California expects strong demand when it sells state buildings

In putting an estimated $2 billion worth of real estate up for sale during a horrific recession, state officials say the properties' trophy value will outweigh the severity of the real estate slump.

Although commercial property values have fallen as much as 35 percent in the past couple of years, private investors are hungry for quality real estate that is completely leased up, said Fred Aguiar, secretary of the State and Consumer Services Agency. The state would lease the buildings back for 20 years.

"There's a huge appetite," said Doug Button, project director at the Department of General Services. "We think we're going to be overrun with interest."

Aguiar and Button, in an interview Tuesday with The Bee's editorial board, insisted they'll pull the buildings off the market if the prices aren't right.

In an effort to raise cash, the state is proposing to sell 11 different properties, including the giant East End Complex next to Capitol Park and the Attorney General Building on I Street in downtown Sacramento. The plan has raised questions among some private analysts about the wisdom of trying to sell huge assets in one of the worst real estate markets in decades. The project represents 17 different buildings and 8 million square feet of space.

Despite the down market, Aguiar and Button said the leaseback provision would give the state a big edge. The Class A office vacancy rate in greater Sacramento is 18 percent, according to market researcher CoStar Group. Guaranteeing an investor a fully occupied property makes the state's buildings extremely attractive, state officials said.

While the state hopes to sell the buildings for a combined $2 billion, the bond debt on the properties would leave a profit of about $600 million.

The state wants to put the buildings on the market next year but could end up staggering the different properties, Aguiar said. The entire process could take up to six years, he said, and the state could choose to withdraw some buildings if sufficient demand doesn't materialize.

"We're not compelled to sell" all the properties, he said.

Source Sac Bee

Using stimulus funds, capital-area project to renovate homes

Sacramento city officials gathered Monday around an abandoned, shopworn home in Oak Park to describe how they plan to use millions of dollars in federal stimulus money to transform foreclosed eyesores into gems.

The property on 34th Street is the first single-family home purchased by the Sacramento Housing and Redevelopment Agency on behalf of the city under the Sacramento Property Recycling Program.

The effort is funded by part of the $13.2 million the city of Sacramento received from federal legislation aimed at shoring up foreclosure-battered neighborhoods.

"If we can rehabilitate these homes and get buyers into them, it helps the whole neighborhood," said Chris Pahule, assistant director of SHRA.

He noted that the 34th Street house had been broken into previously, and that vacant houses "are a magnet for vandalism and crime."

The 34th Street property was once appraised for $60,000, but it was foreclosed upon by Wells Fargo Bank. SHRA subsequently purchased it for $38,000.

Renovation on the house will begin later this year. SHRA plans to put it on the market in early 2010.

SHRA has allocated $3 million of the city's $13.2 million in federal funding to the Property Recycling Program, which will be run in partnership with nonprofit and for-profit partners that will actually make the needed repairs.

The rest of the money is going to programs that make loans to developers who rehabilitate distressed single-family homes for sale and multi-family properties for rent to low-income tenants.

SHRA officials hope to rehabilitate 50 to 60 homes with the $3 million allocation. Proceeds from the sales will be plowed back into the program to buy additional houses.

Sacramento County received $18.6 million from the federal housing bailout bill, and through SHRA also will spend part of that money to buy and fix up foreclosed homes.

In addition to Oak Park, SHRA plans to target portions of Meadowview, North Highlands, Del Paso Heights, North Sacramento, south Sacramento and Galt.

SHRA is seeking an additional $20 million under the second version of the federal Neighborhood Stabilization Act. If it gets that money, the agency envisions rehabilitating more than 300 foreclosed properties throughout Sacramento County.

City Councilwoman Lauren Hammond, in attendance Monday, said she wants to see the bleeding stop in the Oak Park neighborhood, her entire district and countywide, and hopes the federal money will help.

She said there were 252 notices of default and 134 foreclosures in her district in the first quarter of this year alone. Last year, the county recorded 17,221 foreclosures, more than 7 percent of California's total.

"Just before the recession, we had gone from 85 percent rentals to 60 percent, with 40 percent homeowners (in Oak Park)," she said. "I was really hoping to reach a goal of 50-50, because homeowners tend to be more dedicated to taking care of their homes and property. ...

"And then (the recession) hit. Now, I'm hoping that this program will get us heading in the right direction again."

Right now, the house on 34th Street doesn't look like much. It needs painting, and the lawn is dead with bare patches. Inside, the floors and walls need work.

To illustrate its potential, SHRA officials on Monday showed off a nearby home renovated by a developer using a loan from the agency. That 950-square-foot home, with new carpet, gleaming features, a separate garage and a basement, is on the market for $86,000 and has a pending sale offer.

While one spruced-up home may not seem like much amid a sea of foreclosures, Sergio Barajas, West Coast community development manager with the National Community Stabilization Trust, a new national nonprofit working to fight foreclosure blight, said surgical rehabilitation of a relatively small number of houses can make a difference.

"When you look at a home like this, we look at the potential to stabilize the neighborhood as a whole, not just one home," he said.

Source Sac Bee

Seeds: Get the ideas: Boulevard Park, east Sac homes to open doors for tours

Home tours – a fundraising staple of spring and fall – used to be relatively easy: Open the doors of beautifully decorated homes and curious people will come.

But with money tight, everybody wants added value, no matter the product or occasion. Pretty isn't enough.

Three local home tours illustrate that trend. Visitors can tap into local resources, hook up with renovators and learn about going "green" in style. More really is more, even on a budget.

"Home values have dropped least in older, established neighborhoods," notes Cecily Hastings, co-chairwoman of the Friends of East Sacramento upcoming tour. "That makes remodeling and renovating viable. People can't afford to make mistakes. For $20, you can see what other people have done. You can learn what works."

Sunday, the Sacramento Old City Association invites the world to its annual tour, focusing on eight homes in historic Boulevard Park in midtown Sacramento. Some dating back a century or more, the featured homes have been lovingly restored while incorporating modern technology.

The "added value" comes in a neighborhood street fair that will take over the 21st Street median between E and H streets. Visitors can meet artisans and home- improvement specialists (including some who worked on the tour's homes) as well as get help researching their own houses' past lives.

On Sept. 27, east Sacramento gets its turn with a tour devoted to five remodeled homes and one outdoor "room," created by renowned garden designer Michael Glassman.

After a one-year hiatus from their annual open houses, Friends of East Sacramento put together a home tour with the emphasis on making old new again.

About 800 people are expected to turn out for this fundraiser to support local parks projects while taking a peek inside these renovated Fabulous 40s homes.

"With the break, we had a waiting list of homes for the tour," says Hastings. "This is all how people live, not just designer makeovers. And each home is very, very different."

Some of the renovations are truly inspiring. Cheryl and Dan Hansford use their two-bedroom, one-bath brick-front east Sacramento Tudor as a second home.

He owns a Sacramento metal-fabrication business and frequently spends weeknights here. Although their primary home is in Pleasanton, the Hansfords have family in Sacramento, too, and wanted a place where they could entertain. They wanted smart, no-fuss style while maintaining the 80-year-old home's original character.

Interior designer Joan Stone Thomas of Stonewood Design worked many months on the project, which won awards from the National Kitchen and Bath Association. Into the design, she incorporated many of Cheryl Hansford's finds, mostly from local antique stores, into a white-and-black palette accented with shiny metals and mirrors.

"You can have small and wonderful detail, and quality," says Thomas. "It doesn't have to be big to be great."

Each tour house still fits with its neighbors.

"So many people have trouble visualizing remodeling," Hastings says. "The whole idea seems overwhelming."

Adds co-chairwoman Lisa Schmidt, "You walk in and see how it was done. You get ideas and there are people who can answer your questions. It makes it a lot less daunting."

What about homes of the future? On Oct. 10, the Placerville branch of the American Association of University Women will have a "green" home tour with seven stops in El Dorado County.

These homes feature solar, geothermal and energy- efficient systems, straw-bale construction and use of reclaimed building materials, plus native plant and drought-tolerant gardens filled with art made from recycled materials.

On these tours, learning goes hand in hand with curiosity as looks behind the doors reveal much more than pretty rooms.

More Information

Home tours

Sacramento Old City Association home tour of Boulevard Park

When: 10 a.m. to 4 p.m. Sunday

Tickets: $18 in advance, $20 Sunday (available at street fair booth, 21st and G streets). Advance tickets available at Joann's Elegant Gifts (1019 L St.), Collected Works Books & Other Fine Gifts (4524 Freeport Blvd.), 57th Street Antique Mall (875 57th St.) and the Avid Reader at the Tower (16th Street and Broadway).

More information: (916) 455-2935

Friends of East Sacramento home remodeling tour

When: 10 to 4 p.m. Sept. 27

Tickets: $20 in advance, $25 day of tour. Advance tickets available at Pulp Papery (Alhambra and H streets), Haus (2512 J St.), Sisters Boutique (Town & Country Village at Fulton and Marconi avenues) and Collected Works (4524 Freeport Blvd.).

More information: (916) 452-8011 or e-mail eastsaclife@aol.com.

Placerville AAUW green home tour

When: 10 a.m. to 4 p.m. Oct. 10

Tickets: $15 in advance, $20 day of tour at ANOVA, 778 Pacific St. (Highway 49), Placerville. Tickets may be purchased by mail until Oct. 1. Send check or money order payable to Placerville AAUW and self-addressed-stamped envelope to: AAUW Green Home, Garden and Art Tour, 3096 Camino Ct., Camino, CA 95709.

Source Sac Bee

California selling buildings worth $2 billion to raise cash

As the California economy roared in the 1990s and tax revenues poured into a treasury overseen by Gov. Pete Wilson, the state laid plans for a series of new office buildings in Sacramento to spare itself from paying rent to other landlords.

Barely a decade later, the Schwarzenegger administration is launching a process to sell many of the same buildings that were originally touted as long-term money savers for taxpayers. The goal today is more immediate: pay off debt and steer cash into the state's depleted general fund. It's among a variety of short-term crisis solutions that include selling surplus state property, moves also being undertaken in cash-strapped Arizona.

In California, 11 state-owned sites with an estimated value of almost $2 billion will be listed for sale in early 2010 to pay off about $1.4 billion in bonds and net another $600 million "to support other critical state government programs," said state Department of General Services spokesman Eric Lamoureux.

The state wouldn't move out of the buildings; it would continue to lease them from the new owners.

The sell-off has lit up the skies for brokers in an otherwise downcast office real estate sector, where few buildings are being bought, sold or even listed, especially in Sacramento. It's likewise called fresh attention to the state's battered finances and stirred banter about whether it's smart to sell long-term real estate assets for short-term goals in a weak market.

Many in the real estate industry acknowledge it's a close call, but believe "beautiful class A" state buildings with a single tenant will command premium prices.

"It's unfortunate they would sell them. But they definitely have a need for financing right now, for equity to solve this budget crisis," said Tom Aguer, president of Sacramento-based commercial real estate brokers Aguer Havelock Associates. "It's a very creative way for them to fix their problem. But in the long term, these are great assets."

Brokers like Aguer and others among the nation's leading real estate firms are already assembling proposals and lining up national teams to broker the sales. The state is demanding an experienced partner: a firm that has done five separate deals of $20 million or more in the past seven years, and at least $150 million in total deals in that span.

No one can calculate for certain the fees such a deal could bring a brokerage firm. But it's widely said in the industry that the higher the price, the lower the commission. Even a commission as low as one-quarter of 1 percent of almost $2 billion in sales could net a firm nearly $5 million.

Specifically, the state is proposing a so-called "sale/leaseback" deal in which buyers of state buildings would rent them to the state afterward.

"We intend to maintain 100 percent occupancy in the buildings just as we have today," said Lamoureux, whose department manages state buildings. "We're just looking to sell the property and lease back over an extended term, probably along the line of 20 years or so."

Brokers say the lease-back provision is likely to stir interest among risk-averse investors known in the trade as "coupon clippers." Those are big institutional investors such as pension funds and insurance companies.

"There are numerous buyers looking for single-tenant buildings with the long-term leases. It's a steady income. It's a low-risk deal," said Nico Coulouras, vice president in Sacramento for Lowe Enterprises, a Los Angeles-based development and investment firm.

Among the state complexes proposed for sale are some of Sacramento's biggest buildings and most distinctive landmarks: downtown's massive East End Complex next to Capitol Park, finished in 2003; the 17-story Attorney General Building on I Street, completed in 1995; and the sprawling 1.8 million-square-foot campus of the Franchise Tax Board, expanded earlier this decade at the city's eastern edge.

Elsewhere, fixtures of the Oakland, San Francisco and Los Angeles skylines – bearing names of politicians from Ronald Reagan to Hiram Johnson – will also be sold.

Source Sac Bee

New builder pounces on distressed Sacramento-area land

Sacramento's big developers have lost plenty of possessions since the real estate market collapse: private jets, vacation homes, expensive cars and multi-million-dollar tax refunds.

But mostly they've lost land. Lots and lots of it.

Their loss is Ray Sahadeo's gain. The 27-year-old has spent much of this year buying lots and building houses, capitalizing on the stumbles of his more established peers.

The local real estate industry is in the midst of a massive reshuffling as developers who have long been in the top tier of Sacramento society see their fortunes fall, and others step in to fill the void left by their departure.

Sahadeo, a relative unknown, has gained control of more than 400 home lots from distressed builders and banks. Buying low, he sells low, with homes starting at $139,000.

It's the Great American story: a son of immigrant parents from Guyana tapping private equity to "make hay while the sun shines."

While Sahadeo and partner Mark Chisick stake a claim in the local housing market, some of the most prominent family names in Sacramento development circles have become synonymous with bankruptcy and losses.

The list of those brought low includes royals like John Reynen and Christo Bardis, Sidney B. Dunmore and C.C. Myers. Collectively, as their businesses have collapsed, they've lost status and well-paying livelihoods, and surrendered corporate jets, vacation homes and millions of dollars in tax refunds to creditors.

Even so, they have managed so far to keep some vestiges of their opulent lifestyles.

As their stories unfold in bankruptcy courts, players like Sahadeo and others with access to money have moved into the game or gotten bigger. Last year, McClellan-based janitorial services partners and land developers Ron Alvarado and Charles Somers scooped up 879 building lots on 250 acres in growth-friendly Rancho Cordova from Pulte Corp. and Centex Corp., home building giants that were shedding assets.

It was a "prudent buy" for a "decent property" said Alvarado, and reportedly for far less than Pulte and Centex paid and spent to improve it.

Investors from Granite Bay, Pleasanton and Southern California also have swooped in for bargains after implosions of John Laing Homes, Kimball Hill Homes, Dunmore Homes and Reynen & Bardis Communities.

Among builders that survived after selling assets and downsizing, none has a more formidable position for the region's next housing boom than Pulte and Centex. Last month, the giants merged into a superbuilder that accounts for almost one in five sales.

That giant is in place now to realize dreams of builders killed off by debt and plunging land values – the same knockout punches that sent thousands of homeowners hurtling toward foreclosure and bankruptcy.

"The critical thing with land is not to owe," said Angelo K. Tsakopoulos, owner of AKT Development Corp. and the region's largest land developer.

Tsakopoulos, 73, said he is buying in this downturn just as he did in the 1990s recession and housing crash. Back then, Tsakopoulos bought hundreds of distressed and discounted acres, especially in North Natomas, after landowners crumbled under debt.

"Those were pretty bad days," he said. "But this cycle's a bad one. People didn't see it this time. We never do. They come, and come quickly, and they're brutal."

Brutal is an apt description of the past two years in the lives on John Reynen and Christo Bardis, partners for 36 years in Reynen & Bardis Communities, the Mather-based home builder and land developer. The pair filed for Chapter 11 personal bankruptcy protection after they personally guaranteed $900 million in loans for land their company bought during the housing boom. Lenders are now selling off many of their possessions.

Their bankruptcy filings offer a glimpse into how well Sacramento's development class lived when the market was booming, and how much it's losing now that it isn't.

Bankruptcy court records show that Reynen and his wife are giving up $26.8 million in cash to creditors, including $24.5 million in income tax refunds. They're surrendering a $2.5 million vacation home in Mendocino, a $325,000 property in El Dorado Hills, a $1.8 million vacation home in Cabo San Lucas, Mexico, and a vacant lot valued at $1.35 million in the same city.

Source Sac Bee

Sacramento County median home price down 53.5 percent from 2005 high

Last month, Sacramento County marked the fourth anniversary of its housing boom high with a median sales price of $180,000 – a whopping 53.5 percent less than in August 2005, property researcher MDA DataQuick said Thursday.

The county's August sales tally of 2,061 new and existing homes likewise fell well short of 3,800 in August 2005.

Now, four years later, these DataQuick numbers reveal the long, hard fall taken by the capital region, a descent defined by billions of dollars in lost home equity, more than 42,000 foreclosures and a marked slowdown in home sales.

A reversal of fortune that began in Sacramento County during the late summer of 2005, then quickly spread to seven other area counties, made Sacramento one of the first big U.S. housing markets to spin out of control. The aftermath still plays out in 2009.

"Everybody says buy a house. It's the best investment of your life," said Scott Seacrist, 30, who bought a small home in Sacramento's Elmhurst neighborhood in March 2006. "If I lived here 20 years, it would be the best investment."

Seacrist, like thousands of area buyers four years after the boom crested in Sacramento County, owns a home that's worth less than he paid.

"We love our house," said the married schoolteacher, noting that "it has a lot of charm." But a sustained housing downturn that came after moving in has provided its occasional bouts of anxiety.

No wonder, economists say.

"The bubble we saw was a once-in-a-century kind of event," said Dr. Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento. "You seldom see all the conditions in place simultaneously that allowed it."

DataQuick reported another month of uncertainty on the housing front. The researcher counted 3,375 closed escrows in August on new and existing homes in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That was down sharply from 3,815 in July and marked a third straight month of lower sales than the same time last year.

There were 3,998 closed escrows in August 2008, DataQuick reported.

The firm noted that sales similarly fell from July in the Bay Area and Southern California. Its analysts attributed the drop to "a thinning inventory of foreclosure properties and financial uncertainty among potential homebuyers."

For months, first-time buyers in the capital region have expressed increasing frustration at being outbid on a dwindling supply of bank repos.

"In Sacramento County, foreclosure resales were 50.4 percent of sales in August," said DataQuick analyst Andrew LePage. "That's the lowest since 43.8 percent in December 2007."

Would-be buyers are nervous, too, about jobs as capital-area unemployment has reached 11.8 percent. LePage said, "It's not as if the job market is creating huge demand."

Four years ago, such a bleak scenario seemed improbable to experts at all levels. But it became real as median sales prices peaked at $387,000 in Sacramento County – after doubling in four years – and then rolled backward. The median, a point where half sell for more and half less, has fallen by more than 50 percent in Sacramento, Sutter, Yuba and Amador counties and more than 40 percent in El Dorado, Placer and Yolo counties.

The steepest peak-to-trough mark in Sacramento County came in February, when the median price fell to $160,000, down 58.6 percent.

The smallest decline is 35 percent in Nevada County, where there are fewer new homes and the "lowest percentage of bank-owned homes in the region," said Linda Kaneko, executive with Paul Law Realty in Grass Valley.

DataQuick records show 2005 highs of $501,000 in Nevada County and $474,000 in Yolo County. Yuba County reached $351,500, while Placer County touched a boom high of $525,000. Sutter County peaked at $339,000. El Dorado County's high was $531,250. Amador County crested at $425,000.


Source Sac Bee

Home Front: Sacramento-area home sales seeing falling to 1967 levels

The annual real estate forecast season opened this week with an estimate that the end of 2009 won't be much better than the beginning, and capital home builders will sell just 3,400 new houses, condos and town houses this year.

It's hardly a wonder that home builders say their powerful industry, so long accustomed to getting its way politically and economically, is in a depression, not a recession.

Such a sales number – shockingly low, projected by consultant Hanley Wood Market Intelligence – hasn't been heard in this region since the 1960s.

Home Front took out the history books to compare: In 1967, with President Lyndon Johnson in the White House, builders in El Dorado, Placer, Sacramento and Yolo counties started 3,544 single-family detached homes, according to the Construction Industry Research Board. It's likely they sold roughly the same.

This year, considering that 85 percent of sales regionally are single-family homes, they'll sell about 2,900. Add in the townhouses and condos and you get the 3,400.

"Sacramento can support about 8,500 sales a year," Hanley Wood's Sacramento analyst Kathryn Boyce told a gathering of about 75 to 80 area home-building industry reps. "We stole from the future quite a bit from the heyday when we had our special financing. If they had a pulse, we gave them a loan."

Stimulus aid for high-rise

Here's some better economic news. Federal stimulus funding is bringing $10 million to restore an empty residential high-rise at Seventh and I streets in downtown Sacramento.

"We were high-fiving each other. It's not every day you get $10 million in a competitive grant project," said Nick Chhotu, director of public housing at the Sacramento Housing and Redevelopment Agency. The money is headed to a thorough face-lift for the 12-story Riverview Apartments owned by SHRA. It's a senior complex built in the late 1970s at 626 I St. The building has been empty for two years.

Plans are to start construction late next year after getting up to $6 million more in federal funds. The building, with 108 rooms for people 62 and older, needs new windows, a new electrical system and new plumbing, a job that will run well into 2011, said Chhotu.

The Public Housing Capital funds are provided through the American Recovery and Reinvestment Act of 2009.

Mixed-use to cut driving

How much do residents of Sacramento's eastern suburbs and foothills love their cars? Plenty. They lead the region in driving, averaging 75 miles a day. But another forecast on the PowerPoint circuit last week suggests they'll be driving a lot less by 2035.

The next generation of drivers, in Placer County especially, will live in neighborhoods with a greater mix of uses, said Mike McKeever, chief of the Sacramento Area Council of Governments. He told a gathering of Urban Land Institute-Sacramento members that shopping, home and work will be closer together as cities like Roseville and Rocklin urbanize more.

El Dorado Hills and its environs will have "more jobs in the foothills to balance houses," McKeever said.

And look, too for still less driving in the Sacramento-West Sacramento core, he said.

Consultant on Net radio

Look who's talking now on Internet radio. It's long-time Sacramento-area building industry consultant John Schleimer. He has a new VoiceAmerica Talk Radio Network show, "Housing in America." The show debuts Monday at 2 p.m. PDT.

Schleimer, owner of Roseville-based Market Perspectives, will launch with a show on the federal government's Making Home Affordable loan modification program. Guests include a U.S. Treasury Department official and New York Times economics reporter Peter Goodman.

Guests on coming shows, running weekly at the same time, include economist Mark Zandi of Moody's Economy.com and National Association of Home Builders Chairman Joe Robson. The show streams live on the Internet. Details: Google VoiceAmerica and click on "hosts."

Source Sac Bee

Region's home sales fall in August

Sacramento-area home buyers closed escrow during August on 3,375 new and existing homes, fewer than July and a third straight month of lower sales than the same time last year, La Jolla researcher MDA DataQuick reported today.

Sales fell somewhat sharply from July across the capital region. It mirrored a statewide trend that DataQuick attributed to "a thinning inventory of foreclosure properties and financial uncertainty among potential home buyers."

The firm noted that first-time buyers have expressed increasing frustration with the competitive process of buying bank repos, and hinted that more would-be buyers are also nervous about losing their jobs. The drop reveals continued uncertainty in a capital-area housing market still struggling to find balance after years of falling values and thousands of foreclosures.

August's 3,375 sales in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties compared to 3,815 in July and 3,998 during the same month last year, DataQuick reported.

Median prices for new and existing homes combined remained flat at $180,000 in Sacramento County, but remained well up from a February low of $160,000.

But they broke past the $300,000 barrier in Placer County for the first time since February, reaching $305,000. Median is that price point where half sell for more and half for less.

Today's price report marked the fourth anniversary of Aug. 2005, when median prices peaked at $387,000 in Sacramento County, and then began falling backward. Prices in five other area counties also peaked in late 2005. Nevada County reached a boom high of $501,000 in October. Yolo County crested at $474,000 in November. So did Yuba County, reaching a peak of $351,500. Placer and Sutter counties cemented the trend in December. Placer reached its housing boom high of $525,000, and Sutter peaked at $339,000.

El Dorado County's median price topped out in March 2006 at $531,250. Amador County similarly crested in May 2006 at $425,000.

Prices have since fallen dramatically in every county. They're down by half or more from housing boom highs in Amador, Sacramento, Sutter and Yuba counties.

DataQuick's newest numbers also revealed a continuing weakness of new home sales throughout most of the area. Regionally, new homes accounted for 9.6 percent of closed escrows, the firm reported. Four years ago new homes represented one in four sales.

The exception was Placer County. New homes, largely on the city's west side, represented 22 percent of the county's closed escrows in August.

Highlights of DataQuick's August statistics for new and existing homes combined:

• Sacramento County: 2,061 sales with a median price of $180,000. That's down 14.3 percent from August 2008.

• Placer County: 554 sales with a median price of $305,000. That's down 7.6 percent from the same time last year.

• Yolo County: 209 sales with a median price of $260,000, down 16.7 percent from August 2008.

• El Dorado County: 183 sales at a median price of $310,000. That's 20.5 percent lower than the same time last year.

• Yuba County: 116 sales with a median price of $155,000, down 12.9 percent from a year earlier.

• Nevada County: 129 sales with a median price of $325,500. That's 20 percent less than August 2008.

• Sutter County: 93 sales with a median price of $165,000. It's down 13.2 percent from August 2008.

• Amador County: 30 sales at a median price of $200,000. That's down 23.1 percent from August 2008.

Source Sac Bee

Sacramento Association of Realtors Upcoming Events

Here are some noteworthy events coming up in September that you might be interested in:


SAR Volunteer Opportunity: Rebuilding Together
Date: Saturday, October 3rd
Time: All Day
Location: TBA
SAR has been organizing a team of members to help rehab the home of a needy Sacramento citizen. This team gets together twice a year to paint, construct, and even clean homes. If you are interested please contact Tony @ 437-1205 and for more details you can sign up at www.rebuildingtogethersacramento.org

SAR 2009 Fall Conference & Expo
Date: Friday, September 18th
Time: 8:00-9:00am Early-bird session
9:00am-4:00pm Conference and Expo
Location: Radisson Hotel Sacramento
Cost: $25 (SAR and MLS Members)
$30 (Non-Members)
There will be exciting speakers, fabulous prizes and an extensive trade show not to mention a delicious lunch will be served. Speakers include:
-Right Tools Right Now: Matthew Ferrara
-It's Easy Being Green: Jim Casey
-Recharge Your Batteries: Jay Grant


The Housing Affordability Update: "Show Me the Money"
Date: Wednesday, October 28th
Time: 9:00am - 12:00pm
Location: SAR Mack Powell Auditorium
Cost: $10 ($15 if paid after 10/23)
Topics covered will include the EEM, 203K, MCC and many more. This will be an amazing opportunity for information because the following organizations will be featured FHA, CalPERS, and CalHFA.

Young Professionals Council/Public Issues Forum
Date: Thursday, September 17th
Time: 9:00am - 10:00am
Location: SAR Mack Powell Auditorium
This year the Forum has been moved to accommodate the 2009 Fall Conference and will be held jointly with the YPC meeting. There will be updates given on the Sacramento region's water issues by John Woodling, Executive Director of the Regional Water Authority.

WCR Luncheon
Date: Thursday, September 17th
Time: 11:00am - 2:00pm
Location: SAR Mack Powell Auditorium
The Women's Council of REALTORS is holding their monthly luncheon on Thursday following the YPC/Public Issues Forum. A one hour Crime Prevention Seminar will be given by Crime Stop USA. This seminar has been seen by over 30,000 agents. Laugh yourself safe!


Source Sacramento Association of Realtors

Capital's Money Store helped drive subprime loan boom

There is a moment almost 20 years ago that John Wagner still recalls vividly, a scene from a Money Store focus group in Old Sacramento.

A participant suggested the term "less than perfect credit" to describe the then-emerging business of subprime home equity lending. Executives recognized it immediately as a perfect catch phrase, one to replace the negative marketing images usually associated with "problem, spotty or blemished credit."

It was one small innovation among many that the local pioneers of subprime lending fondly recall about their fast-track industry – and a time long ago before it all became so thoroughly discredited.

It's been nearly a decade since the Money Store, which once employed 3,600 people, closed at its distinctive ziggurat-shaped headquarters on the West Sacramento riverfront. But after a spectacular U.S. housing crash in which subprime lending played a large role, some believe the humbled industry – which charges higher interest for riskier loans – may eventually veer back toward its older Money Store roots in Sacramento.

That could mean a return to subprime lending practices that seemed fast and flashy in their time, but in retrospect seem old-fashioned: marketing aggressively, lending conservatively, managing risk and servicing its own loans.

Nine years after the business closed, Wagner and other former Money Store executives talked recently about their company's early role in the subprime lending business, and their growing alarm in the past decade as they watched their former industry turn into an increasingly undisciplined "wild wild West" actor.

"Compared to what evolved, we were buggy whip makers," said Wagner, a former executive vice president. "It changed so rapidly. The Money Store was a pioneer of securitization. It showed Wall Street that it could be done. Then the investment guys just kept pushing the envelope," he said.

In the annals of lending history, the Money Store might be considered Subprime 1.0. The firm, founded in New Jersey as the Modern Acceptance Corp. in 1967, moved to a Victorian in midtown Sacramento in 1984 and became publicly traded in the early 1990s.

Through it all, the company boasted an innovative, fast-paced, get-it done culture where advancement could be quick and new ideas become loan products within weeks. Inspiration came from Chief Executive Officer Marc Turtletaub, son of the firm's founder.

In 1989, Turtletaub, an attorney with roots in the counterculture, helped form a Sacramento business coalition supporting a successful measure to shut down the Rancho Seco nuclear power plant. Later, Turtletaub commissioned and built the 11-story ziggurat building, reminiscent of an ancient Mesopotamian temple, that became a symbol of the Money Store's success.

Bill Templeton ran the Money Store's largest division, home equity lending, through much of the 1990s. He said the Money Store proved that subprime lending could be done carefully to minimize risks to lenders and maximize benefits to borrowers.

"In the big days when we were a multibillion corporation, we never exceeded 5 percent delinquency of all the loans we originated," he said.

Subprime 2.0 was a different creature, however. It was largely centered in Orange County, thriving for a while before imploding from its loosened standards, which allowed people to borrow with no money down nor any proof of income, passing the risky loans along to Wall Street for high fees.

"It was that kind of lack of discipline and lack of risk management that caused the industry to collapse," Templeton said.

The Money Store was the first national provider of home equity loans to people with damaged credit. Stepping into a riskier sector where banks wouldn't go, it shined brightly for years in the financial universe, its brand pitched far and wide by former New York Yankees shortstop Phil Rizzuto and ex-Baltimore Orioles pitcher Jim Palmer.

Then, almost as fast, it disappeared alongside many rivals in the late 1990s.

Source Sac Bee

Mortgage fraud bills sent to Schwarzenegger

As financial carnage from the housing crash continues across California, state lawmakers have sent several bills that crack down on mortgage fraud to Gov. Arnold Schwarzenegger's desk.

In recent days, the Assembly and Senate have jointly passed bills to ban loan modification companies from asking for upfront fees and make mortgage brokers put their customers' financial needs ahead of their own commissions.

They've also limited the size of pre-payment penalties and added California to the roster of states that allow prosecutors to file specific felony charges for those accused of mortgage fraud.

"No one right now is doing these risky loans," said Assemblyman Ted Lieu, D-Torrance. "But five or 10 years from now people (will) forget, and if you don't have these controls in place, the same thing happens again."

Lieu carried one of the Legislature's most sweeping mortgage reform bills this year, Assembly Bill 260, which was sent to the governor this week. It bans so-called subprime "negative amortization" loans where the amount owed grows even as the borrower makes payments.

It also prevents mortgage brokers from receiving thousands of dollars in special fees for originating subprime loans and those with pre-payment penalties. The bill also limits the size of pre-payment penalties for borrowers who pay off their loans early.

Lastly, it requires that mortgage brokers have a fiduciary duty to borrowers – that is, they must place the "economic interest of the borrower ahead of the broker's own economic interest" when making loans.

That provision is especially opposed by the California Association of Mortgage Brokers. Fred Arnold, a Santa Clarita-area broker and the group's past president, said the bill's definition of fiduciary duty is vague and an invitation to "frivolous lawsuits."

"It's not necessary. We already have a fiduciary duty under the Department of Real Estate," said Arnold.

Last year, the governor vetoed a similar broad-based bill by Lieu to rein in mortgage industry practices. But Lieu said he worked with the Governor's Office on this year's version, noting, "We hope we've hit the sweet spot for a compromise."

The bills land on Schwarzenegger's desk as California continues wrestling with more than 410,000 foreclosures since the start of 2007, the aftermath of unfettered lending practices earlier this decade.

During the housing boom, unscrupulous mortgage brokers could earn fees of $20,000 or more for making risky subprime adjustable-rate loans, often to unsuspecting borrowers.

Among groups backing changes in mortgage practices is the California District Attorneys Association, which is pushing for new felony penalties for mortgage fraud. The group sponsored a bill now before the governor, Senate Bill 239, by Sen. Fran Pavley, D- Agoura Hills. It would create a specific category of felony mortgage fraud, which the DA's group calls "one of the linchpins in the demise of the California real estate market and the related crises in the financial sectors."

The group says Sacramento ranks seventh among U.S. metropolitan areas in reporting mortgage fraud complaints to the FBI.

Finally, Schwarzenegger faces a choice of two bills that would bar loan modification companies from asking struggling borrowers to pay upfront fees.

Both bills banning upfront loan modification fees – Assembly Bill 764 by Assemblyman Pedro Nava, D-Santa Barbara, and Senate Bill 94 by Sen. Ron Calderon, D-Montebello – passed the Legislature earlier this week. The governor has 30 days from a bill's passage to sign it, veto it or let it become law without his signature.

Source Sac Bee

Home Front: It's party time at Sacramento-area Sun Cities

It's anniversary time for two of the biggest housing developments the Sacramento region has ever seen – Sun City Lincoln Hills and Sun City Roseville.

Marking its 10th anniversary, Sun City Lincoln Hills will celebrate with a parade at 9 a.m. Saturday. It's part of a four-day party running Saturday through Tuesday for the retirement community's 11,000 residents.

The parade begins at the Orchard Creek Lodge and ends at Kilaga Springs Lodge on Sun City Boulevard, organizers say. Watch for kazoo players of a certain age, floats filled with belly, tap and ballroom dancers, and classic cars.

This year, Sun City Roseville also marks a 15th anniversary as the nation's first non-desert Sun City. It opened in 1994.

The two Del Webb golf course and age-restricted projects – with almost 10,000 homes – have brought thousands of older newcomers to Placer County and the capital region. Almost half the residents of Sun City Lincoln Hills came from the Bay Area, selling homes that appreciated during their working lives.

About 30 percent of Sun City Roseville residents moved in from the Bay Area, said Judy Bennett, marketing project manager for the Sun City Lincoln Hills Community Association. Many more came from elsewhere in California to be near their still-working children and grandchildren.

Bennett said the average age in Sun City Roseville is over 72. In Lincoln, "the average age is approaching 64."

Both projects sold quickly, catching upswings in the real estate market after the prolonged housing downturn of the 1990s. In a region reeling from foreclosures, both Sun City projects are also notable for a relative absence of them.

"There are two big reasons," said Bennett. "About 60 percent pay cash for their homes. The other part is they don't go in for the real creative loans. They are much more conservative in their loans."

'Active adults' rock on

Now that we're speaking of communities for people 55 and older, let's sing that old Grateful Dead "Truckin' lyric: "Lately it occurs to me/What a long strange trip it's been."

This is because boomers have lived long enough to see not just the 40th anniversary of Woodstock, but also now the region's first "Webbstock."

It's a '60s-style promotion – also Saturday – at Del Webb "active adult" communities in Roseville, Elk Grove and Manteca. Watch for hula hoops, rock music, VW Bugs and "guests in far-out outfits." Long strange trip, indeed.

Late mortgages

These reports of loan delinquencies just keep getting worse. As July ended in El Dorado, Placer, Sacramento and Yolo counties, 9.7 percent of mortgages were three months or more delinquent. That's the kind of lateness that's hard to recover from, experts say.

The July delinquency figure is up from 8.5 percent in February, according to First American CoreLogic, which released the statistics Thursday. In July 2008, 6.2 percent of area mortgages were delinquent.

It gets worse: Another 3.6 percent of mortgages in the four-county region were already in the foreclosure process – between a notice of default issued when borrowers fall behind on payments and repossession of the house.

In July 2008, that figure stood at 2.3 percent.

Finally, 0.8 percent of the region's mortgages in July were attached to a home that had been repossessed and listed on the market to sell.

That number was down sharply from 1.9 percent in July 2008. It shows that banks are keeping more of their repossessed homes off the market. That's possibly in hopes that dribbling them out will slow the rapid depreciation that happened last year when they released a flood of repos. It could also be that they expect prices to rise in coming months. The same trend is happening statewide and nationally, statistics show.

Source Sac Bee

Mortgage-relief program helps relatively few troubled homeowners

WASHINGTON – Major mortgage service companies boosted the number of trial modifications they offered to distressed homeowners in August, the government reported Wednesday, but the workouts still cover only a small fraction of the delinquent loans that are eligible for help.

The Treasury Department released its second monthly report on loan modifications under the Obama administration's Making Home Affordable Program. It said that servicers had started 360,165 trial modifications through August, up by 124,918 from the modifications reported through July. The number of offers for trial modifications rose by 164,812, to 571,354 through August.

The total number of trial modifications started represented 12 percent of all loans that are 60 days late on payments and considered eligible for the Obama administration's program. That's up from 9 percent through the end of July.

"We think all the servicers could do more than they are doing now," Assistant Treasury Secretary Michael Barr told the housing subcommittee of the House Financial Services Committee on Wednesday.

The program is on track to meet its target of 500,000 trial modifications by November, Barr said. That number, however, is a small percentage of the more than 6 million potential foreclosures over the next three years that many analysts forecast.

Mortgage servicers, many of them large banks like Wells Fargo and Bank of America, are essentially middlemen that collect mortgage payments on behalf of investors who own securities backed by pools of mortgages. Although borrowers negotiate with servicers as if they were the lenders, the servicers represent the interests of investors, not homeowners.

From 2005 to 2008, servicers modified just 3 percent of all delinquent loans, according to documents reviewed by the House panel.

That low number led the Obama administration to create the servicer performance report, dubbed "Name and Shame," in a bid to pressure investors and servicers to do more. Forty-seven servicers now participate in the administration's program, up from 38 in July.

Wells Fargo and Bank of America improved on their July numbers but are still modifying a low percentage of eligible loans under the government program. Bank of America increased from 4 percent of eligible loans to 7 percent; Wells Fargo improved from 6 percent to 11 percent.

CitiMortgage, part of troubled Citibank, boosted its trial modification numbers to 23 percent of eligible loans in August from 15 percent in July. JPMorgan Chase, thought to be the nation's healthiest large bank, improved to 25 percent of eligible loans in August from 20 percent a month earlier.

The government's trial modification program seeks, through financial incentives to servicers and the investors they represent, to get borrowers into loans whose monthly payments are equivalent to 31 percent of their before-tax incomes.

Industry representatives said in testimony that their modification numbers were much higher than the report indicated, but there are no reliable breakdowns of individual servicer numbers to distinguish between, say, allowing a borrower to skip a payment vs. modifying an adjustable-rate loan into a low-cost fixed-rate mortgage.

"There may be other things going on out there, but to comply with our program rules and to count as a real modification you've got to get people down to an affordable (payment) level," Barr told McClatchy.

The administration will ratchet up pressure on servicers, he said, requiring new data on why loans weren't modified.

"We are requiring next month the implementation of denial codes by each servicer, and at that point we will be able to have good empirical data on reasons for denial," Barr said.

Representatives of JPMorgan Chase, Bank of America and Wells Fargo acknowledged in testimony that they fold legal fees and other foreclosure-processing costs into reworked loans, upping the balance that borrowers owe.

Only Wells Fargo said it had a special program to help borrowers with strong payment histories should they lose their jobs.

Bank of America's executive in charge of credit loss mitigation, Jack Schakett, acknowledged to the panel something long suspected but rarely spoken about publicly. Distressed borrowers who have equity built up in their homes, he said, are more likely to get foreclosed on, because there's a greater likelihood that servicers and investors who hold pools of mortgages will profit from the sales of the homes.

"The more equity that is in the house, the more the market will actually walk away with money, the less likely you will actually modify the loan," Schakett confirmed in an interview after the hearing.

Source Sac Bee

California bill would extend tax credit on new homes

A popular state tax credit of up to $10,000 that helped sell hundreds of new houses throughout the Sacramento region earlier this year appears to be coming back.

A plan to extend the state tax credit to another 4,285 buyers of new, unoccupied homes in California – possibly as many as 500 in the capital area – is expected to receive a vote in the Legislature by Friday's end of the session.

The buyer tax credit began March 1 and unexpectedly sold out by July 2 as many first-time California buyers combined the state credit with an $8,000 federal tax credit.

Statewide, Roseville ranked eighth among cities where new house buyers received the state credit. Sacramento ranked ninth, the state Franchise Tax Board reported.

"It was used very extensively," said Dennis Rogers, a government affairs executive with the Roseville-based North State Building Industry Association. He and others in Sacramento's struggling building industry said the credit helped prod buyers off the fence before it ended in July.

"We've definitely seen a lot of interest from homebuyers coming into the sales environment because of the program," said Pulte Homes spokeswoman Jacque Petroulakis. Pulte is the capital region's largest home builder.

The original tax credit also helped area builders clear an excess inventory of homes finished or nearly finished, but not yet sold.

Builders and buyers now in the sales process hope to see the bill pass the Legislature this week and be signed by Gov. Arnold Schwarzenegger.

That's considered likely by many close to the legislation. The governor was a force behind the original tax credit, calling it a job generator for the construction industry and larger California economy.

Statewide, 10,659 California buyers got the homebuyer credits, which allowed tax breaks of up to $3,333 per year for three years, the Franchise Tax Board reported Aug. 31. Buyers are expected to be notified by Friday about the amount of credit allocated or denied.

The tax agency stopped taking applications July 2, assuming that it had reached the program's $100 million limit. Original expectations were that most people could claim the entire $10,000. Then a newer FTB sample of taxpayers approved for the credit based on "their 2007 income tax liabilities, and incorporating 2009 tax law changes" showed most people won't owe enough state taxes to claim an entire $10,000 credit over three years.

"It's estimated that most people will get about $7,000," said FTB spokeswoman Brenda Voet. She said those who qualify for the entire $10,000 will still receive it.

The new FTB liability estimates means an estimated $30 million in credits could go unclaimed under provisions of the original tax credit bill passed in February.

Assembly Bill 765, by Assemblywoman Anna Caballero, D-Salinas, reauthorizes the tax credit under the new estimates. New credits would be available upon the bill's signing and run through March 1, 2010. Builders must apply on behalf of buyers within one week of closing escrow.

The new bill, however, won't help capital-area buyers who closed escrow after the FTB's July 2 deadline. They'll be ineligible for the tax break because they closed escrow during a time when the law, if it passes, was not in effect.

Source Sac Bee

Backlash against banks growing over mortgage modifications

James Seeley, a machine shop supervisor at the University of California, Davis, just wants a modified mortgage that he and his wife, Sandi, can better afford.

It's a common quest in this economy. Seeley's wages are being cut. His house in Natomas has lost almost half its value. And he owes more than it's worth, even with a $125,000 down payment in 2006.

"We want to get payments down to 31 percent of our income," said Seeley.

In Curtis Park, Hilary Egan is trying to do the same. Her contractor husband has seen a considerable drop in business. She wants a modification before their interest-only loan resets next year to higher payments.

The Seeleys and Egans, both current with their mortgages, have something else in common: Both their modification requests were denied.

Their rejections have aligned them with a broad and growing swath of public opinion: sore that a U.S. banking industry that has received billions of dollars in taxpayer support in the past year hasn't reciprocated on their behalf.

"I don't know a single person who has benefited from the money that was given to lenders," said Egan.

Added Seeley, "The taxpayers are the largest investor in these companies, so I would think they would be taking care of us first."

Banks and financial institutions aren't usually adored even in best of times. But after absorbing much blame for exuberant lending that created the housing bubble, they are increasingly absorbing a backlash for their response to the subsequent foreclosure crisis.

It's not hard to see why. While banks and loan servicers have promised for almost three years to better address rising stresses on their home loan borrowers, foreclosures and defaults still haven't seriously slowed.

The eight-county Sacramento region has counted more than 42,000 foreclosures since the start of 2007. Many area neighborhoods are scarred by vacant repos and dead lawns that pull down property values of other homeowners. Statewide, the foreclosure tally has passed 410,000, and it's believed thousands more are inevitable.

As a result, it's not just borrowers griping about the inability of banks to contain the crisis. Elected officials, besieged by complaints from constituents, are increasingly applying pressure as well.

This month, the League of California Cities, convening in San Jose, will consider a resolution urging 480 cities to yank deposits from banks that "fail to cooperate with foreclosure prevention efforts."

"If you count up the money cities have in banks, that's an amazing amount of power," said Los Angeles City Council member Richard Alarcon, a former state lawmaker. "We have never tried to seize it. I'm trying to seize it. If you're not a good player on the foreclosure front, we're not going to put our money in your bank."

Last week, the Elk Grove City Council voted 4-0 to back the notion and lobby for it at this month's convention. The city of 141,000, one of the fastest growing in California during the housing boom, in the bust became an epicenter of defaults and foreclosures.

"It's time. It's past due. We should have done this some time ago," said Vice Mayor Sophia Scherman, who lives next to a foreclosed home. "It's going to send a very strong message to these institutions."

Others aren't so sure. Tony Cherin, professor of finance at San Diego State University, said, "I can understand the frustration."

But he said cities would have fewer choices for investing because of bank failures and mergers during the meltdown. He said cities' options "may be limited even though they would like to divest themselves."

Two weeks ago, U.S. Rep. Doris Matsui, D-Sacramento, and more than a dozen other California House members applied their own pressure. They wrote Shaun Donovan, secretary of the U.S. Housing and Urban Development Department, urging him to turn up the heat on mortgage lenders to modify more loans. Matsui and others wrote that homeowners who use HUD-approved counselors to contact loan servicers are often "rebuffed or told they couldn't be helped until they were behind on their payments."

Source Sac Bee

Home Front: Sacramento-area man called the housing crash

Hats are off today to Sacramento's Michael Choe, 43, a supervising engineer with the state Department of Toxic Substances Control. This week he earned his second appearance in Time magazine since 2005 – for making good calls in this crazed real estate market.

Choe sold high in 2004.

He rented for four years.

He bought low in 2008.

As the housing crash continues, Choe's is the ultimate wish-we-had-done-that tale.

In September 2004, as the market soared (the median price was 25.6 percent higher than the same time a year earlier in Sacramento County) Choe sold his house in Natomas.

"The (price) acceleration was increasing and that really scared me," he said this week. "I thought this is something that is going to end badly."

He sold the house he had bought in 2001 for $192,500 – for $369,00. He warned others he knew to do the same. He commented on blog sites then springing up that foresaw a massive housing bubble.

"There were very few people who did something about it," he said. "I put my money where my mouth was. I sold the home, and I took a risk by selling it. People were telling me I was crazy, that it would double in two or three years. I said, 'It's going to come back to 2000 levels soon.' "

Time magazine found Choe on the blog sites and profiled him in June 2005 (the median sales price in Sacramento County was then 22 percent higher than the same time a year earlier). The magazine's cover that week showed a cartoon man hugging his house and the title: "Home $weet Home, Why we're going gaga over real estate."

Time noted that Choe had sold and moved into a rental. It asked: "Is he serious? Choose to rent when owning seems a sure way to riches?"

The rest is history. Choe, his wife and two sons rented in El Dorado Hills as what scared him out of Natomas in 2004 came to pass. Then, a year ago, he jumped back in. Choe paid $281,000 for a bank repo in Sacramento that sold in July 2006 for $437,500.

He was too early, he concedes. Said Choe, "I'm still pessimistic about the housing market. I told my family we're buying now, but I know it's going down further. I'm going to lose money on this deal. It has gone down. But I made enough money on the sale of my original house that I can absorb any more losses."

The real story was that his son was ready to start school. Otherwise he would have waited two more years to buy.

"I wanted to get him in a good school district. I wanted to be stable in that way."

This week Time magazine revisited with Choe, recalling his 2004 decision and his 2005 interview. "Exceedingly smart move," said the magazine.

Time noted his decision to buy, and asked, "Is this smart move No. 2? In other words: Is it really time to buy?"

What does Choe think now?

"My prediction," he said, "is when it hits bottom it will stay flat. I would say a good five to 10 years. I've been looking at Japan, too. They stayed flat more than 10 years. There's no way that things are going to bounce right back. This was, in my opinion, a once-in-a-lifetime experience."

That's Choe's call. Anyone can be wrong or right. But the state engineer has been right so far. (He also yanked his money out of the stock market with the Dow at 13,000). That gives him satisfaction. For posterity, Choe is on the record in a national magazine as having called it correctly.

"I can tell my kids that your dad predicted the housing crash and nobody believed him at that time," he said. "They believed I was a lunatic. It turned out I did make the right call."

Interest rates ease again

News is improving on the interest-rate front. Rates for benchmark 30-year fixed-rate mortgages are headed back toward 5 percent as inflation remains in check, Freddie Mac reported Thursday. The federal mortgage giant said interest rates nationally averaged 5.08 percent this week, down from 5.14 percent last week.

The new average is the lowest since the week of May 28, when U.S. rates averaged 4.91 percent. Mortgages rates have remained below 5 percent for 12 weeks this year, mostly in March, April and May.

Source Sac Bee

Schwarzenegger wants answer from feds on water

Gov. Arnold Schwarzenegger has sent a letter to the heads of two federal agencies asking them to reopen talks on federal water pumping restrictions meant to protect fish.

Schwarzenegger wants a response to letters he sent earlier this year asking agencies to reconsider federal regulations restricting water pumping in the Sacramento-San Joaquin Delta. Critics of the restrictions, which are intended to protect different species of endangered fish, say they have exacerbated the impact drought conditions have on farming and the state economy.

"I am concerned that the catastrophic impacts of the current crisis on our economy and environment could take decades to reverse and significantly hamper any long-term solutions," the letter states.

Department of Water Resources Director Lester Snow said Wednesday that the department wants to address flaws it has identified in two separate biological opinions, one to protect the Delta Smelt and one to protect salmon and sturgeon. He said the opinions, issued by different agencies, are also conflicting on some levels.

"We have two aggressive opinions that don't quite match up with each other," he said.

A spokesman for Interior Secretary Ken Salazar told the AP that the agency is reviewing the letter, which you can read after the jump.

In other water news flowing through the Capitol: The joint legislative water panel met for the first time. The Fresno Bee's E.J. Schultz has more on that meeting
here.

We posted the names of the legislators tapped for the committee here.

September 1, 2009

The Honorable Ken Salazar
Secretary of the Interior
1849 C Street, NW
Washington, DC 20240

The Honorable Gary Locke
Secretary of Commerce
1401 Constitution Avenue NW
Washington, DC 20230

Dear Secretary Salazar and Secretary Locke,

California's water crisis continues to grow. Three years of drought continue at serious cost to our farms, our people and our economy. As reservoirs remain low and water deliveries unreliable, those costs increase daily.

Water deliveries by the State Water Project and federal Central Valley Project to the two-thirds of California's population south of the Sacramento-San Joaquin Delta are just 40 percent and 10 percent of normal, respectively. Sixty-four water agencies throughout the state have implemented mandatory rationing to respond to shortages and, on the agricultural front alone, we estimate that these reduced deliveries will result in a Central Valley farm revenue loss of as much as $710 million and cost 35,000 jobs.

This cannot and must not go on. For the past four years, my administration has been working on solutions to California's water supply and the environmental crisis in the Delta. However, I am concerned that the catastrophic impacts of the current crisis on our economy and environment could take decades to reverse and significantly hamper any long-term solutions.

The recent biological opinions issued by the U.S. Fish and Wildlife Service (USFWS) and the National Marine Fisheries Service (NMFS) to protect threatened fish species in the Delta include overlapping and conflicting actions and restrictions that provide little or no fisheries benefit but do come at a high cost to the economy. The opinions cover both the state and federal water projects but were developed separately, by separate agencies. Ironically, these opinions work against each other, especially in wet years, which may lead to species conflict and devastating water shortages in following dry years.

It is clear that we are trapped in an outdated and rigid bureaucratic process that dictates fish protection actions one species at a time rather than evaluating the entire ecosystem and addressing its many stressors. State and federal water pumps clearly impact the Delta, but regulating as though they are the only influences ignores the complexity of the situation and creates new problems while failing to solve others.

On May 7 of this year, my Director of Water Resources, Lester Snow, wrote to the USFWS requesting re-consultation on Delta smelt and the operations of the state and federal water projects. On August 10, Director Snow sent a similar letter to the NMFS asking for re-consultation on salmon and green sturgeon. These letters remain unanswered. If the federal government believes that re-consultation is the wrong path, then we need to know how to proceed, and we need to know now. We have entered an endless cycle of consultation that is guaranteed to reduce water supplies and water supply reliability, but is not guaranteed to recover or even reduce damage to endangered species. This cyclic regulatory process is not working for people, and it has not worked for fish.

The Delta's water supply is of state and national significance, and the so-called "reasonable and prudent alternatives" included in the two biological opinions impose significant water supply and economic impacts without demonstrating assured benefits for the environment.

Thirty-eight million Californians stand waiting for your formal response.

Sincerely,

Arnold Schwarzenegger

Source Sac Bee