For once California’s economy looks good compared to that of some other states.

A foreclosure crisis that has dimmed the state’s golden glow with images of financial ruin and broken government is beginning to wane, says a leading trade group for the U.S. mortgage industry.

The Mortgage Bankers Association said Wednesday that California foreclosure starts have fallen from a year ago – even as problems grow in Midwestern Rust Belt states such as Ohio, Michigan, Indiana and Illinois.

“California is showing signs of improvement. We are seeing it on a quarter-to-quarter basis and year-over-year basis,” MBA Chief Economist Jay Brinkmann said.

Consider:

• In the past year California moved from fourth place among U.S. states for foreclosure starts to seventh.

• Mortgage delinquencies, while up from early 2009, fell slightly in early 2010.

• The percentage of California mortgages in the foreclosure process fell, too, during the past year.

California’s fragile improvements come as the national picture is less clear. Collectively, the longtime mortgage disaster areas – Florida, California, Arizona and Nevada – are becoming less of a problem nationally, MBA data showed.

“A year ago they had 45.3 percent of the problem loans,” said Brinkmann. “That’s down to 37.9 percent.

“We’re looking now at Illinois, Ohio, Michigan and Indiana. They’re climbing back into the list of problems,” he said. Those states have longer-term structural problems as their manufacturing economies continue to decline.

The new data confirmed improvements in California and the Sacramento area recently cited by researcher MDA DataQuick. Last month the firm said mortgage defaults have fallen for a year straight in the state and region, with foreclosures dropping now as well.

In hard-hit Sacramento suburbs such as Natomas, Lincoln and Elk Grove, residents see dwindling evidence of the crisis.

“All those houses that were vacant before were sold in the last year or two,” said Tyler Smith, a Keller Williams agent in Sacramento “A year ago it seemed every other house on some of those streets were vacant.”

Homeowners in distress are increasingly using short sales to unload their properties rather than losing them to foreclosure.

That’s helping preserve neighborhoods, because these owners stay in the homes until they’re sold rather being evicted and leaving an empty house behind.

Make no mistake: California’s long journey into a financial meltdown is nowhere near its conclusion, economists say.

They foresee prolonged trouble for the state economy and government revenues. At best, said Los Angeles economist Chris Thornberg, “The worst is behind us.” He added, “We have years yet of dealing with this.”

Like everything about the foreclosure crisis, even explaining a sense of improvement is open to interpretation. Thornberg said a fall in California foreclosure starts shows only that banks are taking longer to deal with late mortgage payments.

Jeff Michael, director of the Business Forecasting Center at the University of the Pacific, said simply, “This suggests we’ve reached the point where the number moving into delinquency equals the number moving out.”

Even that might be declared victory. More people are moving out of delinquency through short sales – selling their homes for less than they owe. And despite criticism of government loan modification efforts, the U.S. Treasury Department reported this week that 5,400 homeowners in the eight-county Sacramento region received permanent loan modifications since December 2009. Regionally, banks foreclosed on 4,300 more in the first quarter of 2010.

Any slowdown of last year’s frightful rise in delinquencies, said Michael, “indicates we’re close to a peak.”

The state still has a long way to go before it regains a healthy economy, 6 percent unemployment and a budget in the black, Thornberg and Michael agreed Wednesday. But for once, California is falling off lists of the worst performers.

Eventually, the supply of distressed properties will simply be exhausted, Michael said, adding, “The fire will burn itself out for lack of fuel.”

More people bought pricier houses in April, signaling the end of Sacramento’s bargain basement-only sales scene.

Buyers picked up the pace from last year in Granite Bay, El Dorado Hills and older neighborhoods near downtown Sacramento, researcher MDA DataQuick reported Thursday. Simultaneously, buyers dwindled in Oak Park, North Highlands and other repo zones of the past two years.

What gives?

There are fewer available repos after a long blowout sale, market trackers say. There’s also a sense at the higher end that this market is as good as it’s going to get for a while.

He said he sold three houses this week valued between $350,000 and $800,000.

The shifting sales mix tugged Sacramento County’s median sales price for resale houses nearly 10 percent higher than the same time last year, DataQuick reported. The median, where half cost more and half less, was $175,000.

Resale home prices also beat April 2009 levels in Placer, Sutter, Yolo and Yuba counties.

Less than half of Sacramento County’s April sales were cheap bank repos – compared with two-thirds a year earlier. With fewer repos this year, sales in the $200,000 to $400,000 range grabbed a larger market share.

“We’ve had 70 people coming through open houses in the $300,000 to $400,000 range,” said Bob Bronswick, president of Coldwell Banker Residential Brokerage in Sacramento and Lake Tahoe.

“That’s the trend across the state,” said DataQuick analyst Andrew LePage. He said sellers are cutting prices and buyers are still getting low interest rates to make deals work.

Sellers are not thinking about 2005. They’re thinking: ‘We might have to take it back to 2003 or 2002 prices and sell it at that.’

This doesn’t mean expensive is back. LePage said homes priced above $400,000 are only a tiny percentage of Sacramento-area sales.

But the shift is part of restoring balance to a market where repos accounted for a majority of sales for much of 2008 and 2009. Banks have cut repossessed homes on the market.

“The way banks are managing it now will probably keep prices from falling much further,” said Rick Sharga of Orange County foreclosure analyst RealtyTrac.

Overall, 3,255 homes changed hands during April in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported. That was down slightly from March – and fewer than April 2009.

Analysts attributed the slight drop to fewer repo listings for first-time buyers and people delaying escrow closings until May. The state began offering homebuyer tax credits of up to $10,000 May 1.

New homes accounted for 5 percent of sales in the region.

The Sacramento Association of Realtors reports that 1,631 single-family homes were sold last month, down 3.1 percent from 1,683 homes sold in August. The September number is a decrease of 19.3 percent from September of 2008, when 2,020 homes were sold.

The median price for existing single-family homes sold in September was $183,000, a decrease of 3.7 percent from the median of $190,000 in August, and down 6.1 percent from $194,950 in September 2008.

Condominium sales were up slightly from last September. A total of 115 condos were sold in Sacramento County and West Sacramento last month, up 5.5 percent from September 2008, when 109 condos were sold. In August, however, 118 condos were sold, 2.5 percent more than in September.

The median sale price of a condo in September was $90,000, down 3.5 percent from $93,300 in August and 19.6 percent from $112,000 last September.

SACRAMENTO, CA – Sacramento’s home prices are projected to drop 15.7 percent for the year, but that’s good news. Other counties are expected to fall 19 percent to 20 percent.

Much of Sacramento’s good fortune is due to the lack of foreclosures actually hitting the market. Banks are holding on to thousands of foreclosed properties in the Sacramento region. But, they are coming on the market in dribbles. So slowly, they are snatched up in a few days. That kind of demand is pushing up the price of homes that are $300,000 and under.

What was expected to be a flood of foreclosures is turning out to be a trickle. Michael Lyon of Lyon Real Estate agreed.

“Now that we’ve talked to the banks and found out what’s going on, they don’t have the personnel to do the processing to get it out,” Lyon said.

Lyon said the federal government has put heavy restrictions on banks that took bailout money when it comes to following through on foreclosures.

“There’s too much of a bureaucratic mess to really throw these things out on the streets so they’re coming in at a rather absorbable rate, which is keeping that low end, under $300,000,” said Lyon. “It’s becoming a seller’s market. I didn’t think I would be saying this for years.”

Lyon predicts that instead of seeing a wave of foreclosures sweep in over the next few months, it will likely now be a steady stream over the next few years.

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Jason Harnum of Roseville, shown above with his cat Charley, started a pet ID business after he lost his job as a mortgage broker. His company, Pet ID for Me, lets pet owners create ID tags online. The tags look like driver’s licenses, top, and owners can add their pet’s name, breed, color, contact information and photo.

Editor’s note: This one in an occasional series of stories about how Sacramento area workers are reinventing their careers during a period of high unemployment.

Maybe you’ve been laid off, accepted a buyout or taken early retirement and now are thinking about your next step.

Whether it’s a job-training program, a return to college or a venture into a small business or franchise, today’s rugged economy has led many to reconsider their career path.

At the Sacramento Employment and Training Agency, more than 50,000 people visit its 12 Sacramento Works career centers each year seeking résumé assistance and career counseling, said Robin Purdy, SETA’s deputy director of work force development.

Nearly 15,000 job seekers sought the centers’ help in the past three months alone – a 9 percent increase from the same three-month period last year, Purdy said. Many are looking for ways to retrain.

“We are seeing more and more people interested in improving their skills and looking for occupational skills training” in burgeoning fields such as health care and careers tied to green technologies, Purdy said.

Experienced workers are also retooling, re-entering the campus and the workplace. The numbers of students 59 and older enrolled at California State University has steadily grown over the past five years.

In fall 2004 semester, 1,677 students 59 and older were enrolled at CSU campuses. By fall 2008, the number had climbed to 2,117 – 182 of those at Sacramento State – with the majority in graduate studies.

For some seniors, the situation is more dire. They’ve absorbed a late-career layoff or buyout or have watched their 401(k) retirement funds disappear. They’ve forestalled retirement or have been forced to return to the job market.

“We’re seeing a lot of skilled people coming back to the work force,” said Bob Rice, a project director for AARP Foundation’s WorkSearch program in Sacramento, which helps mature workers re-enter the workplace. Officials estimate registration in the program is up 40 percent from the same time last year.

“Frustration is showing up with a lot of the people we work with,” Rice said. “They’re running out of money, they’re losing their house. There’s a lot of desperate people out there.”

At Los Rios Community College District, enrollment this fall at the four-campus district has swelled by 5,000 students from fall 2008, and classrooms are stretched to the limit.

Though officials say the reasons for the spike vary widely, among the incoming students are job seekers and employees squeezing into classes to boost their skills or jump-start their chances on the open market.

“We do have job seekers returning to our colleges. They’re coming to us because their out of work or they’re afraid of losing their jobs,” said Susie Williams, a district associate vice chancellor.

Some 70 El Dorado County residents signed on in June to a program for job seekers organized by Green Valley Community Church in Placerville. After the eight-week program ended recently, five came out of the program with jobs, said volunteer instructor Michael Dugan.

“We wish the numbers were higher,” he said, but in today’s economy, “we’re delighted that anyone’s getting jobs.”

Another 100 job seekers are signed up for the current eight-week module.

In a Sacramento-area market where the jobless rate sits at 12 percent, more people are looking for ways to stay afloat or chart their own destiny.

Now is the time, AARP’s Rice said.

“When you’re laid off and that is a gap in your work life, it gives you a chance to figure out what you want to do.”

CCUL, which is headquartered in Ontario and has an office in Sacramento, said California credit unions originated more than $7.3 billion in loans in the second quarter, up from $7.1 billion in this year’s first quarter.

The league also noted that Sacramento County credit unions saw money market shares gain more than $207 million, or 7.8 percent, in the second quarter, while regular savings and checking accounts had gains of less than 1 percent.

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.

“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: