Do You Believe in Never?

Are Sacramento real estate values gone and never coming back?

In his landmark 1984 album Born in the USA, one of Bruce Sprinsteen’s songs, My Hometown, described job loss and mid-life turmoil that is even more applicable now than when it was written 26 years ago. The lyrics is part read:

Now main streets whitewashed windows and vacant stores

Seems like there aint nobody wants to come down here no more

They're closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they aint coming back to
Your hometown, your hometown, your hometown, your hometown

While Springsteen was singing about job losses, a few change of words and he could have been talking about real estate value losses. Of course who in 1984, much less three or four years, would have thought permanent losses of the value of real property was possible.

According to one source, 24/7 Wall Street, there are 13 unlucky metropolitan American housing markets that will never see the real estate value return to 2007 valuations. According to their analysis, Sacramento is number four (as in fourth worse) on their list.

On a different note, to paraphrase Richard Nixon who once said “we’re all Keynesians now,” of the mortgage market it could be said “we’re all subprime now.”

The first quarter mortgage foreclosure/delinquincy summary is not pretty. As the charts shows, prime loans are now showing a distrurbing upward projection.

Is never Sacramento and Elk Grove's destiny? Let us know what you think.