News, insight and some thoughts about the Sacramento-area real estate market
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May 30, 2008
Homebuilder John Reynen owes banks $972,509,864.00
Since we reported on April 24 that Sacramento-area homebuilder John D. Reynen filed for
personal bankruptcy protection while owing creditors $750 million, banks have added another $222 million to the tab.
That's the tally in an updated court filing. The co-founder of Mather-based Reynen & Bardis Communities has $73.9 million in assets, says the Chapter 11 filing in U.S. Bankruptcy Court in Sacramento.
The filing details show that Reynen and wife own several houses - including a Sacramento residence valued at $3.6 million, a vacation home in Mendocino valued at $3.2 million, an investment property in Incline Village valued at $5.2 million and another vacation house in Cabo San Lucas, Baja, Mexico, valued at $2.7 million.
It can't be fun detailing all you own for all the world to see in a BK filing, right down to the $2,000 Rolex watch and three fur coats valued at $3,000.
As reported earlier, Reynen and development partner Christo Bardis borrowed to buy thousands of acres of land during the housing boom - land which has collapsed in value with the housing downturn. The two personally guaranteed their loans, which gives lenders rights to seize their personal property.
Bardis has not filed for personal bankruptcy protection. The company has not filed, either, for protection.
Photo from Reynen & Bardis Communities
Posted by Jim Wasserman at 1:51 PM | Comments |
Where Ronald Reagan lived when he was governor of California
Sacramento is a political town and probably none of its residential real estate is more famous than that once occupied by the late President Ronald Reagan when he was governor of California from 1967-1975 and Gov. Jerry Brown after him from 1975-1983.It has long been part of the political lore in this town how Nancy Reagan refused to stay in the state's long-time governor's mansion a few blocks from the Capitol and now a tourist attraction known as the governor's mansion state historic park.
Here is how political journalist Lou Cannon described the story about the house in his 2003 book, "Governor Reagan, his rise to power:"
"Trading Pacific Palisades was bad enough. Living in a relic that was more suitable as a museum (which it is today) was unthinkable. Nancy Reagan rebelled. She realized that the mansion, which had ropes in the bedrooms instead of fire escapes, was a 'firetrap.' A rusted screen that wouldn't budge covered the window of her son's second-story bedroom. In case of fire, her son was supposed to smash the screen by running at it with a bureau drawer and then climb onto the roof. Nancy Reagan had no difficulty in persuading her husband to move out of the mansion.
"The Reagans, at their own expense, leased a two-story twelve-bedroom Tudor house in an exclusive section of eastern Sacramento.
Here is a 15-second video shot this morning of that house at 1341 45th Street, in a part of the city now called "The Fabulous Forties" for its big well-kept homes.
The second big celebrity residence - 1400 N Street - belonged to Gov. Jerry Brown. Political lore holds that he slept on a mattress on the floor of his apartment near the Capitol. Here is one version from author Dan Flynn's 2000 book, "Inside Guide to Sacramento:'
"During his 1974 campaign for governor, Jerry Brown had vowed not to move into the suburban Governor's Mansion built by outgoing Governor Ronald Reagan, declaring it to be a 'Taj Mahal.' Upon his election, Brown moved into Apartment #10 on the top floor of this Tudor style apartment house, remaining a resident during his eight years as governor. The unconventional Brown kept odd hours and would sometimes stroll over to the Capitol to get some work done in the middle of the night. Ed Meese, attorney general while Ronald Reagan was governor, also lived in this building when he served in Governor Reagan's administration."
Here's the residence today. Check out the top floor.
Where does Gov. Arnold Schwarzenegger live? The state still has no governor's mansion. Word is he flies home to Los Angeles at night.
Photo courtesy of City of Sacramento
Posted by Jim Wasserman at 11:38 AM | Comments |
Sacramento: Ranked a Top 10 Best U.S. City
Having written so much tough news the last couple years about the Sacramento region - beset by mortgage defaults, falling sales, declining prices - it's a pleasure to note that a new ranking of cities by Kiplinger.com lists Sacramento in the top 10 for best U.S. cities.
California's capital city is ranked number 8.
Say the editors: "We sought places with strong economies and abundant jobs, plus reasonable living costs and plenty of fun things to do."
Here are Kiplinger's 10 Best Cities of 2008:
- Houston, TX
- Raleigh, NC
- Omaha, NE
- Boise, ID
- Colorado Springs, CO
- Austin, TX
- Fayetteville, AR
- Sacramento, CA
- Des Moines, IA
- Provo, UT
Posted by Jim Wasserman at 9:23 AM | Comments |
May 29, 2008
Riskier and riskier in California
For those who really get into the details here is the new 2nd Quarter look at mortgage risk in California from First American CoreLogic. This takes some studying, but you'll be well rewarded. A couple of bottom lines:- California's level of risk rose twice as fast as the national risk.
- As of Q1 2008,
Posted by Jim Wasserman at 5:09 PM | Comments |
May 28, 2008
So you might buy a bank repo
Here are some new tips from Bob Bronswick, president and chief operating officer of Coldwell Banker Residential Brokerage in Sacramento/Tahoe. Bronswick oversees about 1,000
· Not all REOs are a great deal. Certainly, there are good buys out there, and most REOs will end up selling for less than the market value. But prices and property conditions can be all over the map, no pun intended. It's important to do your homework on market values in the neighborhood, what repairs need to be done to the property, the impact of competing bids and future price appreciation potential.
· You're not the only one interested. More and more people are looking for REOs, and that has pushed up prices and created competitive bidding situations in some cases. In one recent example, there were 21 multiple offers on a property. An experienced Realtor may help you find bargains before they hit the market or before 10, 15, or 20 offers come in. The key is to move quickly with an offer, and make sure you have a well-written proposal with the right documentation, the way the banks like it.
·
Be realistic about
your offer price. Most REOs are already discounted, so trying to low-ball
the seller is not necessarily going to work. Banks are not naïve when it comes
to property values and they are not in the business of giving homes away. With
more competition, it is likely a property will sell for asking price or even
slightly higher. Recently, a buyer offered $230,000 for a home listed at
$260,000. Within days, there were a host of other offers and the home sold for
$280,000 - still below the $300,000 market value.
· Be careful buying a home sold "as is." In these cases, buyers are flying blind without professional help. The bank does not provide a disclosure statement, the document that most sellers must fill out listing problems with the property. It is a good bet that the person who just lost their home has been in financial trouble for quite some time and did not have funds to take care of the property. That means there might be hidden issues with poor maintenance, neglected landscaping, interior damage, faulty appliances and other problems. Professional inspections and the guidance of real estate experts are especially critical in these situations.
· Home conditions can vary significantly. There is such a wide array of REOs and the conditions of these properties can vary just as much. We have seen properties trashed so completely that a condominium that sold for $180,000 just two years ago now is being listed for $40,000. But in other cases, the properties are in reasonably good shape and only need minor touch-ups. Some banks will fund repairs on REOs, but many do not. They generally want to spend as little as possible to get it sold so it may be up to you to make any repairs.
· Look for the right home first, not just REOs. Because they have been in the news so much lately, REOs seem to be the buzzword around real estate these days. And while buyers could find good value in a bank owned property, there are many other potential opportunities beyond REOs. There are "short sales," where lenders will agree to accept less than the amount due on their loan. There are also probate sales and even very attractive traditional sales. It's important to not limit yourself to only REOs, but to consider the right home and right neighborhood for you. There are good values all around right now.
Bronswick photo courtesy of www.nrtinc.com
Posted by Jim Wasserman at 9:15 AM | Comments |
Kunstler: Suburbs, production builders aren't coming back
I had an quick and interesting conversation yesterday with James Howard Kunstler, who won some fame and glory in the 1990s for a couple of very readable and entertaining books that were harshly critical of suburbia. Remember them? "The Geography of Nowhere" and "Home From Nowhere."
In this decade, Kunstler has become well known for his 2005 book, "The Long Emergency," which offers a pretty dark view of what we're facing in a world where oil supplies are tight.
Sunday he had an op-ed piece in The Washington Post on the theme that we're driving our cars toward disaster and that our residential living patterns have to change.
When I left him a voice mail from Sacramento, Kunstler was out walking his dog during the lunch hour in Saratoga Springs, N.Y., where he lives. I reached him later in the afternoon and asked about the state of suburbs in a time when gasoline is well above $4 and apparently still rising. He said he didn't think there would be any upturn in their real estate cycle.
"They're going down and they aren't coming back," he said. "The production home builders are going down and they aren't coming back, either."
His point has long been that our American suburbs, filled with commuters and requiring a car for almost every trip, are creations of cheap oil and only function on that premise.
"The bottom line is the suburban project is over for America. We're done," he said on the phone.
He's kind of extreme, as usual. He could be right. But I still like more of a middle ground. His idea about that, though, is there isn't one; it's all a fantasy to think we can keep living the way we do by banking on some kind of alternative energy. He's pretty cranky about that kind of thinking.
We'll see. I've read his books, some two or three times over the years, about the way our cities are built and the way we live in them. It was fun talking with him for a few minutes.
Photo: Kunstlercast.com
Posted by Jim Wasserman at 8:00 AM | Comments |
May 27, 2008
Worst year in making for California builders since 1954
Last night, being Memorial Day, I watched part of "the Longest Day," the movie about the WWII D-Day landings that General Dwight D. Eisenhower directed against the Germans at Normandy. Now, today, that that brings to mind U.S. President Eisenhower who took office in 1953. That was one year before California began keeping records of how many houses and apartments its builders put up every year.That's a very long time ago.
But in this year of our lives we'll likely see the fewest government permits to build new homes and apartments in California ever recorded during those 54 years.
- Builders announced this themselves today.
- There is also a gathering of statistics for individual metro areas.
Statewide, the Yuba City-Marysville metro area saw California's biggest year-over-year drop in single-family home permits - 87 percent fewer in the first four months of 2008 than the same time last year.
Posted by Jim Wasserman at 1:38 PM | Comments |
May 24, 2008
Crash on the northern frontier
Sacramento Bee/Carl CostasTwo words: shock and awe.
Yesterday, I drove north on Highways 5, 99 and 70 into that Yuba County growth frontier that offered such a great relief valve earlier this decade for people with jobs in Sacramento who couldn't afford to buy houses in Sacramento.
It had been a few years since I've seen the place - especially those giant master-planned communities of Edgewater and Plumas Lake that rose off the flat lands almost overnight. I am telling you: it is hard to overstate what a fall they have taken.
I knew sales have been slowing for a couple of years up there as it became cheaper to live in Lincoln or elsewhere near Highway 65 and to skip the commute. Now, gasoline is so expensive - $4.19 yesterday at the Shell station on the exit ramp to Olivehurst's Edgewater - that people have to think hard and long about buying up there and driving 40 or 50 miles south every day.
What did I see? Obviously there are the thousands of houses built during the boom to start with. It's amazing how many people have moved up there. Thousands. You have to see it to believe it. Yuba County dreamed a big dream and everybody came.
But it was the abrupt end of it all that really got my attention. I don't think I saw more than 20 houses being built all day - and most of those were at a D.R. Horton project in Plumas Lake that I am sure they are trying to be done with and move on.
Mostly, it was acres and acres of dead subdivisions that just jumped out at a driver touring this part of the state. In so many places the streets and sidewalks are in, the utility wires are sticking out of the ground, the street signs are up - and it's nothing but weeds almost as far as you can see.
It's also the houses still awaiting buyers: In Edgewater: A street of 20 houses built by Roseville's JMC Homes with only one house occupied.
In Plumas Lake: a Ryland Homes subdivision called Thoroughbred Acres. Five lovely models and nothing else. Behind it a pile of Ryland flags and poles. I walked up to read the writing on the flags and a jackrabbit ran off. Down Arboga Road, another subdivision by Lakemont Homes. Even the models had dead lawns.
I don't mean to pick on Plumas Lake. But some of it looked like a poster child for the consequences of risky lending. In many neighborhoods there is an overpowering feeling of abandonment and at the very least, neglect. I cannot remember anywhere - not in Lincoln nor Merced - seeing so many unkempt and unmowed lawns.
Lest I be accused of seeing the glass as half empty, I will say that the further south I went in Plumas Lake the better and more stable it seemed to get. I don't know if this is true, but I suspect these are the 2,000, 2001 and 2002 neighborhoods where people bought for $180,000 or less with 30-year loans. They looked a lot more stable than neighborhood where prices pushed past $300,000 at the peak of the boom and required adjustable-rate loans to buy.
One other thing I was struck by, driving and driving through these places, was that I had seen few parks. Not until I got farther south in Plumas Lake did I start seeing them routinely. Maybe I missed some farther north or maybe they haven't been finished yet.
The best part of the day was at the very south edge of Plumas Lake, a Cresleigh Home development called Plumas Ranch. It's relatively newer and seems to be attracting more retirees. I talked with a couple who moved there last year from Vacaville and since they don't have to commute anywhere - and neither do most of their neighbors - they are thrilled to be there and out of the rat race along Interstate 80.
I realize this might seem like a pretty negative review. But it's abundantly clear that some builders that went in there with big visions have - at least for now - abandoned them.
I have a lot more reporting to do on a story about this part of the region that is tentatively scheduled to run June 1. But first impressions tell me - and mind you, I haven't toured Southern California's Inland Empire since 2004 or parts of San Joaquin County that are always making news - that Yuba County's newest communities may well be some of the hardest hit in California.
I'd be very interested to hear some other opinions on this.
Posted by Jim Wasserman at 9:18 AM | Comments |
May 22, 2008
New arrests for alleged foreclosure rescue scams
California Attorney General Jerry Brown announces arrests in an odd scam in which a San Diego-based team allegedly convinced hundreds of people to place their property in land grants - a tactic not legal since the Mexican-American War ended in 1846.
Thought you'd heard it all? Now read this.
Posted by Jim Wasserman at 3:47 PM | Comments |
May 21, 2008
Nevada City architects take national honors for Boulder project
Regional architects continue to make a name for themselves nationally. Nevada City architects McCamant & Durrett won a Silver Award for Best of of Senior Living from the National Association of Home Builders on Tuesday.
The firm won the award for its design of Silver Sage Village, a senior co-housing project in the Colorado city.
This Nevada County firm has been at this kind of work for awhile.
The news release notes:
"McCamant & Durrett Architects have actively promoted cohousing concepts since the 1980's, introducing cohousing to the United States with their book Cohousing: A Contemporary Approach to Housing Ourselves (Ten Speed Press, 1988, 1994). Durrett applied cohousing design to senior communities with his 2005 book Senior Cohousing, A Community Approach to Independent Living - the Handbook."
Posted by Jim Wasserman at 10:25 AM | Comments |
May 20, 2008
Pot house chic in suburban Sacramento
Sacramento real estate agent Gary Lee said he had no idea what he was getting into when he took the two Elk Grove listings from a bank that had repossessed them.
They were pot houses.
If anything defines the excesses of Sacramento's housing boom, it's probably those numerous pot houses, where investors got 100 percent financing on new homes and converted them to growing operations. The idea was that who in the suburbs, where people don't readily know their neighbors or ask too many questions, would know the house was occupied by marijuana plants?
Most of those growers have been busted and their homes repossessed.
"As soon as I got access to the properties I was as shocked walking through the front door as anyone else would have been," Lee said.
He had the houses cleaned and sent all the before and after photos to the bank so it knew what it owned. Lee's two homes in Elk Grove "should be hitting the market in about a month," he said.
In the meantime, here are some before pictures he shot after arriving at one of his new listings.
It looks somewhat better after he cleaned.
I think somebody's going to get a bargain here.
Posted by Jim Wasserman at 2:15 PM | Comments |
Whatever happened to the governor's subprime agreement?
It looks like more mixed results for Gov. Arnold Schwarzenegger's Nov. 20, 2007
agreement with subprime lenders to work out deals with struggling borrowers.
You may remember it. The governor's agreement was designed to avert a foreclosure disaster that would wreck the state's economy.
The state Department of Corporations, which monitors the agreement, has released
results of its first-quarter survey of 10 subprime lenders who service California loans.
I've had some time now to look this over with a calculator. Here are are some initial numbers that lenders are reporting to the state for the first quarter (Jan., Feb. and March):
Closed workouts: 60,508
Foreclosures: 56,478
Types of deals offered struggling borrowers:
Loan modifications: 24,039
Temporary relief from payments: 11,583
Loans paid off: 10,831
Accounts paid current: 8,404
Short sales: 3,655
Deed in lieu of foreclosure: 212
How most of the 24,039 loan modifications break down:
Reduce interest rate below initial/start rate: 10,499
Freeze interest rate at start rate for five years or more: 3,894
Freeze interest rate at initial/start rate for less than five years: 964
Extend loan for longer period: 724
Reduce principal balance: 559
Reduce interest rate below reset rate, but above start rate: 165
Other: 6,964 (I don't know yet what other means exactly)
It sounds like a lot of workouts, and is certainly better than nothing. But it's still unclear how much of a difference the governor's agreement is really making.
Partly, that's because conditions have changed in the loan world since he struck the agreement in November. The original idea was to do blanket rate freezes to free up time for lenders to deal with more difficult cases. But interest rates have fallen and so rate resets have apparently prodded fewer subprime borrowers toward foreclosure than feared.
Yet at the same time it seems more borrowers are just giving up and walking away and more borrowers can't make their payments no matter what kind of a deal a lender gives them. So bottom line, lenders are back to time-consuming one-on-one workouts, which is frustrating a lot of non-profit loan counselors who can't seem to get their clients help in time for them to save their houses.
DOC Commissioner Preston DuFauchard in this memo
seems to be saying that results are mixed because of all these factors and that it's having limited impact.
In fact, his exact words in the memo are these:
"Despite a coordinated effort by state agencies and cooperation with local jurisdictions and the non-profit sector, the magnitude of the housing downturn is such that even these efforts will have limited impact in dealing with the mortgage crisis."
Schwarzenegger made a very big deal about this when he announced it, and a lot of tongues wagged around the capital that it was all for show. That was six and a half months ago.
All these lenders are reporting to the state what they're doing to honor his agreement with them. But there were still more foreclosures than ever the first quarter of 2008 - which seems more like the definitive statistic.
We're expecting to be able to talk with the commissioner tomorrow about this. But at first glance it seems somewhat like our first
story on this back in March. The statistics are complicated, things are playing out in unexpected ways in the economy and it's still kind of hard to nail down the impact.
Image courtesy of National Governor's Association
Posted by Jim Wasserman at 11:23 AM | Comments |
How it looks in LA and the Bay Area
Here's DataQuick's April sales reports from elsewhere in California, a look at
Los Angeles and the Bay Area.
Sales in Southern California were up to their highest levels in eight months, but only Riverside County, which is very similar to Sacramento in its former housing boom and now bust, posted more sales in April than the same time a year ago.
In the Bay Area, sales reached their highest levels in seven months. Contra Costa County showed a slight rise in sales from the same time a year ago. And San Francisco remained strong as always.
Posted by Jim Wasserman at 10:29 AM | Comments |
The details behind April's sales bounce
I can't help thinking about all the things that I wasn't able to get into this morning's story about the big April sales bounce. Here's back to the notebook for a few more details about what's clearly a big development in the region's housing market.
Is this sustainable?
I asked veteran Sacramento real estate Carlos Kozlowski of Coldwell banker and his opinion was: yes .
Kozlowski believes there is enough pent-up demand to absorb all the thousands of bank repos still to come on the market this year as rising numbers of people continue to lose their homes to foreclosure.
"Prices are not going up. Prices will stay somewhere about where they are until this inventory is absorbed," he said. Then will come the new wave of buyers: the foreclosure refugees allowed back in the market with new federally-backed mortgages.
"People who lost homes a year or two ago will be able to buy in 18 months," he said. "Everybody who bought for a half million two years ago will be able to buy the same house for $250,000 to $300,000."
That's interesting
Homebuilders not sharing in the sales burst
While year-over-year sales may have risen for the first time in years in Sacramento, Sutter and Yuba counties, homebuilders saw year-over-year sales continue to fall everywhere but El Dorado County. For the entire eight-county capital region - Amador, El Dorado, Nevada, Placer, Sacramento , Sutter, Yolo and Yuba counties - builders tallied 454 sales in April. They reported 687 sales in April 2007.
Five counties see year-over-year gains for existing homes
Placer and Yolo counties would have shown overall year-over-year gains had not home builders taken a dive in both counties.>
- For existing resales sales only, Placer County was up almost 8 percent over April 2007.
- Yolo was up 15 percent.
- Sacramento County, epicenter of the sales boom because of all its bank repos, saw sales rise 40.8 percent over the same time last year.
- Yuba County saw them jump almost 61 percent as its median price remained at about $199,000.
- Sutter County saw its existing resales jump 30 percent over the same time last year.
All in all, this part of the market is really moving inventory. Incidentally, all these numbers are from DataQuick Information Systems and are part of yesterday's blog posting.
Banks have changed tactics
I talked with Elk Grove real estate agent Chris Saizan of Keller Williams about banks getting even more aggressive to dump their rising inventory.
Saizan said, "Earlier they were pricing aggressively, but not to the extent that we're seeing today. A lot of these foreclosed properties six and seven months ago, it was common for them to set for 30, 40 and 60 days. Because of all the foreclosures now the banks are saying, 'let's price incredibly low and we get multiple offers and they close within five days.'"
Saizan said he often tells his clients to offer $20,000, $30,000 and even $40,000 above the listing price to get a shot at it. He said one client wanted to buy a house in the 95757 ZIP Code when he saw it listed for $199,0000.
"My (investor) client wrote an offer for $226,000 and we still got beat out by another buyer," he said.
Posted by Jim Wasserman at 9:13 AM | Comments |
May 19, 2008
How April's sales look in the neighborhoods
For all of you who like to drill deeper, we just got DataQuick's ZIP Code chart of Sacramento-area sales activity in April.
Basically what you will see here is that all the neighborhoods and ZIP Codes that have been the poster children for foreclosures the past year are carving new identities as centers of the new sales boom.
That's not surprising as all have seen steep falls in prices. Check out their median prices per square foot compared to a year ago.
Some highlights: year-over-year sales are up 211 percent in parts of North Highlands, up 133 percent in West Sacramento, up 143.9 percent and 157 percent in parts of South Sacramento and up 125 percent in the newer areas of Elk Grove.
Posted by Jim Wasserman at 4:09 PM | Comments |
Region's home sales reach highest mark since June 2007
Months and months of free-falling prices and increasing numbers of discounted bank-owned homes are clearly bringing buyers back into the real estate market.
DataQuick's monthly sales numbers are in this morning for April and they show 3,163 closed escrows during the month - the most since 3,217 last June.
Sacramento County is the center of the action. DataQuick is reporting a 26.3 percent increase in sales over the same month last year.
It is the first time in 37 months (since March 2005) to see a rise in year-over-year sales instead of a decline.
We'll have more details online this morning. Meanwhile here is the monthly stats chart from DataQuick, a real estate property research firm in La Jolla.
Posted by Jim Wasserman at 9:23 AM | Comments |
May 16, 2008
Here's list of 85,000 Sac County homeowners getting a tax cut
It's been posted:
Here is where you find out if you're getting a property tax cut this fall based on your home losing value the past year.
The Sacramento County Assessor's office says 85,000 residential properties - most sold in 2004 and afterward - will be getting reductions.
The press release with details is here.
Posted by Jim Wasserman at 4:50 PM | Comments |
Here come the property tax breaks
I have been talking with county assessors across the region for the past 24 hours for a story running Saturday about property tax breaks for homeowners who bought after mid-2004 and saw their values tank.
We don't have all the numbers yet but it looks like thousands and thousands of your neighbors are going to be getting what's almost an equivalent of a second tax stimulus check this fall. Many will see their tax bill cut by 20, 30 and 40 percent, assessors say. That means more money in their pockets.
Assessors are required to lower property taxes when home values fall below what a buyer paid for the place. That requirement was added to the state Constitution in 1978, shortly after voters approved Prop. 13, which sharply limited property taxes.
What it means in layman's terms: if you bought a house in Placer County in 2005 for $500,00 - and now it's worth $400,000 - you will pay $1,000 less in property taxes during the fiscal year that starts July 1.
Governments, of course, are going to feel the bite of this, too. Most are going to get several million dollars less - $30 million less in revenue in Placer County in particular.
Here is a CNBC clip from earlier this week on the similar reassessments statewide, particularly in hard-hit Riverside County. There's a lot of strange back -and-forth toward the end of it between East Coast and West Coast anchors. But the first part gives you a good sense of what this is about in a state where home values are mostly falling - and falling pretty fast around here.
Image: countysupervisors.gov.
Posted by Jim Wasserman at 12:31 PM | Comments |
May 15, 2008
Congresswoman Matsui introduces "time-out" foreclosure bill
Democratic Congresswoman Doris Matsui of foreclosure-plagued Sacramento has introduced a bill to allow qualified homeowners to get a nine-month "time out" on foreclosure. The bill also gives them an ability to keep making payments at the introductory "teaser" interest rate during that time out.
The bill also authorizes $200 million more for housing counseling nationally, with priority on areas most affected. The news release announcing the bill is here.
Posted by Jim Wasserman at 12:20 PM | Comments |
California home builders predict fewest sales in half century
In this morning's California Building Industry Association report on March sales, CBIA President and Chief Executive Officer Robert Rivinius said housing starts are at their lowest level since World War II.
That line just leapt off the page given that the story line of postwar California is growth, growth and growth. So I called the CBIA offices in downtown Sacramento for a little more explanation.
CBIA communications specialist Michael Castillo said the California Construction Industry Research Board has tracked housing starts since 1954 - when 207,000 residential units were started.
In the 54 years of boom and bust since then the lowest year for housing starts was 1993, when builders started only 84,000 units, he said.
If anyone remembers 1993, it was a year when recession and the Cold War's end clobbered California with base closings and job losses. Crime was rampant and the mood in this state was pretty glum. Come to think of it, that was even before Netscape became a Web browser, back when AOL was still called AO-Hell for its busy signals. Whoops, we're off on a tangent here...
Anyway, that 1993 record low of 84,000 units is likely to be broken amid the great housing bust that seems to be peaking in 2008. Castillo said the Construction Industry Research Board predicts builders will start only 80,000 homes, condos and townhouses this year.
Now, there are two ways of looking at this. One, as a great disaster with slumping construction payrolls etc. Yet, one of the biggest problems right now in California is too much inventory for sale and more coming on the market daily as bank repos pile up. Anything that reduces inventory right now would appear a plus - and that might include record low production of new homes.
If you read the CBIA news release you'll see that they're seeing a silver lining: three straight months in which the decline of year-over-year sales has has narrowed instead of grown. The CBIA thinks that may be a sign that this year is the worst, when the market finds a bottom.
Posted by Jim Wasserman at 10:08 AM | Comments |
May 14, 2008
55.8 percent of Sac County home sales below $250,000
The reports keep arriving today. The Sacramento Association of Realtors released its April closed escrow numbers, showing a 35.6 percent jump over March. More impressive, escrow closings are up 68.4 percent over the same time last year.
What jumped out to me was that 35.3 percent of sales were for homes priced below $200,000 and 55.8 percent of sales were for prices below $250,000.
This is certainly a market being ruled by bank-owned homes.
Here is the Sacramento Association of Realtors press release and here are the statistics.
Posted by Jim Wasserman at 4:55 PM | Comments |
Elk Grove: homes losing $160 a day
Fair Oaks real estate appraiser Len Fishman weighs in with this market report for Elk Grove showing average price declines of $160 per day the past year in hard-hit ZIP Codes 95757 and 95758.
As a mid-2002 buyer in 95757 I sense that this is about right. I know people question the accuracy of Zillow.com, but I, for one, still only have courage to look every few weeks.
Fishman says in an e-mail that all markets are different:
"A couple of weeks ago, I did a market report for Arden Park which showed no decline in value, yet, Oak Park and parts of South Sac have suffered terribly."
Image from insidefurniture.com
Posted by Jim Wasserman at 4:26 PM | Comments |
Trees bring national recognition to Folsom's "Parkway"
A big salute to El Dorado Hills-based Parker Development Co., which won national recognition yesterday for something near and dear to the Sacramento region: best use of trees. The award was for Parker's 612-acre residential development in Folsom, the
Parkway.
The Building With Trees award announced and explained here by the National Association of Home Builders was presented at its National Green Building Conference in New Orleans.
The winner in the smaller project category was near Cambridge, Mass.
Image: Stanford University
Posted by Jim Wasserman at 12:24 PM | Comments |
Greenspan calls early 2009 bottom
We know how many of you love Alan Greenspan, engineer of the supremely low interest rates early this decade that most people believe fueled a speculative bubble in home values that is now spawning havoc.
This is just in on the Housing Wire, a report from Marketwatch saying Greenspan told an audience in Asia that he sees a bottom for home prices nationally early next year.
While you're on the Housing Wire site you can sign up for a daily e-email with much of the newest news on housing. This is a new venture you might want to check out. Image courtesy of Washingtonpost.com
Posted by Jim Wasserman at 10:43 AM | Comments |
Sales so far absorbing 15,000 bank repos expected in 2008
Sacramento-based TrendGraphix, an operation of Lyon Real Estate, released its
April sales report this morning - a first official glimpse into the spring season.
Owner Mike Lyon says the below-$300,000 bank-owned market is strong and if sustained, shows promise of absorbing an expected 15,000 bank repos expected to come onto the market this year in El Dorado, Placer, Sacramento and Yolo counties.
He says homes priced in the $300,000 to $580,000 range are doing better than they have in two years. But news isn't so good for $580,000 and above, with big down payments required and more expensive interest rates. There is 20 months of inventory to unload in that category and sales are slow.
Posted by Jim Wasserman at 9:35 AM | Comments |
May 13, 2008
D.R. Horton shifts some Sacramento functions to Bay Area
Reports swirled in the Sacramento-area building industry scene today that Fort Worth-based D.R. Horton Inc. (DHI on NYSE) had cut local staff and moved some functions to its Concord-based Northern California division.
I made a call and queried Horton media exec Jessica Hansen in Fort Worth and received this rather opaque response. A further question or two regarding clarification received no response:
Horton is one of the nation's biggest builders and has been one of the capital region's biggest home builders for years. Last week the firm reported a $1.3 billion loss for its second fiscal quarter ended March 31.
Here is the statement:
Regarding D.R. Horton, Inc. - Sacramento
The following statement is to be used in its entirety or not at all:
D.R. Horton has been a leader in the homebuilding industry in Sacramento for over 10 years. Our Sacramento sales, construction and customer service will continue to be managed locally, while certain support functions will now be handled by our Northern California division office. We currently offer homes for sale in 9 communities in the Sacramento area. Each of our homes is covered by a comprehensive warranty program, and we look forward to continuing to provide quality, affordable homes in the Sacramento area.
If anyone here has a clearer idea of what's going on than what we're hearing from corporate please share it with us on this blog. (I am starting to hear privately that most of the office was laid off and that only a handful of execs. remain)
Image from: www.bbbbs-snoco.org
Posted by Jim Wasserman at 7:41 PM | Comments |
Move along, the landlord is losing the house
If you like stability in your life you would not want to be Kyla Salazar-Thompson or Mike Kennedy. The two renters just moved at the end of February and now they're moving again at the end of this month. I visited with them this morning in Elk Grove - an exhibit A city for foreclosures and disruptions in the life of its renters.
The couple seems to have a knack for picking rentals where the landlord eventually stops paying the mortgage. It's happened twice now within six months. This time the two are probably moving into an apartment complex. It may be smaller and not have a yard, but a year's lease at least means something at apartment complexes.
Salazar-Thompson said she has two friends in the same boat, booted out of rentals because the landlord lost the house. We'll have more on the story from them and another booted renter in Friday's Home Front.
Meanwhile, Salazar-Thompson wonders why property management companies aren't doing a better job screening landlords. She says renters have to undergo credit checks and prove their worthiness to the world before being accepted as tenants. What's wrong with this picture, she says, when landlords aren't receiving the same scrutiny before entering leases with tenants?
I was especially struck by how the foreclosure mess interfered with her wedding invitations. The couple, getting married in December, already have the invitations printed and also the envelopes for their guests to RSVP. Those envelopes, of course, carry the address of the house they are now having to leave. So that's another $100 for new envelopes.
Another big question behind the mortgage meltdown is this: If your friends gladly helped you move two months ago for beer and pizza, isn't it a little much to ask them again so soon? Probably not, but it's on their minds as people keep telling them: "You're moving AGAIN?"
Oh, the good life in the nation's Foreclosure Belt.
Posted by Jim Wasserman at 10:46 AM | Comments |
May 12, 2008
Daydreaming along Highway 99
...A long drive north on Highway 99 today after an overnight stay in Fresno and coffee with Sanford Nax, my real estate reporter colleague at The Fresno Bee. Quite a few of this month's blog items have tracked reports of April sales surges here and elsewhere - and Fresno, too, has seen one, according to this May 9 blog item from Nax. He says: "In preparing a story for next week, I talked to Scott Leonard, president of Guarantee Real Estate in Fresno. He sounded upbeat, considering the state of the real estate market, and this is why: his agents put 65% more houses into escrow in April than the same month in 2007.
"We had more pending sales in April than in any single month in all 2007," Leonard said.
He said would-be buyers are getting off the sidelines because they think prices have bottomed out. It remains to be seen if this is the beginning of a rebound or a dead cat bounce...."
Meanwhile, boosters of downtown and Midtown Sacramento will be pleased to hear how much some influential Fresnans wish their downtown was like that of the capital's. I happened onto a radio interview with Fresno mayoral candidate Henry T. Perea who was talking about the long slow haul of revitalizing Fresno's downtown. He was saying they still need to bring more housing down there.
Then the morning radio hosts of KJWL really started in about how much they like downtown and Midtown Sacramento. One had gone here to Sacramento State and she went on and on about how nice it was to take light rail to Midtown's bars and restaurants. The other host, too, went on and on, too, about how cool it is in Midtown, with night life on every corner.
They kept saying it's hard to get people to move downtown if there's not much to do. And you can't open things to do if there's not enough people living near them.
Sacramento can't seem to get K Street moving and too much of J Street is still tired. But it's pleasant to hear that some cities still wish they were more like us.
Highway 99 was a scene, as always, of road construction, new suburban rooftops and a giant new freeway interchange in Madera County. I've been traveling these Central Valley counties for 20 years, and every Highway 99 drive reveals the urban planning theory that the Valley is becoming one of the longest, continuous linear cities in the U.S.
Along some of this drive - especially from Turlock to Elk Grove - it's getting harder and harder to tell where one city ends and another starts. The new car lots, the orange mission-tile suburban house roofs, the Home Depots and Home Town Buffets all just run together whether you're in Ceres, Modesto or Galt.
All these places are feeling a lot of pain now and are some of the hardest-hit real estate markets in the nation. But there's no land to build on like flat land and these inland California counties are friendly to growth. Even for today's turbulent housing troubles along Highway 99 there's no doubt of all the humanity yet to arrive and call this place home.
Image courtesy of motherlodeproducts.com
Posted by Jim Wasserman at 7:17 PM | Comments |
May 11, 2008
Will work for house payments
Back in Sacramento again with a couple things to add here from Saturday's conference wrapup in Dallas.
One, a humorous (I think) quote from a Las Vegas real estate agent during a session on the second-home market.
In an aside on Sin City's battered, overbuilt and price-plunging real estate market, Jim Dague, broker owner of Century 21 Advantage Gold, said, "You know those homeless people on the corners with signs? We got guys in Vegas with signs saying, 'Will you take over my payments.'"
Dague also happened to mention that Las Vegas home sales last month were the highest in 20 months. On the ride to the airport a spokeswoman for Assist-2-Sell in San Diego said March sales there were the highest in a couple of years. In Sacramento, the big buzz is that April sales were the highest since August 2005, when the boom was at the mountaintop.
In all these cities it's a function of people buying bank-owned homes. What it means is subject to a lot of interpretation. But people inside the business are clearly taking it as a good thing.
Posted by Jim Wasserman at 9:04 AM | Comments |
May 9, 2008
Who needs real estate agents when we have laptops?
"If something can be known it will be known."
So says Jorit Van der Meulen, vice president for partner relations at Seattle-based Zillow.com about the increasingly virtual world of real estate.
Earlier today he was on a panel with Google, Realtor.com and a Houston real estate agent telling the National Association of Real Estate Editors about the fast-evolving online dimension of selling and buying houses.
Remember way back in the old days of two years ago, when it was easy to say you had never heard of Zillow? Now it is a major cultural phenonmenon, and I would argue, a major contributor in lost worker productivity in offices where people use computers.
The Zillow panelist said the popular online site now has free home estimates (Fair and balanced? You decide) on 82 million homes in the U.S.
And HALF of them have been virtually visited since Zillow started becoming a household name, he said.
Zillow might never have existed had not Realtors so closely guarded their secrets and tried to keep the nation's multiple listing services a private domain.
"Zillow exists because we had the data and we didn't give it to people," said Bob Hale, president and chief executive officer of the Houston Association of Realtors.
Now I haven't personally visited the association's Web site, HAR.com. But Hale said it provides more information that people want than any other in the U.S. He called the site a one-stop shop for open houses, virtual tours, Google Earth views of houses, price changes in all the city's neighborhoods in the past decade and a list of all the Realtors who serve those neighborhoods. It also offers all its listings in seven languages.
Hale said surveys show that most buyers believe that information they find online is more valuable than what they would get from a Realtor. Still, he said, most people who first browse online eventually use Realtors. That little fact led to his prediction about the next big thing - which some real estate agents will like and others will hate.
That's Realtor Ratings. It's inevitable, he said. Just as Tripadvisor.com collects ratings on hotels, as you can see how people rate computers at chain store Web sites, so, too, will Realtors be rated, he said. Surveys, he said, show that many buyers want to see how others rated a Realtor before they pick one.
That's Web democracy for you.
At Realtor.com, Errol Samuelson, president of the Web site (still the most popular for Web searches of houses), said that despite all the progress of the last 10 years online, virtual real estate is still far behind other sectors such as stocks. He said it takes only seconds to get the most current information on a $3 stock, but it takes 24 hours to learn that the price has changed on a $1 million house.
The guy from Google, Justin McCarthy, member of the Mountain View firm's strategic partner development team, talked, too, but darn if I could figure out what he was really saying. In Google-speak it was all about how consumers always want more and want it faster and want it free.
Maybe that was a more complicated way of saying what Samuelson of Realtor.com concluded with as the session wrapped up: "The next five years will make the last 10 years look like nothing."
Posted by Jim Wasserman at 5:12 PM | Comments |
We win
Memo from the department of tooting one's own horn: This afternoon The Sacramento Bee won an honorable mention from the National Association of Real Estate Editors for its November and December 2007 series of stories called "Behind the Meltdown."
Those stories examined the proclivity of Sacramento-area residents to inflate their incomes when getting mortgages during the housing boom, tracked the lives of several foreclosed residents months after losing their homes and chronicled life on Sacramento's Western Avenue, a street hit harder by foreclosures than anywhere else in the capital region.
The Bee finished second to a major series by The Charlotte Observer on mortgage practices used by by Atlanta- based Beazer Homes that allegedly contributed to foreclosures in the region.
The award category was Team Effort.
Posted by Jim Wasserman at 5:00 PM | Comments |
Seeing the future of downtown Sacramento's Railyards
I have seen now what Sacramento's Railyards might eventually turn into. Here in Dallas, Ross Perot, Jr., son of the entertaining 1992 presidential candidate, is already doing it.
Years ago he bought 75 acres of industrial wastland next to downtown - anchored by the Union Pacific Railroad and a big electrical power plant - and crafted a vision of a Dallas version of New York City's prominent gathering place, Times Square.
Now it's called Victory Park. I imagine some of you have already seen it. You certainly have seen it on TV if you're a Kings fan. The anchor of Victory Park is American Airlines Center, home of the NBA's Dallas Mavericks. Up close, it's as spectacular as it looks on TV.
Now I know the Kings arena no longer appears destined for the Railyards next to downtown Sacramento. But if it was, it might look a lot like Victory Park. The arena has spawned a cool "W" brand hotel with condos on top. (Silly me, wondering if W had something to do with our Texas president, and then hearing that it's a fashionable brand in, I think, New York and Chicago). Nearby were other residential buildings and a big office building under construction.
We members of the National Association of Real Estate Editors had a session on the 22nd floor, meeting the mayor of Dallas in an 11,000 square-foot condo unit looking out over the skyline. Price tag: $9 million. Very nice.
The mayor and a handful of others told us about the "new" Dallas, which aims to have a downtown second in the U.S. only to New York City. And that means more and more and still more housing. They have 30,000 residential units downtown right now, which frankly, for all the booming optimism and bravado about their civic future, didn't sound like that many. It might explain why for all the bulk of this downtown the streets still don't seem full of people. They make no bones about it here: this downtown has only recently become friendly toward housing.
Somebody asked the mayor if they had grocery stores downtown. Only one, he said, and it wasn't a chain. But the city is in talks with a chain grocer. That was kind of astounding, too, considering that Sacramento has a Safeway in Midtown - AND it has people living above it.
But I digress. Mostly, I realized how lucky it was to be taken on a tour to see that what Sacramento has long envisioned for its downtown Railyards is already real in another city. That Railyards is going to be quite a place some day because here in Dallas it already is.
Posted by Jim Wasserman at 4:33 PM | Comments |
Friday whirlwind
Interesting conference session this morning on the real estate economy.
Quotes of the day from Dr. James Gaines, research economist at Texas A&M University:
"Seventy percent of the economy is dependent on us going out every week and spending 110 percent of what we make - and we've been doing a pretty good job of it."
"It takes a Ph.D to come up with this stuff. The Ph.D's, the Nobel laureates and so forth, the guys who run Wall Street, committed a colossal 'duh.' They forgot about a a thing called risk, that if you make a loan to somebody with a shaky credit rating, a shaky job and shaky employment, you might have trouble somwehre down the line collecting on the loan and somehow all of that got lost in the shuffle."
Gaines told us to watch for a couple of things: a financial bailout of more banks and financial institutions - and also for "an extraordinary bailout of the residential market to limit foreclosures." He didn't offer details, but ran instead into an interesting analysis of home prices:
He said home prices are likely to fall to the level at which they would have risen had there not been a housing boom, which got me to thinking about where that line might be in the capital region. I don't have stats with me, but say the median price in 2000 was $185,000 or so and you inflate that by 3 percent a year. What is that magic number and when do we reach it?
Nationally, he said median values peaked in July 2006 at $230,900 and would have to fall to $187,500 to get back on the normal trend line. That would be a 14 percent decline nationally - and I believe he said we have already fallen 8 percent.
That's the magic number I want to find in Sacramento. Where would we be if there hadn't been such a boom and is that the sustainable level now? Anyone have thoughts on that?
We can also expect, he said, the usual rewriting of rules that follow financial meltdowns: in accounting rules, mortgage rules, capital requirement rules , bankruptcy and Freddie Mac and Fannie Mae rules. Watch, too, in a country where the government is essentially broke, for higher inflation, higher income taxes, higher borrowing costs and higher taxes on capital gains and dividends. He thought taxes on capital gains might jump from 15 percent to 24 percent - which would overnight cut the value of commercial real estate by 10 percent or mnore. Ouch.
None of this especially pleasant, unless you live in Texas, where again Gaines talked about a real estate market holding pretty strong in the face of strong job growth in the high-flying energy market ($4 gas for the rest of us). He said population growth in the Lone Star state is expected to be the biggest thing in the next 25 years since California's post WWII-explosion. Retirees are also flocking to Texas - even from California now - because "you can still buy a house here for under $200,000."
A billboard comes to mind on the interstate near Dallas by Fort Worth builder D.R. Horton Inc., always a leading builder in the Sacramento region:
Prices starting in the $170,000s.
All this excitable talk about growth and adding new equivalents of Dallas-Fort Worth to a state that already has 24 million people reminded me of chat I had Wednesday with a real estate magazine editor who now lives in booming Atlanta, but was raised in struggling Detroit. He offered the theory that when the South fills up with too many people and the highways are all filled - sound familiar, Golden Staters? - that people will look back up toward the Rustbelt, where it's cheaper and quieter and has wonderful old downtown buildings and - and start a new boom.
He didn't know what it portended exactly, but he cited a developer who bought a lovely old high-rise in Detroit for $5 million recently. An idiot or just sensing that someday everyone is going to be tired of the unlivable Sunbelt? Time will answer that one.
Posted by Jim Wasserman at 9:16 AM | Comments |
May 8, 2008
Fort Worth or Sacramento: Will the real cowtown please rise
I'm just back to Dallas after hours of group roaming in Fort Worth, a city of 580,000 that is sure proud of its downtown - and a little bit like Sacramento in that respect.
Riding a tour bus filled with real estate editors and writers from New York, Chicago, Florida and all points between, I was struck again, like yesterday in Dallas, to see a city where construction is happening in all directions.
Told by the convention industry that their downtown hotels were dowdy they are remodeling them.
We also toured some of the downtown housing they are really talking up there. All these cities now are talking up the young professionals and the empty nesters downtown. And some on this trip have been quick to hint that $5 gasoline is going to put some muscle behind the trend.
We first saw the new Texas and Pacific Lofts in an old train station and corporate offices that had fallen into serious disrepair over the years.
I like lofts, but these did not do it for me, even with price tags of $180,000 to $225,000 for studios and one bedroom units. Especially with $286 a month in homeowners association dues for a view of the freeway and railroad tracks. The concrete ceilings were really industrial rough and the floors from the 1930s were a little too authentically spotted and cracked for my taste.
Never mind my taste, though. They are selling and that's what matters.
Incidentally, where you you sleep in a 745 square-foot loft in the Texas skyline? Here's the answer I saw Thursday:
We then toured some really expensive models for the 87 condo units that are going atop the city's new Omni Hotel downtown. They were beautiful and smooth and a great place to live. Of course, what would not be at $897,000 for 2100 square feet with a view?
My favorite Fort Worth attraction - I really do love nothing better than going out and looking at stuff- was the 10-year-old concert hall called the Bass Performance Center. Talk about a stunning anchor for a downtown. Inside the concert hall was room for 2,000 and it was somewhere beyond magnificent for $72 million – all raised by the private sector. Naturally, this being Texas it had to be bragged about, that it ranks among the top five concert halls in the world for accoustics.
If you care to have a look inside here is a clip:
I think it really helps to have Visionary Rich People in a city's DNA. The Bass Brothers, descended from old Texas oil money, not only moved mountains for the concert hall. They also bought up a ton of downtown real estate back in the 1970s, when downtown property was a wreck like in most cities. Then with money to burn and years of patience, they slowly brought back a huge area now called Sundance Square, filling it with entertainment, restaurants and shopping - all of it jumping Thursday evening. Now they are making money off that, too.
I digress here about money, but these old families kept all their oil money in the towns where they made it. In Sacramento the gold and railroad barons moved to San Francisco - so we don't have Stanfords and Crockers and Huntingtons now to rebuild 30 blocks of downtown or finance a concert hall.
A couple other points about their downtown. The street musicians, I was told, are hired by the Bass Brothers companies. It means you don't have to give the performers money or feel bad if you don't. It really removes somne of that odd annoyance that comes with guys playing badly on guitar and making eye contact with you for spare change.
One more thing: the city offers free weekend and nighttime parking at five downtown parking garages. The idea is to attract people from the suburbs to come party, too, not charge them $1.50 for 30 minutes as in Sacramento. Hint, hint.
I only have three hours experience with downtown Fort Worth. Some of the landscape is raggedy, even more so than some of downtown Sacramento. I really think Sacramento is a nicer place, but Fort Worth has more serious power and money behind their revitalizing and maybe a clearer sense that they are inhabiting a good place to live. That spirit is sure getting things done.
Posted by Jim Wasserman at 6:28 PM | Comments |
Mortgage industry quote of the day
From a panel on mortgage trends at National Association of Real Estate Editors conference in Dallas this morning:
"It's no secret that in the past couple of years, folks, by and large, have started to look at the mortgage industry in the same way as used car salesmen in the past, and that's not something that feels good to us."
- Debbie Dunn, Executive Vice President, CTX Mortgage, affiliated with Dallas-based Centex Homes.
Posted by Jim Wasserman at 8:17 AM | Comments |
What if Congress had reformed FHA two years ago?
DALLAS -Federal Housing Commissioner Brian Montgomery just made his case to the National Association of Real Estate Editors meeting here that much of this subprime crisis now damaging the housing market could have been avoided if Congress had dropped its partisanship fights and passed proposals two years ago to modernize FHA lending.
Indeed, FHA lending almost disappeared in California during the run-up in housing prices because the FHA limits on loans were well below home prices. So the private sector jumped in with subprime and now we know the results.
Now the wheels are moving in Washington, finally. FHA is seeing changes that allow it to back more loans now for the people who need them.
Montomgery said the problem now is that many people don't know about FHA programs that can help them - even help them avoid foreclosure.
He noted that FHA is sending out 850,000 letters to people with subprime loans that are resetting. He asked the media to help get the word out.
His indictment of Congress was pretty tough. We've heard a lot the last couple years about Washington gridlock and petty partisan bickering. Failure during that time to modernize an old government standby is part of why we're in serious straits now with housing and the economy. NOW they're trying to act fast when, as the old saying goes, the barn door is open and the horse is long gone.
Posted by Jim Wasserman at 7:25 AM | Comments |
Cities where prices are rising
Being from Sacramento, where home values have been falling for almost three years in many neighborhoods it's always amazing to hear about regions where home prices are actually rising. We heard about that this morning in Dallas from Charles McMillan, president-elect of the National Association of Realtors.
His point to the media: painting the national housing market with a broad brush causes some people to stay on the fence without reason. He cited "robust" markets such as Springfield, Ill., Topeka, San Jose and Syracuse. McMillan is realty relations manager with Coldwell Banker in Dallas-Fort Worth. He said prices are up 8 percent from the last quarter in San Antonio and up 6 percent in Austin and Corpus Christi. After such a long time of seeing prices fall in Sacramento it's amazing to hear about anywhere where they are still rising.
Of course, most of those places never saw the big run-up we saw in Sacramento.
McMillan talked about the sometimes strained relationships between the media and real estate agents who think the media has been overly negative. One questioner from New England asked about the image of real estate agents, however, noting that the National Association of Realtors ran full page ads in Oct. 2006 saying that: Now is a good time to buy. The questioner said that anyone who followed that advice in his part of the country has by now lost all their equity. McMillan kind of danced around that one, but it sure sounded familiar.
All during 2006 I recall calls from real estate agents to voice their concern about the tone of coverage as the market started to stumble. Almost always, they said it: Now is a good time to buy. And anyone who took their advice then has seen their values fall pretty hard. I am not saying anyone is always right or always wrong. But just as the media is often charged with having credibility issues, so too, does that apply to the real estate industry.
Posted by Jim Wasserman at 6:56 AM | Comments |
May 7, 2008
Texas is big and brash
Dallas has 18 construction cranes downtown and the locals say almost all of them are for new residential high-rises, so look out Miami. Just before sunset a whole group of us from the National Association of Real Estate Editors were hauled up to the 19th or so floor of one that just opened for a view of this big, brash downtown that's all awitter about hosting the Super Bowl in 2011.
Ironically enough, the big point of it all was to look down on a nearby freeway where the locals aim to connect their arts district with thousands of new downtown residents via a park atop the freeway. This is exactly what is being talked about in downtown Sacramento: decking Interstate 5 to connect downtown with the river. Only Sacramento seems have shelved the idea for the time being for lack of money.
Not in Dallas. This five-acre park above a recessed portion of the freeway begins this September and plans are to have it opened by the time of the Super Bowl. It costs $67 million and Big D has the money nailed down: $20 million in state highway money, $20 million from a city parks bond and $27 million from THE PRIVATE SECTOR, says Linda Owen, a trustee of the Woodall Rogers Park Foundation. Rogers is a former Dallas mayor.
I asked Owen: What do you mean, $27 million from the private sector? She said 10 individual donors put up $1 million each, coporations threw in a few million and foundations did, too. The rest came from investors in nearby property who think it will push up their values.
People will be able to walk back and forth across the top of the freeway, sharing space with a childrens' garden, a restaurant and water foundtains.
Here is a view of the stretch being covered:
I recall a few years back going to a scoping session on Sacramento's plans to deck I-5. It was a beautiful concept and I've often wondered what specifically happeend to put it on the back burner. I mentioned this to a real estate editor from Miami: She said. What? You're the capital of California and you can't get the money? Guess not.
In other action today, we heard from the Steve O'Connor, chief lobbyist of the Mortgage Bankers Association. He said, like many before him have said, "We are clearly in extroardinary times. This is the greatest housing crisis in the country since the Great Depression."
He talked awhile about legislation expected to pass the U.S. House tomorrow to let the Federal Housing Administration help the thousands of people who owe more than their homes are worth. It would let them refinance into loans that would give them incentive to keep the house and not walk away. Lenders would have to eat some losses in the deal to make the loan based more on what the house is worth today rather than in 2005.
O'Connor said Bush intends to veto such an idea, but the whole thing will go to the Senate in attempts to work out a compromise Bush will sign and bring some new level of relief to homeowners. Interesting, even though the Federal Reserve recently offered a huge helping hand to investment banker Bear Stearns, O'Connor answered a question about relief for lenders by saying: "Nobody's going to bail out lenders. There is zero sympathy for lenders. I know because I go up there (to Capitol Hill) every day.
Finally, a quick report from a panel on how developers are salivating at the thought of millions of baby boomers moving into new digs when they retire.
A former economist at Southern California's Jet Propulsion Laboratory addressed us, having started a firm that digs up research for builders and regions trying to tap those restless boomers. That was E.H. Gene Warren Jr.
He said 91 million people will retire in the next 21 years and he thinks 20 percent of them - one in five - will relocate. He thinks home builders will need to build 500,000 new houses a year for them alone.
There was lots of other talk about how boomers are going to redefine senior housing like they've redefined everything else as a generation. Less golf, more swwimming and more Del Webb-like retirement communities in colder climates. Other panelists talked about building houses near campuses for boomers to buy and mix with younger people. Boomers filling downtowns, boomers kayaking and writing business plans for non-profits instead of having sewing circles like their parents.
I don't know. I'm 55 myself and don't get it sometimes that our generation is supposed to be so special and having to redefine everything. There is so much pressure to be different and engaging when all this generation is really going to do is slow down and get feeble like every generation has for 10,000 years. I could be wrong. But that's the news from Texas.
Posted by Jim Wasserman at 7:43 PM | Comments |
May 6, 2008
Throwing around the S word (Stabilizing)
- Mortgage defaults may have peaked in the first quarter or be peaking this quarter.
- Foreclosures are likely to peak in the second half of 2008.
- Sales numbers will bottom out in California in 2008, and may have already done so in Sacramento.
What's it all mean? That's what brought Robert Kleinhenz, deputy chief economist for the California Association of Realtors to the capital this morning. He gave an hour-long overview of the economy, the mortgage market and the housing outlook to the Sacramento Association of Realtors.
His basic tone: big-time caution about the immediate future - and largely because the mortgage market is still cracking down and making it hard for many people to qualify for loans. But...like many others he is seeing a better second half of 2008 than this first half - and is using words like stabilizing.
More and more, even those like Kleinhenz who have proved overly optimistic in their previous forecasts, are offering some sense that - barring unforeseen events that bring big job losses - this year is going to see the worst of it for housing. He repeated assertions by Sacramento County Realtors that April saw a huge spike in sales - much, much higher than the typical seasonal bounce. And that could be an indicator, he said, of bottoming out.
He told Realtors that Sacramento metro area is still seeing some job growth - even