Home Front

Midtown in the rain

2009-11-20T21:42:36Z

A big rain swept into Sacramento this morning mixing with the fall colors really starting to peak now in the older neighborhoods. A street scene at Midtown's 24th and S Streets:

A first serious prediction of rising values ahead in Sacramento

2009-11-20T20:40:02Z

First American CoreLogic predicts that area home values (distressed homes included) will rise by 4.85 percent from Sept. 2009 to Sept. 2010. The forecast is for the collective Sacramento-Arden Arcade-Roseville metropolitan statistical area (El Dorado, Placer, Sacramento and Yolo counties).

It's a small part of a larger report that sees the rate of decline in home values increasing through much of the nation - including here in the capital region. This is one of the first indicators from a large market tracker to show a market-wide appreciation in values starting to take root.

Friday catch-up: A look at U.S. and California loan delinquencies

2009-11-20T18:46:21Z

In the crush of yesterday's deadlines I wasn't able to get these news releases online detailing the wobbly state of the nation's - and California's - home loan delinquencies and foreclosures from the Mortgage Bankers Association.

So we go: first a look at California. (This isn't pretty, but all I can say is be glad you don't live in Florida, where it's so much worse).

Secondly, here's a national view. (Much of the carnage remains in four states: Nevada, Florida, Arizona and California).

I sat in on the national conference call with reporters, a list that seems to be diminishing a little as the worst of the housing problem has shrunk to the Sunbelt.

Here's the podcast of that call.

The main point by VP, and Chief Economist Jay Brinkmann is this: prime loans, including the safe 30-year fixed-rate benchmarks, have replaced subprime loans as the leading edge of delinquencies now as joblessness has moved up the ladder to reach the better-off borrowers.

"Clearly the results have been driven by the changes in employment" he said. "We've had about a 5.5 million increase in the number of unemployed the last year. That compares with an increase of about 2 million loans that are past due."

And it's harder to get out of trouble now when it finds you, Brinkmann said.

"We went into the recession with a weakened housing market. So the impact was when people lost their jobs they were less likely to recover by selling the house. There was less equity in it and that translated to more foreclosures. Unemployment went up and now both the jobless rate the foreclosure rate are both going up together."

For prime borrowers it's become an endurance contest, he said.

"Prime borrowers usually have reserves. They can hold out. But the longer the problem takes place the more will fall," he said. What he means is: for a lot of borrowers this is a race between their savings and when they can find another job.

As for Florida?

Ouch.

- 12.7 percent of the state's mortgages are in the foreclosure pipeline between a notice of default and handing back the keys - and 25 percent more are at least 30 days late with payments.

"It's going to take Florida well into the end of 2011 to clear out what's currently on the books," said Brinkmann about repo inventory. "And then the new ones are coming in. We may not see anything change there until well into 2012 and even into 2013."

Photo: Mortgage Bankers Association

Sayonara to that $10K state tax credit for new-home buyers

2009-11-20T17:39:03Z

From this morning's Home Front Column:

Say goodbye, finally, to hopes of extending that $10,000 tax credit for buyers of new unoccupied homes in California. It's all but dead for this year, says one lobbyist who patrols the state Legislature on behalf of home builders.

"We were disappointed neither of those bills panned out this year," said Allison Barnett of the California Building Industry Association, a trade group for the residential construction industry. An Assembly Bill, AB765, extending the tax credit to 4,300 more buyers failed to pass in the state Senate. A similar Senate bill, SBX3 37 bill failed in the Assembly as lawmakers turned their focus to water bills.

"We're looking for options next year," Barnett said this week. One idea is to establish a tax credit that a buyer could collect only when a building permit is issued for his or her new house. Another is to seek an extension for a few more months. Said Barnett, "We're still looking at details."

Bottom line, buyers of new houses now approaching escrow or signing sales contracts are out of luck in the near term for a state credit. And though there's always next year, it may be a safe bet - considering a new estimated $21 billion hole in the state budget for the next year and a half - that buyers may have seen the last of this one for good.

But check out the federal government's $8,000 first-time buyer tax credit, which has been extended to April 30.

More than 10,600 new-home buyers claimed the $10,000 state tax credit earlier this year.

State unemployment at 12.5 percent, but job growth returns

2009-11-20T15:55:57Z

California unemployment increased to 12.5 percent last month, but the state actually added jobs for the first time in more than a year.

The Employment Development Department today said California payrolls grew by 25,700 in October, the first job growth the state has seen since April 2008. California was one of 28 states recording job growth, according to federal officials.

The unemployment rate grew three-tenths of a percent, to 12.5 percent.

It's not unusual for the payroll statistics and unemployment rate to provide mixed signals. Economists generally look at the payroll numbers, which are derived from a broader survey, as a more reliable indicator of the health of the job market.

In the Sacramento area, unemployment increased to 12.3 percent, a four-tenths of a percent increase from September. The region lost 3,600 jobs.

A key reason was the leisure and hospitality sector - everything from restaurants to hotels to theater companies - shedding 1,900 jobs. Normally that sector cuts back around 1,200 jobs in October.

State government added 600 jobs in the region as university instructors went back on payrolls. But normally the start of the school year translates into 1,300 more jobs.

Justin Wehner, a labor market consultant at EDD, said the Sacramento region is suffering worse than many other parts of California because of continued downsizing in construction. That sector has lost 12,700 jobs in the past year.

Unemployment in Sacramento is "the highest it's ever been since 1990 and it's still going higher," he said. "Definitely no daylight at this point."

There was disagreement about the significance of the gain in jobs statewide. Howard Roth, chief economist at the state Department of Finance, said "I think it's going to turn out to be the start of something."

Others noted, however, that the EDD job-loss figures for September were worse than originally believed. The new estimate is that California lost 66,400 that month, a loss of 27,100 additional jobs.

The two months taken together mean "we're going sideways right now," said Jeff Michael, director of business forecasting at the University of the Pacific. "I'm not sure this is the bottom quite yet, but I think we're getting close."

Stephen Levy, an economic consultant in Palo Alto, added, "I think this is a false signal to say this is the beginning of a sustained period of growth (but) we're nearing the end of the job losses."

Some capital-area price declines back to single digits

2009-11-19T19:48:54Z

FRIDAY UPDATE: The full, more detailed story is here in this morning's Bee.

To see how it looked in the neighborhood in October follow this link to sales and price data by ZIP Code.

In October - for the first time since June 2007 - year-over-year declines in median sales prices have fallen back to single digits. Much the same is true in Placer County. But in wealthier El Dorado County it appears that the speed of declines is growing again - as the upper end of the housing market suffers from fewer buyers and the necessity of cutting hard to win one.

We'll be digging deeper into this today for a story in tomorrow's Bee. In meantime, here is a first look online at October's sales and prices for the capital region.

Wells Fargo in $1.4 billion settlement

2009-11-18T16:53:42Z

Wells Fargo today agreed to a $1.4 billion settlement with state officials over a securities sale that was branded "false and deceptive" by Attorney General Jerry Brown.

Under the settlement, the big San Francisco bank will repurchase $1.4 billion in so-called auction-rate securities from thousands of customers. About half the money, or $700 million, will go to Californians.

According to Brown, Wells had marketed the securities as safe and highly liquid. When the market froze in early 2008, customers were unable to cash them in, he said. Brown sued Wells in April.

"Wells Fargo convinced thousands of investors to purchase auction-rate securities with promises of robust returns and liquidity, but when the market collapsed, investors were left out in the cold," he said in a press release today. "Based on misleading advice, investors bought these risky securities. Now, retail investors and small businesses are finally getting their money back."

There was some disagreement about the size of the settlement. The North American Securities Administrators Association said Wells Fargo is returning about $1.3 billion to investors.

The association said Wells made settlements six states besides California: Georgia, Missouri, Oregon, Texas, Utah and Washington state. It said the settlements stemmed from an investigation led by Washington state's Department of Financial Institutions.

Wells isn't the first institution to refund money over the collapse of the auction-rate securities market. UBS, Citigroup and others have entered into settlements; the securities administrators association pegged the total settlements at more than $61 billion.

Wells didn't admit any wrongdoing in the settlement.

A spokesman for the bank couldn't be immediately reached for comment.

Orange, San Diego counties and Bay Area see annual price gains

2009-11-17T18:26:50Z

MDA DataQuick has issued its

October sales and price report for Southern California - showing that median prices rose sligthly from Oct. 2008 - first time in three years.

Orange County did it for a second straight month.

The Bay Area saw its first year over year gains in two years.

Sales numbers were also higher in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties than the same time last year - for the 16th month in a row.

It's part of a slow continuing thaw in California's real estate deep freeze.

We should get San Francisco Bay Area and Sacramento numbers this week, too.

Down so far that a "lackluster market" is a good thing

2009-11-17T01:09:08Z

That's the analysis from the Sacramento Association of Realtors, which is pointing out that "In the last six months the median sales prices has remained between $180,000 and $190,000." That's considered a positive in its new October sales report - a salute to "market stability."

I think sellers and homeowners who have endured a terrifying downhill slide in prices the past two years are probably ready to agree. After all, the median October sales price of $185,000 is only an amazing 5.2 percent below the same time last year.

All in all, SAR counted 1,716 closed escrows in October in Sacramento County and the city of West Sacramento - up a little from 1,631 in September. Repos were 41.6 percent of sales (still falling) and short sales were 20.7 percent (still rising).

Here are the details:

The October news release.

The Summary Statistics.

A look at prices and sales in the neighborhoods, by Zip Code.

Lyon Real Estate's research arm, TrendGraphix, also predicts more short sales than repos in the higher-end market because expensive repos are too hard to sell. It's also seeing prices rise in teh $400,000 and under market.

Workers' comp - how high?

2009-11-09T22:04:50Z

The twice-a-year dance over workers' compensation insurance premiums is under way again. Earlier today, Insurance Commissioner Steve Poizner rejected the industry's call for a 22.8 percent increase in premiums effective Jan. 1.

"Any increase in costs for employers will only make our already dire economic situation worse," he said in a press release. "Given these harsh economic realities, I refuse to rubber stamp double digit increases." He said insurers can do more to rein in costs.

The commissioner's findings are advisory. So is the 22.8 percent recommendation of the Workers' Compensation Insurance Rating Bureau, an industry-controlled group. If the past is any guide, most insurers will raise rates but not as much as the rating bureau recommends.

Mexican consulate steps in to do foreclosure prevention

2009-11-06T22:25:34Z

The Sacramento-based Consul General of Mexico has teamed with credit counseling agency ClearPoint for a week-long series of foreclosure prevention workshops and personal advice starting Monday, Nov. 9, in Sacramento and the northern San Joaquin Valley.

Events are free to the region's Latino community and will be conducted in Spanish and English. Here is the regional schedule as the consulate reaches out to "support the Mexican community in tough economic times."

Monday, Sacramento's Univision 19 will host a television program from 5 p.m. to 7 p.m. featuring ClearPoint and other volunteers taking foreclosure-related calls.

Tuesday, Nov. 10, a foreclosure prevention workshop is scheduled from 7 p.m. to 9 p.m. at Our Lady of Guadalupe Catholic Church, 711 T Street, Sacramento. ClearPoint representatives will analyze individual cases for those struggling with mortgages and where applicable, make appointments to offer personal advice.

Those individualized sessions will be scheduled at the Consul General's offices at 1010 8th St. in Sacramento from 9 a.m. to 2 p.m. on Monday, Nov. 16, and Friday, Nov. 20.

Another workshop is scheduled Thursday, Nov. 12, from 6:30 p.m. to 8:30 p.m. at St. Stanislaus Catholic Church, 709 J Street, Modesto.

The last workshop is set for Friday, Nov. 13, from 7 p.m. to 9 p.m. at St. Mary of the Assumption Catholic Church, 203 E. Washington St., Stockton.

Explaining that federal homebuyer tax credit

2009-11-06T18:43:11Z

Thanks to Mike Lyon, head of Sacramento's Lyon Real Estate, for clarifying a critical ingredient of the homebuyer tax credit extension and expansion that has passed Congress and is expected to be signed today by President Obama:

I understood the extension of the $8,000 credit easy enough. First-time buyers get another six months of eligibility now.That should prevent an acute winter slowdown in sales.

What I could not get my head around based on reading press reports was the $6,500 credit for people who have lived in their homes for at least five years.It sounded for the life of me that anyone who has lived in a home that long would get one just for being alive.

Not so, said an amused Lyon.You have to buy another house to get the credit, he said.

The aim there is to break up the huge excess of supply in the middle of the market.

There is plenty of competition for lower- end homes, but the middle of the market is extremely lethargic, he said. This credit may spur older people to move out of big houses into smaller ones or to retirement communities. It may spur people who are divorced to sell and buy elsewhere. It may spur people who have outgrown their existing home to move up.

So bottom line: there is no free lunch. You get the $6,500 tax credit for existing homeowners if you move up or down - or sideways. It's designed to get a whole new class of people off the fence and into the market.

Incidentally, here an analysis of what might happen now from Stan Humphries, chief economist at Zillow.com

Sac-area new home sales will reach 1999 levels again in 2016

2009-11-06T17:40:13Z

For that vast swath of humanity beyond the 200 building industry representatives who attended Thursday's 2009 regional housing forecast presented by the North State Building Industry - here is the Powerpoint presentation by Greg Paquin of the Folsom-based Gregory Group. All the charts and graphs you could ever want to see.

Among the most spectacular predictions:his belief that it may take another seven years for capital-area home builders to get back to what they were building here in 1999.

That would be in 2016 - when he projects sales of 10,921 new houses in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.

As for this year: Paquin predicts 3,048 sales in the six-county region. The good news, he told builders who know pretty much nothing but bad news, is that 2009 should be the absolute bottom of sales levels.

Builders in 2004 did almost 18,000 sales in the region.

Paquin called the current situation in the region "an economic recession and a housing depression."

One of the most interesting observations, however, was the consultant's reference to a massive "brain drain" from the Sacramento region's residential construction industy. Economists say the sector has shed 26,300 jobs. Said Paquin: they've all left the business, left the area, retired or moved onto new businesses.

Yet as a result Paquin foresees "an industry that will become younger and more sophisticated." That will be especially important as the entire home building business goes green, he said. Make no mistake about it, he told the crowd about the implications of California legislation and global warming initiatives to reduce energy use. Homes will be green.

"That train has left the station," he said.

World's finest new buildings

2009-11-06T17:27:26Z

The Urban Land Insititute, a progressive arm of the real estate industry, has been meeting this week in San Francisco - and just released its awards for the world's finest new designs.

The list is here and includes the California Academy of Sciences in San Francisco's Golden Gate Park.

Here's the academy: photo courtesy of propertysolutions.com

"This is probably the last extension"

2009-11-05T21:55:56Z

Congress has finally extended the $8,000 homebuyer tax credit and added a couple other sweeteners. The real estate industry is rejoicing.

Still no word in California about extending a $10,000 tax credit for buyers of new homes. The Legislature is awash in water bills. Builders say they're still trying.