Friday, August 29, 2008

The Weak Are Taken Over By The Strong

Golden 1, 1st United credit unions to merge

The Golden 1 Credit Union will merge with 1st United Federal Credit Union, a two-branch financial institution with $19 million in assets.

The National Credit Union Administration chose Golden 1 to merge with 1st United. “This merger is wonderful news for members of both credit unions,” said Teresa Halleck, president and chief executive officer of Golden 1.

1st United was founded in 1960. The credit union -- which draws its membership base from 150 companies -- has branches in San Jose and Gilroy. The Golden 1 was founded in 1933 to serve California state employees.

The credit union, which is celebrating its 75th anniversary, has 75 offices and more than 270 ATMs in the state. The Golden 1 is the state’s largest credit union, with $6.9 billion in assets and 690,000 members.
Here's 1st United's I&E for the last year from the NCUA. I'm not sure this is "wonderful news" for Golden 1 members. Note that of the $19 million in "assets," $13 million are either real estate loans or unsecured loans.

Line Item
Loan Income*880,6751,302,539-1.41,727,370-0.5368,958-14.6713,304-3.3
Investment Income*13,05719,8821.523,229-12.43,001-48.36,3235.3
Other Income*115,847162,719-6.4219,0601.052,815-3.6115,4919.3
Salaries & Benefits*334,720493,606-1.7638,771-2.9146,036-8.6297,6491.9
Total Other Operating Expenses*279,783426,2081.6566,723-0.3169,98020.0306,216-9.9
Non-operating Income & (Expense)*0-2380-23825.00100.031,7480
Provision for Loan/Lease Losses*298,448528,44818.01,051,12749.21,628,791519.82,050,889-37.0
Cost of Funds*308,991463,237-0.1631,2422.2149,948-5.0276,850-7.7
Net Income*-212,363-426,597-33.9-918,442-61.5-1,669,981-627.3-2,064,73838.2

* Items are year-to-date. %Change ratios are Annualized.

Wednesday, August 27, 2008

Craigslist Trolling

Time once again to check out the local pain index.

1968 Chevrolet Camaro, 327 V8 - $7500:
I want to sell the car because I recently lost my office job. I need the money to continue paying my mortgage and car payments on my daily driver.
1988 Toyota Pickup 4 cylinder - $3399: Price just reduced - need to pay my mortgage
Garage sale 8/30/08-8/31/08: We have lots of stuff to sale come help us save our home we need to make lots of money to pay our mortgage.
MERCEDES S420 - $5960: I'm selling it to pay my mortgage.
2007 Suzuki GSXR 600 - $7500: I am only selling due to buying a house in June and now can't afford mortgage.
NEED WORK: IF you know anyone in need of front desk help or customer service or maybe you know someone that needs child care. Summary A highly qualified individual, experienced in loan documentation and processing of consumer loans.
TAKE OVER PAYMENTS • MOBILE HOME FOR SALE: Mortgage is $263.79 and space rent is $532.95. This is a 2 bedroom 1 bath home. Has storage and parking car port. This home will be paid off in 3 years.
Custom Built to your TV all wood entertainment center TV stand: now my work has cut hours but my mortgage payment has stayed the same.
Suzuki drz400s - $2900: I hate to sell this but I need the money for a mortgage.
03 jeep wrangler:Parting with this beauty isn’t easy but our house payment has to be met.
TAKE OVER PAYMENT 2006 CHEVY AVALANCHE: I just can't keep up with the payments along with my mortgage payment.
2004 BMW 330cic convertible: I need the money to pay my five months of mortgage. $21k cash is what I am looking for.
OLD SCHOOL CHOPPER *** - $6500: Price is FIRM, don't insult me by offering less, I'll kick your ass. Must Sell, don't want to, but 3 months behind on mortgage gets you a deal. Be serious or don't bother to call.
GK Gallien Krugger 115 BLX II Bass spkr cabinet: The price is right for $200. Need to pay mortgage. I need your help.
Carpet & Lino/RV Toilet: Our family is the victim of foreclosure. Although, we paid our rent faithfully for 6 years our landlord decided to stop paying his mortgage.
Borrow - $15000: $15,000 as down payment on a loan modification. I can pay the monthly mortgage but don't have the down. Need right away. Thanks. Willing to pay high interest rate.

Bail-out Needed to prevent foreclosure - $9000: Seriously. I want to keep my house but am behind in payments since I have been out of work for almost 8 months. Property in active foreclosure right now--mortgage company says they can tack the overdue $$$ to the loan but I need to show good income. Have been looking, looking, applying, testing, applying, and rejected so many times I am now desperate.... Sharks are circling, and I am told to "walk-away..." or short-sell. In any such case, I will not only be unemployed but homeless.

Obviously, winning LOTTO ticket would be ideal. Unfortunate demise of a very rich relative(none that I know of) would be acceptable. A loan that I could afford would be alright. If you have spare money or really want to invest in an old lady ... let me know please. I really just need to bring the account up to date so I can find a job and get back on track. Thanks so much for reading this.

**Update** Scroll to about 1:30 in. It's a golden age for the repo business. One that will never end.

Monday, August 25, 2008

Sacramento Regional Real Estate Trends for August 23, 2008

Inventory change was essentially flat this week, with a slight decline of 0.5%. The median asking price held steady at $220,000, while the average dropped $2,000 to about $283,000 and change. Lower-priced inventory continues to increase in all four counties, but that increase is being offset by declines in higher-priced inventory. Based on the weekly inventory price change data, I'm thinking this is less to do with repricing of existing inventory at the price-level margin, and more to do with new, lower-priced listings coming on.

As we approach the end of Summer, I expect inventory to begin falling in earnest. That should also be when the decline in asking prices begins to accelerate as well. I think it's better to buy in Winter rather than Summer; the prices tend to be lower, the sellers are way more desperate, and it's easy to spot leaky roofs and drainage problems. :)

Tuesday, August 19, 2008

MSM Pickes Up The Shadow Inventory Story

I won't say I wasn't interviewed by the AP for this, but since they don't quote anonymous bloggers anyway, you'll have to take my word for it. I'm glad this story is getting wider attention. That's what we do here at Sacrealstats: drive the national debate. :)

Foreclosures distort housing data


11:45 a.m. August 19, 2008

NEW YORK – As if the housing market wasn't scary enough, the record-setting surge in foreclosures could be distorting some of the closely watched housing data used to gauge the market's health.

The foreclosure glut is making listings of homes for sale a less reliable indicator, because much of the distressed inventory might be left out. In addition, fire-sale prices for such properties may also be skewing volume figures.

Some real estate analysts say this may indicate that housing conditions are worse than they now look, dampening hopes that the troubled market could soon be bottoming out.

The combination of weak housing sales, falling home values, tighter credit conditions and a slowing economy have left financially strapped homeowners in a tough spot – some borrowers have no other choice but to foreclose if they can't find a buyer for their home or pay or refinance their loans.

Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac Inc. said.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 77,000 properties, or 28 percent, were repossessed by lenders nationwide in July, up from 16 percent a year ago, the company said.

"The wave of foreclosures is unprecedented, making it difficult to analyze, difficult to gauge how large it will get or how bad it will make things," Deutsche Bank analyst Nishu Sood said in an interview.

Sood, in a recent report, lays out a case for why the surge in foreclosures isn't being fully reflected in the resale inventory levels, as measured by the real-estate databases known as multiple listing services, or MLS. In nine of the 33 markets Sood examined, distressed inventory is significantly higher than what is found in the MLS listings.

This is most pronounced in what have been deemed "bubble" real estate markets, which saw the biggest gains during the home buying boom and are experiencing the largest declines since the pullback began more than two years ago. For instance, in Sacramento, the foreclosed inventory was 31,219 units, or more than twice the 14,913 units on the MLS listings. San Francisco had foreclosures running at 190 percent of MLS listings, while foreclosures in Phoenix ran at 130 percent of the MLS listings.

Sood attributes that gap largely to bank-owned foreclosed homes that aren't always captured in the MLS listings. He calls that the "shadow inventory," and says the behind-the-scenes glut of properties wreaks havoc on housing-related statistics.

Foreclosures also are influencing sales and price data. Transaction volumes are being boosted by the sale of the distressed inventory, which in bubble markets represents 40 percent of sales. But such sales then tend to push market prices down, with banks offering steep discounts to move inventory, according to Sood's research.

"Since foreclosed properties are reduced in price until they sell, an increase in foreclosure transactions simply means there are more foreclosures rather than more buyers," Sood said.

What seems key to stabilizing the housing market is finding a way to slow the pace of foreclosures. Industry executives are looking for the Housing and Economic Recovery Act of 2008 to provide some help. Starting Oct. 1, as many as 400,000 borrowers on the brink of losing their homes may be eligible for a more affordable loan backed by the Federal Housing Administration.

"Congress and the White House have offered a lifeline to many homeowners facing foreclosure, which could help keep more people in their homes and fewer distressed properties from coming to the market," Toll Brothers Inc. CEO Robert Toll said Aug. 13 after the Horsham, Pa.-based company reported that a steep decline in new home contracts and sales would hurt quarterly results for the three months ended July 31.

The government program will allow those who qualify to cancel their old home loans and replace them with 30-year fixed-rate loans for up to 90 percent of the home's current value. The FHA will insure a total of $300 billion of the loans over a three-year period.

But this won't necessarily fix the foreclosure problem since refinancing into the new program requires the lender to agree to the loan change. That means the banks would have to be willing to take a loss on the existing loans in exchange for avoiding an often-costly foreclosure.

This new program also is only for primary residences, not investor-owned properties, which have been hard hit by foreclosures.

Until there is clear evidence that the surge in foreclosures has slowed, it will be harder to call the housing collapse a thing of the past.

Rachel Beck is the national business columnist for The Associated Press. Write to her at

Tuesday, August 12, 2008

Insight into Shadow Inventory

Edit: In my haste to publish, I failed to include the following footnote that belongs with each table:

Source: Realtytrac, Housingtracker, Deutsche Bank
Note: Foreclosure inventory includes pre-foreclosures, auctions and REO. 2/3 of pre-foreclosures are assumed to become foreclosures.
I'm not sure if they reduced the pre-foreclosure number by 1/3 before the calculation was made. that'll teach me not to read the fine print. :) Thanks CR!

Nishu Sood, a Research Analyst with Deutsche Bank focusing on home builders, regularly publishes research on wide-ranging issues affecting the industry, including how the resale market impacts builder prospects. Now that REO is dominating housing sales in many markets, including Sacramento, his team at Deutsche is focusing on ways to measure the backlog. Nishu kindly gave me permission to excerpt some of their recently published (subscription-only) findings, which I hope you will find illuminating:

Distressed inventory not captured in resale inventories

The foreclosure wave is arguably the most important phenomenon currently affecting the resale market, dominating transactions in many markets, depressing pricing and creating substantial inventory that competes with builders and individual existing home sellers. The pricing effect of foreclosures is evident in the various home prices indexes, which are showing historic declines. The transaction effect is evident as well, with bubble markets showing a dramatic spike in volumes in recent months. The inventory effect, however, is not as evident. In this section we analyze the extent of the foreclosure wave's impact on resale inventories.

A hidden source of resale inventory, or "shadow inventory"

Foreclosures add a substantial and toxic form of inventory to the market, one that is not fully apparent from traditional inventory metrics used to evaluate the resale market. When bank-owned homes are sold, they do predominantly show up in resale transaction volumes. Thus, 40%+ of transactions in bubble markets have been reported to be distressed homes and more than 1 in 4 nationwide. In terms of inventory however, bank-owned homes frequently do not show up in resale inventory, or MLS listings. The extent to which bank-owned homes do not appear in MLS listings is difficult to quantify because it depends on each bank or servicer's timeline and approach in handling foreclosed properties. In order to provide some sense of the extent to which MLS listings ignore distressed inventories we do a simple comparison analysis below.

MLS listings are missing large amounts of distressed inventory

The foreclosure wave has added another way in which MLS listings are not accurately reflecting true resale inventory conditions. Based on our analysis, MLS based listing inventory is significantly understating the extent of foreclosure inventory in many markets. In Figure 19 below, we compare distressed inventory vs. MLS listings in major metro areas across the US. A certain portion of distressed inventory is included in MLS listings – if it were all included we would expect MLS listings to be higher than distressed inventory…


MLS Listings

Foreclosure Inventory

% of Listings





San Francisco




Inland Empire




San Diego




Los Angeles




Figure 19: Local MLS listings vs. distressed inventory (Edited to show only the top 5 markets in the U.S. – Max)

In terms of the scale of distressed inventory vs. MLS listings, the bubble markets top the list, with all five of the top markets in California

Analyzing distressed inventory at a local level

Foreclosure inventory includes 1.8% of households. Since MLS listings are a poor proxy for true resale inventories (see above section), in this section we compare distressed inventory to other more reliable housing metrics in order to gauge how substantial it is. In Figure 20 below, we compare foreclosure inventories to the number of housing units in each metro. Overall, foreclosure inventory represents 1.8% of homes in the 33 markets we analyze. This list is headed more by the metro areas that experienced the fastest growth in terms of new construction during the recent housing boom, including Inland Empire, Ft. Myers, Las Vegas, Sacramento and Phoenix. In the top three markets, more than 5% of housing stock is distressed inventory. In the bottom 10 markets, less than 1% of housing stock is distressed inventory.

As a reference point, we also include the rate of growth in housing stock in the far right column. This column shows what percent of current (2006) housing stock was added from 2000 through 2006. The top five markets where distressed inventory is the highest as a percentage of housing stock added the most housing units during the boom, with 20% current housing stock added from 2000-2006. This compares with 8% for the bottom five and 10% overall.


Foreclosure Inventory

Housing Units (2006)

% Housing Units

Housing Units Added (2000-06)

Inland Empire





Ft Myers





Las Vegas















Figure 20: Distressed Inventory as a % of Housing Units (Edited to show only the top 5 markets in the U.S. – Max)

Sunday, August 10, 2008

Sacramento Regional Real Estate Trends for August 9, 2008

Inventory showed a minor increase of 200 listings this week, which keeps it within the 14,000-14,500 band we've been in since May. Asking prices held steady, as did the stress indicators.

Welcome to August, when everyone takes a vacation!

Friday, August 08, 2008

Seattle Flippers In Trouble

Yep, I've branched out again, this time to the great green north. Seattle has been one of the last places in the US to experience house price declines; they're where Sacramento was in late 2006. It will be interesting to see if the FIT counts grow as much there as they did here in the months to come. Check out Seattle Flippers In Trouble, and let me know what you think.

Tuesday, August 05, 2008

New Mobile Blog

After patiently awaiting the end of our Verizon contract, my wife and I are each now proud owners of a certain, ├╝ber-trendy handheld cellphone. (I have to say it's pretty slick, which is what you'd expect from a fashion design company masquerading as a computer manufacturer. :) Among the blessings and curses of being online and available 24 hours a day, this phone has given me the ability to blog from anywhere, at any time.

Rather than clutter up the Stats blog more than I already do, I thought I'd try a little experiment. I've created a new blog called "Max Mobile," which will be my attempt at capturing the anecdotal observations I make around town or wherever I get cell reception. I'll still do meatier posts and the weekly stats here, of course, but I'll try and keep my empty store photos over there.

If you want to follow along, I've added a feed widget in the upper right-hand-corner of the blog that will update itself periodically, as well as the usual RSS feed stuff. I'll try to keep the misspellings to a minimum. :)

Monday, August 04, 2008

Sacramento Regional Real Estate Trends for August 2, 2008

The markets continued to tread water this week, with gradual downtrends in both asking prices and inventory, and gradual uptrends in market stress indicators. Of note, the average SIT loss is now 35% of last selling price, and SITs remains at over 50% of the Sacramento market.