Home Front: Small home makes big splash in Sacramento development
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/2108425.html?storylink=pd
The K. Hovnanian-built house in Natomas has a standard-size bedroom and a surprisingly large great room that combines a kitchen and living room. But that's about it for 817 square feet – likely the smallest new house for sale in Sacramento. Price: $126,000.
Home Front discovered this seventh wonder of the real estate world via colleagues who got builder postcards aiming to pry boomers out of Land Park and east Sacramento and into Four Seasons in Natomas.
Seeing the house – very livable, but suited, petwise, for a fish tank or bird cage – raised a question of why builders don't add more of these into their sales mix? This house was a bit of a fluke; a handful of them were built for irregular lots. Sales consultant Dee Elrod said there are no plans for an entire tract of these. The company didn't offer comment.
But an Internet search revealed that KB Home recently tried something similar, selling 880-square-foot homes in Houston for $64,000. The idea was to compete with bank repos. But 1,200 square feet is likely to be the smallest KB house that Northern Californians see, said KB spokesman Craig Lemessurier.
Today, an 800-square-foot home makes a novelty item in a real estate column. But once this was the norm. The 2002 book "Affluenza" says homes in the pioneering New York suburb, Levittown, were 750 square feet in the 1940s. Average size grew to 950 square feet in the 1950s and to 1,350 square feet by the 1970s, the book states.
In 2003 in the Sacramento region, average home size peaked at 2,612 square feet, according to statistics from the Gregory Group, a Folsom consultant. Average size is now about 2,375 square feet. Ask home builders what's ahead and they all say smaller still.
Downsizing – say to 1,200 square feet or 1,400 square feet for first-time buyers in the Sacramento region – is a routine effect of recession, history shows. But it also happens when buyers hew to an old-fashioned rule of real estate: buying at a price three times their annual household income. Builders say buyers have to toe that line now. They can't get loans to buy higher.
"I just think smaller houses fit into the new profile," said Kevin Carson, a former John Laing Homes executive and president of the Sacramento division for the New Home Co. based in Orange County. Carson targets move-up buyers. Yet he says, "There won't be the mini mansions that were built so much five years ago."
Indeed, many big boom-time houses have proved foreclosure-prone, expensive to cool and vulnerable to frightening drops in value. For a long time to come they'll be monuments to the euphoric era that built, financed and sold them.
Meanwhile, nothing marks a new era so abruptly as an 817-square-foot house. Obviously, it can be done – and done well. The question is: why isn't more of it being done?
Home-builder merger
Tuesday will bring a colossal merger in the nation's home-building industry, a union of the Sacramento-Reno division of Pulte Homes of Bloomfield Hills, Mich. and Dallas-based Centex Homes.
Both firms, individually, are already among the capital region's biggest builders. The merger will create a Wall Street giant in the region that can take a buyer from Centex's traditional starter homes to Pulte's traditional move-up homes to Del Webb's houses in post-55 adult communities. Del Webb is a subsidiary of Pulte.
Combined, the three entities held a 17 percent market share of new-home sales the first half of 2009 in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to Hanley Wood Market Intelligence of Costa Mesa.
No comeback yet
Home Front caught up this week with Sidney B. Dunmore, former head of failed Granite Bay-based Dunmore Homes.
As the first area builder to go under during the housing bust it's inevitable that Dunmore would be among the first rumored to be starting some kind of comeback.
Not so, Dunmore, 54, said in a phone conversation. Not yet. He denies there's a new business venture sniffing around for land to start over.
"I'm always looking. I'm always looking at opportunities," said Dunmore. "I can't really say I've found anything at this time. But I'm still in the hunt if some opportunity pops up. But there's nothing on the horizon."
Dunmore Homes filed for bankruptcy in November 2007 and was liquidated in February 2008 – after more than a half century in business and construction of 22,000 homes. Dunmore described the current building industry economy in the capital region as "pretty flat." But at least it's finally stopped getting worse, he said.
Wednesday, August 19, 2009
Monday, August 17, 2009
Troubled homeowners wrestle with loan holders
Troubled homeowners wrestle with loan holders
By Kevin G. Hall McClatchy Newspapers
http://www.sacbee.com/business/story/2111186.html?storylink=pd
WASHINGTON – Nearly three years into the deepest U.S. housing slump in generations, lenders are modifying only a small number of problem mortgages, and rising foreclosures are restraining the economy's recovery.
The Obama administration has stepped up pressure on lenders and their mortgage servicers, who act as bill collectors on behalf of investors who own mortgage bonds. The administration on Aug. 4 unveiled the first of what will be monthly "name and shame" exercises, publishing data on the loan-modification efforts of about three dozen companies.
McClatchy's Washington Bureau received calls and e-mails from borrowers across the nation in response to a recent story about the "name and shame" effort. In subsequent interviews with them, a common theme emerged: Virtually all say they were encouraged, directly or indirectly, by their lenders to fall behind on their mortgage payments in order to qualify for loan modifications. Then the modifications never came.
These borrowers burned through retirement savings, destroyed their credit ratings and suffered mental and financial hardship. Here are two of their stories:
'A LOAN … THAT WAS GUARANTEED TO FAIL'
Phil Stubblefield, 61, arrived in loan-modification hell quite by accident. His ex-wife died of heart failure April 20, and her Sacramento home and Countrywide mortgage passed to their daughters, one of whom was in college and the other starting medical school. As students, each had limited income.
Stubblefield reached out in May to Bank of America, which had bought Countrywide in January 2008, as it faced a bankruptcy filing because of problems with its loan portfolio. Stubblefield sought to modify the loan on the property in order to stay current amid unusual circumstances.
"Virtue was met with no help at all. The only recommendation was, 'We can help you when the loan goes into default,' " said Stubblefield, an Amtrak train conductor in California's capital. "That's when I said, 'That's easy; then they'll talk to us.' "
After the mortgage payment became two months late in June, the girls started receiving what Stubblefield dubs "nasty-grams." Getting authorization to speak for his daughters, he tried to negotiate a lower interest rate to reduce payments enough for him to help, or to have some portion of the loan forgiven.
"I was waiting for them to turn around and say, 'What can you do for us?' There was no coming together, no negotiation," he said. "It was 'Sell the house,' and that's when I came back and said, 'Don't you read the newspapers? There are 40,000 foreclosures in Sacramento and a 19-month turnaround on (real estate) listings.' "
What especially irks Stubblefield, who worked for eight years as a mortgage broker, are the comments from lenders that they're doing everything possible to keep people in their homes and out of foreclosure.
"It comes off to me that it's just window dressing and speech that doesn't translate to anything," he said. "No action."
Stubblefield's ex-wife had a mortgage payment of about $1,850 a month, more than half of her take-home income from a state government job. Until lending standards became unhinged from 2004 to 2007, conventional wisdom was that lenders wouldn't underwrite loans with payments that exceeded 35 percent of borrowers' take-home pay.
"They put her in a loan to begin with that was guaranteed to fail," Stubblefield said.
A Bank of America spokesman took Stubblefield's loan information from McClatchy but didn't comment.
'I FEEL LIKE ALICE IN WONDERLAND'
A work-from-home psychotherapist and Realtor, Helen Rudinsky, who's now 53, bought property in the nation's capital in June 2004. At the height of the housing boom, she took out an interest-only loan, offered for pricier homes and marketed as virtually risk-free because of climbing home values.
A few years later, she gave birth to a boy who was diagnosed with autism. She has temporarily moved to Bend, Ore., seeking easier access to expensive testing and therapy for her child.
By Kevin G. Hall McClatchy Newspapers
http://www.sacbee.com/business/story/2111186.html?storylink=pd
WASHINGTON – Nearly three years into the deepest U.S. housing slump in generations, lenders are modifying only a small number of problem mortgages, and rising foreclosures are restraining the economy's recovery.
The Obama administration has stepped up pressure on lenders and their mortgage servicers, who act as bill collectors on behalf of investors who own mortgage bonds. The administration on Aug. 4 unveiled the first of what will be monthly "name and shame" exercises, publishing data on the loan-modification efforts of about three dozen companies.
McClatchy's Washington Bureau received calls and e-mails from borrowers across the nation in response to a recent story about the "name and shame" effort. In subsequent interviews with them, a common theme emerged: Virtually all say they were encouraged, directly or indirectly, by their lenders to fall behind on their mortgage payments in order to qualify for loan modifications. Then the modifications never came.
These borrowers burned through retirement savings, destroyed their credit ratings and suffered mental and financial hardship. Here are two of their stories:
'A LOAN … THAT WAS GUARANTEED TO FAIL'
Phil Stubblefield, 61, arrived in loan-modification hell quite by accident. His ex-wife died of heart failure April 20, and her Sacramento home and Countrywide mortgage passed to their daughters, one of whom was in college and the other starting medical school. As students, each had limited income.
Stubblefield reached out in May to Bank of America, which had bought Countrywide in January 2008, as it faced a bankruptcy filing because of problems with its loan portfolio. Stubblefield sought to modify the loan on the property in order to stay current amid unusual circumstances.
"Virtue was met with no help at all. The only recommendation was, 'We can help you when the loan goes into default,' " said Stubblefield, an Amtrak train conductor in California's capital. "That's when I said, 'That's easy; then they'll talk to us.' "
After the mortgage payment became two months late in June, the girls started receiving what Stubblefield dubs "nasty-grams." Getting authorization to speak for his daughters, he tried to negotiate a lower interest rate to reduce payments enough for him to help, or to have some portion of the loan forgiven.
"I was waiting for them to turn around and say, 'What can you do for us?' There was no coming together, no negotiation," he said. "It was 'Sell the house,' and that's when I came back and said, 'Don't you read the newspapers? There are 40,000 foreclosures in Sacramento and a 19-month turnaround on (real estate) listings.' "
What especially irks Stubblefield, who worked for eight years as a mortgage broker, are the comments from lenders that they're doing everything possible to keep people in their homes and out of foreclosure.
"It comes off to me that it's just window dressing and speech that doesn't translate to anything," he said. "No action."
Stubblefield's ex-wife had a mortgage payment of about $1,850 a month, more than half of her take-home income from a state government job. Until lending standards became unhinged from 2004 to 2007, conventional wisdom was that lenders wouldn't underwrite loans with payments that exceeded 35 percent of borrowers' take-home pay.
"They put her in a loan to begin with that was guaranteed to fail," Stubblefield said.
A Bank of America spokesman took Stubblefield's loan information from McClatchy but didn't comment.
'I FEEL LIKE ALICE IN WONDERLAND'
A work-from-home psychotherapist and Realtor, Helen Rudinsky, who's now 53, bought property in the nation's capital in June 2004. At the height of the housing boom, she took out an interest-only loan, offered for pricier homes and marketed as virtually risk-free because of climbing home values.
A few years later, she gave birth to a boy who was diagnosed with autism. She has temporarily moved to Bend, Ore., seeking easier access to expensive testing and therapy for her child.
Friday, August 14, 2009
Suburban Sacramento land rush? Big homebuilders buy up 'finished' lots
Suburban Sacramento land rush? Big homebuilders buy up 'finished' lots
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/topstories/story/2108559.html
Sacramento's new-home sales are still down and out, but some capital-area builders are betting money that the region's suburbs will soon resume their growth boom.
They've begun snapping up ready-to-build home lots at prices ranging from $25,000 to $67,000, setting the stage for a new suburban land rush.
The phenomenon suggests that a real estate market in decline for four years may be resetting for a new business cycle, some say.
Builders looking for land are focusing on "finished" lots, which already have government approvals, streets and utilities.
"They just have to pour a slab and start building," said Kathryn Boyce, Sacramento analyst for Costa Mesa consultant Hanley Wood Market Intelligence.
Capital-area builders say prices for finished lots have risen 20 percent since April as giant public builders muscle back into the region's land game for the first time since 2005.
Boyce said the land rush is greatest in Placer County, followed by Folsom and Elk Grove.
Hanley Wood counts 17,251 finished lots in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. Many are owned by lenders that repossessed them. Others are owned by development firms that need to raise cash. Investors own still more.
The recent escalation in land prices has led some in the industry to question whether they can make money when so many homes are priced at $250,000 or less.
"Prices might be going up too fast," said Tim Lewis, owner of Roseville-based Tim Lewis Communities.
Lewis recently bought lots at two projects in the capital region and one in Reno – his first in that city. "I'm cautiously looking at projects, but I'm certainly not on a buying frenzy like some of these publics (publicly traded builders) might be," he said.
Even with the recent rise, land prices in the Sacramento region are nowhere near the dizzying levels of five years ago. At the height of the real estate boom in 2004, builders paid up to $150,000 for finished lots in Roseville, and up to $120,000 in Natomas and Elk Grove.
Still, the renewed scouting and buying by building giants has sent a buzz through an industry that has endured prolonged downsizing and financial trauma.
"There is a consensus out there that we are at the bottom or pretty darn close," said James Radler, a Roseville-based land broker with Park Place Land Advisors of Irvine.
Radler and others say publicly traded home builders such as Los Angeles-based KB Home, Texas-based D.R. Horton, New Jersey's K. Hovnanian Homes and Meritage Homes, headquartered in Arizona, are among those looking at lots and buying. Others in the game include private Arizona-based building giant Taylor Morrison. All are among the capital region's top builders.
"These guys need lots," Rad- ler said. "If they don't do deals, they don't build homes, and if they don't build homes they aren't in business."
Most of the builders didn't respond to Bee inquiries, which is not surprising, say those who watch the industry. Said Boyce, "They're trying to position themselves without anybody knowing."
"They all want to be under the radar as much as they can," added Dean Wehrli, vice president and Sacramento analyst for Sullivan Group Real Estate Advisors of San Diego.
During the housing downturn that began after area home prices peaked four years ago this month, many large builders sold off home lots to maintain balance sheets. A few closed down divisions and left the area. Now, though capital-area home building remains sluggish – just 1,764 sales the first half of 2009 – firms are competing again for lots in a market they expect to begin rising as early as 2010.
Industry analysts say big Wall Street home builders, especially, need more lots to keep operations going while waiting for a new cycle.
"They essentially haven't done any buying for four years," said Radler.
The supply of lots is also constrained by the closing of Natomas to new building permits through 2011. That region, popular with buyers and builders for much of this decade, is under a building-permit moratorium until levee fixes bring 100-year flood protection.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/topstories/story/2108559.html
Sacramento's new-home sales are still down and out, but some capital-area builders are betting money that the region's suburbs will soon resume their growth boom.
They've begun snapping up ready-to-build home lots at prices ranging from $25,000 to $67,000, setting the stage for a new suburban land rush.
The phenomenon suggests that a real estate market in decline for four years may be resetting for a new business cycle, some say.
Builders looking for land are focusing on "finished" lots, which already have government approvals, streets and utilities.
"They just have to pour a slab and start building," said Kathryn Boyce, Sacramento analyst for Costa Mesa consultant Hanley Wood Market Intelligence.
Capital-area builders say prices for finished lots have risen 20 percent since April as giant public builders muscle back into the region's land game for the first time since 2005.
Boyce said the land rush is greatest in Placer County, followed by Folsom and Elk Grove.
Hanley Wood counts 17,251 finished lots in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. Many are owned by lenders that repossessed them. Others are owned by development firms that need to raise cash. Investors own still more.
The recent escalation in land prices has led some in the industry to question whether they can make money when so many homes are priced at $250,000 or less.
"Prices might be going up too fast," said Tim Lewis, owner of Roseville-based Tim Lewis Communities.
Lewis recently bought lots at two projects in the capital region and one in Reno – his first in that city. "I'm cautiously looking at projects, but I'm certainly not on a buying frenzy like some of these publics (publicly traded builders) might be," he said.
Even with the recent rise, land prices in the Sacramento region are nowhere near the dizzying levels of five years ago. At the height of the real estate boom in 2004, builders paid up to $150,000 for finished lots in Roseville, and up to $120,000 in Natomas and Elk Grove.
Still, the renewed scouting and buying by building giants has sent a buzz through an industry that has endured prolonged downsizing and financial trauma.
"There is a consensus out there that we are at the bottom or pretty darn close," said James Radler, a Roseville-based land broker with Park Place Land Advisors of Irvine.
Radler and others say publicly traded home builders such as Los Angeles-based KB Home, Texas-based D.R. Horton, New Jersey's K. Hovnanian Homes and Meritage Homes, headquartered in Arizona, are among those looking at lots and buying. Others in the game include private Arizona-based building giant Taylor Morrison. All are among the capital region's top builders.
"These guys need lots," Rad- ler said. "If they don't do deals, they don't build homes, and if they don't build homes they aren't in business."
Most of the builders didn't respond to Bee inquiries, which is not surprising, say those who watch the industry. Said Boyce, "They're trying to position themselves without anybody knowing."
"They all want to be under the radar as much as they can," added Dean Wehrli, vice president and Sacramento analyst for Sullivan Group Real Estate Advisors of San Diego.
During the housing downturn that began after area home prices peaked four years ago this month, many large builders sold off home lots to maintain balance sheets. A few closed down divisions and left the area. Now, though capital-area home building remains sluggish – just 1,764 sales the first half of 2009 – firms are competing again for lots in a market they expect to begin rising as early as 2010.
Industry analysts say big Wall Street home builders, especially, need more lots to keep operations going while waiting for a new cycle.
"They essentially haven't done any buying for four years," said Radler.
The supply of lots is also constrained by the closing of Natomas to new building permits through 2011. That region, popular with buyers and builders for much of this decade, is under a building-permit moratorium until levee fixes bring 100-year flood protection.
Wednesday, August 12, 2009
Sacramento-area prosecutors focus on mortgage fraud crime
Sacramento-area prosecutors focus on mortgage fraud crime
By Chelsea Phua cphua@sacbee.com
About two years ago, El Dorado County District Attorney Vern Pierson hired a forensic auditor and increased training for his prosecutors in the area of real estate fraud and other financial crimes.
He dedicated two prosecutors and two investigators to handle a majority of the fraud cases.
As a result, more financial schemes that in the past might have been dismissed as belonging in civil court are instead being prosecuted as criminal offenses, El Dorado prosecutors and investigators said.
Pierson said his office has made mortgage fraud crime cases a priority. "The magnitude of the loss is so great on the individual victim and also on our economy as a whole," he said.
Prosecutors in the Sacramento area have taken varying approaches to the surge in real estate fraud. Some, such as El Dorado County, have devoted more resources, while others have used existing anti-fraud units.
Nationwide, the number of suspected cases of mortgage loan fraud has increased from 52,868 in 2007 to 64,816 in 2008, the FBI says.
Former U.S. Attorney McGregor Scott said that about 2 1/2 years ago his office started receiving reports of mortgage fraud on an increasingly regular basis.
"It was just a recurrent theme I was hearing over and over again," said Scott, now a partner with Orrick, Herrington and Sutcliffe.
Scott pushed for a mortgage fraud task force that included the Internal Revenue Service, the FBI and the state's real estate board.
As the cases poured in, Scott said his office and the task force realized that "we need to find allies in the region." The task force started to offer training to law enforcement agencies and local district attorney's offices in the investigation and prosecution of mortgage fraud cases.
"We realized we were ground zero here for mortgage fraud in this district," said Assistant U.S. Attorney Matthew Stegman.
The U.S. attorney's office for the Eastern District of California, which handles cases from the Oregon border to Bakersfield, had the most mortgage fraud indictments in the nation during fiscal year 2008, Stegman said.
Training provided by the federal government and organizations such as the California District Attorneys Association is helping smaller district attorney's offices to handle the increasing workload as a result of the mortgage meltdown, said Bob Cosley, supervising investigator with the El Dorado County District Attorney's Office.
Larger agencies such as the Sacramento County District Attorney's Office usually have an established unit that handles real estate fraud and other types of white-collar crimes
"We have a unit specializing in this type of caseload for more than 20 years," Sacramento County Assistant District Attorney Albert Locher said.
The office participates in the Sacramento-area mortgage fraud task force.
"In times of economic downturn, there are more of these kinds of cases that surface," Locher said, but said it's not necessarily because more crime happened.
"When times are flush, criminals can churn enough fraud to cover their tracks," Locher said. "When the tide goes down, you'll see more rocks, but the rocks have always been there."
In Placer County, the District Attorney's Office's elder abuse unit encounters most of the real estate-related fraud cases. About 70 percent of elder abuse cases are financial in nature, Deputy District Attorney Jim Deslaurier said.
The number of cases hasn't fluctuated much in the last few years, but as the population ages, the office might see more of these cases, Deslaurier said.
Yolo County District Attorney's Office hasn't had many mortgage fraud cases referred to the office, said Dan Stroski, lieutenant of investigation in charge of the insurance fraud unit at the District Attorney's Office.
Stroski said the courts seemed apprehensive to hear them because it takes about three years for such cases to make their way through the system. Suspects in such cases also typically do not have an extensive criminal history and end up serving little time.
"That doesn't mean we'll give up," Stroski said.
By Chelsea Phua cphua@sacbee.com
About two years ago, El Dorado County District Attorney Vern Pierson hired a forensic auditor and increased training for his prosecutors in the area of real estate fraud and other financial crimes.
He dedicated two prosecutors and two investigators to handle a majority of the fraud cases.
As a result, more financial schemes that in the past might have been dismissed as belonging in civil court are instead being prosecuted as criminal offenses, El Dorado prosecutors and investigators said.
Pierson said his office has made mortgage fraud crime cases a priority. "The magnitude of the loss is so great on the individual victim and also on our economy as a whole," he said.
Prosecutors in the Sacramento area have taken varying approaches to the surge in real estate fraud. Some, such as El Dorado County, have devoted more resources, while others have used existing anti-fraud units.
Nationwide, the number of suspected cases of mortgage loan fraud has increased from 52,868 in 2007 to 64,816 in 2008, the FBI says.
Former U.S. Attorney McGregor Scott said that about 2 1/2 years ago his office started receiving reports of mortgage fraud on an increasingly regular basis.
"It was just a recurrent theme I was hearing over and over again," said Scott, now a partner with Orrick, Herrington and Sutcliffe.
Scott pushed for a mortgage fraud task force that included the Internal Revenue Service, the FBI and the state's real estate board.
As the cases poured in, Scott said his office and the task force realized that "we need to find allies in the region." The task force started to offer training to law enforcement agencies and local district attorney's offices in the investigation and prosecution of mortgage fraud cases.
"We realized we were ground zero here for mortgage fraud in this district," said Assistant U.S. Attorney Matthew Stegman.
The U.S. attorney's office for the Eastern District of California, which handles cases from the Oregon border to Bakersfield, had the most mortgage fraud indictments in the nation during fiscal year 2008, Stegman said.
Training provided by the federal government and organizations such as the California District Attorneys Association is helping smaller district attorney's offices to handle the increasing workload as a result of the mortgage meltdown, said Bob Cosley, supervising investigator with the El Dorado County District Attorney's Office.
Larger agencies such as the Sacramento County District Attorney's Office usually have an established unit that handles real estate fraud and other types of white-collar crimes
"We have a unit specializing in this type of caseload for more than 20 years," Sacramento County Assistant District Attorney Albert Locher said.
The office participates in the Sacramento-area mortgage fraud task force.
"In times of economic downturn, there are more of these kinds of cases that surface," Locher said, but said it's not necessarily because more crime happened.
"When times are flush, criminals can churn enough fraud to cover their tracks," Locher said. "When the tide goes down, you'll see more rocks, but the rocks have always been there."
In Placer County, the District Attorney's Office's elder abuse unit encounters most of the real estate-related fraud cases. About 70 percent of elder abuse cases are financial in nature, Deputy District Attorney Jim Deslaurier said.
The number of cases hasn't fluctuated much in the last few years, but as the population ages, the office might see more of these cases, Deslaurier said.
Yolo County District Attorney's Office hasn't had many mortgage fraud cases referred to the office, said Dan Stroski, lieutenant of investigation in charge of the insurance fraud unit at the District Attorney's Office.
Stroski said the courts seemed apprehensive to hear them because it takes about three years for such cases to make their way through the system. Suspects in such cases also typically do not have an extensive criminal history and end up serving little time.
"That doesn't mean we'll give up," Stroski said.
Monday, August 10, 2009
Bad June swoon for Sacramento-area homebuildres
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: 163Feb: 201March: 297April: 290May: 346June: 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.
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: 163Feb: 201March: 297April: 290May: 346June: 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.
Wednesday, August 5, 2009
New Land Deals seen
Construction: New land deals seen
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/2080102.html?storylink=pd
The real estate market isn't cured yet, but several indicators suggest that it is beginning that long, slow and greatly anticipated climb out of intensive care.
If so – and if the patterns continue – the market here could stabilize, finally reversing the decline that has marked the capital region as one of the worst-hit metro areas in the United States. Sacramento's ill-fated housing boom peaked four years ago this month when home values reached their zenith across much of the region – and then started slipping backward.
Among positive June indicators that have fueled relatively upbeat news in recent days are those that show greater-than-expected U.S. construction activity, especially in the home building sector.
• Even in the capital region, home builders are doing better – starting 374 houses, apartments and condos in June. That was 122 more than in May, the California Building Industry reported.
• Statewide, home builders started 17 percent more dwellings in June than in May, and reported the most construction starts for single-family homes in almost a year, according to the CBIA.
Analysts have warned these improved housing indicators look good primarily because of the ferocity of the real estate downturn. Nobel Prize-winning economist Paul Krugman referred to the indicators Monday on National Public Radio as "just the first glimmer of hope" and warned the economy will remain weak for an extended time.
Foreclosure activity that has saddled the capital region with 41,900 home repossessions since 2007, as well as an 11.6 percent unemployment rate in the state and the region, still applies brakes to excess enthusiasm about the economy.
In Sacramento "we have a lot more decompressing to do," added Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento. "Normally, I would have said we would have defined a bottom, too, later this year or early next year. I think for us the challenge is the government layoffs have just begun.
"We might be looking at our cycle to be pushed out compared to the national cycle," he said.
Yet, rising construction numbers – even if well below the same time last year – are steering developers and builders into new land deals. One Sacramento-based development operation bought 800 home lots in Reno last week in anticipation of an upturn.
"We're really seeing enthusiasm on the part of builders that we haven't seen in a few years," said Douglas Mull, vice president for land acquisition in Northern California and Nevada for the Lewis Group of Companies of Upland.
A Lewis venture – Lewis Investment Co. of Nevada – paid $6.6 million for lots that fell into bankruptcy court after the original developer, affiliated with CalPERS, invested more than an estimated $20 million readying them for homes. That was LandSource Communities Development, LLC, a multistate real estate portfolio once run largely by Miami-based Lennar Homes. CalPERS lost nearly $1 billion on its investment in the partnership, which filed for bankruptcy in June 2008.
Mull said Lewis plans to sell lots to U.S. home building giants, many of which run Reno operations from headquarters in Sacramento and the Bay Area. Most of the lots are in the suburban 5,000-lot Damonte Ranch community that Lewis helped develop early this decade. Sales stalled during the housing bust.
Mull said Monday that Reno's $20,000-per-lot builder fees are especially competitive for national builders. Fees can run four or five times higher in Sacramento-area cities.
The land executive, reminded of double-digit unemployment and high foreclosure activity in both Sacramento and Reno, acknowledged the road to a rebound is long.
"But there's new home demand," he said. Mull estimated Lewis will take about five years to sell all the lots.
Some other indicators drawing attention:
• California's existing home sales rose 20 percent in June compared with the same period a year ago. Though capital-area sales failed to beat June 2008, analysts and real estate agents blamed dwindling bank repos for sale. They also report fierce bidding wars for repos that remain. June's existing home sales in the Sacramento area marked a peak for 2009, while a once-frightening and prolonged glut of for-sale signs continued to fall.
• Multiple offers have spread now to vacant land for new homes, said Mark Rowson, Northern California president for Agoura-based Warmington Homes. He said, "A year ago nobody was talking. Now, there is movement.
"We've put some offers in, but we have not been accepted," he said. "Offers have come in a lot higher than we've been offering."
Kathryn Boyce, a Sacramento analyst for Costa Mesa-based home-building industry consultant Hanley Wood Market Intelligence, explained: "They're trying to position themselves for the next wave."
• Investors are also returning to home builder stocks. Monday, Michigan-based Pulte Homes reported second quarter losses worse than last year. But the losses were not as bad as the first quarter's, and the company attributed the improvement to markets starting to recover. Share prices on the New York Stock Exchange rose 3.43 percent in Monday trading, to $11.76. Texas-based Centex posted a profit in its first quarter, thanks to a $407 million tax gain. Its stock price was up 3.76 percent Monday to $11.32.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/2080102.html?storylink=pd
The real estate market isn't cured yet, but several indicators suggest that it is beginning that long, slow and greatly anticipated climb out of intensive care.
If so – and if the patterns continue – the market here could stabilize, finally reversing the decline that has marked the capital region as one of the worst-hit metro areas in the United States. Sacramento's ill-fated housing boom peaked four years ago this month when home values reached their zenith across much of the region – and then started slipping backward.
Among positive June indicators that have fueled relatively upbeat news in recent days are those that show greater-than-expected U.S. construction activity, especially in the home building sector.
• Even in the capital region, home builders are doing better – starting 374 houses, apartments and condos in June. That was 122 more than in May, the California Building Industry reported.
• Statewide, home builders started 17 percent more dwellings in June than in May, and reported the most construction starts for single-family homes in almost a year, according to the CBIA.
Analysts have warned these improved housing indicators look good primarily because of the ferocity of the real estate downturn. Nobel Prize-winning economist Paul Krugman referred to the indicators Monday on National Public Radio as "just the first glimmer of hope" and warned the economy will remain weak for an extended time.
Foreclosure activity that has saddled the capital region with 41,900 home repossessions since 2007, as well as an 11.6 percent unemployment rate in the state and the region, still applies brakes to excess enthusiasm about the economy.
In Sacramento "we have a lot more decompressing to do," added Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento. "Normally, I would have said we would have defined a bottom, too, later this year or early next year. I think for us the challenge is the government layoffs have just begun.
"We might be looking at our cycle to be pushed out compared to the national cycle," he said.
Yet, rising construction numbers – even if well below the same time last year – are steering developers and builders into new land deals. One Sacramento-based development operation bought 800 home lots in Reno last week in anticipation of an upturn.
"We're really seeing enthusiasm on the part of builders that we haven't seen in a few years," said Douglas Mull, vice president for land acquisition in Northern California and Nevada for the Lewis Group of Companies of Upland.
A Lewis venture – Lewis Investment Co. of Nevada – paid $6.6 million for lots that fell into bankruptcy court after the original developer, affiliated with CalPERS, invested more than an estimated $20 million readying them for homes. That was LandSource Communities Development, LLC, a multistate real estate portfolio once run largely by Miami-based Lennar Homes. CalPERS lost nearly $1 billion on its investment in the partnership, which filed for bankruptcy in June 2008.
Mull said Lewis plans to sell lots to U.S. home building giants, many of which run Reno operations from headquarters in Sacramento and the Bay Area. Most of the lots are in the suburban 5,000-lot Damonte Ranch community that Lewis helped develop early this decade. Sales stalled during the housing bust.
Mull said Monday that Reno's $20,000-per-lot builder fees are especially competitive for national builders. Fees can run four or five times higher in Sacramento-area cities.
The land executive, reminded of double-digit unemployment and high foreclosure activity in both Sacramento and Reno, acknowledged the road to a rebound is long.
"But there's new home demand," he said. Mull estimated Lewis will take about five years to sell all the lots.
Some other indicators drawing attention:
• California's existing home sales rose 20 percent in June compared with the same period a year ago. Though capital-area sales failed to beat June 2008, analysts and real estate agents blamed dwindling bank repos for sale. They also report fierce bidding wars for repos that remain. June's existing home sales in the Sacramento area marked a peak for 2009, while a once-frightening and prolonged glut of for-sale signs continued to fall.
• Multiple offers have spread now to vacant land for new homes, said Mark Rowson, Northern California president for Agoura-based Warmington Homes. He said, "A year ago nobody was talking. Now, there is movement.
"We've put some offers in, but we have not been accepted," he said. "Offers have come in a lot higher than we've been offering."
Kathryn Boyce, a Sacramento analyst for Costa Mesa-based home-building industry consultant Hanley Wood Market Intelligence, explained: "They're trying to position themselves for the next wave."
• Investors are also returning to home builder stocks. Monday, Michigan-based Pulte Homes reported second quarter losses worse than last year. But the losses were not as bad as the first quarter's, and the company attributed the improvement to markets starting to recover. Share prices on the New York Stock Exchange rose 3.43 percent in Monday trading, to $11.76. Texas-based Centex posted a profit in its first quarter, thanks to a $407 million tax gain. Its stock price was up 3.76 percent Monday to $11.32.
Monday, August 3, 2009
Nation's economy appears set for upswing
Nation's economy appears set for upswing
By Kevin G. Hall khall@mcclatchydc.com
http://www.sacbee.com/business/story/2074069.html
WASHINGTON – The worst U.S. recession in 70 years should end over the next three to six months, judging by data released Friday that showed that the economy's contraction eased considerably from April through June.
The Commerce Department reported that the economy shrank at an annualized rate of 1 percent in the year's second quarter, less than most analysts had expected, and far less than the dramatic 6.4 percent shrinkage in the first quarter, a figure revised downward Friday from the initial estimate of 5.5 percent.
Independent economists think that the economy now is poised to grow, albeit slowly.
"The key point is that this is the last negative (growth) report in the Great Recession, signaling the end of the downturn. The economy won't come roaring back, but at least it's back," said Mark Zandi, the chief economist for Moody's Economy.com, a forecaster in West Chester, Pa.
Several factors augur well for the near future. Recent reports on home and auto sales have shown improvement.
"Leading indicators of activity are pointing up, and the housing sector appears to be stabilizing," Commerce Secretary Gary Locke said in a statement.
Adding to the hopefulness is the stock market, which enjoyed its best July in 20 years – and its best month since October 2002.
The Dow surged 725 points or 8.6 percent for the month, with most of the gains arriving in bursts in the final 15 days. The Dow has risen four of the past five months.
Businesses did cut their stockpiles of goods at a record pace in the second quarter, but even that carries a silver lining, the Associated Press reported.
With inventories at rock bottom, businesses will likely need to ramp up production to meet customer demand. That would stimulate the economy in the current quarter.
AP reported that some economists think that these factors could push growth in the July-to-September quarter to a more vigorous rate than previously forecast – possibly 3 percent annual growth or higher.
President Barack Obama credited the $787 billion economic stimulus plan that passed earlier this year for the emerging signs of recovery.
"This and other difficult but important steps that we've taken over the last six months have helped us put the brakes on recession," he said at the White House. "I am guardedly optimistic about the direction that our economy is going, but we've got a lot more work to do."
Many uncertainties remain.
The first-quarter improvement was fueled, in part, by an 11 percent boost in federal government spending, along with a decline in exports that was far less harsh than in the first quarter.
Consumer spending, which powers two-thirds of U.S. economic activity, remained weak. Real personal-consumption expenditures fell 1.2 percent in the second quarter, after increasing 0.6 percent from January through March.
Sales of durable goods – big-ticket items such as large appliances and wide-screen televisions – shrank 7.1 percent from April to June after expanding at a 3.9 percent annual rate in the three previous months.
The job market appears unlikely to do much to increase that spending in the near future.
Although the size of job losses has fallen in recent months, the Fed says that unemployment – now at a 26-year high of 9.5 percent – will top 10 percent at the end of this year. Businesses likely won't boost hiring until they're certain the recovery has staying power.
Vincent Reinhart, a former top economist at the Federal Reserve who is now a scholar at the American Enterprise Institute, said that the continued rise in joblessness will "test bank balance sheets. That'll test business models generally. … A lot of manufacturing and retail activity doesn't look good when the unemployment rate is above 10 percent."
Economists also worry about commercial real estate.
"The commercial real estate problems are a big worry for the financial system and thus the rest of the economy. … As rents and prices decline, given all the vacant space, commercial mortgage holders will default on their loans, causing big write-downs at banks and other financial institutions," said Zandi, of Economy.com.
Still, the recent economic improvement as well as the easing pace of job losses, could help consumers sense that they are finally in a position to rebuild their nest eggs, and families may eventually start to feel comfortable spending again.
"I don't know when it'll happen, but the savings rate will plateau at some point," Greg McBride, a senior financial analyst at Bankrate.com, told the New York Times. "Consumers will strike that balance between living within their means but still living life."
By Kevin G. Hall khall@mcclatchydc.com
http://www.sacbee.com/business/story/2074069.html
WASHINGTON – The worst U.S. recession in 70 years should end over the next three to six months, judging by data released Friday that showed that the economy's contraction eased considerably from April through June.
The Commerce Department reported that the economy shrank at an annualized rate of 1 percent in the year's second quarter, less than most analysts had expected, and far less than the dramatic 6.4 percent shrinkage in the first quarter, a figure revised downward Friday from the initial estimate of 5.5 percent.
Independent economists think that the economy now is poised to grow, albeit slowly.
"The key point is that this is the last negative (growth) report in the Great Recession, signaling the end of the downturn. The economy won't come roaring back, but at least it's back," said Mark Zandi, the chief economist for Moody's Economy.com, a forecaster in West Chester, Pa.
Several factors augur well for the near future. Recent reports on home and auto sales have shown improvement.
"Leading indicators of activity are pointing up, and the housing sector appears to be stabilizing," Commerce Secretary Gary Locke said in a statement.
Adding to the hopefulness is the stock market, which enjoyed its best July in 20 years – and its best month since October 2002.
The Dow surged 725 points or 8.6 percent for the month, with most of the gains arriving in bursts in the final 15 days. The Dow has risen four of the past five months.
Businesses did cut their stockpiles of goods at a record pace in the second quarter, but even that carries a silver lining, the Associated Press reported.
With inventories at rock bottom, businesses will likely need to ramp up production to meet customer demand. That would stimulate the economy in the current quarter.
AP reported that some economists think that these factors could push growth in the July-to-September quarter to a more vigorous rate than previously forecast – possibly 3 percent annual growth or higher.
President Barack Obama credited the $787 billion economic stimulus plan that passed earlier this year for the emerging signs of recovery.
"This and other difficult but important steps that we've taken over the last six months have helped us put the brakes on recession," he said at the White House. "I am guardedly optimistic about the direction that our economy is going, but we've got a lot more work to do."
Many uncertainties remain.
The first-quarter improvement was fueled, in part, by an 11 percent boost in federal government spending, along with a decline in exports that was far less harsh than in the first quarter.
Consumer spending, which powers two-thirds of U.S. economic activity, remained weak. Real personal-consumption expenditures fell 1.2 percent in the second quarter, after increasing 0.6 percent from January through March.
Sales of durable goods – big-ticket items such as large appliances and wide-screen televisions – shrank 7.1 percent from April to June after expanding at a 3.9 percent annual rate in the three previous months.
The job market appears unlikely to do much to increase that spending in the near future.
Although the size of job losses has fallen in recent months, the Fed says that unemployment – now at a 26-year high of 9.5 percent – will top 10 percent at the end of this year. Businesses likely won't boost hiring until they're certain the recovery has staying power.
Vincent Reinhart, a former top economist at the Federal Reserve who is now a scholar at the American Enterprise Institute, said that the continued rise in joblessness will "test bank balance sheets. That'll test business models generally. … A lot of manufacturing and retail activity doesn't look good when the unemployment rate is above 10 percent."
Economists also worry about commercial real estate.
"The commercial real estate problems are a big worry for the financial system and thus the rest of the economy. … As rents and prices decline, given all the vacant space, commercial mortgage holders will default on their loans, causing big write-downs at banks and other financial institutions," said Zandi, of Economy.com.
Still, the recent economic improvement as well as the easing pace of job losses, could help consumers sense that they are finally in a position to rebuild their nest eggs, and families may eventually start to feel comfortable spending again.
"I don't know when it'll happen, but the savings rate will plateau at some point," Greg McBride, a senior financial analyst at Bankrate.com, told the New York Times. "Consumers will strike that balance between living within their means but still living life."
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