Archive for April, 2009

New round of defaults and more inventory will be a good thing for Sacramento buyers



Jim Wasserman of the Sacramento Bee wrote in a story the other day that “We’re going to find out now whether foreclosure moratoriums and new loan-modification programs will work”.

It seems the moratoriums have only dammed up the flow, and raised the level; now the dam has burst, three months worth of foreclsosures are going to hit us at once.

Banks and mortgage lenders filed a record 11,049 new notices of default in the Sacramento region in the first three months of 2009, Real estate data provider MDA DataQuick from La Jolla reported Wednesday.

The rise in defaults are happening even as foreclosure numbers and inventories of homes for sale fell for a second straight quarter across the Sacramento area. The same numbers are showing up as well in all of California.

So inventory of available homes on the market has tightened, causing buyers to come off the fence, thinking we have hit bottom. A good thing for the Sacramento housing market; it seems that we have hit a price level, especially in the lower price points, where there is some stability and predictability.

But what happens now that a new wave of foreclosed homes and short sales hits the market? 

43,620 people lost their homes in the first quarter in California, DataQuick reported, raising the statewide number of California foreclosures to 365,000 since 2007.

But , the  135,431 new notices of default filed in the last 90 days brings the biggest challenge for a financially challenged system under pressure to modify loans and stop foreclosures.

Meanwhile, some real estate brokers, agents, buyers, investors and gurus, say they believe the foreclosure slowdowns and moratoriums are simply delaying the inevitable and prolonging the housing crisis.

Sean O’toole of has said “Arguably, foreclosure is actually one of the few mechanisms that IS dealing with the real problem at the moment… eliminating the trillions in unsustainable mortgage debt that was taken on nationwide during the bubble years. By delaying foreclosures we only delay the elimination of this debt and the return to a healthy housing market”.



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California State of Emergency – Unemployment Proclamation

State of Emergency – Unemployment Proclamation
by the
Governor of the State of California

WHEREAS the people of California, like people throughout the nation and the world, continue to suffer from the current severe economic downturn; and

WHEREAS Californians have been hit hard by the mortgage and foreclosure crisis and the downturn in the housing market; and

WHEREAS in my prior Emergency Proclamation issued on February 27, 2009 in response to the drought, I noted that agricultural revenue losses exceed $300 million to date and could exceed $2 billion in the coming season, with a total economic loss of nearly $3 billion in 2009; and

WHEREAS many businesses are shutting their doors in this difficult economy, and other employers are laying off workers, eliminating jobs or reducing employee hours and income in an effort to stay in business; and

WHEREAS the income and job losses have adversely impacted entire communities and diverse sectors of the economy supported by those jobs and income; and

WHEREAS these conditions are causing a loss of livelihood for hundreds of thousands of people, an inability to provide for families, and increased harm to the communities that depend on them; and

WHEREAS this loss of income and jobs continues to lead to defaults, foreclosures, bankruptcies, loss of businesses and loss of property; and

WHEREAS when jobs, property and businesses are lost, some families will move away from their communities, causing further harm to local economies, lower enrollments in local schools and reduced funding for schools; and

WHEREAS the economic downturn has provided graphic examples of how people are struggling, including the growth of homeless tent cities around the country; and

WHEREAS on April 17, 2009, the State Employment Development Department (EDD) reported that the unemployment rate in California increased to 11.2 percent in March, that nonfarm payroll jobs declined by 62,100, that the year-over-change (from March 2008 to March 2009) showed a decrease of 637,400 jobs, and that the number of people unemployed in California was 2,080,000, up over 119,000 for the month, and up by 913,000 compared with March of 2008; and

WHEREAS in that same report, EDD indicated that there were 79,979 new claims for unemployment insurance in March 2009, compared with 76,303 in February 2009, and 48,282 in February 2008; and

WHEREAS EDD and the California Unemployment Insurance Appeals Board (CUIAB) have made significant efforts to expand its operations in response to the exponential increase in demand for their services, but more resources are needed to effectively serve the needs of Californians struggling in this economic downturn; and the services are of such an urgent nature that the delay incumbent in their implementation under state civil service and contracting rules would frustrate the very purpose of unemployment compensation under state law, and the federal stimulus payments under federal law; and

WHEREAS the circumstances of the economic downturn, and the circumstances of the resulting unemployment in California, by reason of their magnitude, are beyond the control of the services, personnel, equipment and facilities of any single county, city and county, or city and require the combined forces of a mutual aid region or regions to combat; and

WHEREAS under the provisions of section 8558(b) of the California Government Code, I find that conditions of extreme peril to the safety of persons and property exist in California caused by the current and continuing economic downturn and resulting unemployment in California.

NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, in accordance with the authority vested in me by the California Constitution and the California Emergency Services Act, and in particular California Government Code sections 8625 and 8571, HEREBY PROCLAIM A STATE OF EMERGENCY to exist in California.

IT IS HEREBY ORDERED that all agencies of the state government utilize and employ state personnel, equipment and facilities for the performance of any and all activities consistent with the direction of the California Emergency Management Agency (CalEMA) and the State Emergency Plan.


            1.  EDD and the CUIAB shall, as deemed appropriate by the Labor and Workforce Development Agency, contract for facility space, the services of qualified personnel, and/or for the supplies, materials, equipment, and other services needed to immediately and effectively increase EDD’s and CUIAB’s ability to assist the people making unemployment claims, contacting EDD, or appealing their claims.  Because strict compliance with the provisions of the Government Code, the Unemployment Insurance Code, and the Public Contract Code applicable to the state hiring process and state contracts would prevent, hinder, or delay the mitigation of this emergency, applicable provisions of these statutes, including, but not limited to, advertising and competitive bidding requirements, are suspended to the extent necessary to enable EDD and CUIAB to enter into such contracts as expeditiously as possible.  This suspension is limited to the scope and duration of this emergency.

            2.  State agencies and departments within my administration shall provide assistance and resources to EDD and CUIAB, as needed, including the use of state personnel, facilities, equipment, resources and state contractors to respond to this emergency.

            3.  State agencies including but not limited to the State Office of the Chief Information Officer (OCIO), the Department of General Services, the Department of Personnel Administration, and the Department of Finance shall expedite project, contracting, budget, and personnel action review and approval processes so as to expedite the hiring of EDD and CUIAB staff and the implementation of EDD and CUIAB information technology projects designed to expand and enhance unemployment insurance services, and personnel to support these efforts.

            4.  To the extent allowed by applicable law, state agencies within my administration shall prioritize and streamline permitting and regulatory compliance actions to provide for relief from the economic downturn and unemployment in California.

I FURTHER DIRECT that as soon as hereafter possible, this proclamation be filed in the Office of the Secretary of State and that widespread publicity and notice be given of this proclamation.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 17th day of April, 2009.

Governor of California

Secretary of State

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California Declares State of Emergency; Actual Unemployment at 20%


As California’s economic woes worsen, Governor Schwarzenegger declares a state of emergency.
Is this an indication of what the rest of the country will face in the near future? California has led in nearly every indicator in this recession, what happens here first usually follows nationally. California also makes up a huge portion of the national economy…

With job losses mounting and social pressures growing, California Gov. Arnold Schwarzenegger declared a state of emergency on April 17.

“I find that conditions of extreme peril to the safety of persons and property exist in California caused by the current and continuing economic downturn and resulting unemployment in California,” Governor Schwarzenegger said in his “Unemployment Proclamation.” He added that the magnitude of the economic downturn and resulting unemployment were out of the control of the services, personnel, equipment and facilities of any single city and/or county and required the combined forces of an entire region or regions to combat.

The latest unemployment figures show that conditions in California are much worse than in the rest of the country. As of March, the official unemployment rate stood at 11.2 percent—the highest for the state since statistics have been collected—and far above the official national average of 8.5 percent. Tens of thousands of workers lost their jobs in March, which caused the unemployment rate to surge.

But the actual unemployment rate paints an even darker picture. If you include those people who have given up looking for work and those who work only part-time because they cannot find full-time work, the California unemployment rate doubles to about 20 percent.

Economists expect unemployment rates to continue to rise at least through the end of summer, when President Barack Obama’s stimulus packages filter down to the local economies. But economists worry that once this one-time spending is gone, job losses may rise again.

California’s bleak economic condition is an omen for the rest of the country.

California has been plagued by a host of curses over the past few years: a housing bubble, massive budget issues, widespread and uncontrolled illegal immigration, major droughts, and wildfires. In February, Governor Schwarzenegger was forced to issue a state of emergency over drought conditions.

Since the state is responsible for approximately 13 percent of the nation’s gross domestic product, as long as California continues to deteriorate, it will exert a disproportionate drag on the rest of the country. And the drag looks like it will only get heavier.

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California Association of Realtors: March home sales increase; prices down

“All of the regions in the state experienced increases in month-to-month raw sales, with the smallest gain in the Sacramento region at 9.7 percent and the largest gain in the Riverside/San Bernardino region at 32.2 percent,” says CAR President James Liptak.  
According to the Association of Realtors, home sales increased 63.8 percent in March in California compared with the same period a year ago. The median price of an existing home declined 39 percent, according to a limited survey of Realtors by the California Association of Realtors. Sales in March decreased 16 percent compared with February.

Based on information collected by CAR from more than 90 local Realtor associations,  the study does not include every county or information from non-Realtor sources, such as foreclosure sales.

According to CAR’s survey the median price of an existing, single-family detached home in California for the month of March was $253,040, a 39 percent decrease from the revised $414,520 median for March 2008.

The March 2009 median price actually rose 2.2 percent compared with February’s $247,590 median price.

“The statewide median price showed the first monthly increase since August 2007, and has remained in the $250,000 range over the past three months,” says CAR Chief Economist Leslie Appleton-Young. “A number of regions around the state also have registered monthly gains for one or more months since the beginning of this year. While these are welcome signs, it remains to be seen whether home prices have stabilized.

 Appleton-Young continues; “While we still face continued weakness in the general economy and expect continued foreclosures, the increased incidence of multiple offers indicates that first-time home buyers and investors are responding to dramatically improved housing affordability.”

 Statewide, inventory is declining; CAR’s unsold inventory index for existing, single-family detached homes in March 2009 was 5 months, compared with 12.2 months (revised) for the same period a year ago. This index tracks the number of months needed to deplete the supply of homes on the market at the current sales rate, if no additional homes were listed for sale.

Average Days on the Market was 48.3 days in March 2009, compared with 56.8 days (revised) for the same period a year ago.

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gavin newsom 042509 2


SACRAMENTO – Saying California is a “state of dreams”, San Francisco Mayor Gavin Newsom called for a “New Direction for California” in a speech to California Democratic Party members in Sacramento today.

In his speech, Newsom discussed his record of accomplishment in San Francisco and said “…California can’t afford to keep returning to the same old, tired ideas and expect a different result…. We’re Californians. We’re not content to re-live history. We’re going to keep making it. So let’s start making a better future for California.”

“…I’ve had enough of politicians who say they care about liberty and then fight to take our freedoms away. I’m done with the excuses. I’m over the finger pointing. I’ve seen enough of the blame game. I’m tired of California leaders promising the future and delivering the past.

This state is ready for a new direction. And this party is ready to show the way.

Read more…

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Sacramento’s Cheapest Houses


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Option Arms Resets Delayed; May not be the Tsunami Once Forecasted?

Option ARMs (Adjustible Rate Mortgages) typically reset after five years, and when they do, the monthly bill generally increases 65% or more. A total of $500 billion of option ARM loans are outstanding, according to Credit Suisse. And Barclays Capital says that about 37.5 percent of option ARMs originated in 2005 are still outstanding, 63% of the 2006 originations are outstanding, and 82% of the 2007 loans are still outstanding. According to Barclays Capital (BCS) about a third of all these loans are deeply delinquent.

The Mortgage Bankers Association says the impact of an increasing tide of resets will be diminished because lenders are helping borrowers refinance the option ARMs before they reset.  “I don’t think this is going to be the tsunami that was forecasted a few years ago,” says Keith Gumbinger, vice-president of, a publisher of loan information.  “But it’s probably bigger than a ripple in a pond.”  Yeah, that’s what Barney Frank said about Freddie Mac and Fannie May.

Keith Gumbinger, vice-president of, a publisher of loan information in Pompton Plains, N.J., said the lower interest rates have helped to diminish the option ARM problem. But it remains unclear how many option ARMs are left to reset and how many borrowers will be able to get out of the loans before it’s too late. Moreover, by the time they do reset it is unclear whether the economy will be better off. If home values and unemployment continue to weaken, it will become even harder to refinance. But the delay in resets gives some motivated borrowers time to work with lenders and negotiate a solution.


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Folsom Lake Bank Assets Improve 87%

Folsom Lake Bank endured a first-quarter loss of $461,803, a common scenario for a startup financial institution.

The current quarter decline — greatly affected by a $300,000 loan loss provision — compares to a loss of $366,564 in first-quarter 2008.

“We are not unaffected by the economic downturn, however our loan portfolio remains strong with no past due or non-accrual loans,” Folsom Bank president and chief executive officer Robert Flautt said in a news release. “We remain an active lender in the community and look forward to a continued growth in our loan portfolio.”

The bank’s first-quarter revenue climbed 79 percent to $946,107, from $528,781.

“We are pleased with the continued strong growth this past quarter and look forward to additional growth as we add our second branch in Roseville later this year,” Flautt said. The new branch on Douglas Boulevard is expected to open in July.

Shares of Folsom Lake Bank (OTCBB: FOLB) remained unchanged at $8.10 in trading Friday.


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Sacramento Median Home Prices Rise Over $5,000

 A fast-paced  home sales market makes Sacramento the envy of real estate agents across the nation. In the month of March, for the first time in more than a year, the median prices for new and existing home sales combined rose to $165,000 in Sacramento County – a $5,000 hike from February. The county’s median sales price has risen only a handful of times from one month to the next since prices peaked in 2005 at $387,000.

Some days it seems the worse may be over, ie; inventory is definitely tightening, buyers are ‘off the fence’, the fear and uncertainty seem to be subsiding, Short sales are getting approved… Yet there still looms perhaps, another tsunami of foreclosures coming over the next several months, as California imposed moratoriums begin to lift… Listing agents across the Sacramento region are reporting many more assignments;  BPO (Broker Price Opinions) orders are way up (we are doing three times as many as we’ve EVER done) and reports many more trustee sales are taking place again…

So analysts remain stubbornly cautious. They say there are still too many conflicting signals to accurately forecast a bottoming out of the real estate cycle. The year’s worth of increases, after all, follow 37 straight months of year-over-year declines,

“Usually, after 12 months, you start looking for prices to stabilize,” said Andrew LePage, an analyst with researcher MDA DataQuick. DataQuick announced Thursday that March saw 3,419 homes close escrow in the region, an increase of about 31.5 percent from March 2008.

“But we’ve never been down this road before,” he said, “and historical road maps haven’t done a good job of showing where we’re headed… 

Now nationally, prices continue to fall in most areas; however the average price is actually rising!

According to DS News; The Federal Housing Finance Agency (FHFA) reported on Wednesday that U.S. home prices rose 0.7 percent from January to February, based on the purchase prices of homes owned or guaranteed by the GSEs. It’s the second month in a row that FHFA has recorded a national gain in residential real estate values. From December to January, the agency said, prices rose a full percentage point at the national level.

Although the recent gains are a welcome departure from months of steady declines, property values still have a ways to go to recover from the hole that’s been dug by the housing crisis. Based on FHFA’s market data, for the 12 months ending in February, the national House Price Index (HPI) is down 6.5 percent. The U.S. index is 9.5 percent below its April 2007 peak. February’s numbers are currently sitting at about the same level as home prices in April 2005, the agency said.

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Sacramento Area Rents Fall for the Sixth Month in a Row

Jim Wasserman of the Sacramento Bee wrote a story today about the free fall in rental rates in the Sacramento area.

Sacramento area apartment and housing rents, which have long been lower than in much of California, are getting even lower.


According to RealFacts, Average asking rents in large apartment communities all over the sacramento region have fallen for six straight months.

The phenomenon isn’t happening in all Sacramento area cities, but a RealFacts survey of 76,000 apartment units in Sacramento, El Dorado, Placer and Yolo counties, shows a second straight quarter of falling  rents.


According to RealFacts, this years first-quarter apartment rents in the Sacramento area averaged $961, down from $966 in the fourth quarter of 2008.

Rents are also falling across much of the United States, RealFacts data shows. Asking rents, on  average,  have fallen around 4 percent or more the past year in Miami, Orlando, Phoenix and Riverside-San Bernardino .

Nearly all the major metro areas of California, with  the highest unemployment since 1941  –  (they reported a 11.2 percent unemployment in March)  have seen rents fall in large rental communities.

“There are a lot of people who have lost jobs here in California, and those who haven’t are apparently scared they will, so everyone is watching expenditures,” said Caroline Latham, chief executive officer of RealFacts.

Sacramento area’s March unemployment was 11.3 percent. It may pass the 12 percent mark, the Stockton-based University of the Pacific’s business forecaster has said.

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