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Posts Tagged ‘Foreclosures’
Was the State Capital really SOLD!!!!!
Monday, September 21st, 2009Lennar falls deeper into red
Monday, September 21st, 2009Signs that the housing market is gaining traction have yet to pull Lennar Corp., one of the nation’s largest homebuilders, out of the red.
The Miami-based homebuilder (NYSE: LEN and NYSE: LEN-B) said it lost $171.6 million, or 97 cents a share, on revenue of $720.7 million for the third quarter ended Aug. 31. A year ago, it reported a net loss of $89 million, or 56 cents a share, on revenue of $1.11 billion.
The third quarter results included write-downs totaling 76 cents a share.
Analysts polled by Thomson Reuters expected a 46-cent loss on revenue of $774 million.
Lennar was the area’s fifth-largest homebuilder in 2008, selling 277 homes in the six-county Sacramento region with a 5.7 percent market share, according to analyst Hanley Wood Market Intelligence.
Lennar president and chief executive officer Stuart Miller said the overall housing market is on the “road to recovery.”
“While high unemployment and foreclosures will continue to present challenges, consumer sentiment has significantly improved as homebuyers have recognized that the residential housing market is stabilizing,” he said.
Miller said the company’s strategy is to target first-time buyers and bargain-hunters, which are helping new home orders rise each month. New orders were still down 8 percent in the third quarter, but that decline was the smallest percentage year-over-year decline since November 2006.
“In order to capitalize on the improvement in our sales pace, we increased our home starts during the quarter, which will lead to higher deliveries in the fourth quarter,” Miller said. “We are also encouraged by the continued improvement in our cancellation rate.”
The cancellation rate dropped to 19 percent from 27 percent, gross margin on home sales shrunk to 15.6 percent ($98.9 million) from 18 percent ($179.4 million).
Third-quarter home sales revenue in the third quarter decreased 36 percent, to $635.3 million from nearly $1 billion in 2008. The drop was mostly due to a 28 percent decrease in home deliveries and a 12 percent decrease in the average sales price of homes delivered.
Year-over-year, the average sales price was down by $30,000 – to $239,000.
California unemployment: 12.2 percent
Friday, September 18th, 2009The state’s unemployment rate rose three-tenths of a point in August, to 12.2 percent, state officials said today.
Sacramento-area unemployment hit 12 percent, up slightly from a revised 11.9 percent the month before, the state Employment Development Department said.
But there was some good news: Payroll jobs fell statewide by only 12,300, suggesting an easing of the recession. That was only one third as many jobs as were lost in July, and the lowest toll in more than a year.
The Sacramento region lost 1,700 jobs during the month, or about one-fourth the job loss recorded in July.
“This moderation (in job loss) looks to me like we’re going to have job growth pretty quickly here in California,” said Howard Roth, chief economist at the state Department of Finance.
But he added that the August jobs report got a seasonal boost of sorts: With the school year starting so early in many districts, education payrolls swelled more than usual.
And even as layoffs taper off, the unemployment rate will keep going up for a while as Californians resume looking for work, he said.
“I think we’re on the road to recovery,” said Stephen Levy of the Center for Continuing Study of the California Economy. But he acknowledged that continued job loss, however small, will leave many Californians skeptical that the situation is improving. “There’s a reason people don’t think the recession is ending,” he said.
Michael Bernick, a former director of the EDD, said that although layoffs are slowing, “there’s been no uptick in terms of hiring.”
Tags: recession
wow..$10M in stimulus funds for empty downtown senior high-rise
Wednesday, September 16th, 2009Federal stimulus funding is bringing $10 million to restore an empty residential high-rise at 7th and I streets in downtown Sacramento.
“We were high-fiving each other. It’s not every day you get $10 million in a competitive grant project,” said Nick Chhotu, director of public housing at the Sacramento Housing and Redevelopment Agency. The money is headed toward a thorough facelift for the 12-story Riverview Apartments owned by SHRA. It’s a senior complex built in the late 1970s at 626 I St. The building has been empty two years.
Plans are to start construction late next year after getting up to $6 million more in federal funds. The building, with 108 rooms for people 62 and older, needs new windows, a new electrical system and new plumbing, a job that will run well into 2011, said Chhotu.
The Public Housing Capital funds are provided through the American Recovery and Reinvestment Act of 2009. The agency said Sacramento’s $10 million is among the largest grants nationally, and one of two on the West Coast. The other: Seattle.
Here is the building everyone is talking about:
Slow recovery ahead: buck stops in the pocket
Wednesday, September 16th, 2009
Star-spangled camper … a homeless man in a temporary tent city in Sacramento, California Photo: Getty
The continuing fear of job losses in the US means consumers are saving rather than spending – denying fuel to the retail engine of the economy.
EVEN in the affluent US capital, a city that has been relatively insulated from the worst recession since Great Depression, the beggars are visible. They sleep on the street just a block from the White House and at major intersections they wait for fellow Americans to come to a standstill and spare a dollar.
Many carry signs telling their personal story: laid off, returned Iraq vet, lost the house and the job, got sick and no health care.
A year after the US financial markets went into a tailspin, its economy is showing tentative signs of a weak recovery but unemployment continues to rise, though not at the terrifying rate of six months ago, when 600,000 people a month were joining the jobless lines.
Something else has happened in America as well. The era of easy credit that fuelled two decades of mostly spectacular growth is over, not just on Wall Street. The American consumer has started saving. Mortgages, personal loans and even credit cards are harder to get. Consumer credit was down 5.2 per cent annualised between April and June. Revolving credit, which includes credit cards, was down 9 per cent.
The turbocharged consumer market that powered the American economy since the 1980s has run out of puff. These combined, related factors – people don’t spend if they fear for their jobs – are likely to define the US recovery. It will be slow and painful.
The jobless rate rose to 9.7 per cent in August and is expected to peak above 10 per cent in the months ahead. It is already there in at least 15 states and some economists predict it could be five years before the US economy generates enough jobs to overcome those lost and to employ the new workers entering the labour force.
This fear of job losses is likely to keep consumers’ wallets in their pockets. Without a return to spending – retail sales make up 70 per cent of the US economy – it seems inevitable the recovery will be slower than in the past.
So what are the positives? Retail sales have shown signs of improvement and the federal stimulus package is working its way into the economy.
The retail figures for August were up 2.7 per cent, the biggest jump since January 2006, and vehicle sales up 11.9 per cent.
Excluding vehicles, retail sales were up 1.1 per cent – the comparable figure in July was a 0.6 per cent decrease – but the boost was due in part to higher petrol prices at convenience stores. Most analysts are cautious about popping the champagne corks too early and will wait for a stronger spending trend to emerge.
In the housing market – which helped spark the crisis – there are tentative signs of stabilisation. Home foreclosures dipped slightly in August from July but are still 18 per cent above a year ago. The highest foreclosure rate is in Nevada, with one house in 62.
On home prices, the Case-Shiller Index has shown increases for May and June after 37 months of decline. The number of home sales has risen too.
”The only doubts about it are the market is rather abnormal now with all these foreclosure sales,” said Robert Shiller, who helped develop the index.
Falls in house prices have been huge – in some markets as much as 50 per cent. Many Americans, perhaps a quarter of those with mortgages, owe more than their homes are worth.
The Obama Administration’s ability to stimulate the economy further is severely curtailed by its huge budget deficits – and Congress has run out of patience with financial bail-outs.
“I don’t think we are out of the woods yet,” President Barack Obama said this week. “We need to be careful about taking the crutches away from the patient too early.”
Hanley Wood’s 209 Housing Forecast: seeing a little light now
Tuesday, September 15th, 2009Costa Mesa-based Hanley Wood Market Intelligence held its annual Sacramento housing forecast this morning at the Doubletree – telling about 75-80 members of the region’s struggling home building industry that the signals are still mixed – and projections call for 3,400 home sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties this year. (Comparing that to a different category – housing permits issued by local governments over the year to start homes – that has to be the fewest since the late 1960s in this region).
It’s little wonder the ball room is full of shell-shocked building industry types looking for any kind of good news at all. I took notes of both speakers and will offer somewhat of a transcript here of what was said about the national home building scene first, and then the regional scene. The forum was sponsored by the Propane Education and Research Council.
(Check back a little later, we are expecting to be able to upload a PowerPoint here to go along with this)
Boyce Thompson, editorial director of Hanley Wood’s fleet of builder magazines, and editor of Big Builder Magazine, in particular, offered this national overview. (He, by the way, visited with principals of Sacramento’s Township 9 infill project and toured downtown’s successful Sutter Brownstones infill project).
8:06 a.m. Thompson: This is like the third or fourth time I’ve been here. My forecast is going to be decidedly optimistic here today. People are talking about W-shaped recovery..We’ve fallen so far there’s nowhere to go but up. We’ve already started up. I just feel like things are going to get better.
Sacramento has received a lot of national press. Your land market is coming back, with lots of bids on land and that’s one of the tell-tale signs of beginning recovery. I have a way more positive presentation this year..The last three years I have been negative about the housing market. Nationally, our fortunes are all tied to the national financial markets. We’re going to see an uneven market..Some are beginning to recover. Others are still getting worse. Chicago, of all places, still seems to be getting worse.
The recovery is going to be slow. Housing starts usually bounce back in the first two quarters after recession, don’t think it will be so much this time. We are kind of dragging along the bottom, and it looks like we’re having a little bit of a W-shaped recovery, where it bounces down and up and down.
Headwinds: We still have all that unsold inventory. We’ve got 2.2 million extra (new and built) homes that we need to burn through. And the existing home inventory remains too high. A lot of people believe this is the single biggest problem in the market. There are too many existing homes for sale. Nationally, we have a nine months supply, compared to a usual average of 6.4 months.
We expect to get double-digit unemployment by end of year nationally. But the housing market always comes back while job losses are increasing….You still have 80 percent of households in decent shape. It’s not going to take a lot of people to move that metric forward.. It’s the reason the market rebounds before the economy in general does.
The foreclosure problems: The problem is the foreclosure problem is spreading from subprime to prime. There is the danger of anther flood of foreclosures from Alt-A and Option ARM loans. But there are so many government programs now to help people with these loans. It’s hard to tell what will happen. I’m going to punt on that one.
Consumer confidence has improved.Mortgage rates are still incredibly low. We expect mortgage rates to stay in the low “fives” for the next two years as the Fed continues its policies…The other good news is the banks have loosened up somewhat. Over 70 percent in 2008 had seriously tightened credit; now they’re starting to loosen somewhat and builders have found other sources of liquidity, too, somewhat.
Some market are going to recover before others..Texas, the Carolinas haven’t had rampant price inflation so they haven’t had corresponding deflation.Texas and Washington, D.C., have had strong job growth. The healthiest top 10 new home markets nationally are Austin, San Antonio, Washington, D.C., Houston, Oklahoma City, Baton Rouge, Tulsa, Salt Lake City, Dallas Fort Worth and Olympia, WA..
There are four Texas markets in top 10. Baltimore, too, is a place where sales are actually up year over year. It’s an affordable market. New home sales are up 8.4 percent from January through July this year compared to last year.
Compare that to the Central Valley of California. Sales are down 48 percent from the same time last year. But at least that rate of decline is slowing now.
New home sales in Sacramento’s six-county region are down 43.7 percent this year so far from the same time last year. Riverside-San Bernardino is down just 28 percent from last year. That’s amazing.
There;s nobody who doesn’t see the market coming back next year. Even Economist Mark Zandi of Moodys, who is usually a bear, thinks the market will come back in second half of 2010 and be strong in 2011. On the single-family home side, the National Association of Home Builders predicts 2010 will be better than 2008 again.
And for all the trauma there are still successful projects out there that sell eight to 10 homes a month.Most are aimed at at first-time buyers.They target tax credits. The old rules of real estate still apply: a great project in a place where people really want to live. That still works.
Transit-oriented development through this downturn has always done better than the rest.
All these projects were green. Well, it’s not so much green, but energy efficiency. There’s a lot of marketing going around green. You may think people don’t really care about it, but what’s the harm, it seems to be working for people.
Here’s some big winners nationally:
- Mueller row and yard Homes, It’s by Catellus in east Austin. Prices start at 269K. It’s a five-minute drive from downtown.
- TLofts in West LA. CityView is the developer. These are lofts near Santa Monica Boulevard, starting at $415K. They sold 13 in first month in July. These are condos and lofts. There are 18 parking spots where you can charge an electric car and that’s gotten a lot of media attention.
- Paradise at Ironwood Crossing, outside of Phoenix. It’s in Pinal County and the San Tan Valley. The builder is Fulton Homes. It’s selling 21.5 per month. It starts at $115,900 to $148,900. Single family homes.
- Ivy at Woodbury East. This is in Irvine; The developer is The Irvine Co. and the builder is William Lyon Homes..sold 21 homes a month in July to mid August. Starting in the mid 300s. Townhomes. A lot of these places have done price cuts to boost sales.
- Stafford Lakes: Fredericksburg, VA. Builder Centex is selling nine per month, with prices from $255K to $325. They’re single-family homes. That’s neat success story.
8:33 a.m. Thompson: We’ve done a survey of 660 people shopping for new homes in May and June in California, Nevada, Arizona, Texas, Florida and North Carolina.
Shoppers were pessimistic about the shape of the economy, but they were way more optimistic about the shape of their own personal finances. Only 31 percent saw their personal income situation as not so good or poor. A lot were in the market because they could get a lot for their money.
74 percent said they were not concerned about hitting the bottom of the market, but they were still very concerned about losing their job or their spouse losing a job. Sixty-six percent were up to somewhat concerned about job losses. So they don’t want to stretch their finances too much to buy a home. That’s a standard feature of downturns. When it starts rebounding people are really careful about their money. The starter market always comes back first because people feel that’s where they can really get their value.
8:41 a.m: The capital regional market with Hanley Wood’s Sacramento regional sales manager and analyst Kathryn Boyce:
Foreclosures: We’re finally down to 11th nationally. We are at least out of the top 10 now. But notices of default are climbing again. Job growth continues to be negative. We’re expecting 41,000 lost jobs in the region in 2009. We rank 58th of 75 job markets nationally for jobs. Our unemployment is projected to go to 12.9 percent by year’s end.
We’re in the middle nationally for population growth. But 27 percent of people coming to the Sacramento area are from the Bay Area. Proximity to the Bay Area is a really good thing for Sacramento. They’re still relatively holding on for equity of their houses. It hasn’t dropped as much as Sacramento so they’re still able to bring some of the equity into Sacramento.
Our housing permit history is way off from 2008 even. We’re down 50 percent. Overall, based on year to date we’re projecting 3,400 sales for 2009. Sacramento can support about 8,500 sales a year. We stole from the future quite a bit from the hey day when we had our special financing. If they had a pulse we gave them a loan. But now Generation Y is coming in. It’s bigger than the Boom generation.
They want to buy a house, but they’re not looking for big 4 BR and 4BA homes. And they’re holding back on marriage and having children.
Most sales here are in the $200-$300K range followed by $300-$400K. There’s an under-abundance of new houses in the $200K and below range. We need to have some houses brought in there. Our median sales price for existing single-family detached homes is $218K. It’s $330 for new single-family houses. We have to stay with that median income. There are no more rebates for California and no special financing. We need rebates or to lower prices.
Our sales rate: we’re at a dismal 1.5 houses per month. But we’re seeing it increase.
We have 1.9 months overall of standing inventory. There’s just not that much standing inventory out there anymore. That’s a great thing…You have 10 months inventory out there total. We’re seeing builders picking up land, we’re seeing Tim Lewis, Meritage, Homes by Towne and K. Hovnanian picking up lots. We’re hearing now again about paper lots having some value.
Cancellations: We’ve had a downward trend. There isn’t a renters mentality any more. Buyers cant come in without a percentage down. The people walking into these subdivisions are committed buyers. They are actually looking for a house.
Our top 10 builders represent half the sales market and only one is a privately-owned builder, JMC.
8:52 a.m.: The existing home market: Boyce: We now have 34.4 percent affordability for new homes and 78 percent affordability for existing homes. It’s a big range there. We’re going to be soft until we lower prices.
The notices of default are coming back and we’re seeing here what might be another huge wave, depending on who you talk to, that there might be another wave of foreclosures coming.
The gap between the median is huge. It’s $189k for single family median for existing.
There are 94,000 lots out there and 18% are finished lots. The bulk of the lots are in Placer, Sacramento and Yuba Counties.
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Land values: We are having issues with land values. If you add in impact fees from our municipalities it them just right out of whack.. I know the North State Building Industry Association is working with municipalities to lower fees.
Our outlook and conclusion: We have a potential light in the economy. Demand is still weak, but it is turning. We’ve seen unemployment drop in July, but it’s still up, and its still up higher than other places around the country. The stock market is rebounding. The Fed will continue to buy mortgage-backed securities. But there is still a large overhang of foreclosures and we expect Sacramento’s mortgage delinquency rate to be 12.2 percent by the year’s end. California’s could be 14.2 percent by the end of the year.
Finally, it’s a wild card if the municipalities will lower fees or not. We’ve seen a couple of them doing it, but we’ve seen a couple of them say no. In terms of consumer demand, the first-time home buyer stimulus was a plus. The impact was good for first half of 2009. We’re hearing talk of the National Association of Home Builders going to Congress asking for a $15,000 tax credit for all buyers. That would replace what we have in California because I don’t believe (the state of) California is going to be able to pick up that demand again.
Median price rising toward $200K again in Sacramento County
Monday, September 14th, 2009August’s median sales price for existing single-family homes rose to $190,000 in Sacramento County and the City of West Sacramento – after three straight months parked at $180,000, the Sacramento Association of Realtors is reporting this afternoon.
That $190,000 figure is 2009’s highest – well up from bottoming out at $167,000 in March.
The median sales price first fell below $200,000 in August, 2008.
The higher number almost certainly reflects the continuing fall in the really cheap repo share of this market. Bank repos feel again to 47.6 percent of sales, while short sales – in which a bank accepts less than owed to avoid costs of foreclosing – went up again to 18.8 percent of sales.
That makes “distress sales” about two-thirds of all sales.
The number of single-family home sales also fell a bit. August’s 1,683 closed escrows were down 8.9 percent from 1,848 in July – and are down 10 percent from 1,871 the same month last year.
Here is the summary of statistics.
And here is a look by ZIP Code.
California bill would extend tax credit on new homes
Thursday, September 10th, 2009A popular state tax credit of up to $10,000 that helped sell hundreds of new houses throughout the Sacramento region earlier this year appears to be coming back.
A plan to extend the state tax credit to another 4,285 buyers of new, unoccupied homes in California – possibly as many as 500 in the capital area – is expected to receive a vote in the Legislature by Friday’s end of the session.
The buyer tax credit began March 1 and unexpectedly sold out by July 2 as many first-time California buyers combined the state credit with an $8,000 federal tax credit.
Statewide, Roseville ranked eighth among cities where new house buyers received the state credit. Sacramento ranked ninth, the state Franchise Tax Board reported.
“It was used very extensively,” said Dennis Rogers, a government affairs executive with the Roseville-based North State Building Industry Association. He and others in Sacramento’s struggling building industry said the credit helped prod buyers off the fence before it ended in July.
“We’ve definitely seen a lot of interest from homebuyers coming into the sales environment because of the program,” said Pulte Homes spokeswoman Jacque Petroulakis. Pulte is the capital region’s largest home builder.
The original tax credit also helped area builders clear an excess inventory of homes finished or nearly finished, but not yet sold.
Builders and buyers now in the sales process hope to see the bill pass the Legislature this week and be signed by Gov. Arnold Schwarzenegger.
That’s considered likely by many close to the legislation. The governor was a force behind the original tax credit, calling it a job generator for the construction industry and larger California economy.
Statewide, 10,659 California buyers got the homebuyer credits, which allowed tax breaks of up to $3,333 per year for three years, the Franchise Tax Board reported Aug. 31. Buyers are expected to be notified by Friday about the amount of credit allocated or denied.
The tax agency stopped taking applications July 2, assuming that it had reached the program’s $100 million limit. Original expectations were that most people could claim the entire $10,000. Then a newer FTB sample of taxpayers approved for the credit based on “their 2007 income tax liabilities, and incorporating 2009 tax law changes” showed most people won’t owe enough state taxes to claim an entire $10,000 credit over three years.
“It’s estimated that most people will get about $7,000,” said FTB spokeswoman Brenda Voet. She said those who qualify for the entire $10,000 will still receive it.
The new FTB liability estimates means an estimated $30 million in credits could go unclaimed under provisions of the original tax credit bill passed in February.
Assembly Bill 765, by Assemblywoman Anna Caballero, D-Salinas, reauthorizes the tax credit under the new estimates. New credits would be available upon the bill’s signing and run through March 1, 2010. Builders must apply on behalf of buyers within one week of closing escrow.
The new bill, however, won’t help capital-area buyers who closed escrow after the FTB’s July 2 deadline. They’ll be ineligible for the tax break because they closed escrow during a time when the law, if it passes, was not in effect.
Good call: He sold in 2005, rented, then bought a repo in 2008
Wednesday, September 2nd, 2009That’s Michael Choe of Sacramento, who has turned up again in Time Magazine for his good call during California’s manic housing boom. The piece dated today notes that he bought a local bank repo late last year after selling in 2005, then renting for a few years as the market crested and crashed.
Time uses his example to frame the age-old question: Is now a good time to buy?
Choe first made the magazine in June 2005 for the amazingly prescient decision to sell his house for $369,000 – twice what he paid for it in 2002 – and rent for awhile. Time then called it “the (surprising) case for renting.”
In that 2005 issue the cover showed America’s love affair with houses. If ever a cartoon said a thousand words and evokes a thousand memories of great times that one does. Choe appeared in that light to be a bit of a kook for selling in a rising market and renting.
Years later, what’s better than national recognition for calling it right on the money?
Deeper Sacramento housing crisis is forecast
Thursday, August 27th, 2009A major credit reporting company predicts mortgage delinquency rates will continue rising in the Sacramento area – with 12 percent of homeowners falling at least two months behind on their payments by year’s end.
That’s nearly twice the national projection and a dramatic jump from just two years ago, when less than 2 percent percent of area homeowners’ notes were delinquent.
“California faces some challenges, and that’s reflected in the statistics,” said Ezra Becker, director of consulting and strategy at TransUnion, one of the nation’s three large credit reporting agencies.
“There are serious delinquency rates in California, and it’s not out of the woods by the end of the year,” Becker added. He predicted the delinquency rates in California would begin falling in 2010.
TransUnion, based in Chicago, analyzed trends in the mortgage industry for the second quarter and offered year-end projections for the Sacramento market and the state.
Today, Sacramento’s 60-day mortgage loan delinquency rate – the percentage of homeowners at least 60 days behind on their mortgage payments – stands at 9.62 percent, just below the state’s rate of 9.7 percent, according to Trans Union.
The national rate, at 5.81 percent, is projected to rise to 6.93 percent by the end of the year.
California trails just Arizona, Florida and Nevada, which has the highest delinquency rate at nearly 14 percent. Delinquency rates are a key indicator because the 60-day threshold is traditionally seen as a step toward foreclosure.
In markets where home values have dropped most sharply, delinquency and foreclosure rates are highest. By that measure, the capital remains in trouble. In June, more than half of Sacramento-area households owed more on their homes than they were worth, First American CoreLogic reported last week.
“As long as that persists, we’ll see delinquencies and foreclosures continue,” said Suzanne O’Keefe, an economics professor at California State University, Sacramento. “Until the housing market turns around, there’s not much hope for those rates to reverse.”
By the end of the year, TransUnion predicts, 12.2 percent of Sacramento-area homeowners and more than 14 percent of homeowners statewide will be at least two months behind on their house payments.
Double-digit percentage unemployment and unpaid furlough days are increasingly catching up with homeowners who have “safe” fixed-rate loans, rather than the subprime loans that initially sparked the housing crisis.
Mike Himes, director of NeighborWorks Homeownership Center in Sacramento, which counsels struggling and first-time homeowners, said his office is seeing more clients facing growing debt and making choices between house payments and other expenses. His clientele includes a growing number of state workers whose paychecks have been pared by unpaid furloughs.
“There’s a lot of money borrowed to stay in the house and keep up with living expenses,” Himes said. “This is becoming more and more of a problem.”
Despite the current darkness, Becker of TransUnion predicted the clouds could lift in 2010. And when they do, the sun will shine more brightly on the Golden State than the rest of the nation. TransUnion predicts that the delinquency rate will fall three times faster than in the nation as a whole.
“We anticipate the recovery will be more robust and last longer” than in other regions of the country, he said.
