Inventory levels of for-sale homes at the end of 2012 were down 17.3 percent from year-ago levels, reaching the lowest level in more than five years, Realtor.com reports. In some areas, inventories have dropped 68 percent over the year.
“It’s been a buyers’ market for a while. Sellers have been reluctant to put their homes on the market,” says Steve Berkowitz, chief executive of Move Inc., which operates Realtor.com. As housing numbers roll out for January and February in the coming weeks, these will be notable to watch because they’ll provide early clues about buyer traffic and sellers’ expectations, Berkowitz says.
For-sale inventories dropped the most year-over-year in December 2012 in the following metros:
- Sacramento, Calif.: -68%
- Stockton-Lodi, Calif.: -65%
- Oakland, Calif.: -64%
- San Jose, Calif.: -52%
- Seattle-Bellevue-Everett, Wash.: -45%
- San Francisco: -43%
- Ventura, Calif.: -43%
- Riverside-San Bernardino, Calif.: -41%
- Los Angeles-Long Beach, Calif.: -40%
- Orange County, Calif.: -39%
Hundreds of new laws take effect Tuesday
• From high-speed rail to pipeline safety to foreclosure protections
• “Will give Californians a fair opportunity to stay in their homes”
The fruits of a year of work by legislators are harvested by constituents beginning Tuesday with some 800 new laws kicking in as the New Year rings in.
Among the new laws that could have immediate impact on the Central Valley, epicenter of the nation’s foreclosure crisis, is the package of legislation that extends key mortgage and foreclosure protections to California homeowners and borrowers.
Dubbed the California Homeowner Bill of Rights, the new laws restrict dual-track foreclosures, guarantee struggling homeowners a reliable point of contact at their lender and impose civil penalties on fraudulently signed mortgage documents. In addition, homeowners may require loan servicers to document their right to foreclose.
“For too long, struggling homeowners in California have been denied fairness and transparency when dealing with their lending institutions,” says Attorney General Kamala Harris, who pushed for the new laws. “These laws give homeowners new rights as they work through the foreclosure process and will give Californians a fair opportunity to stay in their homes.”
Other new laws include:
• Another new law impacts the California High-Speed Rail project, due to start construction first in the Central Valley.
It requires the High-Speed Rail Authority to encourage purchasing high-speed train rolling stock and equipment made in California consistent with federal and state law and continued investment in California businesses.
• Natural-gas pipeline safety upgrades are required by several new laws. One requires disclosure of gas transmission lines when a home is sold, another forces the Public Utilities Commission to finally answer the recommendations of the National Transportation Safety Board’s investigation of the San Bruno pipeline blast that killed eight people and leveled a residential neighborhood.
• Women who breast-feed their children will be protected from harassment by their employers. A new law puts breast-feeding under the scope of the Fair Employment and Housing Act.
• Another business-related law says that employees and former employees have the right to obtain copies of their personnel records. Businesses will have to provide them within 30 days.
• Employers and higher-education officials will now be banned from asking for applicants’ social-media user names and passwords.
• Another law lurches California into step with much of the rest of the world by allowing juveniles who have been sentenced to life without parole the opportunity to petition for a new sentence of 25 years to life. The United States is the only country in the world that sentences children to life in prison without the possibility of parole. According to state Sen. Leland Yee, D-San Francisco, the author of the new law, California has over 300 youth serving this sentence and who without SB 9 would have died in prison without any chance to earn release.
• SB 1001 increases fees required of registered lobbyists, ballot measure committees, and independent expenditure committees, in order to finance the maintenance of the state campaign and lobbying database known as Cal-Access, which keeps the public informed as to who is influencing their elected officials.
Reading the headlines this week, you might get the impression that the country was hurtling towards a huge deficit catastrophe on Dec. 31. From the front page of Thursday’s New York Times (“Back to Work: Obama Greeted by Looming Fiscal Crisis”) to today’s Wall Street Journal (“Pressure Rises on Fiscal Crisis”), the rhetoric suggests that the U.S. is facing a crisis akin to problems that have engulfed Europe. (A Yahoo headline from 2011: “The U.S. Fiscal Crisis: Just Like Greece, With One Exception.”)
In fact, the problem with the fiscal cliff is precisely the opposite: The tax hikes and automatic spending cuts that would kick in after Dec 31 would sharply curb our federal deficit through enacting major, sudden austerity measures that would save the U.S. government about $720 billion in 2013 alone, according to the Bank of America’s estimates, which would be about 5.1 percent of GDP.
“If we let all of those changes [happen], there would be a sharp reduction in the budget deficit—in decline in debt to GDP, falling deficits as a share of GDP,” says Chad Stone, chief economist at the Center for Budget and Policy Priorities. “It’s all a dream for people who want really sharp austerity.”
So the reason that the fiscal cliff could push us into another recession in 2013 is because it enacts too much deficit reduction upfront, not too little. By contrast, the reason that Europe became mired in a fiscal crisis in the first place is because profligate nations haven’t done enough to curb their spending and raise revenue to their more fiscally responsible neighbors’ satisfaction.
The folks who want to avoid the fiscal cliff for fear of its impact on a still-faltering economy are effectively arguing that now isn’t the time to enact austerity measures: Instead of taking money out of government programs and people’s paychecks, the government should be putting that money into the economy. And certain parts of the fiscal cliff bring more bang for the buck than others, CBBP’s Stone points out: Payroll tax cuts and unemployment benefits are more effective way to boost economic growth in the short-term than the Bush tax cuts for upper-income Americans, according to a new report from the Congressional Budget Office.
So if it’s immediate austerity that we want to avoid, and stimulus that should take its place, why is there so much talk about the need for major deficit reduction as a solution to the fiscal cliff? It’s because lawmakers decided months and years ago that they wanted this austerity crisis to happen as a way of creating leverage for more sensible, long-term deficit reduction measures.
Despite all their hand-wringing over the fiscal cliff, it was Congress and the White House that decided in the summer of 2011 that we would raise the debt ceiling only on the condition of reducing the deficit by over $2 trillion, with some cuts upfront and the rest attached to the supercommittee with a sequester trigger. (As President Obama reminded us in his speech today, “Last year, we cut more than $1 trillion in spending that we couldn’t afford.”) It’s also because lawmakers decided nearly a decade ago that the Bush tax cuts would be phased out in 2010, which Obama and Congress then extended for another two years because of the weakness of the economy.
The essential dilemma, as both the U.S. and European countries like Greece have begun to discover, is that weak economies don’t respond well to immediate austerity measures. The deficit hawks arguing for a bipartisan “grand bargain” or similarly ambitious deficit-reduction plan want to replace the kind of austerity that we’re facing now with austerity that takes effect further down the road, not undo it altogether. Others simply want to put austerity off for at least a year by extending all the tax cuts and suspending the sequester.
All of these solutions affirm one underlying truth: The reason the fiscal cliff is so scary is that it’s an austerity crisis.