase, the California Association of Realtors said today.

The figure are in line with recent trends. Sales have dipped lately with the expiration of a federal tax credit April 30. But California pricing has continued to improve despite the shakiness of the economic recovery.

The association said the volume of sales declined 4.2 percent statewide in June. Median prices increased 13.6 percent compared to a year ago, to $311,950.

In greater Sacramento, the sales volume grew 1.7 percent from a year ago. Prices rose 7.6 percent, to $196,220.

Since bottoming out in April 2009, Sacramento median sale prices have improved 17.3 percent, the association said.

Mortgage defaults fell to a three-year low in California in the second quarter, market researcher MDA DataQuick said today.

However, the number of actual foreclosures rose slightly.

The latest numbers represent further evidence of a housing market that's finding stability but hasn't yet roared back to life. In California, foreclosures increased 4.4 percent compared to a year earlier.

The increase was more dramatic in the Sacramento region. Foreclosures jumped 21 percent from a year earlier in the region, DataQuick said.

Defaults, however, continue to ease. Defaults are the first formal step on the road to foreclosure. Statewide defaults fell 44 percent from a year earlier. In the Sacramento region, stretching from Amador to Nevada counties, defaults fell 38 percent from a year earlier.

 DataQuick analyst Andrew LePage said the drop in defaults signifies that "the market has stabilized in most areas." But at the same time, he said, more distressed homebuyers are going through short sales. That means they're sidestepping default and foreclosure.

Sales of new homes in California fell 46 percent in May compared to a year ago, the California Building Industry Association said today.

The decline in greater Sacramento was 51 percent.

The CBIA report, compiled by Hanley Wood Market Intelligence, essentially confirms what my colleague Jim Wasserman reported a couple of weeks ago: that new-home construction in Sacramento has become moribund. His story, based on a study by Folsom consultant Greg Paquin, showed that new-home sales in Sacramento fell 50 percent in the second quarter compared with a year earlier.

Analysts blamed the expiration of the federal tax credit April 30.

Stockton's University of the Pacific Business Forecasting Center says gradual improvement in private sector hiring ;will head off any double-dip recession in California. But recovery is weak and uneven across the state and "the forecast projects it will be a long five years before economic conditions return to normal."

The weakest 12-month outlook is for Sacramento. It cites lack of lawmaker urgency to resolve the state budget gap and huge uncertainty among state workers about the size of their coming paychecks. The Business Forecasting Center sees Sacramento-area unemployment staying above 12 percent through 2010, falling to 11 percent next year and finally to 9.8 percent in 2012.

Sacramento-area homes sales climbed again in June to their highest levels in 20 months, property researcher MDA DataQuick reported this morning.

The researcher counted 3,922 closed escrows of existing and new homes in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That is up from 3,716 in May, and higher than June 2009.

 But it failed to beat June 2008's count of 4,045 closed escrows.

Median prices also continued their slow ascent in the largest sector of the market, Sacramento County. The median sales price for new and existing homes combined in Sacramento County was $185,000 in June - 5.7 percent higher than June 2009. Judging by patterns of recent months that reflects fewer sales of bank repos and more sales of higher-priced homes.

Median is that point where half the homes cost more and half less.

Prices for new and existing homes combined beat the same time last year in Sacramento, Sutter, Yolo and El Dorado counties.  They remained below last year's prices in Amador, Nevada, Placer and Yuba counties.

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

And below is a first overall look at the region's monthly sales and price chart.

June sales of existing and new homes rose slightly from May in the San Francisco Bay Area, researcher MDA DataQuick reported minutes ago.

The newest market snapshot showed that the region's median price of $410,000 is up 16.5 percent above the same month last year. DataQuick says the next few months will prove whether the housing market can continue rising with the expiration of federal $8,000 first-time buyer tax credits.

Other highlights:

- Jumbo loans above $417,000 accounted for 33 percent of sales.

- 11.9 percent of sales involved adjustable-rate mortgages.

- Buyers presumed to be investors bought 16 percent of the homes sold in June.

Home sales numbers and prices continue to edge upward in Sacramento County and the City of West Sacramento, the Sacramento Association of Realtors reports.

The SAR counted 1,777 closed escrows in June, up 3.3. percent from 1,720 in May. The Realtors' group counts only existing homes, not new home sales.

Median prices also edged closer to $200,000 - reaching $194,000 in June. That's where half sold for more and half for less. June prices are up 2.1 percent from May - and up 7.8 percent now from the same time in 2009. 

Distress sales continued to dominate, accounting for 62 percent of all homes sold. SAR said 35.6 percent were bank repos and 26.4 percent were short sales. That short sales percentage continues to rise as banks increasingly take that route over foreclosure.

A year ago in June short sales were just 16.6 percent of sales and repos were 54 percent.

Here's a look at June sales and prices by ZIP Code.

Los Angeles-area home sales surged again in June, beating May levels. The numbers were highest since last July, researcher MDA DataQuick reports here this week.

That stands in contrast to a national trend in which home sales fell sharply after expiration of an $8,000 federal tax credit for first-time buyers.

Highlights:
- 33% of sales were bank repos.
- 6.6% involved adjustable-rate loans.
- 17.3% were financed with "jumbo" loans above $417,000.
- 19.7% of buyers were presumed to be investors.
- 23.5% of sales were all-cash.
-3.4% were flips - bought and sold again within the past six months.

On the California foreclosure front, ForeclosureRadar reports a mixed picture in June, while noting that notices of default are down by almost half from June 2009.

Finally, here is CoreLogic with home price index changes for May. It shows collective prices in El Dorado, Placer, Sacramento and Yolo counties just a bit higher than May 2009.

WEDNESDAY A.M. UPDATE: Here is the full version of this morning's story.

A $700 million plan to prevent 40,000 California foreclosures came under fire this morning by activists and struggling homeowners who called it another bailout for the nation's largest banks. 

Groups including the Service Employees International Union, One La-Industrial Areas Foundation and Communities Organized for Relational Power in Action staged a news conference and later made presentations to the California Housing Finance Agency.

They argue that CalHFA's plans to spend $420 million to partially pay off mortgages of struggling California homeowners unfairly subsidizes losses by large lenders and leaves the homeowner still owing too much to avoid foreclosure.

The full story runs in Wednesday's Bee. But CalHFA said it is sticking with its plans that begin Nov. 1 - at least until they know if they help people avoid foreclosure. 

More Home Front photos from the news conference below:

  Here's a video clip of the opening remarks. It's a bit long at 2:46, but it gives you the full notion of changes they're seeking in CalHFA's plan, which starts Nov. 1.

If you closed escrow on a new or existing home in June (in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo or Yuba counties), we'd love to chat with you by phone and quote you by name for a story running later this week.

Did you get either the state or federal tax credit?

A good deal on a foreclosure or short sale?

Finally, land your dream after months competing with investors?

Also seeking state employees who may have given up the housing hunting, or gone into stall pattern while minimum wage question plays out.

916-321-1102
jwasserman@sacbee.com

San Francisco-based Wells Fargo Bank just released its new California Economic Outlook, saying widespread fears of a derailed housing recovery aren't likely to materialize in California.

"While fears of a national housing market double dip are on the rise due to the sharp decline in home sales following the expiration of the homebuyer tax credit, we see less of a chance for a douple dip in California, at least one that takes out the cyclical lows put in place in late 2007."

Wells Fargo economists say the signs of healing in the California's housing market have solidified in the past six months. They also see a "fragile and highly uneven" recovery in jobs, a slow rise in personal incomes and "tentative signs of recovery."

The bad news hits home close to home, however: a state budget crisis that portends large "expenditure reductions" and "significant cash shortfall problems."

Since 2007 began an estimated 2.5 million American housesholds have lost their homes to foreclosure - and African Americans and Latinos have fared the worst, according to a recent report by the Center for Responsible Lending.

 The report, Foreclosures by Race and Ethnicity: The Demographics of a Crisis, says 8 percent of Latinos and African-Americans lost their homes compared to 4.5 percent5 of whites. 

 Sales of new homes across Sacramento followed a national pattern, toppling off in May and June after the deadline to get an $8,000 federal tax break. Builders and industry tracker The Gregory Group in Folsom acknoweledged it this week.

Just 485 sales in April, May and June, as published in this morning's Bee. Lowest quarter in possibly half a century.

Here is the full Q2 2010 chart from the Gregory Group, showing prices and sales in individual cities across the Sacramento region.

Here is a report from Wells Fargo saying these lousy sales numbers are necessary to rebalance the market.

 The percentage of Sacramento-area mortgages in serious trouble or on the path to foreclosure declined for a fourth straight month in May, home loan industry tracker CoreLogic reported Wednesday morning.

Corelogic said 11.18 percent of the mortgages in Sacramento, Placer, El Dorado and Placer counties in May were either 90 days or more behind on payments, somewhere in the foreclosure process or tied to a bank-owned home listed for sale.

That is down slightly from 11.27 percent in April, and easing back from a high of 11.58 percent in February, CoreLogic reported. In May 2009, the figure was 9.06 percent.

The decline is partly due to declining numbers of homes somewhere in the foreclosure process, the firm said.

 In May, 3.03 percent of area homes with mortgages were in that process.  That is a sixth straight month of decline there as lenders try other alternatives such as short sales and loan modifications. It may also partially represent banks' inability to process foreclosures given the large number of delinquencies.

But bottom line: the percentage of homes in the foreclosure process is down from the same time a year earlier.

The Sacramento area, however, is still running ahead of the California and U.S. average for its percentage of troubled mortgages, CoreLogic reported.

Legal Services of Northern California announced today that it will sponsor a free foreclosure workshop Wed., July 21, at the Arthur F. Turner Community Library, 1212 Merkley Ave. in West Sacramento.

The workshop runs from 6 p.m. to 8 p.m. Attendees will get information about how to avoid foreclosure or navigate the process. Advance registration is required. Call 916-375-6465.

Alysa Meyer, managing attorney of the Yolo County office of Legal Services of Northern California, will conduct the workshop. More details are here.

The moving vans are coming and going this week on W. Capitol Avenue as West Sacramento's newest affordable apartment project opens its doors to tenants. That's the 62-unit Parkside at Sycamore, a $20 million project opened by Roseville-based USA Properties Fund.

 USA's CEO Geoff Brown toured Home Front through the complex late Thursday, showing a variety of floor plans that rent in a range between $407 and $1,049. Complex managers said Thursday they are getting a lot of people from mobile home parks and other apartment complexes in West Sacramento.

It's easy for Home Front to see the attraction. Tenants here with working-class jobs get a nice new place with nice facilities, especially for the kids.

Whenever I write about one of these affordable projects with income restrictions the phone rings off the hook for a week. People, especially, seniors, are looking for nice places they can afford. Many who can't afford better say they're stuck in run-down places where they're afraid of crime.

Now on W. Capitol, for same money (due to tax credit financing, redevelopment money and state housing bond money to get these built) lower-income working people can live better.

Here is USA's Geoff Brown with a quick comment about high demand from renters for these kind of projects: (Photos-Video/by Home Front)

The economy continues to drift, and the effects show up in different ways around here.

First comes the news that Amador Bustos' Spanish-language radio-TV empire is crumbling. Bustos Media's assets have been taken over by their lenders, a sad turn of events for one of Sacramento's most compelling business executives. I've linked to my colleague Mark Glover's breaking news story here; we'll have more analysis and background in Friday's paper.

Meanwhile, there's no breakthrough in the state budget situation, but Gov. Schwarzenegger today did officially declare the end of furloughs. Jon Ortiz, the State Worker columnist, has the story.