"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.
...
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.
...
“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.
...
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.

Pardee's Over

From Home Front:

In 2004, the firm [Pardee Homes] plunked down more than $150 million for land and improvements at the very height of the land boom then sweeping the Central Valley. It bought land to build more than 600 homes in Natomas, 1,100 in Rancho Cordova's Sunrise Douglas area and 2,200 homes on the north side of Stockton. It also started up a new Sacramento division.
...
The market here in Sacramento then soured so quickly that Pardee decided it couldn't sell at prices good enough to recoup the boom-era price it paid for land. So it fenced off Natomas Meadows and shut it all down...Last week it sold 637 lots on 100 acres north of downtown Sacramento at its first big project in the capital city: Natomas Meadows.

Related Posts:
-Pardee Time in Sacramento?
-Moths to the Flame

From Bloomberg:

Las Vegas had the biggest drop on a per-square foot basis, falling 33 percent in July from a year earlier, New York-based real estate data company Radar Logic Inc. said in a report today. Los Angeles, Phoenix, Sacramento and San ["We're Immune"] Francisco each dropped about 28 percent. Three of the five worst-performing markets were in California.

Rejected Transplants

From the Sacramento Bee:

Three years ago this month, median sales prices peaked in Sacramento County. The result: The end of the housing boom. Across three years, the damage has piled up. In 2006, the spring rebound that area real estate agents were predicting failed to materialize...A discussion at year's end with some real estate professionals had a common thread: Foreclosures probably wouldn't get out of control.

Attached to this article is a nice chart showing the decline from peak in eight area counties.

From Bloomberg:

Home prices fell in 23 of 25 U.S. metropolitan areas in May from a year earlier [according to Radar Logic]...Sacramento had the biggest price drop, falling 31 percent from May 2007....The number of transactions rose 27.7 percent in Sacramento and 13 percent in San Diego from a year earlier and fell in the 23 other areas surveyed.

From the Sacramento Business Journal:

National homebuilder Ryland Homes will end more than 20 years of building in Northern California and gradually wind down operations in the region, including Sacramento.

From the Modesto Bee:

Could real estate woes persuade residents to abandon the Northern San Joaquin Valley? Bay Area transplants -- nicknamed BATs -- swooped into the valley en masse during the 2000-to-2005 building boom...At least one industry analyst suspects the valley's foreclosed families are headed back to the Bay Area, especially those who had been commuters.
...
"We saw similar (population shifts) happen in the 1990s, but nothing close to this level," [Steve] Dutra [VP for John Burns Real Estate Consulting based in Sacramento] said...."The data won't show it yet, but we know (the population is shifting) from our clients' reports," Dutra said. He noted that his clients are builders who monitor where people who are shopping for housing are coming from.
...
Another indicator of population movement is public school enrollment. This is summer vacation for most schools, but some Stanislaus County districts already are noticing shrinking enrollments.

From the Sacramento Bee

28 percent of Sacramento households earn more than $75,000 (the higher income range); 54 percent earn less than $50,000 a year (the lower income range); and 18 percent earn $50,000 to $74,999 (the middle income range).

The market is not providing housing affordable to folks in the lower and middle income ranges. The city's most recent housing update estimates that only 15 percent of households in 2007 could afford the median-priced home of $300,000. Home prices are dropping as the real estate bubble has burst, but even home prices of $220,000 remain unaffordable for the bulk of Sacramento households.

This mismatch between housing prices and incomes is a relatively new development for the Sacramento market. In 1997, 65 percent of Sacramento area households could afford a median-priced home.

From the Sacramento Bee

In another marker on the economic misery scale, a 1.1 million-square-foot mall on tap for southern Sacramento County has stalled, officials confirmed Thursday. The Elk Grove Promenade, an open-air regional mall that repeatedly has pushed back an opening date, is among a number of retail projects nationally that General Growth Properties Inc. of Chicago will delay, several City Council members said.
...
City Councilwoman Sophia Scherman...expressed fear that conditions would deteriorate at the mall, where parking lots are poured and future retail spaces are rising. "I don't care how it's done," Scherman said. "I want security there. I don't want it to become a blight."
...
Mayor Gary Davis...said, Elk Grove's economic climate will rally. "It's just a matter of timing. It's going to turn back around," Davis said. "It's not like in this downturn the place is going to hell in a handbasket. … That's not happening."

From Sacramento Bee:

Already burdened with its worst unemployment in 12 years, the Sacramento area figures to suffer even more following Gov. Arnold Schwarzenegger's decision Thursday to lay off 10,300 temporary and part-time employees and cut most full-time workers' salaries to minimum wage. Though the cutbacks are expected to be temporary, the news sent a chill through a metro area that has one of the worst foreclosure rates in the country.
...
With the real estate market just starting to get healthy, John Arvanitis, president of Sunrise Vista Mortgage Corp. in Citrus Heights, said lenders may think twice about approving a mortgage for a state worker affected by the governor's order. "If you're an underwriter and you see someone who's listed as one of those casualties who's gotten laid off or had their salary reduced indefinitely, that's going to be significant," Arvanitis said.

RadarLogic: Sacramento Leads Nation with 31.7% Price Drop

From Inman News:

The Sacramento, Calif., area topped the list for price decline with a 31.7 percent year-over-year drop in the price per square foot in April, according to the RPX Monthly Housing Market Report [pdf], which is based on values of a daily price-per-square-foot index during a 28-day period in April.

From the Sacramento Bee:

In Antelope, Randy Fatius, 55, has had it. He says he's walking away from the 1,200-square-foot house he bought in October 2005. Fatius made his last payment in March. Until April, he had never missed a payment.
...
Walking away is embarrassing, Fatius, a pipefitter and welder, admits. But staying is "stupid," he says..."I crunched the numbers and it floored me," he says. He figures he's lost around $200,000 in less than three years and that "it would take me 17 years to get back the value I've lost."
...
This was the first home Fatius bought. "I don't think I'll ever buy a house again," he says...He expects he can stay in it two or three more months. Afterward, he says, he'll move to the Pacific Northwest...Looking back almost three years after buying, Fatius says, "I had a gut feeling from the beginning I shouldn't have done it. I've felt it the whole time."

From the Sacramento Bee:

Downtown isn't immune to market forces. Projects opening now were mostly started during the real estate boom – and were too far along to stop when the bottom fell out. Housing has been particularly hard hit. Downtown developers say they've had to heavily discount their product to move it, and they're making little, if any, profit these days. "This is a depression in real estate; everybody who was really flying high isn't anymore," said developer Mark Friedman, who has sold 12 of his 26 Sutter Brownstones in midtown.

From the Manteca Bulletin:

It is without the doubt the largest housing-related foreclosure yet in the Manteca-Lathrop market. Hundreds of lots in Beck Properties' highly-touted Oakwood Lake Shores and two sister developments in Mossdale Landing are now in the foreclosure process. It marks the first, major development to start the foreclosure process and is a clear sign that a significant up tick in home sales since March may not be enough to rescue large segments of the collapsing real estate economy.

From the St. Helena Star:

No place has been more affected than San Joaquin County, said [Stan] Brody [of Burlingame-based U.S. Mortgage Corporation], where 1,600 homes have been foreclosed upon and 22,000 are in one stage or another of default. “In Stockton, which is ‘ground-zero’ for California, we closed escrow for $197,000 on a property that sold previously for $550,000,” he added.

'It's Kind of Like Bleeding to Death'

From Bloomberg:

Home prices fell in 23 U.S. metropolitan areas in March, led by Sacramento and San Diego, as rising foreclosures prolonged the housing recession. The price per square foot in Sacramento, California's capital, dropped 31 percent to $160 from a year earlier, according to a report released today by New York-based Radar Logic Inc., a real estate data company.

From Housing Wire:

Most key markets in California saw motivated sales comprise a growing portion of transaction volume, as well. In Oakland, distressed sales were 35 percent of the housing market in March, RadarLogic said; in Sacramento, that number soared to nearly 50 percent.

From the Sacramento Bee:

At the current sales pace, real estate experts say, it will take 13 years to develop and sell all the new homes planned in Yuba County and its neighbor, Sutter County. "That is horrifying. That's like seeing a mouse under the table," says Dean Wehrli, a Sacramento-based home-building industry consultant, addressing a home-builders meeting last week. "My take is that marketplace is going to be hurting for a while."

From the LA Times:

It wasn't long ago that Andy Krotik was selling houses to out-of-town investors who would sometimes buy two at a time. Now, Krotik spends his days warily entering abandoned houses, checking for angry holdouts or startled squatters. He wants to make sure the properties are empty and secure so he can sell them for the banks that have repossessed them. "We're experiencing a tsunami of bank-owned properties," said Krotik, who has been selling real estate in this Central Valley town since 1989.

Few places in California flew as high in the real estate boom and crashed as hard as Merced.

From the Associated Press:

Robert Lindsey was not surprised by new data last week that showed new home sales have fallen more than 40 percent from their peak almost three years ago. He can tell from his company's bank account. "We're literally losing money every month," said Lindsey, general manager of Signature Drywall Inc., in Sacramento, which installs drywall in new homes and apartments in the Sacramento and San Francisco areas. In 2005, the firm raked in some $30 million in sales. Last year, sales were less than half that, and this year Lindsey hopes he can make $8 million. "It's kind of like bleeding to death," he said.
...
In California alone, subcontractors have laid off, on average, up to 80 percent of their staff, according to the California Professional Association of Specialty Contractors in Sacramento, which mostly represents firms engaged in new home construction projects...Head hunters say workers have fled California for Utah, Texas and other states where there's a better chance to get work in homebuilding.

From the Sacramento Bee:

Democrat Vicki Cabrera, 47, of Sacramento, who also plans to vote, directly feels the effects of a lagging economy. She lost her job as an administrative assistant for a real estate firm due to the weak Sacramento housing market. "I've never in my life gone without a job. Never," said Cabrera, who had to let go three of her family's five prized Sacramento Kings season tickets and is contemplating selling her sports memorabilia collection.

From the Modesto Bee:

Katina Hearn has been a waitress for almost 20 years, the past two at Skewers Kabob House in Modesto. She's seeing the same trend now that servers experienced during the recession of the early 2000s: people are eating less-expensive dishes and leaving smaller tips. "It really does affect us," Hearn said about the economic downturn. Servers must claim 8 percent in tips for their taxes at the end of each night. But on some nights, that isn't balancing out because people may tip only 5 percent, Hearn said.

From the Sacramento Bee:

Private schools are also seeing some changes with the downturn in the economy. Several in the Sacramento region reported a slight drop in the number of applicants for next year and a small increase in the number of requests for financial aid. "We know that some of our parents who are in development or home construction or sales, we know they've experienced significant downturns in their income," said Stephen Repsher, headmaster of Sacramento Country Day School, where tuition is around $16,000 a year.

From the Lodi News:

Two weeks after Galt City Council members urged the public to help keep up abandoned homes, one of them has been fined $100 for doing just that. Barbara Payne received a citation from the city's Public Works department last week for watering the lawn of an abandoned home next door — a violation of the city's code.

Radar Logic: Sacramento Home Prices Drop Nearly 30% YoY

From the New York Times:

At the end of 2007, areas with the highest vacancy rates in housing intended for owner occupancy fell into two categories: Rust Belt areas like Detroit, Cleveland and Akron, Ohio, and former boom areas like Orlando and Tampa in Florida, and Las Vegas. Although home prices have fallen sharply in parts of California, only the Sacramento area shows high vacancy levels.

High vacancy rates put renewed pressure on prices, of course, and also serve as a warning that the home building industry may have a long wait before it can regain volume.

From the Modesto Bee:

"The new home sales rate is nothing short of dismal," lamented Dean Wehrle, vice president of Sullivan Group Real Estate Advisors. He said Stanislaus, Merced and San Joaquin county subdivisions are averaging one sale per month...Sales have been so slow throughout the three-county region that Hanley Wood said the inventory of approved lots is enough to last until 2012.
...
New home prices have dropped dramatically to lure buyers, but Wehrle said homes in the region still cost far too much for most residents...He said it was "outrageous" how the region's home prices more than doubled from 2000 through 2005, rather than appreciating at a more "natural" 6 percent a year.

Though home price have fallen since 2005, Wehrle's charts demonstrated how it will take until the end of 2011 or early 2012 for the valley's housing market to stabilize enough to bring it in line with builders' current median prices. He said that means builders must continue dropping prices or stop building.

From Bloomberg:

Home prices fell in 22 U.S. metropolitan areas in February, led by Sacramento and Las Vegas, as record foreclosures deepened the housing slump. The price per square foot in Sacramento, California's capital, dropped 29.8 percent to $161 from a year earlier, according to a report released today by New York-based Radar Logic Inc., a real estate data company.

From Radar Logic:

The increasing number of foreclosures occurring throughout the country has introduced a new supply of homes and a larger segment of a nontraditional type of seller. This increasing segment of foreclosures in the market highlights a type of unusually ‘motivated seller’ who is influenced by a desire for greater liquidity rather than obtaining a higher price. Radar Logic’s analysis creates a baseline estimate by tracking sales by financial institutions (e.g. banks, mortgage servicers), foreclosure service firms, and foreclosure auction sales in order to track the trends of motivated sellers. After taking ownership of the homes, the institutions face capital constraints and incur carrying costs. If they believe prices will not rebound soon, they have an incentive to unload the house quickly and minimize losses.

As this segment becomes a larger fraction of transactions, many markets show significant differences in both price levels and price trends between motivated sellers and the rest of the market. In all 25 MSAs motivated sales show median prices at lower price points than non-motivated sales. Some markets currently experiencing large percentages of motivated sellers include Sacramento (51.7% of all transactions), Las Vegas (44.1%), San Diego (37.0%) and Los Angeles (27.0%). In Sacramento, year-over-year price per square foot declines of 29.8% are influenced by more than half of the market being motivated sellers selling for 26.4% less than non-motivated sellers.

From Time:

The black bus rivals a greyhound in size but has an interior like a limo--and it gets a few curious looks as we wander into the dense neighborhoods of Elk Grove, Calif., a quiet suburb 15 minutes south of Sacramento. Five of us--a mortgage counselor, three investors and I--are looking at 10 recently foreclosed homes....

Like many communities across the U.S. that boomed during the housing bubble, Elk Grove is feeling the pain of the housing burst...Elk Grove alone has about 2,120 bank-owned houses for sale and 1,280 in pre-foreclosure, according to RealtyTrac, a real-estate-data website.

From the Stockton Record:

Clearly this foreclosure mess has yet to run its course. That should surprise no one who paid attention in the first half of this decade and saw, for example, the median home price in Stockton jump from about $100,000 in 2000 to about $400,000 in late 2005. At the same time, more and more of the sales pressure from speculators and Bay Area transplants that fueled the run-up in prices was being financed by interest-only and adjustable-rate mortgages. In other words, too many people were speculating in homes here or buying homes they could not afford.

The good news is that home sales, which have increased each month this year, continue to climb. Granted, most of the sales are of foreclosure properties, but until those homes are sold, there is no real hope of the market stabilizing. It will take time. How much is unclear since we cannot yet tell how many more homes will fall into foreclosure.

From the Auburn Buzz:

If a deal is not reached, the bank will hold a foreclosure sale on more than a third (137 unsold lots) of the 409 lots in the Winchester development, it’s massive 35,000-square-foot country club, and its pristine 18-hole private-member golf course. In preparation for a possible sale, Winchester Country Club employees confirmed bottles of wine and other items in its gift shop have been discounted in an effort to move the merchandise before the scheduled foreclosure sale.
...
While the soft housing market in Placer County and throughout the nation is at the root of Myers’ financial woes at Winchester, there is speculation he failed to lower lot prices and club membership fees, which run up to $80,000 a year for non-residents, as the market softened.

From the Sacramento Business Journal:

Home furnishings retailer Linens 'N Things filed for Chapter 11 bankruptcy protection Friday and said it will close 120 underperforming stores as part of its restructuring, including its store in North Natomas and 26 other California locations.
...
"The significant deterioration in the mortgage, housing and credit markets and the resulting impact on the retail marketplace, particularly the home sector, has overwhelmed the operating and merchandising improvements that we have made over the past two years," said Robert J. DiNicola, Linens Holding executive chairman....

Radar Logic: Sacramento Home Prices Fall 28%

From Bloomberg:

Home prices declined in 21 U.S. cities in January, led by Sacramento and Las Vegas, as banks sold foreclosed homes at bargain prices. The price per square foot in Sacramento, the capital of California, dropped 28 percent to $166 from a year earlier, according to a report [pdf] released today by New York-based Radar Logic Inc., a real estate data company.

From the Central Valley Business Times:

One of the Central Valley’s largest community banks, Merced-based Capital Corp of the West, which operates as County Bank, saw its bottom line plunge along with housing values and foreclosed borrowers in 2007. The company says it had a net loss of $3.6 million for the year, compared to a profit of $22.6 million in 2006. It’s the first annual loss in the company’s 30-year history.
...
"The largest factor contributing to the increased provision was the rapid decline in real estate values in California's Central Valley in fourth quarter 2007...." the company says..."The scope and rate of the decline of the real estate market were completely unexpected," says Donald Briggs, Jr., a director of the bank. "No economic forecast predicted its rapid collapse during the fourth quarter of 2007."

From the LA Times:

Wachovia Corp. signaled that it may no longer offer some Californians the controversial "option ARM" mortgages that give borrowers the choice of paying so little that their balances actually rise. In a memo Monday, Wachovia's top California managers told employees that the loans would no longer be offered in 17 California counties where property values have declined the most, including Riverside, San Bernardino and San Diego, plus the Central Valley.
...
If Wachovia cuts back, it could further disrupt distressed housing markets where the recent tightening of credit has compounded the problems caused by easy-money lending earlier this decade. "This product was the last remaining hope for the sub-prime borrower," said broker John Diamond of Bancorp Funding in Chino.

From the Stockton Record:

Five Chinese real estate officials on a three-week, coast-to-coast tour of the United States spent nearly a week visiting Stockton, which they know is the top foreclosure area in this country...The Chinese officials said they were mostly curious about the subprime meltdown in the United States...More than anything else, he said, "they sounded like they wanted to buy some of these foreclosure homes. They thought they were good deals."

CNBC on Stockton's new home market here and here. (hat tip Jeff)

Sacramento Real Estate Market - February 2008 Statistics

Change in median asking price (year-over-year): -27.9%



Change in median asking price (since August 2005): -35.2%
Source: Housing Tracker

AgentBubble has posted some numbers for February over at the Sacramento Real Estate Statistics blog. Year-over-year change:

• Sales: -14.7%
• Median $: -26.3%
• Median $/SF: -29.5%
• Average $/SF: -28.9%
• Average $: -29.2%

From Reuters:

"Price declines are spreading and accelerating," Radar Logic, a data and analytics business based in New York, said in a news release. "December 2007 brought to a close a year in which the housing bubble burst."
...
The nine markets with double-digit losses compares with six such markets in November...Sacramento had the biggest drop, at 23.7 percent, followed by 21 percent for Las Vegas.

More from Radar Logic's press release [pdf]:

Five cities show recent increases in volume that could foreshadow a closing of the bid-ask spread and possibly the beginning of the recovery. These five cities are Boston, Cleveland, Detroit, Sacramento, and San Diego.

Sacramento and San Diego…are prime examples of speculative markets that rode the housing bubble to great heights. They are also two of the markets that have fallen the furthest, ranking 22 and 25 on this month’s chart of year-over-year appreciation, and having been in the bottom half since April 2005. The increase in volume that these five cities are experiencing could indicate that a correction may have occurred and the bottom may be in sight.

More from Business Week's Hot Property blog:

If you’re selling a home in any of these markets, don’t get too excited. [Radar Logic's Jonathan] Miller says that if he’s right, home prices in these cities would only start stabilizing in about 15 months.

From the Modesto Bee:

Two Stanislaus County irrigation districts are caught in the same national credit crisis that's driving up interest rates on Modesto bonds. Rates doubled in the past month on some Modesto Irrigation District and Turlock Irrigation District bonds, costing the agencies hundreds of thousands of dollars...The districts and the city issued the bonds through auction-rate securities that until the past month offered government agencies lower interest rates than traditional, fixed-rate bonds. But as the market for auction-rate bonds has softened, the interest rates have skyrocketed.
...
"This is not a reflection on the MID's financial health or the MID's creditworthiness," [MID spokeswoman Kate Hora]...said. "It's just a reflection of the crazy conditions in the housing market and the mortgage market.

"The Wrong House at the Wrong Time"

From the Sacramento Bee:

Sukhwinder "Suki" Kaur bought the wrong house at the wrong time. Within months of her July closing on the two-story home in Elk Grove, work in the new subdivision stopped and the builder's parent company, Dunmore Homes, filed for bankruptcy protection. Kaur, who is paying on a $430,000 mortgage, has become the target of two lawsuits and 28 liens from unpaid subcontractors and suppliers. More than a dozen other individuals in the Monterey Village development are in similar predicaments.
...
At one end of Kaur's street are the visible signs of the owners' distress. Rows of utility lines are capped and waiting for homes across a sea of mossy dirt. Nearby, temporary poles mark one subdivision entrance where a gate was never installed. In the distance, a cluster of unfinished homes are sore reminders of the unfolding tragedy. Many of the 50 or so homes completed are vacant.
...
Rebecca Westmore, senior staff counsel for the state Department of Insurance, said contractor liens could become more common as the home market slides. If builders are closing up their shop and not paying, "that's the natural fallout of this market," she said.

From the Wall Street Journal:

The six cities showing the greatest deterioration in home prices are Sacramento, Las Vegas, San Diego, Tampa, Los Angeles and Miami, according to Radar Logic, a New York-based research and analytics firm. All these locales showed double-digit declines in November from November 2006. The report, which looks at prices in 25 metropolitan statistical areas across the U.S., showed that the price per square foot for homes fell 18.6% in Sacramento to $185.98....

November was the fifth consecutive month that Sacramento has claimed the bottom spot on Radar Logic's list. To read the report, click here [pdf].

The Radar Logic stats are a bit stale. Do more recent stats show any improvement in Sacramento home prices? No, says the Altos Research blog.

From CBS 13 (video):

[T]hree zip codes in the Natomas area are being hit the hardest. Homes there typically sell for well over $250,000. But in the past year, some have seen a 50% depreciation.

From the Stockton Record:

The city of Tracy is headed toward a $6 million deficit by the end of this budget year, as the downturn in the housing market finally takes its toll on the city's property tax revenues, Tracy Finance Director Zane Johnston said.

From the New York Sun:

Mr. Clinton stopped in Sacramento at lunchtime, where he was greeted by a crowd of about 1000, according to the Associated Pres. In the afternoon, he was in Stockton, Calif., where several thousand people attended a hastily arranged rally at the University of the Pacific. He honed in on the subprime mortgage crisis, which is severe in cities like Stockton. Mr. Clinton said his wife's plan to keep people in their homes is "much more aggressive than any of the other candidates" and would stave off what he warned would be a "calamitous collapse" of the housing market.

From Reuters:

In Stockton, where single-family neighborhoods are tied together by expressways lined with small and mid-sized shopping malls, many mortgages are in defaults or foreclosure. "I go to the gym and hear a lot of horror stories," Gonzalez said. "A lot of people bought houses a year, year-and-a-half ago and paid top dollar and now can't make the payments."
...
But many who bought during Stockton's housing boom simply ignored loan terms, said Bill Herrin, an economist with the University of the Pacific: "Everybody wanted to do it now, today ... Collectively, we went a little nuts out here."

From the Stockton Record:

The CBS news magazine "60 Minutes" put Stockton on the national map last Sunday in the program's lead story about the foreclosure crisis, "House of Cards." Ground zero, reporter Steve Croft called us, and ground zero we are.
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Croft's report, mercifully, did not paint the city as unique in this meltdown. Neither did he suggest that what's going on is the result of a concentration of nincompoops in residence (although there was one family interviewed ready to walk away from a mortgage they could afford simply because they were disgusted their home had dropped in value).

One of the many things not guaranteed in life is that your home, or anything else, will appreciate in value. Had appreciation continued unabated - something that carries its own dangers - it would have covered up all the ills being visited on us by the subprime mortgage meltdown. Stockton would not be ground zero in this one and Steve Croft would have busied himself reporting on something else, like reporting that no one, outside a few millionaires, could ever buy a house here because prices had gotten so astronomical. You know, sort of like they were two years ago.
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The fact is this isn't over, not by a long shot. A lot more loans are going to reset to much higher rates, a lot more families are going to lose their homes, a lot more neighborhoods are going to be hurt and a lot more equity is going to be lost by homeowners who are making their payments.