The Recession is No Where Near Over

California Recession No Recovery in Sight

Sacramento California is a microcosm of what is happening throughout America.  Some think because the DOW industrial are in an apparent rebound and unemployment figures have slowed a bit even though they have not dropped below 600,000 per month that this recession is over or that a bottom has been reached.

But this is not the case, the inventory of homes across America will increase through the summer as government programs and bank hoping for an increase in sales are holding off on selling their inventory in hopes of receiving better prices for the toxic assets they hold on their books. But as the business cycle worsens bank balance sheets will need to rid themselves of this bad debt and face the fact that they need cash to keep their doors open.

Because of the increase in taxes in California the State is reporting $13 billion less in April tax receipts, leaving them $700 million behind the revenue forecasts incorporated into the budget deal reached in February. This is a problem happening all across America, where higher taxes do not result in more State revenue.  This recession cycle is still spiraling lower and when decreasing tax revenues indicate an inability to support massive government spending on bureaucratic jobs there will only be two choices, increases taxes or cut spending.

Here is a review of the current situation in Sacramento the capitol of the Great State of California as reported in the Sacramento Bee, May 5, 2009 by Phillip Reese and Jim Wasserman:

24,000 homes and apartments are vacant in the Sacramento area and nearly a third or 7,200 of the six-county region’s vacant homes have been empty longer than a year. In other sections of the city more than one in 10 homes is vacant, and one in 20 homes are in areas of southern Sacramento.

Real estate agents in the area claim recent foreclosure moratoriums in legislation recently signed by Governor Schwarzenegger  extending the time to six month before foreclosures can be resolved is one of the causes that banks are sitting on an inventory of homes.  Unemployment is forcing apartment communities to report a 11.3 percent rise in vacancy as unemployment forces family members to double up.

Banks are also trying to keep their excessive inventory from coming to the market as this would cause prices to drop further as supply outstrips demand.

Yuba County leads California in the percentage of residences, homes, apartments condominiums, vacant for at last 90 days and half have been empty for over a year:

Among the 10 largest counties in the State, only Riverside held a higher vacancy rate 4.1 % than Sacramento County’s 2.8 %.

Nothing is moving reported one local real estate agent.  Yuba, a rural county that has seen 1,200 foreclosures in the past 15 months, according to a reacher at DataQuick.

Thousands of vacant properties have driven down the value of empty homes and apartments across the region.