Archive for the 'Sacramento Economy' Category

Sacramento Foreclosures and Short Sales to Continue For at Least Four Years… Analysts say

Sacramento Foreclosures will continue until prices rebound, people get back to work and the economy improves. Analysts say that will be at least four years. But economists agree that the California economy is more tied to joblessness than to housing.

Foreclosure Drive

Even though there are signs California may be beginning to emerge from the recession; the numbers indicate there are many more homes to come through the “foreclosure pipeline”.  Housing sales have been growing for several months, and state Controller John Chiang on Thursday released his December cash report that showed the month’s receipts rose above estimates by $481 million, or 5.7%.

According to an article the other day in the Bee, even the Appraisal Institutes economic forum analysts agree that joblessness and politics have more to do with the economy than foreclosures.

(Source: The Sacramento Bee) trackingBy Jim Wasserman, The Sacramento Bee,

Jan. 16–Even as Sacramento entertains ambitious proposals for a new NBA arena, economists Friday warned it will take up to four years for the region to recover from its overbuilding and overspending spree.

Analysts Friday told 150 residential and commercial appraisers that area recovery could begin taking shape in mid- to late 2011. But it will be prolonged, slow and susceptible to setbacks, they said during a 2010 economic forum sponsored by the Sacramento Sierra chapter of the Appraisal Institute.

The pronouncements came as the capital region endures 12.4 percent unemployment and predictions the jobless rate may rise to 13.5 percent. Hanging, too, over Friday’s forum: a wild-card specter of new state cuts that many fear could disproportionately afflict the capital.

“I don’t expect 2010 to be anything more than a year of stabilization,” said Garrick Brown, Sacramento research director for commercial real estate brokerage Colliers International. Brown said rents are still falling and more stores, offices and industrial spaces are sitting empty.

“I think we’re about to enter a period of two to three years where there’s virtually no new construction,” he said. “It means there’s going to be a lot of developers out there without a lot to do.”

Brown said retailers are again filling large area stores that went dark after 2008 retailer implosions. But they won’t fill smaller shopping center spaces any time soon.

“You won’t see a new push by mom and pop retailers for four or five years. They’re dependent on home (refinancings) and it’s not happening,” he said. Unfilled space and tenants struggling to pay rent are forces pushing many owners toward foreclosure, he said. That suggests a sequel to the residential meltdown that began in 2007.

But an often-predicted tsunami of commercial foreclosures won’t happen, Brown said. Instead, they will dribble out “in waves of distressed assets the next five years.”

Folsom home-building industry consultant Greg Paquin told appraisers that commercial real estate “is where (the residential market was) two years ago.”

He said 2009 was the bottom for capital-area home builders, who reported a half-century low of 2,814 sales for the year. That’s an 84 percent drop from the housing boom’s 2004 peak. Sales will rise 10 percent this year, said Paquin, president of The Gregory Group.

Though residential foreclosures still cloud the housing market, Paquin said he doesn’t expect a double-dip recession or spiraling inflation, or, in response to a question about rising commuting costs, the death of suburbia.

“I’ve heard people say the suburbs are dead.

I strongly disagree,” he said. “I think we’ll see urban-style development in suburban areas.” Paquin, like Brown, expressed anxiety about the politics of state budget cuts. Both analysts noted that large-scale state employee layoffs could push area unemployment past 15 percent, delay recovery by a year or two and send the foreclosure rate “vertical.” Said Brown: “Until we get a handle on that, it’s hard to know what’s going to happen to our local economy.”

Los Angeles economist Chris Thornberg sounded the same theme, saying the economy rests more on political decisions than fundamentals.

Thornberg declared the U.S. recession over, saying, “The recession didn’t end because the problem of imbalance was fixed. It came to an end because of massive government intervention in the economy.”

Thornberg, head of Bacon Economics, said the shape of recovery depends on the “politics of the next 18 months.”

He told appraisers he’s bullish on California and praised a return of cheaper housing once again aligned with incomes.
“For all intents and purposes we’re back to where we need to be,” he said.
Thornberg counseled patience in working off excesses from 15 years of large trade deficits, overspending and debt.
“We have to work our way back to where the economy can grow normally,” he said.

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Sacramento Short Sales… All the rage in 2010

Sacramento  Short Sales Shark Attack

Shark

“Just when you thought it was safe to go back in the water…”

“Houston, we have a problem…”

“We’re not in Kansas anymore, Toto!

Can’t think of any more silly quotes right now, been a long day, but I just got an email from Chris McLaughlin, one of the nations top real estate attorneys and a huge investor of real estate; hope he doesn’t mind, but it was so interesting I thought I’d pass it on to you here.

 

 

Forth,

Just when you thought things were turning the corner…
looks like we could be in for a double dip recession.

Don’t take my word for it … why do you think the FHA recently gave the green light for property flipping to FHA buyers?  They know things are going to get worse, so they need to start moving more properties ASAP.

Here’s why:

#1 While the subprime crisis may be showing signs of
stabilizing, the ARM crisis is just beginning to rear
its ugly head. 

According to one business journalist: “The big wave of Option ARM resets has yet to come, and given the drop in home prices, refinancing won’t be realistic.”

Look for more short sales coming in 2010.

#2. Municipal Defaults: yep, local towns and counties
are feeling the pinch with foreclosures and tax
defaults draining their coffers.  And when a town
goes broke, it will put their resident’s property
even further underwater.

Look for more short sales coming in 2010.

#3.  Commercial Real-Estate Collapse: The second
largest chain of malls has already declared
bankruptcy.  Obligations needing refinancing
in the commercial market are in the trillions.
And most of them, even with positive cash flows,
are as underwater as residential mortgages.  As
these businesses crash, they will cause even
more unemployment.

Look for more short sales coming in 2010.

#4.  Loan modifications aren’t working.  Unless
and until there is meaningful principal reduction,
most people getting a loan modification will stop
making their payments if they are $100,000+
upside down on their home.  And there are A LOT
of people upside down.  Look for lots of “jingle
mail,” where the homeowner just sends back the
keys, in 2010. 

Look for more short sales coming in 2010. 

But look for a lot more buyers now that FHA has given the green light. 

Are you seeing a theme yet?

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Sacramento Area Foreclosure News

 

720 9th St. Trustee Sale Location

The Foreclosure market here in Sacramento is currently drying up… very few homes coming on the market as REO or bank-owned, fewer foreclosure filings, Multiple offers for the homes that are priced right, and an overall sense of “wait and see” seems to be on most potential buyers’ minds right now.

The banks have been rescheduling foreclosure sales or Trustee Sales at the county courthouse for so long, that now the foreclosure departments just haven’t been scheduling them in the first place– kinda makes sense, if all your going to do is reschedule it and put it off anyway; why spend the time and money on  scheduling it in the first place?

If the number of buyers at the foreclosure sale (trustee sale) is any indication– there must be many investors who believe the prices are not going much lower, or who think there may be some up-tick in the market sometime soon: the number of buyers has tripled or quadrupled in the last several months and continues to grow, according to friends who attend the sales down at 720 9th St. downtown Sacramento (address for the Sacramento County Municipal and Superior Courts). they say tat over 90% of foreclosure sales are postponed still, or re-scheduled, usually for only 30 days at a time…

In other Sacramento area real estate news: According to OBSNews

An amendment co-authored by Sacramento Congresswoman Doris Matsui (D–California) has been based by the House of Representatives and was added to the Wall Street Reform and Consumer Protection Act (H.R. 4173) yesterday. The act requires mortgage servicers or lenders who are participating in the Making Home Affordable Program (HAMP) to publicly report their progress in helping responsible homeowners stay in their homes. The amendment was introduced by Congresswoman Matsui with Rep. Betty Sutton (D–Ohio) and Rep. Kathy Castor (D–Florida), and debated on the House floor. Passage of H.R. 4173 is expected today.

“Too many families in my district of Sacramento have faced foreclosure on their homes as a direct result of the economic meltdown,” stated Matsui. “There is another uptick in foreclosures expected that could affect as many as 4.5 million homeowners over the next two years. The Making Home Affordable Program holds the potential to greatly reduce these figures, and my amendment will ensure accountability on the mortgage industry. Transparency will incentivize the mortgage industry to help responsible homeowners stay in their homes.”

 

Some information courtesy (OBSNews.com)

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Sate Pulls Reedevelopment Funds; Gets Sued…

The state’s decision to pull redevelopment funds to solve its budget problems is effecting redevelopment plans in cities throughout the region.

For the second time in Less than two years,  California Redevelopment Association has filed a lawsuit against the state over the states plan to take more than $2 billion from the state’s redevelopment agencies to balance the budget.

Redevelopment money is the engine of local economies – getting the ball rolling on big and small projects.

Local Communities will pay the price in terms of lost jobs and community vitality.  Kevin Payne, assistant planning and redevelopment director for the city of Roseville Stated in a SacBee article lately “The issue that I see with the state taking our funding is basically, it’s not constitutional,” Payne said, “and it’s really taking opportunity away … to create jobs, housing and a better physical environment overall.”

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Prime Fixed-Rate Loans Account Now For 1 in 3 Foreclosure Starts

Prices are being pressured in the high end becouse of prime defaults here in sacramento

It used to be that two income families with two well educated, high paid breadwinners were nearly ‘exempt’ from the economic difficulties many are facing in the worst economic slump since the depression. Not any more.

Especially here in the Sacramento area, these are the new people in trouble as 11.6 percent unemployment and 14 percent wage cuts across state government jobs take a toll.

With the recession nationwide throwing thousands of people out of work daily, more than 13% of American homeowners with a home mortgage have fallen behind on their payments or are in foreclosure.

Thursday, the Mortgage Bankers Association spotlighted the trend nationally, saying “prime fixed-rate loans account now for one in three foreclosure starts.”

“This is further confirmation of what we’ve seen in the past year, one that’s increasingly driven by fundamental issues in the economy,” MBA Chief Economist Jay Brinkmann told reporters during a conference call. Brinkmann has long said that early-recession layoffs hit renters first, many in construction. Then it hit manufacturing-dependent homeowners. Now, it’s moved up the food chain to the professions with good educations and prime-rate “safe” loans.

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Sac International Airport’s Bond Rating Dropped by Second Credit Reporting Company

Sacramento-area’s biggest construction project has hit a bit of financial turbulence, The two largest credit-rating companies recently downgraded  bond ratings of Sacramento International Airport. The downgrades were done in anticipation of a $500 million airport bond sale this week.

Standard Poor’s Rating Service downgraded revenue bonds for Sacramento International Airport, from “stable” to “negative” late Wednesday. The credit-rating company issued an “A+” rating for the county’s $213 million airport system revenue bond, and an “A” rating for its $278 million airport system subordinate and passenger facility charge revenue refunding bonds. Both have a negative outlook.

“The ratings actions reflect our view of the fundamentally strong economic characteristics of the service area, despite weakness reflecting the general economic recession; a decline in passenger traffic and financial margins; and continued strong liquidity events,” according to a Standard Poor’s report.

Moody’s Investors Service downgraded the airport’s bond ratings, just as it plans to sell $500 million in bonds this week. Moody’s dropped the airport’s senior bond rating from A1 to A2, citing a sharp drop in passengers this year, as well as the recession and higher costs for airlines.

 

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California First To Sell Build America Bonds And Take Advantage of Federal Recovery Act

Gov. Schwarzenegger Said on Wednesday that California is the first state in the nation selling Build America Bonds, and taking advantage of the new Federal Recovery Act . With this help, more than 5,000 projects will be restarted in California. Restarted projects cover everything from transportation, school construction, environmental and park projects, infrastructure projects and more. Many of these projects have been on hold since December 2008.

One of the most awaited projects to get restarted for Sacramento is the  The Railyards in the downtown district.

The Railyards, a joint venture with Thomas Enterprises will redevelop the 240-acre downtown Sacramento railyard, that has been on the books for several years.

Governor Schwarzenegger released a statement after the California Transportation Commission voted to give additional American Recovery and Reinvestment Act (Recovery Act) funding designated by the federal government for highway transportation infrastructure projects.

He said “We must maximize the use of precious tax dollars – not only in California’s General Fund spending but also with the Recovery Act funds coming into the state for federally defined purposes.  President Obama designated Recovery Act funding for transportation infrastructure to create and save jobs while also investing in our nation’s infrastructure – and in California we are working around the clock to take full advantage of each and every dollar.”

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Sacramento Area Unemployment- Wer’e In For A Long Economic Fight…

Upcoming Cuts in Sacramento area government jobs, including State and County services, will surely affect the Sacramento real estate market.

With the state of California about to start a round of massive layoffs beginning with about 6,000 employees in the next month, the Sacramento job pool is surely going to shrink.  The Capital region is home to many state offices who will be affected by the job cuts. Also struggling with the economy; Sacramento area Police Forces, road workers, firemen, teachers… 

The Sacramento area, four-county region’s jobless rate dropped to around 11 percent last month, compared to a modern-day record 11.4 in March, ending 11 consecutive months of rising unemployment. The drop in unemployment was surely boosted by the California state government actually adding 500 jobs last month.

Why would they do that?

Depending on whose numbers you use, we lost as a state, around 63,000–64,000 Jobs in California last month. This summer’s numbers won’t be so good…

The national economy lost 345,000 jobs in May, taking the total to 14.5 million unemployed workers.  The state has lost 706,700 jobs during the past year, the most in the nation. Almost 2.06 million people are unemployed, about 35,000 fewer than a month ago.

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7 of 10 Sacramento Home Sales are Distressed Properties

Joel Singer, executive vice president of the California Association of Realtors, said that as painful as it is, all this housing distress has one advantage… Affordability,

Addressing the over 1500 Realtors that attended the annual CAR convention held this week in Sacramento, Singer said that today’s statewide median, skewed by high numbers of bank repos and other distressed listings, is now at $256,700. a huge, almost surreal drop from the nearly $600,000 in the recent boom.

“That affordability, in itself, will help cure this problem in the future if we can maintain it,” said Singer. “It also makes California, in my book, a more competitive place, something we all need in terms of long-term economic growth.”

Singer told agents from all over the state to expect more distress, even though he sees a “bottom forming”, especially in the low-end market. He thought the higher-end market was still declining.

News form other sources confirm this; research shows that inventory of homes priced under $500,000 has shrunk to a three-month supply at current rates of sale while the supply of million-dollar homes has expanded to 17 months.

With many local markets’ median prices still declining, California remains “uncharted territory,” he said. Singer said nearly nine in 10 homes sold in Solano County this March were bank repos, short sales or had some kind of financial distress. Sacramento County was only a little  better, with seven in 10 sales being distressed homes.

Distress sales have caused the squashed  prices, but have also killed commissions, even as sales have risen.

“If you look at the dollar volume of housing transactions, why does it still feel so bad when sales are twice what they were? It’s because the dollar volume of housing contracted by 53 percent. If you’re getting half of what you made in the peak year of 2005, you’re beating the average, and that’s why you feel so bad. That’s why I am so impressed that there are so many of you still here. Most industries don’t survive a 50 percent downturn.”

 

 

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Housing, Unemployment, Foreclosures – Elk Grove Has Been Hit Harder…

Elk Grove is one of the only Sacramento area communities struggling with rising crime lately, according to a new statistical report.

According to a SacBee article this morning, By Phillip Reese;

FBI statistics released today show that violent crime dropped significantly in Sacramento and Roseville last year, remained steady in unincorporated Sacramento County, crime dropped significantly in Sacramento and Roseville last year and jumped in Elk Grove.

Elk Grove was the outlier last year. While most types of crime in the suburb dropped slightly, the number of aggravated assaults rose 50 percent.

The city’s aggravated assault rate remains below Sacramento‘s but it is high for a suburb – the rate is roughly the same as Fresno’s, FBI statistics show.

“Housing, unemployment, foreclosures – Elk Grove has been hit harder than a lot of the other cities,” Elk Grove Police spokesman Christopher Trim said.

Elk Grove’s property crime rate declined last year, but not as quickly as Sacramento‘s.

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