'Who would have thought?'

From the Sacramento Bee:

Gov. Arnold Schwarzenegger will send layoff warnings to at least 20,000 state workers Friday unless he reaches a budget agreement with legislative leaders that precludes the need for such cuts, his office announced Tuesday. The Republican governor intends to eliminate 10,000 full-time positions from the state's general fund, either by job cuts, attrition or transfer to positions funded by special revenue streams, according to Schwarzenegger spokesman Aaron McLear.
...
Jason Dickerson, a budget analyst at the nonpartisan Legislative Analyst's Office, said the state has never laid off 10,000 workers before. "It might be possible to lay off 1,000 to 2,000 people, but laying off 10,000 or more employees would be next to impossible without gutting core services," Dickerson said.

From the Sacramento Bee:

Executives at the two local banks that have received shots of federal capital say the money isn't likely to spur much new lending, at least until the economy begins to recover. "It's that old economic spiral thing. … It's really difficult in this environment to find loans that we can underwrite," said Mark Lund, president and chief executive at Auburn-based Community 1st Bank. Last month, the bank received a $2.55 million investment as part of the government's Troubled Asset Relief Program.

From the Sacramento Bee:

Andrea Hawkins, 31, said she was doing well financially, running a mortgage business out of her Elk Grove home until the housing downturn. Now she's struggling to pay her own mortgage each month. "It's scary trying to make ends meet," she said...Now the single mother of four has joined the ranks of those needing assistance.
...
Blake Young, director of Sacramento Food Bank & Family Services,...said his organization served 25 percent more people in 2008 than 2007. Many are larger family groups from the same address. "People are finding it necessary to combine households to make ends meet," he said.

From LA Land:

[L]ooking ahead, the Zillow survey found a surprisingly sunny outlook. Fully 25% of homeowners in the West thought their home will increase in value within six months. That's up from 14% in the third quarter who had such high hopes for their home.

An update on the squatlord story. From News10:

The neighbors were suspicious but the tenants showed police a lease to prove they belonged. But now, the case of mystery tenants moving into a vacant upscale Natomas house in the Westlake subdivision last week has brought arrest warrants for those tenants and their real estate broker.

More here.

From the Tracy Press:

The sinking housing market has taken down an 18-year-old Tracy business that once employed more than 300 people. Piedmont Lumber and Truss...will issue its last paychecks to its 25 or so employees Thursday....

From the OC Register:

National Association of Realtors’ chief economist Lawrence Yun told an Orange County crowd today that he failed to foresee the depth of the housing crash....“What I found out was there was a credit market bubble that led to a housing market bubble. There was not check and balance in the system,” he said.
...
When the bubbles burst, home prices fell by as much as 45% in Stockton, he said...“Who would have thought a tangible asset would fall 45% in one year?” Yun asked.

Certainly not the NAR!

From the CVBT:

Home prices have plunged three and a half times more in San Joaquin County than the nation as a whole, according to a report Tuesday from Integrated Asset Services LLC....San Joaquin County leads the nation with a 51 percent drop in home values compared to the height of the housing bubble – more than any county in the nation, the report says.

From the Stockton Record:

Stockton resident Jorge A. Aragon is shocked at the ever-sinking house prices, hammered down by a predominantly foreclosures market over the past 21/2 years, but he's not looking to buy. He bought a house in 2002 for $220,000 and another in 2007 for $344,000, and now he's working with two banks to try to get loan modifications that will keep them out of foreclosure. Meanwhile, he can only be amazed as people move into his neighborhood into homes such as his at prices running below $100,000.
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Jerry Abbott, president and co-owner of Grupe Real Estate of Stockton...thinks prices won't sag further. "We're dragging along the bottom."
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In Stockton, the median sales price of $125,000 last month is a level not seen since 2001, said John Knight, professor of finance and real estate at University of the Pacific's Eberhardt School of Business. "I cannot envision that prices are going to continue to go down," he said. "I think we're either at or near the bottom for selling prices." Now the rents that investors can get for foreclosure homes covers mortgage payments for these lower-priced houses and then some, he said, and that's why the market is clearing out the listings.

From Seeking Alpha:

Having just returned from Sacramento/Stockton to look at defaulted condominium projects, I can tell you it's a solid mess out there. Investors from all over the Bay Area, and indeed the entire country, are making the same drive across Interstate 80 and descending on more or less the same spots. Unfortunately, the smartest investors will tell you they have no idea when it will end or what their exit strategy is, so not much is getting done on any scale.

The unemployment rate in Sacramento/Stockton is now in double digits (and climbing), and most people will have no choice but to relocate in order to find work. Consequently, there are some projects that will simply need to be bulldozed and plowed under.
...
[F]oreclosures not only create additional supply of "shadow" rentals, but home prices in these hard hit areas will eventually drop (if they haven't already) to levels where it will be much cheaper to buy than to rent.

Moody's Economy.com: Sacramento Real Estate Market to Bottom in Q4 2009

From Home Front:

How many times have we asked this question - where is bottom of this housing market - and seen it pushed farther into the future? One more time today, comes Moody's Economy.com, pushing it out until the fourth quarter of this year for El Dorado, Placer, Sacramento and Yolo counties.

From the Modesto Bee:

"To survive, you have to pare back your expenses, cut down advertising, let your employees go and ride it out," [Joseph] Anfuso [of Florsheim Homes] said. During the past two years, he's reduced his staff from 55 to 11...When housing was hot, Riverbank's Monschein Industries employed 406 people to craft cabinetry and countertops. Now only 72 remain.
...
To stick it out, some builders have drastically slashed prices. When Taylor-Morrison's Carriage Lane project opened the summer of 2007, its 1,127-square-foot model had an advertised base price of $271,990. Now it's just $139,990. That's a nearly 49 percent reduction.
...
[T]he housing slump won't end anytime soon, analysts warn. "The Central Valley is not immune to the slowing national economy and the region's housing market is feeling the effects," said Greg Gross, director of Metrostudy's Central Valley division.

From CBS 13:

Other job seekers expressed frustration at what they see as a growing divide between the instability of the private sector and relative safety of government employment. "The idea that state employees are somehow exempt from feeling the pain -- I find that somewhat ludicrous," said Pat Young of Corona del Mar, a former vice president of real estate developer Pacer Communities who lost his job in 2007. "They're upset because they're being docked two days a month. I think they look rather foolish against a backdrop of people who have lost their jobs entirely."

SacBee: The fastest shrinking job sectors in Sacramento

From News10:

Not bad for a day's work: In a down market, a Sacramento real estate broker made $275,000 buying a bank-owned home in West Sacramento and reselling it the same day. While other real estate professionals were struggling to stay afloat in the worst market in generations, the "flipper" was on a roll. Two months after buying the West Sacramento house, he picked up bank-owned homes in Sacramento and Rio Linda and flipped them both in a matter of weeks for a profit of $358,000.

The secret to his phenomenal success is simple: He's a crook.

Forbes: Stockton Home Prices to Drop to Mid-1990s Levels

From Forbes:

Topping the charts [of the Forbes Misery Measure] is Stockton, Calif., which was the runner-up on our list last year...Stockton was ground zero for the housing boom and now the subsequent bust. Home prices more than tripled between 1998 and 2005 and then came crashing down last year...Things are not looking much brighter in 2009 as housing prices are expected to fall another 36% on the heels of a 39% drop in 2008. Also, unemployment is expected to jump to 13.3% from 10.4%, according to economic research firm Moody's Economy.com.
~~~
[H]ousing prices should keep falling back to their mid-1990s level when the median home price was $130,000.

From Business Week:

It was good while it lasted. But the housing crisis and the recent economic downturn have forced many of the America's fastest-growing towns to adapt to the new reality of falling home prices and rising unemployment. And it's not clear whether the builders will return or whether the nation's next boomtowns will rise elsewhere.
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When the construction boom crashed a few years ago in the farming town of Elk Grove, Calif., south of Sacramento, it caught retail developers off guard. The launch of the 1.1 million-square-foot Elk Grove Promenade open-air shopping mall, originally set for 2008, has been pushed off until the end of next year even though the project is nearly complete. Not only is the developer struggling financially, but the mall is located on the edge of a rural expanse where Elk Grove was expected to develop.

"When everything was booming, the builders said, 'We're going to get ahead of the game,'" said Garrick Brown, director of research for Colliers International in the Sacramento regional office. "Usually retailers follow rooftops. In this case, they followed building permits."

From the Sacramento Bee:

The McClatchy Co. will trim payroll, curtail its retirement plan and cut operating expenses by at least $100 million following a dismal fourth-quarter earnings report Thursday. Posting a net loss for the quarter, The Bee's owner is readying its third round of major cutbacks in less than a year. Details are still to come, but layoffs are likely, and the Sacramento publisher will freeze its pensions and suspend contributions to its 401(k) plans.

ADDED - From the Modesto Bee:

County Bank, reeling since the real estate market collapsed in the Northern San Joaquin Valley, was shut down late this afternoon by state regulators, the Federal Deposit Insurance Corp. announced. The FDIC agreed to sell bank's deposits and branches to Westamerica Bank of San Rafael...The move comes a week after County Bank reported its losses linked to bad real estate development loans had swelled to about $96 million.

Squatlord Republic?

From the Sacramento Bee:

California saw a 42.5 percent drop in home sales at $1 million or above last year, according to a report Tuesday by market researcher MDA DataQuick...The dropoff was slightly worse in the Sacramento area: 50 percent in Sacramento County and 45 percent in Placer...The high end was battered by the downward price pressure at all levels of the market and was hit by a severe shortage of financing, said DataQuick analyst Andrew LePage.

From the Sacramento Bee:

The nation's foreclosure crisis has sparked scams nationwide, emboldened squatters and homeless advocates and led to numerous federal indictments. But this?

Sacramento police were in one of the city's most affluent neighborhoods Tuesday investigating a scheme with a twist: claims that the house involved is under the protection of a sovereign republic and that trespass could be met with "self defense" and "justifiable homicide." The bizarre case unfolded Tuesday in a gated West Natomas neighborhood that boasts million-dollar homes and some of the city's most prominent residents – think members of the Maloof family.

From News10:

The mortgage industry insider who admitted on his company Web site that he had been involved in massive mortgage fraud was charged Thursday with multiple felonies. The complaint was sworn by an IRS agent who said Christopher Warren, 27, fled the country on a private jet on Monday, the same day he replaced the home page of the Triduanum Financial Web site with a seven-page essay outlining his crimes and asking for forgiveness.

From the Sacramento Bee:

As soon as they default on a mortgage – or before – the calls begin. Often, the firms seek $1,500 to $4,000 upfront to help them out of jams with housing-boom loans...."It's similar to after a hurricane hits," said Tom Pool, spokesman for the California Department of Real Estate. "The bogus contractors come and collect money for repairs and don't do anything. These people are on their last dollar, anyway, and these loan-modification companies are having them draw on their credit cards with false promises."
...
Pool said DRE has shifted staffers to investigate 250 cases of loan-modification offenses. Many involve former real estate agents.

From News10:

John Laing Homes has shut down construction on its northern California projects according to company insiders...At the height of the housing boom, the company employed 165 people in the Sacramento area according to insiders. By the time the final layoffs came, the staff numbered 31.

Another report from CBS 13.

From the Stockton Record:

Kevin Huber, president of Stockton-based Grupe Co., said foreclosures have significantly affected development and home building in both the short and medium term, because foreclosures are selling well below what it costs to develop and build new homes. "Nobody's going to start a new home knowing you're going to lose money," he said. There's probably 18 months to two years more of foreclosures dominating the marketplace before home builders can compete again in a "normal" market, he said.

From the Sacramento Business Journal:

Sacramento ranks No. 9 on a list released Thursday of the metropolitan markets with the largest potential for distressed retail real estate assets. Madison Marquette, which owns 20 million square feet of retail and mixed-use properties across the country, compiled the list with its own research along with that of CoStar, a commercial real estate information company.

From the Sacramento Bee:

The city of Sacramento sent layoff notices Thursday morning to 24 employees within its development services department. Four supervisors - including the city's chief building official - were among those to receive layoff notices.

"The [Stockton] Man Who Started the Global Recession"

From Time:

Some communicable diseases can be traced back to what medical researchers call "patient zero", the first carrier of an illness and often someone who has no symptoms...The global recession has a "patient zero", a single person who set off the series of events which may lead the economy into its greatest downturn since The Great Depression and, by some estimates, push 50 million people around the world out of jobs this year, according to The International Labour Organisation. "Patient zero" bought a house in Stockton, California, in 2003 after getting a subprime mortgage. He defaulted on that mortgage 39 months later.

From the Stockton Record:

Tonight Stockton will get another dose of national attention as a foreclosure hot spot in yet another round in the TV spotlight. This time, though, say the producers of the "Deals on the Bus" series by Discovery's TLC channel,...will show a new real estate trend: People riding in tour buses in the quest to buy nice yet affordable homes in communities hard hit by the housing downturn. "It's kind of like speed dating for homes," said executive producer Carlos Ortiz of Actual Reality Pictures, an independent Los Angeles-based film company that has filmed such reality-genre programming as "Flip That House" for TLC.

From News10:

The managing broker behind a failed mortgage operation posted a rambling essay on the company's Web site describing his years of fraudulent activity and asking for forgiveness. The seven-page essay by Christopher Warren, 27, replaced the home page of Triduanum Financial which abruptly closed its doors last month.
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Warren said WTL Financial faked credit scores and W-2s to peddle loans to investors who failed to scrutinize the files. "I made over $2.25 million, all of which was spent on 24 cars, five houses and drugs," he wrote.

From the Sacramento Business Journal:

A custom homebuilder that had been among the region’s top in revenue before the housing downturn is preparing to file for bankruptcy as it’s being investigated for fraud and other complaints. The Contractors State License Board has referred two complaint violations against Ultimate Development Inc. of El Dorado Hills to law enforcement agencies for investigation.
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“The recession has essentially shut down residential construction and there are virtually no credit opportunities available anymore,” he [owner Kevin Javaheri] said.

From Home Front:

The Construction Industry Research Board and California Building Industry Association now reports 65,380 construction starts in 2008. It's the lowest since CIRB began keeping records in 1954 in the Eisenhower Administration.
...
It's so low that even in the lowest point of the 1990s recession - 1993 - with Southern California base closings, a defense industry imploding in the wake of the cold war ending, with job losses from San Diego to Eureka, builders still planted 84,656 houses on California soil. That's 19,276 houses more than last year.

From the Sacramento Business Journal:

The worst period in the construction industry was in 1990 and ’91, and we’re fast approaching that now. The only reason we’re not already as bad now as then is that voters approved some infrastructure bonds and that money is still available and working. As a consequence, our picture is not as bleak as, say, homebuilders. But if the state doesn’t come up with a plan by Feb. 1 and it runs out of money, our industry, and the state, could be worse off than it was in 1990 and ’91.

From the Sacramento Bee:

Fighting to avoid a bankruptcy filing and apparently unable to finish the job, the developer of the long-delayed Elk Grove Promenade shopping mall is seeking investors to bring the project across the finish line...The mall has become something of a poster boy for the Sacramento area's hard-hit commercial real estate market...The mall's opening has been postponed three times, the victim of a poor economy and Elk Grove's disastrous housing market.

From the Sacramento Business Journal:

For Ike’s Landscaping, business started spiraling downward halfway through 2008...Although Ike’s had a strong first half in 2008, [president Eric] Aichwalder said, “We’ll be down to 20 employees in the next few months.” Ike’s employed 133 last year.

The bottom line for commercial landscapers is the market’s getting tougher. “Owners are watching all their dollars because tenants are coming to them for reduced rents,” said Ken Reiff, managing partner in the Sacramento office of brokerage NAI BT Commercial.

From Inman News:

[According to Radar Logic] San Francisco had the highest [price] decline, at 36.8 percent year-over-year during the November period, followed by Phoenix (down 34.6 percent) and Sacramento, Calif. (down 32.4 percent).

From the Modesto Bee:

Rental home rents also have become a bargain throughout in the region. "The economy is driving the rental prices down," said Kris Marin, who manages about 250 rental properties in the Northern San Joaquin Valley for Tri-Tal Realty. "There are a lot of vacancies. It's hard to find good, qualified tenants if the rent is too high." So to get homes occupied, Marin said, monthly rents have fallen about $100 for three-bedroom homes and about $200 for four-bedroom homes.
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Al Nazmi said his family members have purchased more than 20 foreclosed houses during the past 18 months..."Most Modesto investors have run out of cash to buy homes the last three months," said Nazmi, noting how few people attend the daily foreclosure auctions on the county courthouse steps. But out-of-town investors are filling the void: "I have friends in neighboring states who are buying homes in Modesto now." All those investors are turning former owner-occupied houses into rentals. Those homes now compete with apartment complexes for tenants.

From the Press Democrat:

Exchange Bank reported an $18.5 million year-end loss Friday, its first annual loss in at least five decades....The problem loans are concentrated in construction lending, largely among loans made to home builders in the Sacramento region. The bank expanded into the Sacramento area earlier this decade near the peak of the housing market. Now, with housing mired in a deep downturn, many builders are struggling to stay in business and pay off their loans.

From the Appeal Democrat:

Plummeting revenues due to the construction slowdown will lead to layoff notices for eight Yuba County employees and the deletion of 12 vacant positions.
...
[Supervisor Mary Jane] Griego noted the development boom that preceded current conditions and that she said was spurred in part by dramatic increases in housing prices in Placer and Sacramento counties. Those increases helped push development into Yuba County, she said. "We'll never see that again," Griego said of the extraordinary rise in home values in this region and the rest of California. "It was like the stars came together for Yuba County."

From the Sacramento Bee:

The economy is in such wretched shape – finishing 2008 with its worst performance in a quarter century – that some forecasters have begun writing off 2009 as well...Some analysts are rethinking predictions that the recovery would start in late 2009; now they're talking 2010...Two weeks ago, [CSU Sacramento economist] Suzanne O'Keefe said job growth could resume in Sacramento by September. Now she says it probably won't happen until 2010.

Bay Area SOS

From the Sacramento Bee:

The recession has finally caught up with Silicon Valley and much of the Bay Area...The economy here escaped the worst of the housing market crash – but not the more recent slump in consumer spending. That's hitting the tech sector hard.
...
Sacramento is hurting because it's being starved of the eastward migration – of people, jobs and wealth – that occurs when the Bay Area is healthy.
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State records show Intel Corp. laid off 200 workers at its 6,000-employee Folsom research park last year, and it continues to struggle...Hewlett-Packard Co...let 70 workers go at its Roseville campus last year, bringing employment to less than 3,500. As it integrates its acquisition of EDS Corp., it plans to lay off 24,600 workers worldwide over three years, which could affect Roseville and EDS operations in Sacramento, Rancho Cordova and Folsom.

From the Sacramento Business Journal:

Sacramento’s office market went backwards in 2008. The vacancy rate for Sacramento’s office buildings rose for the seventh straight quarter to end the year. And for the first time in two decades, tenants used less space at the end of the year than they occupied at the beginning, according to the region’s top brokerages.
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Even traditionally stable areas have seen a drop-off. Nico Coulouras, vice president at Lowe Enterprises Real Estate Group, which controls about 700,000 square feet in the Highway 50 submarket, one of the best-performing areas in recent years, said leasing activity in that area was steady until November. “Then, it got quiet,” he said.

From the KCRA:

Home Depot Inc. said it is cutting 7,000 jobs and closing its smaller Expo chain, including a store in Roseville, as the recession continues to batter the nation's housing market.

From the Stockton Record:

...[San Joaquin] County's unemployment rate hit 13 percent in December, up 1.1 percent from November, according to data released Friday by California's Employment Development Department. It is the highest rate in the county in 12 years.
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In recent months, [UOP economist Jeff] Michael had been saying that San Joaquin County employment numbers weren't as bleak as the national numbers and wondering whether that was a short-lived phenomenon. "Pretty clearly it was a blip," he said. "My reaction to (the new employment report) was, 'Wow!'"

From Business Week (hat tip RV6Flyer):

We asked AXIOMetrics, a Dallas-based apartment data company, to assemble a list of the 25 large metros where the rate of rent declines accelerated most in the fourth quarter.
...
Sacramento/Arden-Arcade/Roseville, Calif.
Rank: 24
Rent drop: -1.9%
Q4 2008 rent change: -3.9%
Q4 2007 rent change: -2.0%

From The Housing Bubble blog's Ben Jones:

We had...[a serious recession] in Texas when I was young. At first, lots of people hoped oil and real estate would bounce back and save our necks, but economics don’t work that way. We had a bubble and it didn’t come back.

What is frustrating to me is that the ongoing debate is headed by the fools that got us in this situation. Housing isn’t going to lead us anywhere. The fact is we’ve had the largest financial mania in history. It’s not going to return, and we better start working on how we will work and live in the future. Nobody can turn the clock back, and hoping that housing will lead a recovery is just as futile wishing oil would rebound in the 80’s.

Sacramento Unemployment Hits 8.7%; Rental Occupancy Drops

From the Sacramento Bee:

Greater Sacramento unemployment jumped to 8.7 percent, up from 8.1 percent a month earlier...The region has now lost 22,400 jobs in the past year, or 2.4 percent of its employment base.

From the Sacramento Business Journal:

The highest local jobless rate was in Yolo County, at 9.8 percent. The county has a labor force of 99,900 with 9,800 unemployed last month. The county had a 9 percent unemployment rate in November.

From the Sacramento Bee:

Unaccounted for [in the employment numbers is]...the growing numbers of workers who have had to settle for less of a job than they wanted. "The pain in the economy is much greater than the jobless numbers would indicate," said economist Sung Won Sohn of California State University, Channel Islands...Jenny Beard, owner of the Express Employment Professionals office in Roseville, said the number of former full-time workers seeking part-time work is undeniably up. "I'm positive of that," she said. "We're seeing many candidates who just want to keep themselves employed."

From the Sacramento Bee:

Sacramento-area rental occupancy dropped nearly a percentage point – 0.7 percent – in the fourth quarter of 2008 compared with the year-previous quarter, according to a survey released Wednesday by Novato-based rental industry analyst RealFacts...About 93 percent of area rental properties were occupied, one of the lowest occupancy rates in the state....
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One local analyst cited a "cacophony" of factors contributing to the drop, from overbuilding, to single-family homes turning to rentals in a disastrous housing market, to a struggling economy.

From Home Front:

Here at The Bee, we do a ton of stories on the housing market, but don't often enough explore the world of apartments that house an estimated 35 percent of the region's population...The bottom line right now: the apartment industry is slumping, too. Sales prices are falling, a few have fallen into foreclosure and buyers are waiting on the sidelines to see if prices fall more, the two said. There's still more supply than demand, which has lessened investor interest, too, in apartments.

From the Placer Herald:

Placer County’s foreclosure rate continued to gain steam in 2008, according to a year-end analysis of government records. And experts say to expect more of the same in 2009. The number of foreclosures in the just-ended period was up more than 110 percent from a year ago, with 2,552 residential properties being taken over, compared to 1,193.
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Homes in all segments of the market – from “starter” homes to area mansions – showed up on county default rolls last year en masse, experts say. “It’s pretty much going after all of them,” said Ben Herb, president of the Placer County Association of Realtors. “Even the houses that are a million-plus have been going into foreclosure.”

From CBS13:

Loan consultant, Robert Turrietta, say that one particular foreclosed home in Sacramento's Oak Park neighborhood lost almost 75 percent of its value. "This particular home transferred a couple of years ago for around $200,000 and just recently sold and closed escrow for $39,000," Turrietta explains. Turrietta says while home prices fall, nearly half of the buyers applying for a loan are getting denied.

Related Post: Housing Bubble Casualties: Professionals 'Suckered' into Oak Park

From the Sacramento Bee:

Most of Sacramento's local banks bet small on the real-estate boom and, as a rule, they haven't been badly hurt by the bust. But according to federal filings, most local lenders have a larger stake in the commercial real estate market, where vacancies – and loan defaults – are expected to soar this year as more businesses fold.
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[Colliers International's Garrick] Brown anticipates 5 percent to 6 percent of the region's commercial real estate properties will go into foreclosure in the next two years. That's similar to the rate of home foreclosures locally in 2007-8, according to data from foreclosures.com.

Merced breaks the -50% YoY mark. From the Modesto Bee:

Stanislaus County's median sale price was $157,500 in December,...44 percent below the $281,250 in December 2007 and 60 percent off the $396,000 in December 2005, when the bubble was at its biggest...[YoY price declines:] 51.8 percent in Merced [and] 47.5 percent in San Joaquin.
...
Richard Green, director of the University of Southern California's Lusk Center for Real Estate, said the market is being hammered by tight credit, expectations of further price declines and job losses. "If you see the unemployment rate turn around, that's when you'll start to see housing prices bottom and start turning in the other direction," Green said. "Until that happens, I'm pretty gloomy."

From the Sacramento Bee:

Sacramento County is about to announce a mid-year budget shortfall of $42.3 million....As a result the county at the Feb. 10 Board of supervisors meeting will propose getting rid of almost 200 positions on top of almost $30 million in cuts, according to an official, not authorized to speak on the budget, who had been briefed on the situation.

From CBS13:

With a skyrocketing foreclosure rate and plummeting sales taxes, Stockton has to cut $30 million from their $180 million general fund...[O]fficials say layoffs are inevitable.

From CBS13:

The recession is leaving some doctor's offices empty. More women are putting motherhood on hold and recent reports show contraceptive sales are through the roof. The data runs about two years behind, we won't know for sure until 2011, but it appears that with the economic slowdown has come something of a pregnant pause.

"Serious Trouble" Ahead

From News10:

A big presence in the Northern California home-building industry says it could be shutting down some projects. John Laing Homes spokeswoman Linda Mamet confirmed to News10 Wednesday the homebuilder is "reviewing operations based on market conditions and will determine whether sales will continue. Some offices may be closed. It is not clear on whether all or part of the Sacramento area operations will be closed."
...
Sacramento real estate consultant Jake Allen says the company appears to be in serious trouble. "I think it's a very sobering sign of the times, when we see a large, national builder like John Laing Homes that is essentially on the ropes at this point in time and looks like fighting for their life."

From the CVBT:

There’s a smidgen of good news for the Central Valley in the latest PMI Mortgage Insurance Co.’s “risk index.” The region, where the mortgage meltdown started more than a year ago, is surpassed by many Florida cities that PMI estimates will have the risk of lower house prices two years from now. Still, virtually every metropolitan area in the Central Valley is ranked at better than a 90 percent likelihood of further price declines.
...
Merced (High) 95.4
Modesto (High) 96.5
Sacramento (High) 96.3
Stockton (High) 96.6

From the CVBT

The Stockton metropolitan area in the Central Valley led the nation in 2008 in per capita foreclosures, according to a report from RealtyTrac Inc. of Irvine, a foreclosure information company. Stockton’s foreclosure rate last year was nearly double that of 2007, says RealtyTrac, up 99.16 percent. There were 21,127 homes in some level of foreclosure in Stockton last year, or 9.46 percent of all homes.
...
Sacramento was ninth, says RealtyTrac, with 39,876 homes foreclosed or 5.20 percent of all units.

From CNN Money:

[RealtyTrac's Rick] Sharga thinks that as many as 70% of the bank-owned homes listed on RealtyTrac's site have not yet been posted on multiple listings services (MLS), the industry databases of homes for sale. Those homes are less likely to be sold because most real estate agents won't know they're available. "Either banks are overwhelmed and can't get the houses on the MLS quickly, or they're deliberately slowing down so they don't have to take markdowns to actual home values on their books," Sharga said. Either way, it has the effect of underestimating the foreclosure inventory problem.

From the Sacramento Bee:

Facing a projected $8.6 million shortfall in the current fiscal year alone, the city of Folsom on Tuesday took the first step toward effectively throwing out the current budget and adopting a new 18-month spending plan that would take the city through June 30, 2010. The proposed plan calls for the elimination of 55 positions – including 39 layoffs – and service cuts. Folsom joins other area municipalities looking to cut because of the recession.

From the Sacramento Bee:

Faced with losing 43 jobs, including a dozen police and firefighter positions, Lincoln's remaining city workers also have been asked to take a two-year pay freeze.

From the Sacramento Bee:

Roseville city officials announced Monday a voluntary employee buyout program to close a nearly $4.5 million budget gap. The city has been freezing positions and cutting costs since March 2007, but another 40 to 50 positions must be eliminated, City Manager Craig Robinson said in a letter to employees.

From the Sacramento Bee:

The city of Sacramento is more than $11 million short of balancing its books, meaning more cutbacks are likely in the coming weeks. Mayor Kevin Johnson said Monday that "the outlook is not good" for a city that already made significant cuts in recent weeks.
...
Asked if it is likely city officials will need to make midyear cuts next month – either through layoffs or reductions in services and programs – Johnson said, "I think we will have to."

'Nothing Left To Trim'

From the Sacramento Business Journal:

Angel Ahumada, founder of recruiting firm Integrity International Partners of Rancho Cordova that recruits professionals for the building industry, said homebuilding companies have pared down staffs and combined offices as much as possible. “I think that 2009 will be a survival year for everyone in the housing market,” he said. “Layoffs are finished and office consolidations are over with — there is nothing left to trim. I heard from one of my senior executive contacts that he sees ‘large storm clouds ahead’ for them.”
...
[Gregory Group's Greg] Paquin admitted he hasn’t been able to accurately call the bottom of the housing market, as housing sales appeared to bottom out at various points during the past two years. “I was joking with some people this morning that it was probably the lowest since there’s been a capital in Sacramento,” he said of the fourth-quarter figures. “That’s probably not true, but the reality is no one’s buying.”

From the Sacramento Bee:

GreenFiber LLC, a manufacturer of natural fiber insulation, on Tuesday closed its plant in Sacramento, citing the decline in the local housing market and decreased demand for its products. The company said the 26 employees working at the plant...received severance pay.

From the Sacramento Bee:

It's approaching crunch time for Circuit City Stores Inc. and Fresno's Gottschalks Inc., two troubled retail chains whose possible demise would add to the miseries of Sacramento's commercial real estate market..."We're going to see more of this," said George Whalin of Retail Management Consultants in San Marcos. "We're just getting started."
...
The region's shopping center vacancy rate, pegged at 8.8 percent in the third quarter of 2008, will probably peak at around 11 percent sometime this fall, said research director Garrick Brown of broker Colliers International's Sacramento office...Rents have fallen by a third in some areas of Sacramento.

From the Sacramento Bee:

J.C. Penney's decision to close its Carmichael call center on March 20 will cost 260 local jobs and put a dent in the Sacramento area's recent reputation as a call-center magnet...At the dawn of the decade, Sacramento was being hailed as a call-center mecca. From 1996 through mid-2001, about 40 centers set up shop in the Sacramento area, according to the Sacramento Area Commerce and Trade Organization.
...
Layne Holley, managing editor of publications with the Colorado Springs, Colo.-based International Customer Management Institute (ICMC), said Monday that call centers are a likely cutting point for retailers amid the recession.

From the Stockton Record:

The median sales price fell to $133,000 in Stockton and $165,000 countywide...In Stockton, that has meant a 47 percent drop in prices in 12 months alone, from $250,000 in December 2007 to $133,000 last month, according to figures from the Grupe Real Estate-TrendGraphix monthly sales report....Foreclosures continue to dominate the existing home market, accounting for 84 percent of all December sales.
...
"Median sales prices may go lower, but they can't go much lower," he [Mike Collins of Collins Realty in Stockton] said. "Some people pay that much for a high-end luxury car."

From the Associated Press (hat tip DJ/SMF)

The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates.
...
Financial adviser Barry Hartz lived in California for 60 years and once ran for state Assembly before relocating with his wife last year to Colorado Springs, Colo., where his son's family had moved. "The saddest thing I saw was the escalation of home prices to the point our kids, when they got married, could not live in the community where they lived and grew up," Hartz says. "Some people call that progress."

From News10:

"It's getting too expensive for us to live here. We just can't afford it," said Cathy Hawkins of Sacramento. The Hawkins are moving from California for an area that's more affordable to live..."We just lost our house to foreclosure and I recently lost my job," said Daniel Hawkins.

Report: Sacramento Headed for Double-Digit Unemployment in 2009

From the Sacramento Bee:

A new forecast says unemployment will hit 10 percent in Sacramento this year [a rate worse than anything from the 1990s recession]. That's the most striking finding from the premiere issue of the Sacramento Business Review....The review also says the Sacramento region can expect to lose 14,500 jobs in the first quarter of 2009 alone. By contrast, the region lost 12,700 jobs in the 12 months ending in November.

From the Sacramento Business Review report [pdf]:

Construction...has become the largest production input in Sacramento since 2000 and hit its peak in 2005. Currently, construction contributes to 56% of Sacramento’s goods production input. We view this larger exposure to real estate as one reason the region was hit particularly hard by the housing collapse, partially offset by the larger exposure to the relatively stable government sector...By the end of 2005 - coinciding with the peak of the residential market - 26% of all jobs in the region were real estate related. Since that time the real estate sector has steadily lost jobs and now represents only 22% of overall employment.
...
While this U.S. recession officially began in December 2007, we believe the Sacramento region felt the economic effects earlier given the region’s large exposure to housing price declines, and the collapse in construction and in real-estate related financing activities. Using unemployment and taxable sales as a gauge, Sacramento was likely in its own local “recession” as early as 2Q07. Given our negative outlook, we would be looking closer to the end of 2009 or early 2010 for a local recovery and job growth to return, but we also believe there is a greater risk that a recovery occurs later than this rather than earlier.
...
While a recovery is at least a year (or two) away, it is likely we will reach or approach the bottom of the [real estate] downturn by the end of 2009. The local residential market is further along in the cycle than most the rest of the country, having already incurred a significant correction in pricing. As such, we expect the Sacramento region to be one of the first markets to recover. However, whether we reach the bottom soon and how long we remain there is dependent on how quickly the credit markets thaw and the depth and duration of the current economic recession.

From Housingpredictor.com:

[I]n the state's capitol of Sacramento, which has been one of the states harshest hit areas, the increase in foreclosure sales is also helping to boost the ailing home market. The real estate crisis is forecast to deflate home values in Sacramento another 15.7% by year's end.

From News10:

City employees in Lincoln are bracing for layoff notices that could come as early as Friday, according to Mayor Spencer Short..."I think everyone saw the slowdown coming but it was just a sudden collapse because of the mortgage crisis and everything else," said Short.

From the SF Chron:

"My policy prescription: Let them get foreclosed on," [economist Christopher Thornberg] said. "The home market is not going to recover, on the building or appreciation side, until two things happen: a) all these people with dodgy mortgages who bought things they couldn't afford get shoved out and b) all those homes get absorbed. The fastest way to do both of those things is to let prices fall."

"An MSM Confession"

From the Sacramento Bee:

Sacramento-area real estate market befuddled the experts

Home Front spent time in the electronic library this week, looking at how experts misjudged the extent of this decline as the housing market began to wobble and shift in 2005 and 2006, even 2007. We aren't trying to pick on analysts who were then swimming in uncharted waters after a long, euphoric boom. The Bee's real estate coverage, too, had its overly sunny moments.
~~~
We feature a lot of real estate experts who misjudged the extent of the downturn - and note that our own coverage was sometimes overly rosy, too, as a result.
...
It had occurred to me a couple times as I researched today's column that there were early people saying we were going over a cliff with this housing boom. They were mostly bloggers and not mainstream "experts," predicting this was a disaster soon to unfold. Therefore, in the process that often leads to these kind of business stories, they seemed to have less weight than someone who sold houses for a living or financed them. (There's an MSM confession for you).

But many of these seers proved correct.

From the Sacramento Bee:

"One bright note is that the (housing) sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out," said Scott Anderson, senior economist at Wells Fargo & Co.

It's still too early to declare real estate's revival...But 2008 could also be seen as the year Sacramento-area real estate began to show signs of stabilizing, and the idea that housing might help establish a foundation for the economy here is something experts are starting to debate. Prices and inventory are down and sales are up, even as foreclosures continue. Mortgage rates have fallen to their lowest levels in at least 37 years. The correction has been enormously painful, but there are believers who contend Sacramento will be among the first U.S. markets to recover.

From the Sacramento Bee's Bob Shallit:

We anticipate the capital region will endure higher unemployment (perhaps hitting 10 percent), more hard times in housing, a grim market for commercial real estate and perhaps a bank failure or two...Builders and buyers will continue struggling in 2009, but by midyear we see home prices bottoming out, foreclosures dropping and sales picking up, spurred by declining interest rates.

From Rocklin & Roseville Today:

I believe we will start to see some stability in the Sacramento housing market. I am not suggesting that we don’t still have some downward pressure on prices but I think we will see, in some areas and in some price ranges, price stability and even some upward movement. I believe we will see buyer’s who took a wait and see posture in 2008 return to the market. At the same time, if we learned anything from our experiences in 2008, we must be mindful that there are likely to be some additional surprises along the way.

From Home Front:

[In 2008] Dunmore Homes went out of business. Then John Reynen of Reynen & Bardis Communities filed for personal bankruptcy protection. So did C.C. Meyers, owner of Winchester Country Club. And then so did Christo Bardis of R&B. I doubt ever in their wildest imaginings did they imagine it would all some day come to this...Crossing familiar names off my list of real estate industry sources as they disappeared into unemployment. Sacramento County's median price falling back below $200,000. (On the other hand I talked with a lot of happy new homeowners this year. That was the really cool side of the free-falling home prices).

From the Modesto Bee:

The housing slump will enter its fourth year in January, but Chad Costa sees reason for hope. The Modesto real estate agent said plenty of people will benefit from the reduced prices and mortgage rates. "I think what has to be identified here is that the affordability is back," said Costa, who specializes in selling property that has gone through foreclosure. "That's the upside of this, and you don't hear a lot about that."

From the Appeal Democrat:

A huge tide of home foreclosures rippled through the nation in 2008, and few communities were battered as badly as the Mid-Valley. Defaults left hundreds of houses from Yuba City to Linda to Wheatland — built and bought in anticipation of profiting from a decade of soaring real estate prices — empty as owners seduced by adjustable-rate mortgages were caught between suddenly higher payments and plunging values for their homes.

From the Sacramento Business Journal:

Sacramento on Monday announced it has laid off eight workers in the city’s development services department due to falling revenue.

From the Appeal Democrat:

About 70 workers at Kbi Norcal on Rancho Road in south Yuba County are slated to lose their jobs in the next few months, according to an announcement Monday from the lumber and wall panel plant’s parent company, Building Materials Holding Corporation. BMHC executives...have said they will shut down the Rancho Road plant some time during the first quarter of 2009.

From the Sacramento Business Journal:

Grubb & Ellis Co. on Monday released its 2009 global forecast that predicts a troublesome year for commercial real estate in the U.S., including Greater Sacramento. “Several forces contributed to the decrease in Sacramento’s investment market in 2008, primarily the unavailability of credit, and this will linger through the coming year,” said Robert Dean, executive vice president and managing director of Grubb & Ellis’ Sacramento office...“The depth and duration of the local residential recession has virtually assured retail’s struggle,” Dean added.

From the Wall Street Journal:

The commercial market "is going to be ugly for the next 12 to 24 months," said Michael Restuccia, chairman of the San Joaquin County (Calif.) Employees' Retirement Association. "Not just bad, but ugly."

From the Sacramento Bee:

Commercial real estate is in trouble...Brokers such as [Boyd] Cahill are suffering along with their clients. For a while, they were uneasily holding ground while colleagues in residential real estate were seeing their livelihoods melt away as home sales plummeted. Then the bad economy got drastically worse and the commercial business crashed
...
As "the toughest year" of his career closes, Cahill said the first half of 2009 doesn't look much better. He thinks more retailers will file for bankruptcy protection, adding to vacancies and making it even more competitive to land the few tenants looking for space. The shakeout will strike commercial brokerage firms, too, Cahill said. His company just closed its Sacramento office and pulled staff to Roseville.

From the Stockton Record:

Foreclosures continue to dominate the existing home-sales market, making up nearly nine out of 10 purchases...[M]edian home selling prices in the city [of Stockton] dropped as low as $130,000 for November - down more than half from $265,000 the previous November.

Lela Nelson of Lela Nelson Realty said December business was hopping as more first-time buyers and investors jumped into the market as ever-dropping prices combined with historically low mortgage rates. In more than 30 years in the real estate business, she said, she has never seen a better combination of low prices and interest rates for buyers.

From the Stockton Record:

Community Bank of San Joaquin has become only the second locally based bank during the current economic downdraft to receive a warning from state and federal regulators.
...
[P]roblem loans were made before 2007 to builders. In other words, they were made to exactly the kind of borrowers you would expect to be doing business with such a bank, and they were seeking loans when business, especially real estate, was booming...In fairness, no one saw this coming, certainly not the kind of downdraft we've experienced. And with San Joaquin County being the nation's foreclosure capital, the real estate market collapsed here with unprecedented speed and severity.

From the New York Times:

[T]he ultimate symbol of suburban success has become one more reminder of the economic meltdown, with builders going under, pools going to seed and skaters finding a surplus of deserted pools in which to perfect their acrobatic aerials. In these boom times for skaters, Mr. Peacock travels with a gas-powered pump, five-gallon buckets, shovels and a push broom, risking trespassing charges in the pursuit of emptying forlorn pools and turning them into de facto skate parks.
...
California officials estimate that there are tens of thousands of abandoned pools in the state, with as many as 5,000 in places like Sacramento County, where a building boom in the capital’s suburbs has gone bust.

Ding Dong - DataQuick: Price Drop Exceeds 50% Off Peak; Unemployment Tops 8%

From the Sacramento Bee:

MDA DataQuick said Thursday, the median sale price for a home in Sacramento County dropped to $185,000 last month. That was the lowest level since September 2001 and represented a $10,000 drop in one month. Prices have fallen $105,000, or 36 percent, in a year...The DataQuick numbers show that the median sale price in Sacramento County has fallen by 52 percent from the August 2005 peak of $387,000.
...
In a normal market, when sales are hot at the low end, it filters up to more expensive homes. Someone sells a starter home and then moves up to fancier digs, raising the prices for expensive properties. But when the sellers of low-end homes are mainly banks, there's no such upward pressure on the pricier homes, [DataQuick's Andrew] LePage said.
...
"There's really no better time to buy than right now," [John] Arvanitis...of Sunshine Vista Mortgage Co. in Citrus Heights...said.

Data by county
Data by zip

Related post: Ding Dong - YOY Price Declines Arrive in Sacramento

From the Sacramento Business Journal:

The Sacramento-area’s jobless rate increased to the highest level in almost 15 years, as construction companies continued to cut payroll and a less-than-cheery holiday season created fewer temporary positions in November, according to a report released Friday. The four-county region’s jobless rate increased to 8.1 percent last month, compared to 7.9 percent in October and 5.6 percent in November 2007, according to the state Employment Development Department. It’s the highest rate since 8.4 percent in February 1994.

SacBee: Unemployment by county

More waves...From the Sacramento Bee:

Gov. Arnold Schwarzenegger's administration is telling labor unions that it will order two-day-a-month unpaid furloughs for state employees beginning in February to help the state save cash amid its budget crisis. Bruce Blanning, executive director of the Professional Engineers in California Government, said he received a call this morning from Department of Personnel Administration officials informing the union of the impending executive order...The furloughs would apply to all general fund and special fund employees and amount to about a 10 percent pay cut....The unpaid furloughs would begin in February and continue through June 2010....

DPA officials told Blanning the governor would seek a 10 percent elimination of jobs in the state workforce, which could result in thousands of layoffs.

From the Sacramento Bee:

When the housing market soared in Sacramento a few years ago, many cities, counties and school districts hiked fees for a new house, with some soaring into the $80,000s and $90,000s...What did $90,000 matter if a house sold for $470,000 or more to a buyer using exotic financing?...[M]uch of the new home market is [now] back in the $200,000s. At those prices, builders say, the fees make it hard to break even.
...
On Tuesday, Woodland became the first city in the region – and possibly first in the state, according to the California Building Industry Association – to...rethink impact fees in light of a devalued housing market. Typically, builders pay about $90,000 in city, county and school fees to build a house in Woodland. But with a 4-0 vote, the City Council cut its $69,000 fee to $54,000 – a 20 percent discount of $15,000 per house.

From the Sacramento Bee:

The Sacramento region's population growth rate continued to drop during 2008, falling to its lowest level in more than a decade, according to state figures released Wednesday.
...
People tend to move when they see opportunities. At the beginning of the decade, many looked to California and thought they had a better shot here than elsewhere, said Howard Roth, the state's chief economist. Now, they may compare California to their home state and think, "Why bother?" That trend occurred in Sacramento County, too, where about 3,000 more people left for other areas than arrived from them, state figures show.
...
[A]long with the rash of foreclosed homes, low growth eases demands on the housing market, bad news for homeowners but good news for home buyers.

From the Sacramento Business Journal:

The real estate decline that has hurt homebuilders is also punishing nurseries that grow plants for the new yards...Several growers in Southern California have talked about grinding up plants and using them for potting soil, he said. One large grower, who has more than 200 acres of plants, might grind up 15 acres.

From the Wall Street Journal:

Rio Vista began to see the trouble last year, when property-tax revenue began to falter...Rio Vista has cut a third of its city workers and slashed its recreation budget to $29,000 from about $250,000. The city is looking into selling more than 100 acres of its land for revenue.
...
Isleton's city manager, Bruce Pope, says the town owes $950,000 for an assortment of services including trash pickup and electricity. With Isleton's operating budget of about $1 million, interest on unpaid bills could overpower the city's budget, he says. Some county leaders are pressuring Mr. Pope to dissolve Isleton. But the town, with about 1,000 residents, doesn't have the money to cover the fees to do so, he says.

Weekend reading [pdf] (with lots of fun data) via Calculated Risk.

"All the Arrows Were Pointing Down"

From Forbes:

Drive along Interstate 80, just outside the city of Sacramento, Calif., and scores of gated and planned communities await. Only they're not what developers envisioned. Sidewalks are empty; homes are unoccupied. Blame the heady days of the real estate boom. Easy-to-acquire mortgages, plenty of open land and generous zoning provided new homes to scores of buyers. Between 2000 and 2005, Sacramento-area builders doubled production.

But as prices dropped and demand dried up, builders cut back. This year, there are expected to be 6,140 new constructions in the Sacramento metro area. That's down from 20,370 in 2005, according to the National Association of Home Builders (NAHB). Median prices are now $212,000, down from $375,000 in 2005. For many residents, this is old news. Sacramento home builders and buyers engaged in the same behavior leading up to, and following, the Savings & Loan crisis. That's when construction doubled and then quartered once prices fell. Indeed, it's a market prone to booms and busts, which not a good sign for long-term investment.

From the Sacramento Business Journal:

CB [Richard Ellis], Greater Sacramento’s largest commercial real estate brokerage, wanted the market outlook this year to be more of a low-key panel discussion with fewer numbers bandied about. Office chief David Brennan joked that all the arrows were pointing down anyway.
...
CB’s land group...declared that prices for residential land hit bottom late this year — a bottom they weren’t ready to call in 2007 as land buyers and sellers executed very few deals.

The pressure to unload land has become too great as homebuilders sold at deep discounts, at about 25 to 30 cents on the dollar, CB senior vice president Randy Grimsman said. That trend will increase next year, said senior vice president Peter Nixon....About 70 percent of the land deals will be lender repossessions, he predicted.

From the Sacramento Bee:

San Francisco-based regional brokerage TRI Commercial is closing its Sacramento office as of Friday and consolidating local operations in Roseville...In response to our questions, TRI issued a press release calling the closure a "strategic move" based on prospects for diminished revenue next year. The release states that the 12 agents in the Sacramento office will be invited to meet with managers in Roseville, but it doesn't say how many – if any – will be offered jobs.

From the Sacramento Business Journal:

Stunned by a dramatic decline in loan applications and a frozen secondary market for small-business lending, Comerica Bank trimmed its operations, including a processing and sales center in Sacramento. The banking giant eliminated 64 jobs nationwide, including 10 in the Sacramento region.
...
Comerica handled 15 loans for a total of $9.1 million for the first nine months of the year in the Sacramento district, a 56 percent decline from the 34 loans for a total of $19.4 million for the same period in 2007. Lenders in the Sacramento SBA district saw loans decline almost 38 percent. Nationally, SBA loan approvals were down 29 percent.

From Business Week:

[Thomas] Lawler [economist and founder, Lawler Economic & Housing Consulting in Vienna, Va.] says he's seen prices begin to stabilize in some places—Sacramento, for one, and even some areas outside hard-hit Las Vegas. He believes that if Congress and President-elect Obama launch a big economic stimulus plan on Day One and homebuilders bring no new inventory onto the market for six months or so, the national housing market could find its bottom by the third quarter of 2009.

From the Average Buyer blog:

Back in late 2006/early 2007 I couldn't find a RE agent (and we looked hard) that would tell me a home was overpriced, nor could I find a broker who would only give me a quote for a 30yr fixed loan (2 other quotes that lowered my monthly payment always seemed to come with it). So its interesting to see how history gets revised.

Real Estate Fraud Crackdown - 'Too Little Too Late'

From the AP:

[F]raud helped artificially inflate home values that have since come crashing to earth..."Let's not lose sight of the fact that there is immense criminal fraud involved in this financial crisis," said U.S. Attorney McGregor Scott, whose district spans California's vast Central Valley and is among those most affected by the housing bust. "It's a profound ripple effect that affects everyone."
...
In Scott's California district, prosecutors have filed charges related to housing scams against 53 people in 15 ongoing prosecutions. They have another 15 active investigations against 68 individuals. They estimate hundreds of millions of dollars have been paid out by banks and other lenders because of mortgage fraud in the Central California district, which stretches from just north of Los Angeles to the Oregon border. "We're running out of bodies to handle these cases," said Scott, calling on Congress to approve more money for investigators and prosecutors. "We're just being overwhelmed."
...
"I wish they had engaged in this earlier," [Paul] Leonard [director of the California office of the Center for Responsible Lending] said. "I think it's constructive to sort of root out these evil and malicious scams when they occur ... Given the state of the economy, it's too little too late."

From the Modesto Bee:

The economy appears to be in a "mini-depression" but could start growing again by mid-2009, the publisher of Forbes magazine told a Modesto audience Wednesday...[Rich] Karlgaard also said the housing market, especially depressed in the Northern San Joaquin Valley, is starting to turn around as buyers bid up underpriced homes.

From the Modesto Bee:

And then ... the crash. The bottom dropped out of the real estate market and almost without warning the nation itself fell into an economic sinkhole that seems to have no bottom...While Central Valley cities have been especially battered by the crashing real estate market, there's reason to hope we will recover faster than the rest of the country. Our economy is still based on agriculture, and agriculture will weather this storm better than many other markets.

From Sacramento News & Review:

It could get worse. Much worse. If unemployment continues to increase as the economy unwinds, by this time next year, the state may not be able to pay all of those who are eligible for [unemployment insurance] benefits, according to EDD spokeswoman Loree Levy.
...
Combined with the recent wave of job losses from the collapsing housing bubble, [a]...structural gap [between payroll taxes and benefits] led to a 55 percent decrease in the fund during the past year. EDD forecasts a $2 billion-plus deficit next year, and double that figure by 2010.

In short, unemployment insurance, established in 1935 during the Great Depression as a component of President Franklin Delano Roosevelt’s New Deal program, may not provide workers enough protection from the present downturn, which many economists are already calling the next Great Depression.

From the Sacramento Bee:

"This year I told my mom, 'Don't be surprised if you receive a macaroni necklace as a gift made by me, not your 3-year-old grandson,' " said Shelly Hutchens of Sacramento. Hutchens was joking, but there's more than a bit of truth there, too. A state employee and mother whose husband is in the construction industry, Hutchens said her family and friends have felt the effects of a slumping economy. "We're at a different time. If you haven't been affected by the economy, you know someone who has," she said.

From the Sacramento Bee:

Office Depot will close two of its Sacramento-area locations today as part of a wide-ranging, cost-saving measure announced on Wednesday by store officials. Stores in Citrus Heights and Rocklin are among six California stores to be closed...About 40 full- and part-time employees at the Citrus Heights and Rocklin stores will be affected by the closures, said spokeswoman Melissa Perlman.

Interactive database: See who is laying off workers

"New Year Bodes Ill for the Central Valley" Economy

From the Sacramento Real Estate blog:

Prices have fallen yet again...Sacramento county is now at $122.69 a square foot, a drop of 34.3% over last November...Median price has also fallen for the same period - here we see a fall of 40.3% year over year. Median price last November was $293,000 and is currently $175,000.

From Sacramento-based Foreclosures.com:

The nation's foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, pushing home prices up and fueling a real estate recovery, according to the 2009 Outlook from ForeclosureS.com....

"Recovery is underway. Affordable is back in the housing market," says Alexis McGee, real estate expert, educator, and president of ForeclosureS.com. "In 2009, housing will not only recover, but we'll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market. With 4.5% fixed mortgage rates, housing prices lower than they were 'pre-housing bubble', commodity prices lower, tax credits available for homebuyers, and the government eager to stimulate our economy, for the first time in years I can see prices rising again in 2009," adds McGee.

From the CVBT:

The New Year bodes ill for the Central Valley as the global recession deepens, says a new economic analysis by the University of the Pacific. “While home prices are beginning to find a bottom and real estate sales have surged with low prices, the outlook for the agriculture industry, trade, transportation and other key service sectors have weakened substantially in the past three months,” says the report written by Jeff Michael, director of the Business Forecasting Center at the Eberhardt School of Business at Pacific in Stockton.

From the Sacramento Bee:

Get ready for two years of 9 percent unemployment. California and Sacramento's jobless rate will top 9 percent sometime early next year and won't fall below it until early 2011, according to an economic forecast released Tuesday by the University of the Pacific. The higher unemployment is the obvious result of a deepening recession as the economy moves well beyond the initial job losses in construction and mortgage lending. "We're out of the housing thing and into a pretty severe … traditional structure of a recession," said Jeff Michael, director of UOP's Business Forecasting Center.
...
Michael said the Sacramento area figures to lose 2 percent of its jobs next year, a significant downturn.

From the Modesto Bee:

In preparation for slower times, Pacific Southwest Container of Modesto has laid off an undisclosed number of employees. The container manufacturer...joins a growing list of San Joaquin Valley companies that have scaled back their staffs to reflect slowing business...[A]s consumer confidence wanes and people buy less, there is less need to make and ship the goods that once flew off store shelves.
...
Initially, the decline in the valley housing market triggered job losses in real estate, finance, construction and other, related industries. As the economy continued to slow, the ripple effect has forced other businesses, including The Bee, to trim workers. Jeff Michael said he isn't surprised to hear of Pacific Southwest Container's layoffs. The director of the University of the Pacific's Business Forecasting Center said it is part of a coming wave in the manufacturing sector. Goods that people can put off buying will take a hit, Michael said.

From the Tracy Post:

As a soft housing market and rising food and fuel costs eat away many folks’ disposable income, the ancient art of bartering has become an increasingly common way to get what one wants.
...
Out-of-work Tracy carpenter Donald LaMmond, 42, can’t afford Christmas presents this year for his two daughters, ages 7 and 11, so he’s trading his handyman skills for board games and dolls to put under the Christmas tree. The contractor and his real estate agent wife, Kimberly LaMmond, 39, represent a pairing of two of the hardest-hit professions in today’s economy — definitely a source of stress for the couple, who sold their home 2½ years ago for much less than the loan that paid for it. "We’re both learning how to update our resumes, to get back out there," he said. "And we’ve applied to McDonald’s and Wal-Mart, but it’s hard to get out there — other people want those jobs now, too."

Paquin Predicts Sales Bottom for 2009

From the Stockton Record:

Question: It's been the slowest year yet for home builders. When do you anticipate that the market will hit bottom?

Answer [Gregory Paquin, president, Gregory Group]: It is our expectation that the Central Valley will hit bottom during 2009 and begin to see the signs of recovery in 2010 and 2011, although some areas - Sacramento and some northern Central Valley communities - may experience the recovery sooner than others (some mid- and southern Central Valley communities). Several things will need to happen before the housing recovery can begin: a slowing of foreclosure activity, less fear about job losses, the stabilizing of the overall economy and the easing of credit markets - a swing of the pendulum back to the center.

Related posts:
Paquin Predicts Sales Bottom for 2008
"I'm optimistic we will [reach bottom] in 2007"

Speaking of predictions, Sacramento Bee housing reporter Jim Wasserman invites readers to submit questions to an upcoming Sacramento real estate roundtable, which apparently includes blogger Average Buyer. Kudos to the Bee for making room for an informed consumer's perspective. Knock 'em dead AB! (no pressure or anything)

From the Sacramento Bee:

California's financial troubles have prompted Gov. Arnold Schwarzenegger to start talking about state layoffs...At a Los Angeles event last week, Schwarzenegger said the state has to look at all areas of government to close the $11.2 billion funding gap this fiscal year. "I think the longer we wait the more we will have to lay off people from government," he said in response to a question about the state's financial health. "And I think because of the delay now, we are almost, I think, forced – as a matter of fact, we are going to have a meeting … about that, how many people we need now to lay off in order to make ends meet."
...
About 112,000 state workers are employed in the Sacramento region, roughly 10 percent of the work force.

From the Sacramento Bee:

Sacramento, already weakened by one of the nation's highest foreclosure rates, is especially vulnerable. The stumbling state economy has prodded Schwarzenegger to propose that state employees take off one day per month without pay. "What I'm seeing now are state workers who are panicked … who are living paycheck to paycheck and are saying, 'Once I'm forced to take one day off a month I can't make my mortgage payment,' " said Jonathan Stein, an Elk Grove bankruptcy attorney.

From News10:

Sacramento Salvation Army homeless shelter supervisor David Benning...believes they've never had a higher percentage of first-time homeless in the shelter than they do now. The bad economy is likely to blame, as more people face the same crippling hardships. "Foreclosure, generally," says Benning, talking about the reasons people give when looking for shelter. "They lost their job, unemployment benefits have run out."

From the Sacramento Bee:

[B]orrowers rolled up the center's escalators for a massive foreclosure prevention workshop organized by Hope Now...The larger-than-expected crowd at the convention center spoke to the magnitude of problems in the region..."At 7 p.m. we had 1,200 borrowers registered," said Hope Now spokeswoman Katherine McGann. "They're still coming."

From CNBC:

The top U.S. banking regulators said Monday that some of their foreclosure prevention efforts are floundering and that they have no agreed plan for the future, two years into a housing crisis that has dragged the economy into a deep recession. More than half of troubled borrowers face losing their homes even six months after lenders have eased their monthly payments, one regulator said, a discouraging sign for reversing a tide of foreclosures.
~~~
[I]nstead of spending so much time focusing on trying to modify these loans, perhaps we need to look at the problem from a different perspective. How do we transition these borrowers out of homes they can't afford, with as little pain as possible, and in turn give qualified borrowers the incentive to buy up the inventory? Unless the lenders or investors or government officials are willing to simply throw the loan out and give away an awful lot of house to an awful lot of borrowers, modifications, and certainly "mass modifications" which a lot of government types are pushing, are just exacerbating the problem.

From the CVBT:

U.S. Rep. Dennis Cardoza, D-Merced...says the Treasury Department should immediately look into expanding the [4.5 percent fixed rate] program to all American homeowners...Homeowners who have been responsible and paid their mortgages every month should receive the benefit of a lowered mortgage, as well as those who need assistance meeting the demands of their mortgages, he says. "By lowering the monthly payments, we will essentially be giving each homeowner a stimulus check by putting more money in their pocket and without placing a burden on the Treasury or the taxpayer,” says Mr. Cardoza.

From the Stockton Record:

[N]ew numbers from Irvine-based RealtyTrac, which tracks the foreclosure market, indicate that the number of single-family homes actually repossessed by banks and mortgage companies is growing at a faster pace in San Joaquin County. In the first six months of this year, a total of 5,643 houses were repossessed countywide, RealtyTrac said. Compare that with 10,478 from January through October. That means the monthly average of repossessed homes is up from about 940 per month in the first six months of the year to more than 1,200 per month so far in the second half of the year - a nearly 28 percent jump.

From the Sacramento Business Journal:

Kobra Properties won’t bother to save 16 of its most troubled assets as it starts bankruptcy proceedings, the founder and president said in documents filed in the case. The plan to abandon 238 acres — mostly unfinished office, retail and restaurant projects — of its 900-acre real estate portfolio is part of Kobra’s strategy to emerge from bankruptcy as a more viable property developer...The abandoned assets will likely be repossessed by lenders and eventually offered for sale, and could be purchased at a steep discount by investors hoping to profit from one of the worst real estate reversals in decades.
...
“I have determined that certain real property assets of the debtors’ bankruptcy estates are unnecessary for the debtors’ reorganization and have no value to their respective estates,” company founder and president Abe Alizadeh said in court papers. “These assets are burdensome, of inconsequential value and have no equity or value.”

From the Manteca Bulletin:

More than 80 percent of the record 1,044 existing homes in Manteca that have closed escrow so far this year are foreclosures. That means owner-occupants and investors alike lost their homes because they couldn't make the payments. And for the most part it wasn't due to job loss or a catastrophic event such as a major illness. They simply borrowed more than they could afford and did it so with low introduction periods where interest - as well as sometimes part of the principal - was deferred for two to three years. They were betting prices would continue to increase and being able to refinance. The foreclosures are bad news for those who got caught in what is looking more and more like a Ponzi scheme where the last ones in on the housing bubble that expanded beyond reality by liar loans.

'It's sort of a Hail Mary pass'

From Inman News:

In Sacramento, Calif., the price per square foot fell 31.9 percent from September 2007 to September 2007, according to Radar Logic.

From the Sacramento Bee:

Is the foreclosure phenomenon at last beginning to peak in California? Home Front is hearing rumblings that October saw a "meaningful decline" in various foreclosure filings for the first time in two years. The familiar industry trackers – MDA DataQuick, ForeclosureRadar and Foreclosures.com – all acknowledge the change...What does it mean? It's still early to speculate whether this might be the beginning of the end.
...
"What we have seen over the last 60 days is a lot of announcements around foreclosure moratoriums and loan modification programs," said [Foreclosure Radar's Sean] O'Toole. He also cited Senate Bill 1137, which makes lenders try harder to talk with California borrowers before foreclosing. That legislation prompted a noticeable slowdown in notices of default as early as September.
...
[A]n abundance of new loan modifications could be pushing the foreclosure problem out three to five years. "It's sort of like, 'let's put these people all in teaser rates and hope it goes away.' It's sort of a Hail Mary pass," he said.

From the Sacramento Bee:

Property owners -- facing rough economic times and a prolonged housing slump -- have been flooding area assessors' offices with appeals in the hope of getting their tax bills lowered. Monday was the final day for property owners to appeal the assessed value used to calculate this year's property tax bills, and preliminary estimates project near-record numbers of appeals. Sacramento County officials are expecting twice as many appeals as last year.
...
Sacramento County reduced the assessed value on as many as 30 percent of residential units this year in the wake of the housing slump. The reductions translate to a loss of about $65 million in property tax revenue countywide, officials said.

From the Sacramento Business Journal:

[Roseville-based] real estate developer Kobra Properties — which owns more than 80 restaurants, corporate centers and other commercial properties mostly in Northern California — has filed for Chapter 11 bankruptcy reorganization in Sacramento, citing a worsening economic recession, depressed real estate market and a “tumultuous” credit industry.

From the Sacramento Bee:

These are terrible times for the auto industry, and the impact shows up at places such as the Elk Grove Auto Mall. Sales are down, staffing is down, and the loss of two dealerships hurts the survivors. "It doesn't help the image of the auto mall to have two tenants gone," said David Johnson, general sales manager at Elk Grove Buick Pontiac GMC. "It doesn't help with consumer confidence." Johnson has cut his sales staff in half, eliminating six jobs.
...
The numbers pay perverse tribute to Californians' other great love, real estate. Before the housing market crashed, 30 percent of California's new cars were bought with home-equity loans, according to CNW. That was triple the U.S. average. Now only 16 percent of California cars are purchased with home equity. "When the housing bubble burst … that just hammered car sales," [analyst Art] Spinella said.

From the Sacramento Bee:

[Howard] Roth [chief economist at the California Department of Finance] and economist Jeff Michael, of the University of the Pacific, said it's likely that California entered the recession sometime sooner than the rest of the country. It's possible that places like Sacramento, where the housing market seems to be stabilizing, could come out of it earlier, as well.

From the Sacramento Bee:

The family of Teresa Martinez, a preschool teacher in Stockton, is living proof of how the nation's economic storm is uprooting immigrants with family ties on both sides of the U.S.-Mexico border. While it's unclear if anecdotal evidence about Mexicans leaving the United States will eventually add up to a mass exodus, it is clear that those on the move aren't necessarily in this country illegally.

Martinez's two brothers are both legal U.S. residents who earned a good living, she said, working in trucking and construction during healthier economic times in California's Central Valley. About a year ago, when work dried up, both men decided to ride out the U.S. downturn south of the border, taking refuge in a cheaper, family-owned home in Mexico's northern Sonora state.

From the Stockton Record:

[Terry Hull Sr., Property Management Experts in Stockton]: Foreclosures have drastically impacted the economy of Stockton and the entire country. Sales prices have continued to go lower. However, shrewd investors are buying houses at these very low prices. Currently, there are too many rentals available, and it takes longer to find good tenants...I believe that we are beginning to see an overabundance of rental units, and eventually the vacancy factor will increase and rents may go lower.

From the Stockton Record:

Neighborhoods pummeled by the subprime mortgage debacle will start seeing a few new folks moving into foreclosed homes with help from federal funding on its way to San Joaquin County. On Tuesday, the Board of Supervisors approved a plan that would spread about $9 million in targeted areas across the county, primarily to snap up foreclosed properties, refurbish them and flip them to home buyers earning just about the median income.
...
"We think it will have a positive effect, (but) there are larger market forces at work," said Steve Baker, a project specialist at the city's Community Development Department.

From the Stockton Record:

A $10,000 tax credit would provide just enough incentive to push fence sitters to become home buyers, according to Hanley Wood Market Intelligence, a real estate data and consulting firm.
...
Yeah, but ... should we be building more new homes with so many existing homes on the market? Should we be handing out government tax credits for new-home buyers when thousands of California families are facing foreclosure? With virtually every segment of the economy struggling, how do we decide who gets help, who doesn't and how much?
...
Whatever the form and eventual cost of an economic stimulus plan, it cannot cover everything. Some segments will be left out. A higher priority should be given to keeping families in their homes and not on building and selling new homes.