2008 was year home buyers finally got off fence...Jim Wasserman
Suddenly, the game got affordable again.
Just weeks ago, tech worker Brian Jacobosky moved into a Folsom home that once would have cost in the $600,000s.
But the move-up buyer from Arizona paid in the "mid-fours," he said. The deal was a distress sale that helped owners out of a jam, spared a bank further losses and settled his family in a suburban city of 70,000. Jacobosky also caught interest rates drifting toward 5 percent.
"It was a case of biding our time and waiting for the right opportunity," he said.
In 2008, long to be remembered for fear and opportunity, capital-area investor Scott Arbuckles and partners also saw the sudden opening.
"In a period of a couple months, the banks started selling properties at prices that would allow an investor to come in and make in excess of 10 percent per year," he said.
Last year, he bought eight Sacramento County repos priced below $120,000 to fix up and rent. By December, investors like him accounted for one in four home sales in the county – the most since mid-2004 – according to statistics released Tuesday by MDA DataQuick of La Jolla.
DataQuick's numbers paint turbulent, chaotic 2008 as the year that finally pushed the reluctant buyer off the fence. The year just ended was the first since 2004 to see annual home sales rise instead of decline.
DataQuick counted 41,030 closed escrows in the region in 2008 – 7,763 more than 2007.
The yearlong sales uptick in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties signaled a market enduring huge stresses, but also affordable to many first-time homebuyers for the first time since the earliest years of this decade.
They included Sacramento County employee Casandra Leon, 26, who paid $235,000 in February for a bank repo in Elk Grove, and construction worker Travis Watson, 25, who bought a bank repo in Galt for $181,000. There were thousands like them.
Steadily, they pushed down the number of for-sale signs in El Dorado, Placer, Sacramento and Yolo counties – from 13,445 in January to 9,526 in December, according to Sacramento researcher TrendGraphix.
In December, 2,485 homes total sold in Sacramento County. And a dip in the county's median sales price to $176,000, lowest since May 2001, drove 2,148 existing-home sales, highest for the month since 2004.
Elsewhere in December:
• Placer County had 546 sales and a median price of $317,250. That was down 15 percent from a year earlier.
• El Dorado County had 160 sales and a median price of $330,000. It fell 24.5 percent from December 2007.
• Yolo County reported 231 sales and a median price of $281,500. It was down 14.8 percent from December 2007.
• Sutter County tallied 115 sales and a median price of $173,500. That was down 30.7 percent from a year earlier.
• Yuba County's 104 sales had a median price of $160,000. It fell 34.7 percent from December 2007.
• Nevada County reported 78 sales and a 20.2 percent annual drop in median prices, to $331,000.
• Amador County had 29 sales and a median price of $270,000. It was down 18.6 percent from December 2007.
Free-falling median prices throughout 2008 testified mainly to lenders' efforts to dump repo properties after 19,000 foreclosures in the region from January through September. DataQuick will report fourth quarter foreclosure numbers this month.
The median price in Sacramento County, hardest hit by the region's foreclosure crisis, fell almost $100,000 the past year. But that doesn't mean everyone's house has fallen so far, analysts said.
"That decline in the median definitely overstates the decline for the typical house," said DataQuick analyst Andrew LePage. "It speaks to the declines in some of the hardest-hit areas. It's so heavy on foreclosures."
Even as repos pushed the region's 2008 sales within a shout of 2006 totals, overall sales were still among the lowest since 1998, said DataQuick.
"It's fair to say we've seen the beginning of a recovery in sales," said LePage. "But it's a strange recovery that's not as broad-based as you'd usually see. A lot of starter homes sold and nothing happened. A lender gets the money back, but no one is moving up."
Seven in 10 December sales in Sacramento County were bank repos, he said.
In December, 3,748 new and existing homes changed hands in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported.
That was up from 3,321 in November, a typical December sales bounce. The surge came as interest rates for 30-year loans began to reach historic lows.
That has continued into this year. Rates dipped below 5 percent last week, a bonanza for buyers with good credit.
The outlook for 2009: more of the same, said LePage.
"I think so much is riding on the health of the job market this year in Sacramento. For the market to really stabilize, you have to end that vicious cycle of foreclosures in hard-hit areas, and it's going to be hard to do that if more people are thrown out of work."
Delta trustees vote to hold classes in portables while state wrestles over budget (6:35 a.m.)
STOCKTON – Classes at San Joaquin Delta College’s controversial Mountain House site will be taught in portable classrooms indefinitely while administrators look for funding sources other than the dwindling pot of voter-approved bond money originally set aside to finish the promised campus.
Already having spent a decade and millions of dollars on the project – and despite past warnings that pulling out could cost the college millions more – trustees voted 4-2 late Tuesday to suspend planning for the south county campus. Instead, the college will use what’s left of the $250 million Measure L bond for other projects, including improvements at the Stockton campus.
Trustees who voted to change direction insisted Mountain House is not dead.
Administrators said the state budget crisis has frozen money that would have gone to at least two ongoing projects – a new library and a math and science facility – and the college could be on the hook for millions as a result. If bond money is used to replace those funds, future state proceeds could be put toward a permanent Mountain House campus, administrators said.
The campus might qualify for state funding three or four years from now that could be used for Mountain House, officials said.
“We’re not recommending abandoning Mountain House,” Superintendent and President Raul Rodriguez told trustees. “We’re saying, ‘Let’s go about it in a different way.’”
Trustee Ted Simas doubted the state’s fiscal outlook will brighten anytime soon to aid the proposed campus. “We can’t depend on the state,” said Simas, who voted against the recommendation. “There’s just no way. Let’s be realistic.”
San Francisco Chronicle
Obama halts all regulations pending review...JENNIFER LOVEN, AP White House Correspondent
One of President Barack Obama's first acts Tuesday was to put the brakes on all pending regulations that the Bush administration tried to push through in its waning days.
The order went out shortly after Obama was inaugurated president, in a memorandum signed by new White House chief of staff Rahm Emanuel.
Former President George W. Bush's administration moved into overdrive in the last year or so on a host of new regulatory proposals. Now the Obama administration will review everything that is still pending.
In doing so, the Obama administration is taking a page out of Bush's playbook from 2001.
Within hours after Bush was sworn in, Bush advisers were seeking to reverse some late-term actions of President Bill Clinton, who in his final 20 days in office issued 12 executive orders, including directives on migratory birds and the importation of diamonds from Sierra Leone.
Eight years later, the Obama White House is making a similar move. In some cases, however, the Bush administration moved too fast for the incoming administration.
For example, just six weeks ago, the Bush administration issued revised endangered species regulations to reduce the input of federal scientists and to block the law from being used to fight global warming.
The Bush administration worked diligently to get the change in place before Obama took over, corralling 15 experts in Washington in October to sort through 250,000 written comments from the public on the revisions in 32 hours.
Obama has said he would work to reverse the changes. But because the rule takes effect before he is sworn in, he would have to restart the lengthy rulemaking process.
The changes would eliminate some of the mandatory, independent reviews that government scientists have performed for 35 years on dams, power plants, timber sales and other projects, a requirement that developers and other federal agencies have blamed for delays and cost increases.
The rules also prohibit federal agencies from evaluating the effect on endangered species and the places they live from a project's contribution to increased global warming.
Another Bush administration regulation that went in effect this month overturned a 25-year-old federal rule that severely restricts loaded guns in national parks.
For rules that have already gone into effect, the Democratic-controlled Congress might be able to help the Obama administration by using the Congressional Review Act, a legislative tool to bring new federal regulations under scrutiny.
Los Angeles Times
Conservation plan for Tejon Ranch condors...Louis Sahagun, Greenspace
A developer’s draft conservation proposal aimed at clearing the way for approval of a construction project in the Tehachapi Mountains would prohibit the issuing of permits to kill condors, mandate the burial of new utility lines, and create condor feeding stations away from a proposed complex of luxury homes, hotels and golf courses.
The Tejon Ranch Co.’s plan for protecting the California condor on 142,000 acres of the largest chunk of privately owned wilderness in Southern California also provides protections for 26 other species, including the yellow-blotched salamander and striped adobe lily. Hanging in the balance is approval from the U.S. Fish and Wildlife Service to proceed with Tejon Mountain Village, a development that would consume about 8% of the critical habitat for condors in a nearly pristine landscape about 60 miles north of Los Angeles.
"Our goal is to provide the protections to endangered species necessary to move forward with our various activities including development," said Barry Zoeller, spokesman for the ranch.
The Fish and Wildlife Service is expected to release a draft environmental impact statement of the ranch’s development plans sometime next month.
In May, the ranch and a coalition of environmental groups agreed on a landmark strategy to preserve 90% of the entire 270,000-acre spread, where gray foxes and bobcat prowl secluded meadows and great horned owls roost in the boughs of 11 species of oak. In exchange, environmental groups including the Natural Resources Defense Council, the Sierra Club and Audubon California will not oppose the company’s overall plans to build three urban centers, including more than 26,000 homes, at the western and southwestern edges of the ranch.
Some biologists, however, are strongly opposed to Tejon Mountain Village, which they worry would result in substantial harm to condors and weaken the concept of federally designated critical habitat for endangered species.
In an earlier interview, Adam Keats, an attorney for the Center for Biological Diversity, which specializes in fighting development projects, said Tejon Mountain Village "should not be allowed to happen.... We’ve rolled up our sleeves and we’re fighting the hell out of it."
Federal regulators identify new problems at UCI hospital
In a 127-page report, regulators described repeated examples of poor oversight and inadequate systems to protect patients. The hospital has been threatened with a loss of its Medicare funding...Alexandra Zavis
Federal regulators investigating serious failings in UC Irvine Medical Center's anesthesiology department threatened to cut off Medicare funding after identifying dozens of new problems within the hospital.
In a 127-page report, regulators described repeated examples of poor oversight and inadequate systems to protect patients.
In one case, a psychiatric patient urinated on a pile of bed linens because the audio equipment used to monitor seclusion rooms was not working, according to the report. No one heard her shouting that she had to go to the restroom. Another patient developed blisters on both buttocks when she was not turned during a four-day stay for knee surgery.
In a letter dated Dec. 19, the U.S. Centers for Medicare and Medicaid Services (CMS) gave the Orange-based teaching hospital 10 days to show it had corrected the deficiencies or face losing its funding. That deadline was extended to last Friday so that the hospital could prepare a detailed plan of correction.
Dr. David Bailey, UCI's vice chancellor for health affairs, said the hospital was disappointed to learn of new deficiencies but welcomed the opportunity to improve. He said the hospital had remedied every issue by the time the plan was submitted last week.
"I was surprised, but on the other hand, I was also gratified because these were all things that were fixable and correctable," Bailey said.
"We really believe that we offer outstanding healthcare . . . and we don't want to see one slip-up for any patient."
The federal scrutiny began last year, when UCI was placed under state supervision because of its anesthesiology department's "inability to provide quality healthcare in a safe environment." Among the most serious findings was a practice of filling out medical records in advance, indicating specific outcomes before procedures were done.
That problem was resolved by installing an electronic anesthesia information monitoring system, which tracks the timing of entries, Bailey said.
In October, 14 inspectors returned to perform a full review of the hospital. Their report, given to The Times by the hospital, concludes that UCI Medical Center was not meeting standards in six of the 23 areas evaluated, including patient rights, quality assurance and infection control.
To avoid future problems, Bailey said the hospital had revamped procedures, including requiring weekly sweeps through the hospital by senior managers. The hospital also defended itself against some of the criticisms, saying, for instance, that staffers had visited the secluded psychiatric patient in person every two hours and asked if she needed to use the restroom.
If the federal government accepts the hospital's latest correction plan, it will authorize another inspection, said Rufus Arther, a manager for CMS' certification branch. The findings come at an inopportune time for the hospital, where officials were hoping to receive a clean bill of health before moving staff and patients into a new facility next month.
In a letter to hospital staff Thursday, Bailey emphasized that "no deficiencies were found for anesthesiology."
Even so, some practices in the anesthesiology service were criticized in the latest report. For instance, two nurse anesthetists were observed repeatedly injecting drugs through patients' IV lines without first using an alcohol wipe to clean the access ports.
Three staff members, who asked not to be identified for fear of retaliation, said the nurses either did not notice or did not understand a pager message reminding everyone to "clean your ports." It was one of many sent during the inspection to alert staffers of investigators' interests and whereabouts, they said.
"When everything is working as it is supposed to be working, there is no need to send out messages like that," one staff member said.
Another employee added: "It's kind of sad actually. They just want to get through the inspection: they don't want to change the culture."
Bailey said the messages were intended to ensure that staff were on hand to answer the inspectors' questions.
Other deficiencies noted in the report included:
* Not assigning enough nurses in the neonatal intensive care unit to ensure that the most acutely ill newborns received one-on-one care.
* Failing to properly maintain medical equipment and storing oxygen too close to combustible materials.
* Allowing nurses to adjust medicine doses without instructions or standing orders from a physician, and allowing dietitians to draw up meal plans without consulting the doctor.
* Failing to store and handle food safely.
The controversy in the anesthesiology department was the latest in a series of high-profile scandals that have beset the hospital over the last 14 years.
In 2005, the hospital shut down its liver transplant program after The Times reported that 32 people died awaiting livers in 2004 and 2005, even as doctors turned down organs that later were successfully transplanted elsewhere.
In 1999 and 2000, the university's Willed Body Program came under fire after its director sold parts of cadavers and did unauthorized autopsies.
And in 1995, a team of fertility doctors at the school's Center for Reproductive Health was accused of stealing patients' eggs or embryos and implanting them in other patients without permission.
San Diego Union-Tribune
2 watchdogs won't oppose sewage waiver...Mike Lee
SAN DIEGO — In a controversial change of direction, two leading pollution-watchdog groups are pledging not to challenge San Diego's bid to finalize its third federal waiver for the region's largest sewage processing facility.
Yesterday, leaders of San Diego Coastkeeper and the local chapter of the Surfrider Foundation said they are forging an agreement with Mayor Jerry Sanders that makes more sense than suing to enforce the Clean Water Act, which the Point Loma Wastewater Treatment Plant violates.
To make up for not spending about $1.5 billion to upgrade the facility so it treats wastewater more thoroughly, San Diego would pay for a study of how it can use more recycled water and thus minimize wastewater discharge to the Pacific Ocean.
The pact will be discussed publicly today, when state and federal regulators hold a hearing in San Diego to discuss the five-year waiver. Sanders plans to sign the agreement after presenting it to the City Council next week.
“It helps us in terms of forestalling litigation,” Sanders said, and “it gives us an opportunity to look at how we are going to produce a supply of wastewater that's treated for business and other activities.”
For at least seven years, Surfrider and Coastkeeper leaders have criticized pollution controls at the Point Loma plant. They also have threatened litigation to block a third waiver.
In December, the U.S. Environmental Protection Agency gave preliminary approval for San Diego's waiver request. That decision renewed environmentalists' efforts to negotiate water-use issues with Sanders instead of going to court.
Eventually, Coastkeeper and Surfrider essentially agreed with one of the mayor's main arguments: Spending more than $1 billion on relatively minor improvements for the Point Loma facility “may not be the best use of funds,” said Bruce Reznik, executive director of San Diego Coastkeeper.
Reznik would rather see major investments in expanding San Diego's water recycling system, which cleans wastewater for industry and irrigation. Each day, the Point Loma plant discharges about 175 million gallons generated by 2.2 million residents from Del Mar to Chula Vista.
The agreement doesn't require the city to act on ideas that would come from the analysis, which is expected to take about two years to complete and cost the city no more than $2 million.
“It is definitely a leap of faith,” Reznik said.
The policy shift was a “huge, huge deal” for Coastkeeper and Surfrider, and it has generated criticism from inside the environmental ranks, said Marco Gonzalez, an attorney representing the two groups in talks with San Diego officials.
One critic is Joey Racano of the Ocean Outfall Group, which works statewide to limit water pollution from treatment plants. He plans to oppose the waiver at today's hearing.
“If the environmental groups choose to go along with breaches in the Clean Water Act, then who is left to defend the ocean?” Racano said.
If finalized, the waiver would allow the Point Loma plant to remain as the nation's largest sewage facility without at least a plan to meet the federally mandated “secondary” treatment level for removal of solids and other pollutants.
Homebuilder sentiment falls to record low
Confidence for newly built single-family homes sinks amid worst housing market since the Great Depression, report says.
NEW YORK (Reuters) -- U.S. homebuilder sentiment sank to a new low in January as concerns about the faltering economy and reluctant homebuyers hurt confidence in the market for newly built single-family homes, an industry group said on Wednesday.
The National Association of Home Builders said its preliminary NAHB/Wells Fargo Housing Market Index was 8 in January, down from 9 in December. That is the lowest level on record since the gauge was launched in January 1985.
Readings below 50 indicate more builders view market conditions as poor than favorable. The January index was below expectations of 9, based on a Reuters survey of economists.
Eric Belsky, executive director at Harvard University's Joint Center for Housing Studies, said homebuilders are not only struggling under sinking demand and a credit crisis, but are facing a flood of homes in foreclosure.
"They have been responding to slack conditions by reducing production dramatically, but demand continues to fall and until that comes back, the drop in production is not enough to make the market turn around," he said.
Interest rates on mortgages have fallen sharply recently, a key development that could help turn around the hard-hit housing sector, but not enough to improve demand at this point.
"Even though we have lower mortgage rates, people are staying sidelined out of fear over further home price drops, anxiety about the economy, their income and their job," Belsky said.
Housing worst since Great Depression
The U.S. housing market is suffering the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.
"Clearly, conditions in the nation's housing market aren't getting any better, and they aren't going to get any better until the federal government takes substantial action to encourage qualified buyers to get back in the market," NAHB Chairman Sandy Dunn, a homebuilder from Point Pleasant, W. Va., said in a statement.
The gauge of current single-family homes sales fell to 6 from 8. The index of sales expected in the next six months, however, increased to 17 from 16. The prospective-buyer traffic measure also climbed, rising to 8 from 7, the group said.
Homebuilders have curbed new construction as they have been working through inventories of unsold homes by slashing prices at the expense of profits to pay off debt and keep afloat.
"Builder views continue to track with historically low consumer confidence measures," NAHB Chief Economist David Crowe said in a statement.
"The fact that there has been microscopic movement in the historically low HMI and its component indexes over the last three months provides further evidence of the need for government action to rejuvenate housing demand," he said.
Retail: The quiet crisis
The industry shed more than a half-million jobs in 2008. But that doesn't get a lot of attention in Washington...Parija B. Kavilanz
NEW YORK (CNNMoney.com) -- There's a major American industry that lost 522,000 jobs last year and is on one of the longest sales losing streaks in its history.
But the retail industry's crisis isn't getting the kind of government attention being showered on the nation's automakers.
Monthly store sales have declined for six straight months. In the midst of the longest recession in decades, the industry has lost more than three times the 163,000 manufacturing jobs shed by the auto industry last year.
Marshal Cohen, chief retail analyst with NPD Group, said he's especially concerned about this significant erosion of retailing jobs.
Unlike with the auto industry, Cohen fears the issue of retail job losses either isn't getting its fair share of attention from Washington or keeps "getting swept under the rug."
"When the industry is losing 34,000 jobs every couple of weeks, you better pay attention," Cohen said. He was referring to Circuit City's announcement last week that the electronics retailer, which employs 34,000 people in the United States, was going out of business.
J.C. Penney (JCP, Fortune 500) CEO Mike Ullman, too, expressed his concerns about inadequate attention being paid to the accelerating pace of retail job cuts.
"Retailers are the largest group of private employers in the country," Ullman said during a panel discussion last week at the National Retail Federation's (NRF) annual convention in New York.
"We lost twice the number of workers last year than automakers and we hired 45% fewer holiday workers last year," he said. "If that doesn't (press) the point, I don't know what would."
Said Cohen, "Consumer spending at retailers fuels 75% of the economy. So you have to make sure these people have jobs.
"If not, the ramifications are so overarching that it's enough to put the economy in a tailspin," he said. "These people losing jobs are full-time workers, part-time workers, college kids, senior citizens. They aren't only employees. They are consumers and taxpayers too."
Scott Hoyt, senior director of consumer economics for Moody's Economy.com, said he doesn't have a "good answer" as to why the the retailing industry hasn't been as effective as other industries in highlighting the issue of escalating jobs losses.
"If we put it in perspective, although the number of actual jobs lost in retailing is much bigger, the percentage of the total is not as high as for the auto industry," Hoyt said.
The retailing sector employed 15 million Americans in 2008 versus 800,000 jobs in the U.S. auto manufacturing industry, according to the Labor Department.
But auto manufacturing jobs fell 16.9% last year while total retail jobs fell 3.2%.
Government data showed more than half of retail job losses came in the last four months of the year with the biggest cuts occurring among auto dealers, furniture stores, electronics and appliance sellers.
However, retailing was also the third biggest employer after the government and the services sector.
At the same time, retail jobs typically are lower-paying jobs, Hoyt said. "[Therefore] the amount of consumer spending power lost [from a retail job] is probably not as significant to the economy as a higher paying job," he said.
Still, he maintained that in this recession "any job is still better than no job."
Burt Flickinger, managing director with consulting firm Strategic Resources Group, argued that the retail industry is overstored and overemployed and perhaps has itself to blame for its recent woes.
What's more, Peter Capelli, director of the Wharton Center for Human Resources, said Washington has been more responsive to the turbulence in the auto industry for other reasons.
"Auto jobs and sales are being lost to foreign competitors," Capelli said. "This industry used to be 90% domestic. Less than half of it is now domestic. The retailing industry is largely domestic."
But perhaps the biggest difference between two industries - retail and auto - is union representation.
While 50% of the U.S. auto industry is unionized, the retail industry is largely anti-union. Industry watchers estimate that only about 6% of the retail industry has union representation.
Lacking a voice
"It's fairly clear about why retailers haven't been effective in highlighting the jobs issue. This is a non-union industry that lacks a strong lobbying voice in Washington," said Theresa Williams, director of the Center of Education & Research in Retailing at the Indiana University Kelley School of Business.
NPD's Cohen agreed with Williams.
"First, there is no single organization that is in the forefront speaking for [retail] employees," he said, adding that the NRF, the industry's largest trade group, has been ineffective on this front. "This industry has nothing in comparison to the prominence, exposure and connectivity to D.C. as does the auto industry."
"I am not saying that unionizing [the industry] is the way to go, but someone has to speak up for the workers," he said.
NRF spokeswoman Ellen Davis agreed that retailers "collectively need to talk about not only what's happening to their sales but also their workers."
By its own estimates, the NRF maintains that the industry has more than 1.6 million retail establishments, employing more than 24 million workers.
"One in five American workers are employed in the retailing industry in full-time, part-time and seasonal jobs," Davis said. "This is a story that's not being told."
"We are watching the situation closely and we think the more than 500,000 jobs lost [last year] is just the tip of the iceberg," she said.
To her point, the International Council of Shopping Centers (ICSC) estimates that as many as 148,000 retail establishments - both public and private - will go out of business in 2009, possibly impacting more than 600,000 jobs in 2009.
Just this month, five more retail chains filed for bankruptcy, adding to the more than 27 retail chains that filed for bankruptcy - including some that eventually liquidated - in 2008.
"It used to be that if you lose a job at J.C. Penney, you could apply for a job at Macy's," Cohen said. "But that's not the case now."
Regarding Cohen's criticism of the NRF, Davis said the agency has "tried to be a voice on the [jobs] issue. But sometimes the conversation falls on deaf ears."
That's not good enough for Cohen. "Yes, the industry can absorb some of these store closures and job losses but you can't expect it to absorb the entire burden of the economy," he said.
While a "bailout" like the $700 billion Troubled Asset Relief Program for banks may not be feasible for retailers, Cohen said the industry still needs some kind of urgent assistance.
"We need to find a way to assist these store workers who have lost their jobs and get them back in the workforce," he said.
Officials of the Retail, Wholesale, Department Store Union (RWDSU), which is a member of the United Food and Commercial Workers Union, could not immediately be reached for comment.