The good news (from a buyer perspective): Homes are becoming more affordable as prices plummet. From the the Sacramento Bee:
There's a flip side to the Sacramento-area housing downturn that has would-be buyers cheering: Sacramento is getting more affordable. Falling sales prices between last summer and the end of 2007 triggered a nice jump in affordability in El Dorado, Placer, Sacramento and Yolo counties, according to an index compiled this week by the National Association of Home Builders and Wells Fargo & Co. 27.2 percent of homes sold in October, November and December were affordable to households earning the region's median income of $67,200.
The bad news? Affordability is only back to 2004 levels:
The new eligible buyer percentage for Sacramento was the best since 27.4 percent in the first quarter of 2004...[I]t doesn't take much to remember better days from 10 years ago. In the first quarter of 1998, 70 percent of area homes were affordable for people earning at least the median income, according to the home builders and Wells Fargo.
The last time affordability was this low (aside from 2004) was in 1991, at the
front-end of the 1990s housing bust. Between 1993 and 2000, the index remained above 50%.
Here's a look at the index since 1995. You can download the
data here.
From the
Sacramento Bee:
Dozens of Rancho Murieta homeowners have been left with cracked walls and listing foundations after local builder Reynen & Bardis said it can no longer afford to fix their defective houses. Thirty-six residents have hired a law firm and begun filing lawsuits against the company, already reeling from the real estate downturn.
...
Francis Furtado, president of Reynen & Bardis' home building division, said the firm doesn't intend to abandon the Rancho Murieta residents. For the moment, it can't afford further repairs. "We are in a very tough market," he said. "There's no profit in home building. There's no profit in land development. Our income shut off. We had to hunker down. Our intention is to go back in, but right now the finances aren't there."
...
Since the bottom fell out of the land market, the firm has faced mounting pressure from creditors. It has shut down home building and recently furloughed 89 of its 180 employees.
...
The firm's problems have left Lynn and his neighbors with more than cracking walls. Their gated neighborhood is now filled with vacant and rental homes owned by Reynen & Bardis, which is now trying to unload them "as is" at bargain prices...Residents say the flood of cheap houses makes it harder for anyone else to sell, should they decide to get out.
From the
Lincoln News Messenger (hat tip
HBB):
The effects of a deepening national housing slump are hitting close to home. Even Gladding, McBean, one of Placer County’s oldest businesses and a Lincoln institution since 1875, is feeling the market’s pinch. “I’ve been here since 1991, and this is the most significant downturn in our market I’ve seen in that time,” said Bill Padavona, general manager and vice president of Gladding, McBean.
Padavona said the clay company has seen a 60 percent to 70 percent decline in products tied to home construction, such as sewer pipes and roof tiles. Though Gladding, McBean provides products throughout the West Coast, the market is especially bad in Northern California, where “the market has slowed to a near standstill,” Padavona said. Since the downturn began, the company has laid off 100 of its 235 employees.
...
That’s bad news as well for another Lincoln company, lumber supplier Sierra Pacific Industries. "It’s had a dramatic downward impact on lumber prices," said Mark Pawlicki, a spokesman for the Redding-based business. "Prices today go back to about 1992, the last time we had a housing recession."
