Tuesday, May 5, 2009

Is Sacramento the cutting edge of the economic turnaround? or not?

From an above-the-fold article, "Where Home Prices Crashed Early, Signs of a Rebound," in the New York Times today:

SACRAMENTO — Is this what a bottom looks like?

This city was among the first in the nation to fall victim to the real estate collapse. Now it seems to be in the earliest stages of a recovery, a hopeful sign for an economy mired in trouble and anxiety.
The article tells us that other areas in our country that were the first to suffer from the economic decline – Las Vegas, parts of Florida and the Inland Empire in southeastern California – seem to be showing signs similar to those of Sacramento, which is that housing values are perking up and that banks in the areas are becoming more relaxed and willing to give residents the loans they seek.

But while these signs are precisely what economists look for when things move into recovery mode, it's too early to know if the hopeful signs are just blips instead the beginnings of a steady and sure recovery.

Quoting the article:
“It’s fragile, and it could easily be fleeting,” said an MDA DataQuick analyst, Andrew LePage. “But history suggests this is how things might look six months before prices bottom out.”
BUT, in sharp contrast to the New York Times article is an article in today's Sacramento Bee, titled "Almost 24,000 homes, apartments vacant in Sacramento area." This article begins thus:
Nearly four years into California's housing downturn, close to 24,000 Sacramento-area homes and apartments are vacant, a number that climbed 40 percent in the past year, according to a Bee analysis of federal data.

Roughly a third, or about 7,200, of the six-county region's vacant homes have been empty longer than a year. About 3,500 have been empty longer than two years.

The vacancy count, revealing a vast excess of unused shelter in a region that overbuilt during the housing boom, stems from a U.S. Postal Service survey of houses and apartments where mail has not been picked up for 90 days.
So, maybe signs of recovery are chimerical?

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