Million-dollar home sales fall in Sacramento region, state

Sales of homes costing $1 million or more fell sharply across the capital region and throughout California last year as buyers remained wary, large mortgages were hard to get and more homes slipped below the benchmark value, researcher MDA Dataquick reported Thursday.

The La Jolla firm counted 291 sales of homes priced above $1 million in 2009 in Sacramento, Placer, El Dorado, Yolo and Nevada counties. A year earlier, the tally was 502 in the eight-county region. The capital region accounted for 1.6 percent of high-end sales in a state where coastal regions rule the luxury market sector.

DataQuick counted 18,621 California sales with price tags of $1 million or more. It was a fourth straight year of decline in the state after luxury sales crested at 54,773 in 2005.

Nearly 80 percent of last year’s million-dollar and higher sales in the capital area were in Placer, El Dorado and Nevada counties, according to DataQuick statistics. All are home to high-end resort markets in and near Lake Tahoe.

Sales fell from 2008 in all three counties. Lake Tahoe real estate firm Chase International reported 104 sales of lake-area homes valued at $1 million or higher in 2009. The previous year’s count was 134.

Don’t count out the wealthy, though, said the firm’s owner, Shari Chase.

“If you look at high-ticket purchases, those people are not going to be affected by any of the economic conditions. It’s about whether they want to go for their lifestyle,” she said.

DataQuick President John Walsh said traditional million-dollar markets like Hillsborough, Manhattan Beach, Newport Beach and Santa Barbara “are holding up relatively well.” Expensive newer markets that “emerged four or years ago are not,” he said.

Mike Lyon, head of Sacramento’s Lyon Real Estate, attributed part of the capital-area sales decline to significant “discounting” at the harder-to-sell high end.

DataQuick said 29 percent of California’s luxury home buyers paid cash. Lending institutions most likely to help the others were Bank of America, Wells Fargo and Union Bank, the researcher reported.

August 10, 2009
Bad June swoon for Sacramento-area homebuilders

http://www.sacbee.com/static/weblogs/real_estate/

Ouch! Homebuilders in Sacramento, El Dorado, Placer and Yolo counties reported their second worst sales month of 2009 in June, selling just 197 homes, condominiums and townhouses, the California Building Industry Association reported about an hour ago.

These things happen. But the regional sales tally was the lowest since January, when builders sold 163 homes, reported the CBIA, a trade group for state homebuilders.

It rather flies in the face of more encouraging news nationally on the new-home construction front. But sales are still very weak here as builders face significant competition from discounted bank repos. These repos still account for more than half the region’s sales.

Monthly sales totals in the four-county area by month:
Jan: 163
Feb: 201
March: 297
April: 290
May: 346
June: 197

June sales fell 43 percent from May, and were down 57 percent from June 2008, according to Costa Mesa-based Hanley Wood Market Intelligence. The firm compiles statistics for the CBIA monthly sales reports.

Statewide, builders reported 2,607 June sales. That was 13.6 percent fewer than in May and down 26 percent from the same time last year. CBIA execs called it weaker than expected and called again for the state Legislature to extend a $10,000 tax credit for buyers of new unoccupied homes in the state. The tax credit, which began in March, ran out in July due to better-than-expected demand.

Monday, the National Association of Home Builders, also called on Congress to extend the nation’s $8,000 first-time buyer tax credit for another year.

Hanley Wood research executive Jonathan Dienhart said today he expects statewide sales to match last year’s levels in coming months. But he cautioned in a statement, “It will definitely take a longer time to start mounting a significant recovery with home purchase tax credits due to expire and the broader economy continuing to struggle.”

Builders in the four-county Sacramento area plus Yuba and Sutter counties sold 1,764 homes the first half of 2009, Hanley Wood reported. That puts them on track to finish well behind last year’s 4,847 sales.

Top capital builders during the first half of 2009, according to Hanley Wood:
1) KB Home of Los Angeles, 161 sales, 9.1% market share.
2) Dallas-based Centex Homes, 143 sales, 8.1% market share.
3) Miami-based Lennar Homes, 132 sales, 7.5% market share.
4) JMC Homes of Roseville, 123 sales, 7% market share.
5) Beazer Homes, headquartered in Atlanta, 112 sales, 6.3 percent market share.

Other builders in the top 10: Arizona-based Taylor Morrison, Michigan-based Pulte Homes, New Jersey-based K. Hovnanian Homes, Michigan-based Del Webb and Texas-based D.R. Horton.

As an aside, the combined entity of Pulte, Centex and Del Webb – the result of a Centex/Pulte merger to be finalized later this year – accounted for 299 of the region’s 1,764 first-half sales, a whopping 17 percent market share.

Capital-area foreclosures keep climbing in second quarter

By Jim Wasserman
jwasserman@sacbee.com

http://www.sacbee.com/business/story/2047112.html

The capital-area foreclosure crisis raged on in April, May and June, with lenders repossessing another 4,448 homes and filing notices of default against 10,682 more households late on their payments.

The newest statistics from La Jolla-based researcher MDA DataQuick brought the foreclosure total to 41,903 households since the start of 2007 in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.

That’s 10.2 percent of California’s 410,744 foreclosures in the same time period. Statewide, 45,677 households surrendered keys to banks during the second quarter – and 124,562 received notices of default, DataQuick reported. Those are the formal foreclosure warnings issued when homeowners fall three months or more behind on payments.

As the state’s foreclosure crisis has grown and caused the economy to wobble and unemployment to rise to 11.6 percent statewide and the same in the capital region, the percentage of borrowers able to find their way out of trouble has steadily declined, DataQuick has reported.

The foreclosure tally rose both statewide and in the eight-county capital region from the first quarter, while the number of loan defaults fell slightly.

Regional highlights:

• Amador County: 29 foreclosures and 85 defaults.

• El Dorado County: 202 foreclosures and 632 defaults.

• Nevada County: 98 foreclosures and 286 defaults.

• Placer County: 515 foreclosures and 1,570 notices of default.

• Sacramento County: 3,019 foreclosures and 6,862 defaults.

• Sutter County: 154 foreclosures and 355 notices of default.

• Yolo County: 216 foreclosures, 541 defaults.

• Yuba County: 215 foreclosures and 351 defaults.

DataQuick predicted foreclosure numbers will go higher in the third quarter as lenders boost hiring to deal with a large backlog of delinquencies.

The firm said half the loans that defaulted during the quarter were made before July 2006, and half afterward. The lenders that originated the most troubled loans were Washington Mutual, a failed thrift taken over late last year by JP Morgan Chase, Wells Fargo and Countrywide, the failed lender taken over by Bank of America in mid-2008.

http://www.youtube.com/watch?v=BCCg6XK3lCs

http://www.webstarmagic.com/gmac/stats_4_counties.htm

Sacramento area misses move-up homebuyers — they’re staying put

By Jim Wasserman
jwasserman@sacbee.com

http://www.sacbee.com/topstories/story/1959684.html

Almost four years into the real estate crash, a once-thriving sector of the Sacramento-area housing market – the move-up buyer – has become a virtual dead zone that must revive itself for a true recovery to take hold, analysts say.

Even as real estate rocks with enthusiastic first-time buyers and investors – accounting for up to two-thirds of area sales – one expert warns against being fooled by “the common belief that real estate is flying off the shelves.”

Momentum needed for a true recovery rests on the shoulders of those who traditionally dominate real estate markets: people who sell one house and buy another.

And they aren’t doing it.

They can’t.

“Half to two-thirds of sales in the Sacramento region have not triggered a move-up,” said Andrew LePage, an analyst for property researcher MDA DataQuick. “It was just some lender got its money back and then it ends. When that’s been two-thirds of your market for months and months, ouch.”

Until the move-up sector of the market recovers, housing can’t recover, analysts say. (Everything above $400,000 is almost at a standstill. DataQuick says sales in move-up neighborhoods such as Land Park, east Sacramento and Arden Park are half their 10-year average since early 2008.)

And until housing recovers, many believe the economy will lag, and the state with it. The downturn prolongs the pain of layoffs, fuels the plunge in property taxes and deepens the local and state budget morass.

What are the problems confronting move-up buyers? Charlene Singley, president of the Sacramento Association of Realtors, counts three strikes against them:

• “First are the vast numbers” of distress sales and bank repos, she said. “Those people aren’t moving up. They’re not even moving down. They’re just going into rentals.”

The National Association of Realtors says two-thirds of sales in California this year have been distress sales that don’t trigger a move-up.

• “Equally big are homeowners out there who aren’t in a foreclosure, not in a short sale,” said Singley. “They don’t have the equity to pull out to put down on another house. They used to pull it out, move up, make money, do it again. You’d see it three or four times.”

Many consider that real estate stairway the promise of California. The theory is you have to “get in” the market and then ride it up. But now about one-third of borrowers in El Dorado, Placer, Sacramento and Yolo counties are trapped where they are – perhaps for years – owing more than their homes are worth.

• “Finally, if they’re lucky enough to have equity, maybe their income is decreased or they’re worried about their job security,” Singley said. “They could move, but they don’t have to. Why would they put their homes on the market? Not when they could wait a few years.”

This large collective impact of distress sales, negative equity and job fears translates into “an outright collapse in organic sales that measure the true health of the housing market,” according to Mark Hanson, managing director of Field Check Group, a Bay Area financial industry consultant. Hanson said California resales that trigger a second move – whether up, down or across – were down 60 percent in April from three years earlier.

That explains why Cynthia Hearden’s $459,000 house in Sacramento’s Land Park neighborhood has been slow to sell since its March listing. It tells why Kathy McKnight in the city’s Pocket neighborhood decided not to offer her house for sale after an agent suggested an asking price of $525,000, less than she had hoped.

Hearden, nearing retirement and aiming to downsize, showed one of the more creative responses to lack of move-ups. When she got an offer based on the potential buyer first selling her own house, Hearden waited as neither house moved. Then she looked at her potential buyer’s $289,000 house in South Land Park, and proposed a trade accounting for price differences.

The other homeowner was interested, but even that deal fell through last week.

El Dorado County rejects some federal stimulus money

By Cathy Locke
clocke@sacbee.com

http://www.sacbee.com/ourregion/story/1945169.html

El Dorado County officials turned down $1.6 million in federal stimulus funds, leaving an ideologically diverse group, including affordable-housing advocates and local contractors, angry and perplexed.

The Board of Supervisors last week twice rejected what staff members described as no-strings-attached funding.

“It’s as close to a no-brainer as I’ve ever seen come before this board,” Richard Meagher of the Affordable Housing Coalition of El Dorado said of a grant application that could have put local contractors to work rehabilitating foreclosed houses and made the dwellings available to moderate and low-income homebuyers.

But Supervisor Jack Sweeney characterized himself as a “free-market person” and argued that many current economic ills are a result of government’s intrusion into society.

“When people earn something, they appreciate it better,” he said.

During their regular meeting Tuesday, the supervisors voted 4-1, without a staff presentation or discussion, not to join with the city of South Lake Tahoe in applying for Neighborhood Stabilization Funds.

But after receiving a stream of e-mail protests from constituents, some accusing the board majority of putting personal ideology above the good of the county, the supervisors convened a special meeting Thursday to reconsider.

Community leaders, affordable housing advocates, and representatives of the real estate and construction industries urged the board to accept the money.

The grant funds would be used to purchase and rehabilitate foreclosed homes, which would be resold to moderate and low-income homebuyers – those with household incomes that are 120 percent or less of the area’s median income.

On the county’s west slope, the funds would be directed to five areas identified by the Federal Housing Administration as the most affected by foreclosures: Cameron Park-Shingle Springs, Diamond Springs, El Dorado Hills, Georgetown and Pollock Pines.

County staff member Shawna Purvines said 246 homes are in foreclosure in the target areas, and 189 potential homebuyers have been prescreened for eligibility and are on the county’s waiting list.

All funds would have to be spent by Sept. 30, 2011. But until then, money from the sale of each home would be returned to the local program to buy, rehabilitate and restore additional houses.

Purvines estimated between eight and 18 houses could be rehabilitated and sold during that period.

Homes sold under the program would remain income-restricted for 20 years, she said, providing the county with long-term affordable housing stock.

“You don’t often get the federal government to say that you don’t have to compete for (grant funds), we’re allocating it to you,” said Nancy Kerry, housing manager for South Lake Tahoe. The city can’t apply for the money without the county’s participation.

Nonprofit housing firms and local contractors would take charge of the projects, and the county would be reimbursed for monitoring their activities.

But Sweeney noted that under the federal program contractors would have to pay prevailing wages for the Sacramento area, which typically are higher than those in El Dorado County. He, along with Supervisors John Knight and Ron Briggs, argued that such projects were better left to private investors.

The El Dorado Builders Exchange, which represents local contractors, urged support for the program, arguing that it would create jobs and rehabilitate vacant homes that might otherwise be vandalized.

Real estate agent Judy Mathat said that in addition to helping meet the demand for moderate and low-income housing, the program would provide work for contractors, real estate agents and people in related businesses, and possibly help them keep their homes out of foreclosure.

The public arguments swayed Supervisor Ray Nutting, who described his vote Tuesday as a “wobbler.”

“If we don’t collect our fair share (of tax money from Washington), our fair share goes someplace else,” he said.

He joined South Lake Tahoe-area Supervisor Norma Santiago in urging support for the grant application. But the proposal was defeated on 3-2 vote, with Sweeney, Ron Briggs and John Knight voting against.

Use of short sales on rise in Sacramento housing market

By Jim Wasserman
jwasserman@sacbee.com

http://www.sacbee.com/business/story/1933643.html

For years real estate agents have steered buyers away from “short sales,” labeling them a mind-numbing, difficult experience that could exhaust the patience of the biblical Job.

Now buyers can hardly avoid them.

“When it’s 50 percent of the inventory you don’t have a choice,” said Scott Williams, a Roseville-based ReMax broker. Williams specializes in a complex transaction that may be the next evolution of the real estate market in Sacramento.

Banks, with their balance sheets battered after 40,000 capital-area foreclosures since early 2007, are finally warming up to short sales, a traditional marker of soured real estate markets. Increasingly, so are buyers. Some analysts believe short sales – those transactions in which banks accept offers below what they’re owed to avoid the higher costs of foreclosing – may help avert a few thousand new foreclosures in the capital region.

“I still see a ton of defaults coming down the line … but a large percentage, 50 percent or more of these, will get done as short sales and keep the flow of repos to a manageable level,” said Williams. “I don’t see us getting flooded.”

Industry analysts say half the for-sale signs in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties that aren’t bank repos are short sales. They’re especially prevalent in newer suburbs built during the housing boom. According to Sacramento-based Metrolist Services Inc.:

• 56 percent of Lincoln homes priced between $200,000 and $250,000 are short sales.

• 55 percent of Rancho Cordova homes priced between $200,000 and $300,000 are short sales. In Folsom, 46 percent of homes in that price range are short sales.

• 44 percent of Elk Grove houses priced from $300,000 to $325,000 are short sales.

All their owners owe more than their homes are worth. (Online evaluator Zillow.com says 68 percent of Sacramento-area households that bought in the past five years are in that boat). And most are believed to be in some stage of the foreclosure process.

Currently, nearly one in four sales pending – those expected to close escrow within weeks – are bank-approved short sales, according to Williams’ analysis of Metrolist data. That’s a rise from a January-through-June average of one in seven.

Bank repos, by comparison, are about 60 percent of area sales this year. But their share is falling now as the region’s short-sale market share rises.

“It’s a more cooperative solution,” said David Sunlin, senior vice president with Charlotte-based Bank of America Home Loans. He said the firm is adding staff and streamlining procedures to do more short sales more quickly as an alternative to foreclosing.

“It allows the borrower to leave on their own terms. It’s a more dignified exit strategy and the credit reporting is less negative afterward,” he said. “It’s a win for the lender as well. It’s going to shorten the recovery cycle, which is important to all of us.”

The firm, which bought Countrywide Financial last year, services one in five U.S. mortgages and is a top lender in the capital region.

Agents such as Williams hope the new BofA approach brings results. They complain that Countrywide has been among the industry’s most difficult servicers for short sales.

Buyers say short sales make great deals – if you’re patient.

“It probably saved us $50,000″ said Helen Martinez, who, with her husband, Robert, closed escrow two months ago on a short-sale property in Davis. It took almost four months, she said.

“If you need something right away it’s not going to work out,” she said. “You’ll sit around and wait forever and find something else.”

Jamie Trussell also expects to go into escrow soon on a short-sale property in Elk Grove. He and his wife, Tricia, made an offer on the house in February, then sweetened it by $10,000 when others bid on it.

“We fell in love with the house so we remain dedicated to it,” he said. The two checked out other houses while waiting, including bank repos, but Trussell said, “It’s been tough to beat the house we have with everything we want.”

Their long wait has had consequences, however. Higher interest rates are adding to their expected borrowing costs.

“The last few weeks I’ve been watching the interest rate climb,” said Trussell. “It was 4.8 percent in May, and now, it’s at 5.2 percent.

“Our greatest concern when we started was ‘how long is this going to take?’ It’s really pushing to the wire for us.”

Williams said many short sales fall apart between the offer and acceptance because people find other properties.

Short sales take so long because lenders must negotiate permission from other parties, such as investors and private mortgage insurers. Most recent home loans also have so-called “seconds,” an extra loan that financed the down payment. Other short sales involve home equity loans or homeowner associations seeking restitution for unpaid dues.

“That can make the process more complex,” said BofA’s Sunlin. He said BofA also asks some borrowers to contribute funds to ease the lenders’ losses “or sign a promissory note for a later date.”

“We see this every week,” said Scott Thompson, principal at Carmichael-based Mortgage Resolution Services, a short-sale specialty firm. He said such lender requests scuttle many short sales, prompting homeowners to instead “walk away” from the house.

Thompson said homeowners often prefer to walk away than request a short sale.

“Now, banks are ready to do them,” he said. “But many homeowners are so far under water on their mortgages that they’re disinclined to participate at all.”

Sunlin concedes the difficulties on both ends in a still-unraveling housing market.

“These are tough times,” he said. “But we are committed to make the process work better … By doing this we should see more private sales instead of bank-owned sales.”

Home Front: European media want close-ups of capital-area housing crash

By Jim Wasserman
jwasserman@sacbee.com

http://www.sacbee.com/736/story/1883525.html

Europeans are making Sacramento a regular stop on media expeditions to the housing crisis that has been pounding their banks.

This year, Home Front has received inquiries from a Swiss newspaper, a German magazine, a Dutch television show and most recently a German public TV program about finding places that reveal California’s housing crash and the people who have endured it.

Know this: The big real estate meltdown that defines the Central Valley and the outer Bay Area suburbs is interesting to people who live nine and 10 time zones east of here. It’s more than curiosity. Big European banks are taking hits after investing in the risky mortgage-backed securities tied to California real estate.

Public broadcaster ZDF Television of Mainz, Germany, said it plans to show up this Memorial Day weekend in the capital region as part of a Northern California tour. Producers called last week from Washington, D.C., scouting for newer struggling neighborhoods marked by foreclosures and for-sale signs. The aim is to show the audience back home the thousands of homes financed with subprime and adjustable-rate loans sold by Wall Street to German financial institutions.

The Dutch public television current affairs program NOVA also initially planned to have a crew in California this week, but didn’t make it. It was looking for partially inhabited and bankrupt apartment buildings, and was scouting Sacramento for possibilities.

“We didn’t actually make it to California (yet),” said Lynn Berger, a journalist with the Hilversum-based current affairs show. “But although we didn’t make this specific report, we have reported about the California real estate situation in the past (about foreclosures, mostly). It is definitely a topic that has been, and will be, covered widely on Dutch TV and in the newspapers,” he said in an e-mail this week.

Several weeks ago, Munich-based Focus Magazine sent reporter Stefan Wagner to Northern California for a magazine story on “effects of the financial crisis on Californians.” Wagner planned a trip to Sacramento and the Central Valley’s foreclosure belt (Merced especially) to talk with people losing their homes.

A Google search hasn’t yet turned up his report yet. But if you see Germans with video cameras this weekend be friendly; wave your adjustable-rate mortgage for the viewers back home.

Expanding affordability

There’s more good news on the affordability front. On the heels of last week’s California Association of Realtors report that 80 percent of first-time buyers can afford the median-price starter home in Sacramento, a prominent national housing index says three-fourths of homes sold in the capital area are “affordable.”

The National Association of Home Builders/Wells Fargo Housing Opportunity Index reported this week that 76 percent of homes sold in the first quarter of 2009 in El Dorado, Placer, Sacramento and Yolo counties were affordable to households earning the region’s median income of $72,800.

What’s most astonishing is how fast that ratio has changed. Just two years ago in the first quarter of 2007, only 13.4 percent of homes in the four-county region were affordable to households with a median income of $67,200.

Don’t miss credit deadline

There is one new thing Home Front should say about the state’s $10,000 homebuyer tax credit after a phone call from a buyer who missed the boat: Be sure to hound everyone involved in your sale to fax the application to the state Franchise Tax Board within seven days of closing escrow.

This caller said many real estate and escrow agents aren’t up to speed on the tax credit for buyers of new unoccupied homes. And he missed the deadline to apply, being busy with moving and paperwork. Goodbye $10,000 tax break.

The Franchise Tax Board says the builder’s people must complete a state form and give a copy to the buyer or escrow rep. The buyer fills out more details and then the escrow agent faxes it to the FTB. Advice from one who learned the hard way: Keep an eye on them.

Incidentally, a bill, AB 765, that would add $200 million to the tax credit allocation easily passed its first committee test – winning a 9-0 vote Tuesday in the Assembly Revenue and Taxation Committee. It goes now to the Assembly Appropriations Committee for similar consideration.

Pulte dominates region

The giants are getting bigger and more powerful. If 2009 continues the trends of its first quarter, Pulte Homes will sell one in five new houses this year in the capital region.

Pulte, with its Del Webb subsidiary and pending merger with Centex Homes, had a 20.4 percent market share in El Dorado, Placer, Sacramento, Yolo and Yuba counties, reports market tracker Hanley Wood Market Intelligence.

The firm counted 148 sales by Michigan-based Pulte and its two affiliates among 725 January, February and March sales in the six-county region.

That level of market share is unprecedented in the region in the last 20 to 30 years, said Hanley Wood’s Sacramento analyst Kathryn Boyce.

http://www.webstarmagic.com/gmac/stats_4_counties.htm