Wednesday, July 23, 2008
Housing Market in Shambles
OK. This isn't really news. It isn't even an attempt to deeply delve upon the lessons learned by this crises. It is the most profoundly damaging business failure of our times, the root cause of the worsening economy. This devastating economic development is affecting the US, and by extension, the world's financial health. The housing disaster has it's epicenter in the Valley, and in some ways, it's roots.
What is so disturbing about the housing crisis is the ease of predicting that something might be wrong--back in the "good times". Politicians didn't have it in their interests to warn about future problems as they enjoyed the support that good economic times bring. Real estate experts all also happened to be real estate agents, who had it in at least their partial interest to drive up prices to take a larger profit with their percentage. Developers liked the rising real estate market and the ease of obtaining loans, as it both provided a larger pool of customers and an easier path to obtaining financing for their own projects. Economists often warned of the boom and bust cycle of the U.S. economy, but many thought it would be a gentle decline. Any economists that released information warning about the overpriced nature of the housing market or the dangers of variable interest rates were rebuked in the media by financiers and real estate agents.
Well, people don't by umbrellas until the rain starts falling. No one worried until interest rates had to rise, and people that had been paying $1200 per month were now told to pay $1800. Obviously, a significant number could not, and abandoned their homes to banks. As the number of houses defaulted on increased, lenders reexamined their practices, reducing the demand for the houses. As loans were no longer payed for and banks could not unload repossessed properties, less money was available for investment in business loans or stocks. All this has precipitated into a depressed economy.
The Valley's houses have been recognized as being some of the most overpriced markets in the country. A financially distressed area of California loses even more wealth. Investment properties were everywhere. Communities were planned that have yet to be built, despite streets and even large high schools being placed in the middle of vacant lots. Movement from the Bay Area into the Valley was unprecedented. Now, all of that activity is squashed. It is likely that more economic developments will further disturb the Valley, with job loss and a dearth of financial investment.
What is so disturbing about the housing crisis is the ease of predicting that something might be wrong--back in the "good times". Politicians didn't have it in their interests to warn about future problems as they enjoyed the support that good economic times bring. Real estate experts all also happened to be real estate agents, who had it in at least their partial interest to drive up prices to take a larger profit with their percentage. Developers liked the rising real estate market and the ease of obtaining loans, as it both provided a larger pool of customers and an easier path to obtaining financing for their own projects. Economists often warned of the boom and bust cycle of the U.S. economy, but many thought it would be a gentle decline. Any economists that released information warning about the overpriced nature of the housing market or the dangers of variable interest rates were rebuked in the media by financiers and real estate agents.
Well, people don't by umbrellas until the rain starts falling. No one worried until interest rates had to rise, and people that had been paying $1200 per month were now told to pay $1800. Obviously, a significant number could not, and abandoned their homes to banks. As the number of houses defaulted on increased, lenders reexamined their practices, reducing the demand for the houses. As loans were no longer payed for and banks could not unload repossessed properties, less money was available for investment in business loans or stocks. All this has precipitated into a depressed economy.
The Valley's houses have been recognized as being some of the most overpriced markets in the country. A financially distressed area of California loses even more wealth. Investment properties were everywhere. Communities were planned that have yet to be built, despite streets and even large high schools being placed in the middle of vacant lots. Movement from the Bay Area into the Valley was unprecedented. Now, all of that activity is squashed. It is likely that more economic developments will further disturb the Valley, with job loss and a dearth of financial investment.
Labels: California Central Valley, development, housing crisis
Thursday, July 10, 2008
What is the Tipping Point for Stockton?
In the past, this blog has reported on the "renaissance" of Stockton, and it remains apparent that improvements have taken place in the "Sunshine Seaport." However, Stockton is still hampered by an image problem, one of crime and poverty.
In today's Stockton Record, city consultant Roger Brooks talked about Stockton unfairly being label by its own citizens as a grim place to live. Meanwhile, for an outsider's perspective, Elk Grove columnist for the Sacramento Bee Bob Walter fantasized about a future Amtrak station in Elk Grove, giving an anecdote about a conductor in Stockton warning him not to park his car in the lot overnight to avoid the fate of a previously unfortunate rail customer who had his car stripped.
Brooks recommends adopting a logo of "Celebrate" to get Stocktonians to enjoy their downtown amenities. He suggested playing music in public squares such as the Weber Points Event Center, and putting a fountain in the turning basin. The idea is to make Stockton residents feel more civic pride and get them to go downtown.
Michael Fitzgerald wrote in his Record column about the need for people on the street to keep crime down. He talked about pedestrians and the benefit of having an increase of residents in downtown housing. Eyes from windows and people walking around are theorized to make the less bold criminals think twice before doing things society frowns upon.
Here's were Stockton's problems become confoundedly complex. Will upstanding residents move into a community they know has violent and property crime issues? Fitzgerald partially covers this conundrum with the need for Stockton to reduce red tape and reduce costs for downtown developers by $100,000 per housing unit. Will Stockton be able to attract enough developers to gentrify the downtown area enough to make it attractive for all residents of the city, and at some point in the future, tourists? Why would developers or residents take a chance on moving downtown when so many have had their own anecdotes about crime and thuggery in the central city?
It becomes obvious Brooks' ideas to improves citizen's moods must go hand in hand with an evident change in downtown. Brooks himself warned the City Council from advertising a slogan until the reality of the idea is met. His idea to decorate a police car resulted in a negative response by Chief Tom Morris, who said Stocktonians "want a professional and visible police presence that will impact our violent crime rate." Another idea by Brooks, to put free WiFi throughout downtown, will definitely not bring the intended consequences (of having people use their laptops). Clearly, people carrying around laptops through Stockton's current downtown will last only long enough for someone to "offer" to take it off your hands, for free!
The problem is Stockton's problems aren't perceptions of its residents. It's that the perceptions are based in reality. In 2006, the FBI ranked Stockton with the 30th highest murder rate in the country among cities 200,000 or larger. By comparison, Los Angeles was 31st, Sacramento 32nd, and San Francisco 36th. Other similarly maligned Valley cities Fresno and Bakersfield had lower murder rates than Stockton. Meanwhile, Stockton had the 2nd highest violent crime rate of the state's large cities, behind only Oakland. Furthermore, Stockton had the highest property crime rate in the state, with 6811 cases per 100,000 residents.
There is a balance in Stockton, with the focal point being the downtown neighborhood, and the lean of the teeter totter of justice going to the lawless. Efforts are being made to combat these problems, but Stockton has a long way to go before it begins tipping into prosperity.
Labels: California Central Valley, Crime, development, Stockton
Sunday, January 14, 2007
Silence in the Capital City
After the pomp and circumstance of Governor Schwarzenegger's recent inaugurals, Sacramento seems to be, at least for now, shrouded in blanket of silence.
No, there was no blanket of snow on the Capital, as predicted as a possibility by several local media outlets.
The silence is heard at Arco Arena, where fans are staying away in droves to avoid watching another defeat by their hardcourt heroes. The Kings are adding their own brand of silence, with minuscule shooting percentages resulting in the "swish" being named to the endangered sounds list.
The silence is heard on our college campuses and in our young communities, where Ipods and MP3s have replaced records, tapes, Cds, and unfortunately, venerable Sacramento retailer Tower.
Meanwhile, there is again trouble on K Street, where the city would like to redevelop, effectively extending somewhat fancier retail options from the downtown plaza down another block. One of the owners of a K Street building is now balking at a land swap he has already agreed to do. This is something to do with two K buildings that were destroyed in a recent fire. It may only end with imminent domain proceedings. The city, after over a decade of hoping for it, is now determined to rejuvenate K.
The frustration of downtown's failures is even more depressing when compared to all outer edges of the Sacramento area. The Lincolns, Elk Groves, Natomas, and El Dorado Hills of ten years ago are unrecognizable to what they have become. Even West Sacramento is seeing unprecedented growth. Construction in those areas rushes along, while central city work, while assuredly more complex, struggles along and often fails.
Time will tell if Sacramento starts humming again. It is only winter, and construction will likely pick up in the warmer months. Hopefully some of that developmental attention is focused on the heart.
No, there was no blanket of snow on the Capital, as predicted as a possibility by several local media outlets.
The silence is heard at Arco Arena, where fans are staying away in droves to avoid watching another defeat by their hardcourt heroes. The Kings are adding their own brand of silence, with minuscule shooting percentages resulting in the "swish" being named to the endangered sounds list.
The silence is heard on our college campuses and in our young communities, where Ipods and MP3s have replaced records, tapes, Cds, and unfortunately, venerable Sacramento retailer Tower.
The silence is the sound of hammers being set aside, heavy equipment sitting idle, moving vans going unused. Now to the silence of construction. The long expected resurgence of the Sacramento downtown slipped again into doubtfulness. First, John Saca stopped construction on the Sacramento Towers project, previously discussed as a possibility here in ValleyVue. That Saca himself, a grand spokesman in his own right, is primarily communicating to the media through another spokesperson, does not bode well for the future of downtown skyscraper abodes. The news from the Saca camp is that he will not be seeking more money from the city of Sacramento. We should, however, stay tuned to see if Saca can find other funding streams, or else there may be another request to the city council.
Meanwhile, there is again trouble on K Street, where the city would like to redevelop, effectively extending somewhat fancier retail options from the downtown plaza down another block. One of the owners of a K Street building is now balking at a land swap he has already agreed to do. This is something to do with two K buildings that were destroyed in a recent fire. It may only end with imminent domain proceedings. The city, after over a decade of hoping for it, is now determined to rejuvenate K.
The frustration of downtown's failures is even more depressing when compared to all outer edges of the Sacramento area. The Lincolns, Elk Groves, Natomas, and El Dorado Hills of ten years ago are unrecognizable to what they have become. Even West Sacramento is seeing unprecedented growth. Construction in those areas rushes along, while central city work, while assuredly more complex, struggles along and often fails.
Time will tell if Sacramento starts humming again. It is only winter, and construction will likely pick up in the warmer months. Hopefully some of that developmental attention is focused on the heart.
Labels: construction, development, Sacramento, Sacramento Towers
