California home prices and sales fall in July

Prices paid for California homes dipped last month as distressed properties continued to make up more than half of the market.

The median price paid for new and resale houses and condominiums statewide last month was $252,000, down 0.4% from June, and down 6% from July a year ago, real estate data provider DataQuick said.

The state’s median — the point at which half the homes sold for more and half for less — has fallen year-over-year for 10 consecutive months. The median’s bottom for the current real estate cycle was $221,000 in April 2009, and the peak was $484,000 in early 2007. 

An estimated 34,695 houses and condos were sold last month. That was down 11% from June, and down 1.4% from July 2010. A decline from June to July is normal for the season.

Of the existing homes sold last month, 34.6% had been foreclosed on during the past year. That was down from a revised 35.1% in June and down from 35.2% in July a year ago. The all-time high was in February 2009 at 58.5%.

Short sales –- transactions in which the sale price fell short of what was owed on the property -– made up an estimated 17.3% of resales last month. That was down from 17.4% in June and down from 18.6% a year earlier.

Indicators of market distress continue to move in different directions, San Diego-based DataQuick said. Foreclosures have declined sharply, but remain high by historical standards. Financing with multiple mortgages is low, down payment sizes are stable, and cash and non-owner occupied buying has eased a bit in recent months but remains relatively high.

The July median price in Southern California fell 4% from a year earlier to $283,000. A total of 18,090 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July, down 4.5% percent from July 2010.

The median price in the Bay Area was $374,000, down 7% from July 2010. A total of 6,887 new and resale houses and condos sold in the nine-county area including San Francisco, up 1.7% from July 2010.

RELATED:

Bay Area home sales dip in July

Southern California home sales and prices fall again in July

Cheaper to rent than to buy condo in L.A.

-- Roger Vincent

Photo: The Paxton House in South Pasadena. Credit: Erik Grammer / Los Angeles Times.

 

Lawsuits begin in connection to salmonella-tainted turkey

First, there was the contaminated frozen and fresh turkey. Then, scores of people got sick.

Now, here come the lawyers.

An Oregon family has filed a lawsuit against a division of the giant meat processor Cargill Inc., saying their toddler daughter was hospitalized after eating turkey contaminated with Salmonella Heidelberg, a strain resistant to many antibiotics.

This month, the company recalled 36 million pounds of fresh and frozen ground turkey products potentially contaminated with a strain of Salmonella connected to one death in Sacramento County. As of Aug. 11, 107 have been infected by the strain and fallen in in 31 states.

The recall is one of the largest meat recalls in U.S. history.

According to the complaint, filed Monday in U.S. District Court in Oregon, Ruby Jane Lee was only 10 months old in June when she ate spaghetti and meatballs that her father had made. Her dad, Brandon Mullen-Bagby, had used ground turkey produced by Cargill Meat Solutions Corp.

“During the first week of June, Ruby developed diarrhea,” according to the complaint. “Her diarrhea got worse, requiring as many as 20 diaper changes in a day. On June 10, when Ruby’s fever spiked to 102.5°, her mother, Melissa Lee, rushed Ruby to urgent care at Kaiser Sunnyside Medical Center in Clackamas, Oregon. The doctors prescribed Tylenol.”

The child was later hospitalized for seven days. She was discharged from the hospital and is continuing to recover at home.

"Since 1993, Cargill has been the source of contaminated meat implicated in at least 10 major outbreaks, 10 deaths, three stillbirths and 366 illnesses," said William Marler, the Lee's attorney, who specializes in food-safety litigation. "If a car manufacturer had the same numbers on an ongoing defect, what would we say?  What if was an airline?"

Federal health officials have warned the public that they should check the frozen turkey they have in their freezers, as it may be part of the recall. Salmonella can cause fever, diarrhea and abdominal pain and can be fatal to young children, older people and those with compromised immune systems.

The turkey was sold under a number of brand names, including Honeysuckle White, Giant Eagle, Safeway Fresh. A list of the brand names and other information can be found here.

ALSO:

Document: Read the full complaint

CDC updates details of ground turkey-linked salmonella outbreak

'Superbugs' in our food

1 dead, 76 ill in salmonella outbreak tied to ground turkey

--P.J. Huffstutter

Photo: A truckload of live turkeys arrives at the Cargill turkey processing plant in Springdale, Ark., in August. Credit: AP Photo / Danny Johnston

Bay Area home sales dip in July

Home prices dipped in July in the Bay Area as potential buyers and sellers took time out to ponder dreary economic reports and a budget standoff in Washington, a real estate information service said.

Sales fell more than usual from June -– especially for homes above $500,000 -– but edged higher than July last year, according to DataQuick.

“We’re still looking at a dysfunctional market. Distribution curves are lopsided, bottom-feeding is still prevalent and the lending market is just plain weird, said DataQuick President John Walsh. “We’re off bottom by all metrics, but far from anything resembling normal.”

The median price -- the point at which half the homes sold for more and half for less -- paid for all new and resale houses and condos sold in the Bay Area last month was $374,000, down 1% from June and down 7% from July 2010. The June median was the highest this year, while the July median was the second-highest.

A total of 6,887 new and resale houses and condos sold in the nine-county Bay Area last month. That was down 13.9% from June and up 1.7% from July 2010.

Counties tracked in the Bay Area are Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma.

 -- Roger Vincent

Photo: San Francisco. Credit: Getty Images

 

 

Investment advisor sentenced to prison for defrauding retirees

 
A financial advisor from Topanga has been sentenced to nine years in federal prison for running an "audacious" Ponzi scheme that defrauded investors, many of them retired bus drivers, out of more than $7 million.

Thomas L. Mitchell, 64, was sentenced Monday at the federal courthouse in Los Angeles. U.S. District Judge Gary A. Feess also ordered him to pay more than $7 million in restitution to about 60 victims.

Mitchell, who pleaded guilty in April to mail fraud, established several companies to target retirees, many of them former transit operators for the Los Angeles County Metropolitan Transportation Authority, prosecutors said. He operated the scheme from 1995 to 2010 and cost many victims most or all of their retirement savings, said Thom Mrozek, a spokesman for the U.S. attorney’s office in L.A.

Mitchell told investors that he would put their money in stocks, bonds and real estate but in fact used most of the funds he raised to finance a lavish lifestyle including a luxury apartment, high-end cars and expensive travel and entertainment, prosecutors said.

“Mr. Mitchell committed an audacious fraud that spanned many years and devastated many victims,” said U.S. Atty. André Birotte Jr. “He was able to lead a luxurious lifestyle by stealing the life savings of hard-working men and women who only sought a dignified retirement. For his criminal conduct, Mitchell richly deserves his nearly decade-long prison sentence.”

RELATED:

Barry Minkow gets 5 years in prison in Lennar fraud case

Bank emails, bogus lotteries: Your weekly ScamWatch

Ponzi, Ponzi, Ponzi: Your weekly ScamWatch

-- Stuart Pfeifer

Photo: Thomas L. Mitchell was ordered to pay more than $7 million in restitution. Credit: Bloomberg

Fannie Mae and Freddie Mac replacements still uncertain, Treasury says

This post has been corrected. See note at the bottom for details.

The Obama administration is still deciding how to replace seized housing giants Fannie Mae and Freddie Mac, a top Treasury official said Tuesday in denying a report that a proposal was in the works to continue a major government presence in financing mortgages.

Deputy Treasury Secretary Neil S. Wolin said administration officials continued to consider three options they laid out in February for scaling back the government's role in housing finance.

A story Tuesday by the Washington Post said that President Obama had directed a small team of advisors to develop a proposal to continue a major government presence in the housing finance market and possibly preserve Fannie and Freddie under different names.

Many analysts blame the the two companies for helping fuel the subprime housing boom -- including some who say Fannie and Freddie were the prime reason for the housing bubble. They were on the verge of failure because of the bad loans they had guaranteed when regulators seized them in 2008.

Since then, the federal government has pumped about $169 billion into the companies to keep them afloat.

Wolin said that in each of the three options, Fannie Mae and Freddie Mac would be "wound down on a responsible time line" and that the government's now-large role in housing finance would be reduced to a "limited and targeted" one. Administration officials and housing experts are concerned about making major changes too quickly because Fannie and Freddie are playing a key role in keeping the struggling housing market afloat.

"The Obama Administration believes that the private sector -– subject to strong oversight and consumer protection –- should be the dominant provider of mortgage credit," Wolin wrote in a blog post. "That’s why, in each of the three options we outlined in our report to Congress, the government's footprint in the housing finance market will shrink substantially."

Officials from Treasury, the Department of Housing and Urban Development, and the White House continue to analyze the options.

They include one proposal for the government to almost completely leave the housing finance market, providing support only for low-income buyers. The other two options are less extreme pullbacks that still would significantly reduce the government's role to either provide a secondary guarantee for some mortgages or to step in only during a recession to provide an "emergency backstop" to the housing market.

Congress would have to enact the changes through legislation.

White House spokesman Matt Vogel said Obama's economic team has not recommended a specific option yet and the president hasn't made any decisions.

"All three options remain under active consideration, and we are deepening our analysis around how each would potentially be implemented," he said.

For the record, 1:02 p.m. Aug. 16: An earlier version of this post said that Obama administration officials were still considering the fate of Fannie Mae and Freddie Mac. The administration has proposed closing the companies and is considering what would replace them.

RELATED:

U.S. seizes mortgage titans in multibillion-dollar rescue

Plan would reduce federal government's role in mortgage market

Fannie Mae, Freddie Mac bailouts could hit $363 billion, report says

-- Jim Puzzanghera

 Photo: Fannie Mae and Freddie Mac headquarters. Credit: AFP / Getty Images

 

Credit-card delinquencies tumble

Delinquencies on credit cards are at their lowest level in 17 years, credit tracker TransUnion says.

The Chicago company said in a report Tuesday that card companies charging off soured accounts as noncollectable contributed to the trend along with consumers taking a more conservative approach to using plastic to pay for goods and services.

Overall, consumers' non-real estate debt has fallen 9.5% from its peak in the fourth quarter of 2008 to $2.28 trillion, the Federal Reserve Bank of New York said this week in its quarterly report on household debt.

But the decline has slowed to a near standstill, and credit card debt limits and the number of accounts rose slightly.

The big question is whether that is more than a temporary pause in the spend-less, save-more trend. The answer could have big consequences for the economy.

"During the next few quarters we will gain a better understanding of whether this is a permanent or temporary break in the decline of total outstanding consumer debt," a research vice president at the New York Fed said.

RELATED:

Upcoming reports could calm — or validate — recession fears

Americans, economy feel ripple effect from drop in spending

The hidden costs of credit cards

--E. Scott Reckard

Photo: Decline in consumer credit has slowed -- for now -- a Fed study says. Credit: Lawrence K. Ho / Los Angeles Times 
 

Chrysler plans Gucci edition of Fiat 500

What would Bubba think?

Chrysler, which builds the hefty Ram trucks and Jeep Grand Cherokee sport utility vehicle, is going Gucci.

The automaker -- which is gradually merging with Fiat of Italy --  plans to introduce the Gucci edition of the tiny Fiat 500 sub-compact car in time for New York’s Fashion Week starting  Sept. 8.

Chrysler wants the limited-edition Gucci model to build buzz for the 500 by bringing together two famous Italian brands. The special editions of the Fiat 500 and 500 Cabrio (convertible) have been customized by Gucci creative director Frida Giannini in partnership with Fiat's Centro Stile.

 Fiat hasn’t announced pricing or many details, but the cars will feature chrome, black and white and a splash of accent colors. The interior should look like an expensive handbag. 

And that leaves one question: When will we see the knockoff version from China?

RELATED:

Convertible sales lag, panorama roofs up

Goodyear is developing self-inflating car tires

Used car prices continue to rise as depreciation slows

-- Jerry Hirsch
Twitter.com/LATimesJerry

Photos: Gucci edition of the Fiat 500. Credit: Chrysler Group

Coffee gets cheaper as Smucker slashes prices 6%

Coffee addicts rejoice: J.M. Smucker Co. is slashing prices on its Folgers and Dunkin’ Donuts coffees by an average of 6%.

The cut follows recent weakness in the wholesale coffee market, whose heady performance in the last year had coffee roasters rushing to keep up. The price of green, unroasted coffee beans nearly doubled between June 2010 and June 2011 before retreating. Smucker raised its coffee prices 11% in May after a 10% hike in February.

The price cut affects only packaged coffee sold in stores, including the Dunkin’ Donuts brand that Smucker sells under a license -- not the coffee poured in Dunkin’ Donuts shops.

Now, the pressure is on for competitors such as Starbucks Corp. and Maxwell House owner Kraft Foods Inc. to follow Smucker’s lead. After all, a cheaper cuppa joe in the morning and maybe the afternoon -- OK, every 15 minutes -- is likely to appeal to consumers facing high food prices and the specter of a double-dip recession.

Although Ohio-based Smucker still makes Smucker's jams and jellies, Jif peanut butter and other products, coffee is now its largest business segment.

RELATED:

Coffee prices are getting a jolt

No more free cuppa joe at the Original Pantry

-- Tiffany Hsu

Photo: A cappuccino in Los Feliz. Credit: Mariah Tauger / Los Angeles Times

Housing, industrial production data give conflicting signals

Economists had been waiting for a series of data releases Tuesday for an indication of where the direction the economy was headed. But so far the numbers have been mixed.

July housing starts were at a seasonally adjusted rate of 604,000, lower than June but higher than July of last year, the U.S. Census Bureau said. Permits for residential construction also declined, by 3.2%. But few had really expected housing to do well anyway.

"Today's economic data confirms that residential construction will not provide much of a boost to headline growth this year," Comerica economist Robert A. Dye wrote in a note.

On the flip side, industrial production numbers were better than expected. Industrial production grew 0.9% in July, according to the Federal Reserve. This was led by manufacturing of motor vehicles and parts, which started up production again after a lapse casued by the Japan earthquake and tsunami.

Those numbers were "a counterbalance to the drag from recent financial market volatility," Dye wrote.

For production numbers to keep growing, car sales must continue to rebound. Vehicle sales grew to 12.2 million in July, but recent hits to consumer confidence may stall this segment of the economy. The consumer confidence index plunged to 54.9 in August, according to the University of Michigan Consumer Sentiment Index, from 77.5 last February.

Chain store sales numbers from the week also indicate consumer confidence is flagging. Shoppers pulled back for the third straight week with retail sales falling 1.5% in the week ending Aug. 13. In the previous week, sales had declined 0.5%.

"Last week’s large-scale stock market drops and wild volatility added to consumers' concerns about the slowing and failing economy and as a result pulled back on their overall spending once again,” said Michael Niemira, ICSC vice president of research and chief economist.

For a schedule of economic data coming out in the next month, look after the jump.

Is meanness a moneymaker? Nice guys are paid less, study finds

Nice guys don’t get the ladies and may not get the paychecks either, according to a study out this week.

Disagreeable men earn about 18% more -– or $9,722 extra a year –- than their more pleasant counterparts. Rude women out-earn sweet ones by 5%, or $1,828, according to the report “Do Nice Guys -- and Gals -– Really Finish Last?”

Agreeable people who act altruistic, compliant and modest want to maintain social harmony and are more popular among their peers. But the study, which David Lazarus teased Monday, found that anti-competitiveness and self-sacrificing tendencies don’t translate into income and earnings.

Less agreeable employees aren’t necessarily anti-social and are amicable for the most part, researchers said. But they’re also more inclined to pursue their interests aggressively and thrive in conflict –- such as in salary negotiations.

Lack of warmth is sometimes even seen as a sign of competence by many bosses, the study found.

Researchers from the University of Notre Dame, Cornell University and the University of Western Ontario considered more than 20 years of data from thousands of workers across multiple industries.

Gender stereotypes are also hard at work, they found. Agreeable men often come across as violating tough masculine norms. Women, who are expected to be gentle and genial, often find that being disagreeable pays off less for them than it does for men.

RELATED:

Gender gap in science and technology jobs persists, report says

Some wages on the rise, survey says

-- Tiffany Hsu

Photo: Michael Douglas as corporate villain Gordon Gekko in "Wall Street." Credit: Andy Schwartz

Consumer Confidential: Netflix for kids, credit cards, coffee prices

Here's your take-me-home-country-road Tuesday roundup of consumer news from around the Web:

-- Netflix is opening a store on Sesame Street. The company is giving kids and their parents a new reason to embrace its Internet video subscription service by adding a "Just For Kids" tab to subscribers' accounts. Clicking on the feature will pull up a list of kid-friendly recommendations drawn from about 1,000 movies and TV shows in Netflix's Internet video streaming library. It won't suggest titles that are only available as DVD rentals delivered through the mail. That's an option that Netflix is trying to make less enticing to subscribers so it can spend more money expanding its selection of videos available for streaming. The company says about half its subscribers have watched at least two movies or TV shows made for kids in the last 90 days.

-- We're getting smarter with our plastic. Credit card users have been so focused on keeping their accounts in good standing that they've driven the rate of late payments to its lowest level in 17 years. The national credit card delinquency rate, or rate of payments 90 days or more past due, fell to 0.60% in the second quarter, down from 0.92% a year ago. That's the lowest rate since 1994, according to credit reporting agency TransUnion. And the improved payment habits came despite increased use of credit cards, based on quarterly data on Visa, Mastercard, American Express and Discover cards. The average combined debt on all major credit cards increased to $4,699 per borrower, up $20 from the first three months of the year.

-- Here's some more happy news: J.M. Smucker, the top seller of packaged coffee, has cut prices by 6% for most of its brands, including its flagship, Folgers, as well as the Dunkin' Donuts branded coffee sold in grocery stores. Smucker is the first major roaster to trim prices in more than a year, putting pressure on its rivals to follow suit. The company raised its prices four times between May 2010 and May 2011, increasing them by a total of 38%.

-- David Lazarus

Photo: Netflix is striving to be more kid-friendly. Credit: Richard Termine/PBS

 

Disappointing economic data drives down stocks

Stocks retreated for the first time in four days after the release of disappointing reports about the European and U.S. economies.

The Dow Jones industrial index was down in early trading 47 points, or 0.4%, to 11,436.05. The broader Standard & Poor's 500 index was down more sharply.

European stocks began the drop after government officials there announced that the European economy had grown only 0.2% from the first quarter to the second quarter, with the German economy growing at an even slower 0.1%. Both figures were lower than analysts had expected and were at their lowest levels since 2009.

Leading stock indexes were recently trading down 0.9% in Germany and France.

In the United States, Commerce Department statistics showed that the housing industry slowed in July, though less than expected.

Stocks recovered some of their earlier losses after the Federal Reserve announced that industrial production in the U.S. grew in July at its fastest pace of the year. This surprised some economists who had worried that the U.S. manufacturing sector, which has led the recent economic recovery, might be slowing down. 

"This is one of those reasons why we are not rushing to call a double dip," Steve Ricchiuto, the chief economist at Mizuho Securities, wrote to clients.

RELATED:

Americans, economy feel ripple effect from drop in spending

Upcoming reports could calm — or validate — recession fears

-- Nathaniel Popper

Photo credit: Getty Images

 

Inflation: pensioners are biggest victims of RPI/CPI double-dealing

Millions of rail commuters – not to mention their student offspring – are entitled to feel the Government is not playing fair with its double-dealing measurements of inflation. But pensioners are the biggest losers from the way the real value of money is falling.

Rail fares and student loans are uprated in line with the Retail Prices Index (RPI) which is consistently higher than the Consumer Prices Index (CPI), which is applied to things that cost the Government money – such as pensions.

If that sounds like a dry technicality, then beware that new calculations from Saga show that inflation has robbed many older people of nearly a fifth of the purchasing power of their pension since the credit crisis began.

How you measure the rate of inflation depends on what you put in your sample or shopping basket. Excluding mortgage costs and council tax helps keep CPI more than 10pc lower than RPI. The respective  annual rates of increase were announced by the Office for National Statistics today as 4.4pc and 5pc respectively.

But even the RPI does not adequately reflect the way pensioners’ cost of living is rising because they tend to spend more of their money on food and fuel – where commodity inflation makes double digit increases common – and less of their money on electronic goods where prices are falling.

Ros Altmann, director general of Saga said: “Since the credit crisis began four years ago, the effect of RPI has been to reduce the purchasing power of money by 13.9pc – which may surprise some people, as they tend not to notice the cumulative effect of inflation.

“But we calculate the cumulative effect of inflation over the same period on those aged between 65 and 74 has been 18.8pc. If you are living on a fixed annuity, that’s money you will never recover. They have lost nearly a fifth of their purchasing power in four years.”

The Bank of England’s policy of keeping base rates much lower than any measure of inflation has transferred wealth from savers to borrowers by eroding the value of savings and debts. The idea is to prevent higher insolvencies, unemployment and repossessions; all of vital importance to people of working age.

Taking these factors into account, while commuters and students may feel it is unfair that their rail fares and loans are linked to RPI, their standard of living is unlikely to have fallen as much as pensioners’.

Everybody is going to suffer in this financial crisis, according to no less an authority than the Governor of the Bank of England, but older people who must live off their savings and can do little to protect themselves are being hit hardest.

Collapse in German growth will add to euro rebellion

News that Germany recorded only marginal, 0.1pc, GDP growth in the second quarter is not just an economic event; it is a political one too, for the German economic “miracle”, with output rebounding from its post Lehman low far more rapidly than any other advanced economy, has been about the only thing that has kept Germans onside on measures to support the euro during the last year and a half of turbulence.

Indeed, in some respects, the crisis has seemed a positive boon for German industry, for it has meant that its exports have enjoyed a far more competitive exchange rate than would have been the case had Germany still had the Deutsche Mark. Trade has boomed accordingly.

But as the world economy slows, even that advantage is beginning to fade. Now of course there are lots of anomolous reasons why the German economy would have slowed in the second quarter, not least the after effects of the Great East Japan Earthquake, which because of the disruptions it caused in the global supply chain would have hurt the German economy, with its high dependence on manufacturing industry, particularly badly.

Even so, there’s much to worry about. Consumption and investment in construction are slowing fast, and most of the forward looking indicators are turning down. If Germany isn’t even deriving a trade benefit from membership of the euro, then its support for further bailouts will begin to look more questionable still.

The European Central Bank’s decision to start tightening policy a couple of months back is looking ever more indefensible. Even in Germany, money has been contracting for some while now, yet the ECB has allowed itself to be persuaded by Bundesbank hawks into an almost suicidal approach to policy. The ECB’s actions have become dictated more by the intractable politics of the eurozone than the interests of sound policy. Thus it is that in order to quell German alarm over the way the euro is being managed, the ECB has thought it necessary to attack an imagined inflationary threat to sacred German principles of sound money.

It’s tempting to mock the piece on saving the euro that Gordon Brown, the UK’s former prime minister, has written in today’s New York Times. Why is he writing for the NYT, for heaven’s sake? Is it because he’s so discredited back here that he has to go to the US for anyone to take him seriously any longer?

The contemptuous way in which he used to treat other European policymakers and leaders certainly means that none of them will be listening to him. Yet it has to be said that this is a surprisingly good piece, which demonstrates a pretty sound understanding of the extreme nature of the threat Europe faces to its continued economic prosperity. Many will vehemently disagree with his solution, which is in essence just the European superstate the euro area seems to be careening towards in any case, but it’s well worth a read anyway.