Foreclosures drop slightly in Silicon Valley, but remain near record high

Early data from Foreclosures.com shows initial foreclosure notices edging down slightly last month for Santa Clara County, from 1,381 notices issued in April to 1,058 issued in May. This is still an extraordinarily high rate of foreclosure; in May of 2006, by contrast, only178 homeowners received notices of default.

The chart below shows notices of default issued to Santa Clara County homeowners in each month for the past two-and-a-half years.


So far in 2008, 5,573 homeowners have received notices of default on their mortgages -- nearly one out of every 100 households in the county.

Even those who are not yet at risk of foreclosure are suffering the effects of a drop in home values as the housing bubble deflates -- translating to major losses in what for most middle-class families is their biggest asset: their home. Nationwide, the total equity Americans own in their homes dropped last quarter to its lowest point since the 1940s.

[ Continue reading Foreclosures drop slightly in Silicon Valley, but remain near record high ]

What not to do when your economy is tanking

On Friday, the U.S. Bureau of Labor Statistics reported that the nation lost 49,000 jobs in May, while unemployment jumped to 5.5%: the biggest one-month jobless increase in 22 years. The U.S. economy has now lost a total of 324,000 jobs since this past December, and 8.5 million Americans are out of work.

Between the housing market meltdown, rising prices, and falling consumer spending, the state of California has been one of the hardest hit by the nation's economic woes. Millions of Californians are struggling to afford gas and food, make the mortgage payment, and generally keep their heads above water.

So how is our Governor proposing to respond to an economy in crisis? (Continued...)

By cutting back on work supports, making it harder to get health care, pushing big cuts for schools, and dropping services for elderly and the disabled.

Here's an analysis from the California Budget Project showing how many Californians would be impacted by a few of the Governor's May Revise budget proposals. I've also pulled out the impacts just on Santa Clara County. K-12 isn't included; statewide, the cuts there would total $665 per student for 2008-09.



If the raw numbers aren't convincing, check out Patty Fisher's column in the Merc last week for the story of one working mom's struggle to navigate the system.

Not only are these proposals a recipe for short-term disaster -- cutting off work and family supports just when we need them the most -- but by hacking away at education and aid for children, short-sighted reductions like these threaten our state's future economic competitiveness. And as the New York Times points out, looming cutbacks in state and local government spending will deal another major blow to the national economy, possibly even prolonging the recession into 2009. Let's hope Schwarzenegger wises up.

Maybe Arnold is taking a page from George Bush's playbook: in an equally baffling move in the middle of a recession, Bush is threatening to veto an extension of federal jobless benefits for the 1.6 million people who have been looking for work for more than 6 months and are about to exhaust their state unemployment benefits.

[ Continue reading What not to do when your economy is tanking ]

Building a Better Airport: Living wage campaign steps up this Monday

The drive for a Living Wage for all workers at Mineta San Jose International Airport is poised to move ahead on Monday, when the living wage proposal will be heard by the Transportation & Environment Committee of the San Jose City Council.

If all goes well, Monday's hearing will put the policy on track for the final step -- the full City Council -- to raise service standards at the Airport and give over five hundred workers a much-needed raise.

Below is an article on the Airport Living Wage from today's Partnership for Working Families newsletter.


Working Partnerships USA Launches Campaign to Extend Living Wage to San Jose International Airport

Last month, community, labor and faith leaders came together to call for the City of San Jose to assure that it is truly building a better airport -- by ensuring a living wage, establishing increased oversight of subcontractors, and guaranteeing the highest quality, most skilled employees serving the airport's millions of annual passengers.

Stemming from a report by Working Partnerships USA which documented alarming security and retention challenges at Mineta San Jose International Airport, Vice Mayor Dave Cortese and Councilmember Forrest Williams asked the Council's Transportation committee to consider extending a living wage to all airport employees. The report found that over half of airport employees responding to a survey weren't trained in critical emergency procedures, such as facility evacuation. Additionally, while over half of employees earning a living wage had been at the Airport for over three years, the percentage of those earning less who remained that long was 6% or lower.

Members of the community joined elected officials in support of the policy. Pastor Kenny Foreman, of the Cathedral of Faith in Willow Glen, stated:

Our City has been richly blessed, and now should continue its leadership in maintaining the standard that has already been set; ensuring that San Jose will continue to lead the way in providing employees that serve the City a living wage -- including everyone who works at the San Jose Mineta Airport.

(Continued...)

Wheelchair attendant Dwayne Green, an employee at the airport who earns a minimum wage, related his story, including being forced into homelessness for an inability to afford even a basic rent. "I struggled, I fought, and today I see a brighter future. For our safety, we can't afford to churn through employees," Green stated. "The City I live in and love cannot afford to lose good employees simply because they can't afford to live here, to have families."

Dr. Steven Pitts of UC Berkeley relayed the findings of a study conducted by researchers following San Francisco's application of a living wage to its airport. The study found that the living wage did not negatively impact the function of the airport, and that cost to employers was less than a penny on the dollar. In fact, due to decreases in employee turn-over, some employers saw cost savings of up to 11%.

The Living Wage campaign will be discussed at the San Jose City Council's Transportation and Environment Committee on June 2nd and will likely go before the full City Council in the fall.

Copies of the Working Partnerships report, the UC Berkeley study and event photos can be found at the campaign website: http://www.buildingabetterairport.com/


Working Partnerships USA is a public policy and research institute that builds partnerships with community groups, labor unions, and faith based organizations to improve the lives of working families in Silicon Valley. For more information, visit the WPUSA website at http://www.wpusa.org/.

[ Continue reading Building a Better Airport: Living wage campaign steps up this Monday ]

The Merc is asking: How is the recession affecting you?

The U.S. may not officially be in a recession yet, but with four straight months of job losses, an imploding housing market, gas at nearly $4 a gallon, and food prices spiraling up so quickly that some stores are rationing rice, most Americans don't need anyone to tell them that times are tight.

Columnist Mike Cassidy at the San Jose Mercury News wants Silicon Valley residents to tell him how the downturn is affecting their lives. Read all about it on his "Loose Ends" blog -- and send him your stories.

Some possible discussion sparkers:

• On top of immediate strains to your household budget, how is the recession affecting you through its impacts on your neighborhood and community?


• What fallout are you feeling from the housing market collapse and the credit crunch?


• Do you worry about being affected by recession-inspired budget cuts to services like schools, health care, parks, libraries, public safety, and other proposed cuts?


• In the longer term, do you see a hopeful future for your kids if they stay in Silicon Valley?

[ Continue reading The Merc is asking: How is the recession affecting you? ]

Inflation Hits Home

According to Forbes Magazine, San Jose boasts the highest cost of living of any major metro region in the country.

If you've been to the grocery store or stopped at a gas station recently, you know that prices are headed higher still. Inflation indexes released today revealed big jumps in the prices of energy and food in March, leading to the second-largest monthly increase in wholesale inflation since 1975 (the largest increase was last November).

Apparel prices were down, though. Food, gas, housing and healthcare may all be unaffordable, but at least you can buy new clothes!

Here are the price increases for major household budget items since 2000[1] (not including the last couple months):(Continued...)
Healthcare costs lead the pack; in the past seven years, insurance premiums have more than doubled, up 110 percent. Gas isn't far behind, with an 86% increase (and the price is rising so fast that that's already out of date). Childcare is incredibly expensive; the average annual cost at a center for one preschooler is $10,200. Even food -- which has historically been cheap in the U.S. -- has started to shoot up. And then, of course, there's housing (see yesterday's blog post on the thankless tradeoff of renting vs. owning.)

The cost of living is rapidly becoming a worldwide problem. In recent months, the costs of basic necessities have been rising rapidly in international markets, leaving millions of people without enough to eat. Escalating prices for staple foods including wheat, rice, corn and soy are crating a global food crisis.

Here in the U.S., wobbly financial markets, overstretched banks and bankrupt mortgage companies are still getting more attention. But given the choice between a starving family or a Bear Sterns shareholder -- which one is more in need of government aid, and which one should be left to the mercies of the free market?




[1] Data from multiple sources. Food cost is an average for the U.S., based on USDA Moderate-Cost Food Plan. Health care cost is an average for California, based on worker's share of premium for job-based family health coverage. Electricity cost is based on residential rates in the PG&E service area. Gasoline cost is for regular unleaded in the SF-Oakland-San Jose metro area. All other items are based on costs in the Silicon Valley region. Housing costs reflect only the trend through 2006, as 2007 data is not available. Childcare cost reflects the trend from 1998-2006 as costs for 2000 and 2007 were not available.

[ Continue reading Inflation Hits Home ]

Rent vs. own: Between a rock and a hard place

Finding affordable housing may be the toughest financial challenge that most Silicon Valley residents face. Whether you rent or own your home, the last few months have not been good.

Caught by the nationwide mortgage meltdown, in Santa Clara County alone tens of thousands of homeowners are at risk of losing their homes. This chart pretty much says it all:

According to foreclosures.com, 3,133 Santa Clara County homeowners received notices of default on their mortgages in the first quarter on 2008 -- an increase of 64% over the first quarter of last year, and five times the number of defaults in Q1 of 2001. (A notice of default is the first step in the foreclosure process; not all of these homes will end up in foreclosure.)

Renters are feeling the pain too.(Continued...)
To afford a modest 2-bedroom apartment for their family, a worker in Santa Clara County must earn a minimum of $24.87 per hour, according to a study released last week by Housing California and the National Low Income Housing Coalition. That's $51,720 annually. At least a third of all county households had incomes below that standard last year.

And there's worse: these numbers are based on the "Fair Market Rent" for 2008, which was set by federal agency HUD at 40% of median rent last year -- $1,293 for a 2-BR in Santa Clara County. But as more families lose their homes or are reluctant to buy, there are more folks looking to rent, so rents have been shooting up. In San Jose, rents rose by an estimated 14.5% last year and are projected to grow another 7.8% this year, according to the Business Journal.

In addition to rising rents, renters are also being hit by the fallout of the mortgage crisis. The New York Times reported on Sunday that even renters are not immune from the mortgage crisis; as landlords are hit by foreclosures, tenants are increasingly being forced out of their homes. The NYT quotes Mark Zandi, chief economist for Moody's Economy.com, saying, "Landlords of all stripes could potentially get caught up in this very severe downturn. I suspect that it's going to be more of a problem for lower- to middle-income markets."

Local nonprofit organizations like Neighborhood Housing Services Silicon Valley, Project Sentinel, and ACORN Housing are urgently trying to help homeowners avoid foreclosure. If you are having trouble keeping up with your mortgage, or believe you may have been the victim of predatory lending, contact one of these agencies -- they may be able to help. Project Sentinel also helps renters.

[ Continue reading Rent vs. own: Between a rock and a hard place ]

3 out of 10 elders face inadequate incomes in Santa Clara County

In high-priced Silicon Valley, families of all types and ages find it hard to make ends meet. But older adults face particular challenges.

A new standard developed by UCLA indicates that the basic costs of living for elders (age 65+) in Santa Clara County range from $17,632 for a single senior homeowner with no mortgage, up to $47,354 for a couple with a mortgage -- and at least 31% of elder households in the county do not have enough income to meet these minimum standards of living.

The Elder Economic Security Standard Index, released today by the UCLA Center for Health Policy Research and the California Elder Economic Security Initiative, measures the costs for older adults of meeting their basic needs for housing, food, transportation and other necessities.

Here are the annual costs of basic needs for older adults living in Santa Clara County:

Elder Standard Per Year

Elder Person:
Owner w/o mortgage: $17,632

Owner w/ mortgage: $37,641

Renter, one bedroom: $25,391

Elder Couple:
Owner w/o mortgage: $27,345
Owner w/ mortgage: $47,354
Renter, one bedroom: $35,104

Source: UCLA Center for Health Policy Research. Standard per year is based on basic monthly costs for housing, food, transportation, health care (assuming good health), and miscellaneous needs.

(Continued...) As of 2006, at least 31% of households including elders had incomes below these standards, meaning that they face serious challenges in affording the basic necessities of life.

This points at the urgent need in Silicon Valley for initiatives to tackle the high cost of living, including affordable housing for families of all types and income levels; affordable and accessible health care providers; public transit that meets the needs not only of commuters, but also of retirees and transit-dependent residents; and planning future development so that grocery stores, pharmacies, clinics, hospitals, parks, community centers, and other amenities are nearby and accessible by walking or transit for all neighborhoods. We've made progress on many of these fronts, but with more than three out of ten elder households still struggling to make ends meet, it's clear we need to do more.


Source: Elder Standard Index from UCLA/WOW. Housing and population data from the American Community Survey was used to approximate the number of Santa Clara County households containing seniors which fall below the income levels provided in the Elder Standard Index. Because the Index does not provide standards for elders living in larger households, the standard for an elder couple was also used for elders in households of three or more, resulting in a conservative estimate of elders living below the standard.

[ Continue reading 3 out of 10 elders face inadequate incomes in Santa Clara County ]