Elk Grove Foreclosures Likely To Ratchet Up Again

Notice of defaults foretell more pain for consumers and local government; Do we really need to expand Elk Grove? To paraphrase Dickens,...




Notice of defaults foretell more pain for consumers and local government; Do we really need to expand Elk Grove?

To paraphrase Dickens, the last nine years for Elk Grove have been the best of times and the worst of times.

When Elk Grove incorporated in 2000 and in the next few years that followed, the city, with some previous help from the Sacramento County Board of Supervisors, initiated a residential construction boom. This boom coincided with the national housing price escalation and helped feed a boom mentality that led to what John Kenneth Galbraith labeled “conspicuous consumption.”

This new-found wealth, also know as home equity, led people to make purchases based on the thought that even thought their wages might not be going up, they could always tap the ever-increasing home equity.

All of a sudden the sensible family sedan gave way to gas-guzzling SUV’s. To the ill-informed, the law of physics did not apply.

And it just wasn’t consumers who got caught up in this boom mentality. Our local government could not seemingly find a housing or commercial development they could say no to. More retail meant more sales taxes revenues.

Of course the bubble burst and what are we left with? A city besieged with foreclosured houses and vacant or uncompleted commercial space. Nothing illustrates this more than the ill-fated Elk Grove Promenade.

Over the last few months, the rate of foreclosures locally and nationally has fortunately slowed. Now there is light at the end of the tunnel: the question is if the light is an opening or a fast moving train?

According to recently released foreclosure data from DataQuick, that light appears to be a train poised to plow us over again.
A total of 135,431 default notices [in California] were sent out during the January- to-March period. That was up 80.0 percent from 75,230 for the prior quarter and up 19.0 percent from 113,809 in first quarter 2008.

The data suggest that the recession and record job losses are now working their way into the foreclosure picture. The second and third quarters of this year could prove to be as devastating, if not more so, than last year’s wrecking ball.

The Elk Grove City council must heed these numbers and be vigilant with our tax dollars. Property and the almighty sales tax revenues are likely to continue their drop.

Furthermore, given the excess inventory of homes and retail space, does Elk Grove really need to expand our sphere-of-influence? If it does pursue this, for what purpose? To build more homes and strip centers?

This is a dangerous proposition. Before the city council pursues this get-big-at any-cost land-grab strategy, it needs to let the market absorb the excess inventory lest Elk Grove existing retail space becomes nothing more than newer versions of blighted South Sacramento.

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1 comment

Anonymous said...

It is not over!

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