RealtyTrac Executive Predicts Foreclosures Calamity to Continue Through 2012
Normal real estate market years off I recently attended a national foreclosure conference in Las Vegas where one of the key note speak...
https://www.elkgrovenews.net/2009/11/realty-trac-executive-predicts.html
Normal real estate market years off
I recently attended a national foreclosure conference in Las Vegas where one of the key note speakers was Rick Sharga, Senior Vice President of Irvine, Calif. based RealtyTrac. Those closely following the foreclosure calamity are probably familiar with RealtyTrac as the go-to company for national foreclosure statistics.
Without going into all the gory details, these were Sharga's major points during his Monday, November 16 presentation:
- The foreclosure contagion is spreading to states and cities that have up to now have been immune to the crisis such as Boise, Salt Lake City and Provo.
- Next year, in monetary terms, there will be a huge wave of commercial property foreclosures.
- Residential foreclosures will continue to climb through at least 2012.
Not coincidentally, in a speech also delivered on Monday to the Economics Club of New York, Fed Chairman Ben Bernacke blamed banks for the worsening economic conditions and the accompanying rise in unemployment.
“Bank lending has contracted sharply this year...[and] banks continue to tighten the terms on which they extend credit for most kinds of loans… Banks' reluctance to lend will limit the ability of some businesses to expand and hire," Bernanke said. "Because smaller businesses account for a significant portion of net employment gains during recoveries, limited credit could hinder job growth."
Bernacke went on to predict unemployment would continue to rise. The good news, in Berancke’s words was that "the best thing we can say about the labor market right now is that it may be getting worse more slowly.”
What about Elk Grove? Sacramento Railyard in trouble?
Without a doubt, should this foreclosure and unemployment crisis continue as predicted it will continue to affect Elk Grove for years to come. Sales revenues, the city’s single largest source of revenue, will either fall drastically or show no growth.
With declining revenues the city must continually reexamine the costs of the services it provides residents. Baring some miracle, at some point the general reserves fund well will dry up and severe cuts in service will take place.
Where will these cuts be made? Law enforcement? More employee layoffs or furlough days? Reduction in city executive pay? Bus service cuts?
What about the continual rise in unemployment? Will this lead to more criminal activity which would make Elk Grove an unattractive place to locate a business, much less a family? Will rising crime rates push employed people out of town further exasperating the fall?
If commercial foreclosures increase, what will happen to all the never-occupied retail and commercial space in Elk Grove? Speaking of commercial foreclosures, does the Elk Grove Promenade really have any chance of opening for business in the next three or four years? If it does open, will it drive other retailers out of business?
If the predictions of Sharga, Berancke and a host of other economists are correct, these are serious questions current or future members of the Elk Grove City Council need to contemplate now.
Elk Grove is at a crucial point in its short history as a city. How well city leaders navigate through this crisis will be the determining factor of Elk Grove’s long term prospects as being a quality place to live.
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On a side note, one source who asked not to be named said there is "good chance" the developers of the Sacramento Railyard project in Downtown Sacramento would fall into foreclosure sometime next year.
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I took note of today's Elk Grove Citizen with seven and a half pages of Elk Grovian foreclosures. In February there were five pages. A steady stream -- no sign yet of any bottom.
A very large percentage of our current population bought a new housal unit here during our uncontrolled building fiesta. Many Elk Grovians have no experience in living in an aging home or older "community." As our American birthright to a new car every four years stimulated the same feeling with new housing, those with means (i.e., the still employed) will shuffle off to newer and newer "communities," resulting in the slow destruction of older suburban developments. Knowing that they will remain perpetually mortgaged regardless of moving or staying, they'll choose to move. They won't have to replace the siding. They won't have to deal with a leaking roof. Maintenance free if you keep moving to a newer development.
Gougherty asks a good question -- when will the employed, the people with means, decide that their older hollowed out subdivisions aren't worth living in and move out?
I ask myself that every day. I'd love to live in a city where light rail service isn't just some moving thirty year target, where I can walk to the store without having to trudge four miles and risk death crossing the six lane Laguna Highway, and where I can find a good paying local job that isn't a strip retail salesman, a fast food purveyor, or a muffler installer.
Sadly, I believe Elk Grove will continue to play the same string of low-density residential and strip commercial whenever we emerge from recession. In my eyes, our future isn't very bright.
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