May 10, 2007

No Signs The Downturn Will Abate In California

The Contra Costa Times reports from California. “The malaise in California home building will hound the state for a while longer, a top state government economist told an East Bay gathering Wednesday. Even worse, California is particularly vulnerable to ripple effects because the state depends on housing and home building for a greater share of its economic activity than other regions, said Howard Roth, chief economist with the state’s Department of Finance.”

“‘I see no signs that the housing downturn will abate any time soon,’ he said during an interview after his speech.”

“Alan Nevin, chief economist with the California Building Industry, said he has prepared a revised forecast that suggests housing construction will be even weaker in 2007 than initially thought. The revision is based a weak first quarter in home building in California.”

“‘It appears it will be difficult to reach the levels for housing unit construction that we had originally projected last December,’ he said.”

“Roth warned that the weakness could be even more severe based on the first-quarter home building activity. ‘To keep us out of recession, we need for consumers to continue to spend through the rest of 2007,’ Roth said.”

The Orange County Register. “Orange County real estate consultant John Burns says: ‘The housing market has softened much more than is being reported. We have been advising our retainer clients for more than one year about misleading national sales information, both with the Existing Home Sales and New Home Sales data.’”

“‘We are now going public with our concerns because we are concerned that policy makers are relying on national data to conclude that the housing market correction has not been severe.’”

“Here’s what CEO Ray Pacini of California Coastal Communities in Irvine is saying: ‘Conditions in these affordable markets (Inland Empire and Lancaster) continue to be very challenging. We generated orders for 13 homes during the quarter due to the problems in the subprime mortgage market, declines in consumer confidence and competition from large national homebuilders who continue to significantly discount their prices as they try to reduce inventories.’”

“‘This deterioration in market conditions has resulted in a $4.0 million impairment charge for our project of 87 remaining homes in Beaumont, California. We expect that these conditions will continue throughout 2007.’”

“That Beaumont writedown is noteworthy. That’s roughly $46,000 per home in a project selling, according to the company’s Web site, ‘from the mid-$300,000s.’”

“California Coastal Communities, Inc. reported a net loss of $3.0 million, or $0.28 per diluted share, for the three months ended March 31, 2007.”

“During the first quarter of 2007, net new orders decreased 55% to 13 homes compared with 29 homes during the comparable period of 2006. Cancellations as a percentage of new orders were 32% during the first quarter of 2007.”

“At the same time, backlog as of March 31, 2007 decreased to 15 homes compared with 60 homes as of March 31, 2006 and the average sales price of homes in backlog decreased from $835,000 to $533,300, reflecting the close out of the Ranch Santa Fe project at March 31, 2007.”

“The Company continues to actively evaluate pricing strategies and other sales incentives in an effort to sell these homes at an orderly rate.”

The San Francisco Chronicle. “Daniel Y. of San Francisco has a question that’s on the mind of many homeowners these days. Daniel wants to sell his condo and move into a bigger one in a nicer neighborhood. He figures the price he could get would pay off his first mortgage, but not a $50,000 home equity line of credit he took out last year to repay credit card debt.”

“Daniel says the shortfall could be $10,000 to $30,000 and wants to know what would happen if he didn’t pay it.”

“Daniel probably won’t be able to sell his condo unless he comes to some sort of agreement with the home-equity lender, says bankruptcy attorney Steve Elias. If the lender agrees to accept less than the full amount Daniel owes, he will probably owe tax on what’s known as cancellation of debt income.”

The North County Times. “In April, the median price of a single-family detached home in North County decreased by 0.78 percent from $640,000 in March, to $635,000. The median price for single-family detached homes peaked at $650,000 in June 2006.”

“For single-family attached homes, the median price fell by 4.88 percent to $390,000 in April from $410,000 in March. Year over year, the median price decreased by 1.7 percent from $396,650 in April 2006.”

“The number of single-family homes sold fell from 769 in March to 692 in April. That compares with sales of 767 for April 2006 and 1,117 for April 2005. For single-family attached homes, the median price fell by 4.88 percent to $390,000 in April from $410,000 in March.”

“As the real estate market cools from the superheated first half of this decade, agents noted that many would-be sellers and buyers are sitting on the sidelines. Sellers, who a few years ago might have tested the market, are deciding to wait awhile before listing, said Dennis Smith, a real estate agent in Carlsbad.”

“And with appreciation no longer surging at 20 percent a year, Smith said that investment and second-home buyers, who had been a major factor in the boom years, have retreated for now. ‘This is not bad,’ he said. ‘This is good. It gets the hysteria out of the market.’”

“With a drumbeat of news about increased default and foreclosures, many would-be buyers are convinced that prices have no where to go but down, some local agents said. ‘Buyers are waiting for the great bargain,’ said Dallas Woodring, a broker in Escondido and a 23-year veteran of the business.”

“‘A lot of agents are shopping the short sales’ to buyers, Wellborn said. ‘I just picked up a foreclosure for one of my clients.’”

“Wellborn said her client was able to purchase a foreclosed, single-family home for $450,000 in a neighborhood where prices had peaked at $530,000. The previous owners had paid $500,000 for it, held on to it for three years, then lost it when their low-interest teaser rate adjusted to a much higher one, almost doubling their monthly payment.”

“‘Definitely, it’s a buyers’ market. I have a lot of people out there looking for the deal,’ Wellborn said.”

From CNN Money. “Rising foreclosures will bring misery to many home owners, but bargain prices for some lucky home buyers. Dean Williams, CEO of auctioneer Williams & Williams, said his company is very busy.”

“Although many of the sales this year have clustered in the economically hard-hit Midwest, many of the homes coming to auction later this year will be higher-end properties from sun-belt states where the economies are generally strong, but speculative real estate investing has dried up, such as California, Texas and Florida.”

“‘In June, we’ll have 200 properties in San Diego and Los Angeles on auction,’ Webb said, ‘with an average value of around $300,000.’”

“Not all the auction properties are huge bargains. According to Williams, 12 percent of the houses he sells, most of which have already been marketed for an average of six months as conventional listings, sell at auction for more than the original asking prices.”

“But most of the houses do sell for less, and about 15 percent of time ’shockingly’ so, said Williams.”




Speculators Hoping For A Star That’s Never Coming

A report from Arizona State University. “The local resale home market may seem to be functioning at levels below desired activity, but it is following a very traditional pattern. April recordings at 4,855 sales are well below the 5,980 sales of April 2006 and 8,735 sales of April 2005.”

“‘The new home has become a strong competitive and attractive alternative to the resale home in many areas of the market as new home builders have been aggressively pursuing buyers through incentives. The general expectation is that the 2007 resale housing market should be a good year, but no where near the records,’ said Jay Q. Butler, of Arizona State University. ‘This tends to assume that there are no negative geopolitical events and that the subprime problem is contained.’”

The Arizona Republic. “It appears the market is following a traditional cycle, although ‘we may not like it,’ said Butler.”

“Ahwatukee is the one community in the Southeast Valley where sales rose from April 2006 to April 2007. However, prices dropped about 15 percent to $325,000.”

“But the situation is not a disaster, Butler said. ‘It’s not a disaster market; it’s not a horrible market; it’s a fairly normal market.’ In fact, he added, for some it’s a good time to look for a deal.”

“‘You might find a much better deal than you would in the resale market,’ Butler said. ‘Especially if the home has been sitting there for a while, they may be more willing to deal.’”

“New-home builders enticing buyers with incentives like free pools and discounted upgrades appeared to be one reason for the sluggish existing-home sales in April.”

“As housing inventories remain at a record levels in metropolitan Phoenix, ‘new-home builders (continue to add) inventory into a market, and the last thing the market needs is inventory,’ said real estate agent David Lorti.”

From Business Week. “The downturn in the housing market has caught the nation’s homebuilders by surprise, leaving many overextended with costly land they can’t develop and unfinished homes they can’t sell.”

“‘I think we’re going to see a lot more [bankruptcy] filings in the next 6 to 12 months,’ says Tucson attorney Eric Slocum Sparks, who is representing one local builder, AmericaBuilt Construction, in Chapter 11. ‘I’ve got a couple of clients who want to see me next week, and I know these aren’t social visits.’”

The Denver Post from Colorado. “Foreclosures continued to batter the Front Range housing market in the first quarter, dashing hopes that stronger job growth would hold back rising delinquencies, according to a report Wednesday from the Colorado Division of Housing.”

“Public trustees in 51 of the state’s 64 counties reported starting 9,254 foreclosures in the first quarter. If that pace continues, Colorado will record more than 37,000 foreclosures this year, about 30 percent above the 28,453 recorded in 2006, which was 31 percent higher than 2005.”

“‘I thought I would see some moderation and flattening,’ said Ryan McMaken, a Housing Division spokesman who compiled the report. ‘(But) we will exceed last year’s numbers.’”

“Distressed sales, either lender-owned foreclosures or short sales, have come to represent more than half of all transactions in many parts of the metro Denver market, said Tom Steele, an Aurora real estate agent who specializes in short sales.”

“Colorado would have probably recorded more foreclosures in the first quarter if mortgage companies weren’t so backed up and overwhelmed, said Zachary Urban, the foreclosure hotline’s supervisor.”

“‘They aren’t foreclosing on people, because they don’t have the resources,’ he said.”

The Coloradoan. “Lennar Homes, developers of two housing developments in Loveland, laid off 76 workers last week, essentially pulling out of Northern Colorado’s slow housing market.”

“Lennar continues to market homes in Hunters Run II and LakeShore II in Loveland and St. Vrain Ranch in Firestone. Realtor Eric Holsapple said virtually every national builder pulled out of the market as soon as it slowed. ‘It really impacted our market negatively in the way they exited the market,’ Holsapple said.”

“National builders came in, put up subdivisions full of homes, then offered incentives to help them sell quickly. Local builders couldn’t compete, Holsapple said. In Hunters Run, for example, Holsapple said Lennar put up 40 to 50 homes to build out the subdivision, then priced them to sell quickly.”

“‘It’s been their strategy of exiting the market; they finish out the subdivision then sell the homes for what they had to sell them for,’ he said.”

In Business Las Vegas from Nevada. “It’s been a difficult 12 months for the real estate community. About 900 Realtors gathered April 26-27 at the Las Vegas Convention Center to take continuing education classes, visit with old friends and take stock of their industry.”

“Rose Holden has seen it all before in more than 30 years in the business. The market will rebound, hopefully by the end of the year, she said. She adds the caveat that her crystal ball is broken.”

“‘The mood is typical,’ Holden said. ‘Everybody is worried that there’s no business…The business is still out there. It is just a little slower than they are used to. You have to work a lot, but some people are not used to work.’”

“Inventory remains high and sales remain slow because many sellers have been reluctant to lower their price to match what’s happening in the market. Homes priced correctly will sell, said Realtor Donna Brass.”

“‘The problem is many investors who entered the market late keep wishing for a dream, hoping for a star that’s never coming,’ Brass said. Even banks that take possession of homes are holding out for unrealistic prices, she said.”

“Brass said she expects prices to drop at least 10 percent. That prediction is in line with those of the Nevada Association of Realtors and other analysts.”

“‘I am not seeing the prices drop yet, and that’s surprising me. I think you will see it in six months and in December, they will be crying hard,’ Brass said. ‘The best deal ever will be in December. It will be the bargain of a lifetime.’”

The Review Journal from Nevada. “Realtors need to separate fact from fiction to protect clients from the ’subprime tsunami’ and false pretenses of getting rich quickly in real estate, a panel of home loan experts said Wednesday.”

“‘We’re never going to see 54 percent appreciation again, I have a hunch,’ Shane Watson, managing partner of Direct Access Lending, said during a three-hour symposium for local Realtors. ‘We believe the market is very strong here and this is just the calm before the storm.’”

“Watson said that Nevada leading the nation in foreclosure filings and Clark County being second to Los Angeles County is actually good for the industry. It will drive away investors who entered the market with marginal credit and perhaps even misrepresented their income on loan applications, he said.”

“‘What’s the old saying? Buyers are liars,’ he said.”

“Andrew Pugh of SellFastLV.com said anecdotal evidence from his business suggests that many owners have little or no home equity despite the price boom of 2003-2004. That’s why those facing foreclosure aren’t able to cut their prices and ‘be done with it,’ he said.”

“One woman bought her house in July 2003 for $170,000, ‘absolute perfect timing’ as things started to run up for the next 12 months, Pugh said. Last August she refinanced for $300,000. Now she’s behind on payments and needs to sell, but comparable sales in her neighborhood are only $270,000.”

“‘You can’t slash the price below what you owe on the house,’ he said. ‘I seriously think most people in Vegas pulled out all their equity and blew it on who-knows-what. Those 10,000 or 11,000 vacant properties on the (MLS) represent anxious sellers that are slowly bleeding to death and would love to sell at just about any price.’”

“‘Unfortunately, I can’t do anything for these people and neither can a real estate agent,’ Pugh said. ‘They might be able to short sale if they can find a buyer, prove they’re insolvent and don’t get lost in the bank’s bureaucracy. Good luck. Otherwise, they’ll go back to the bank in a few months and then show up as REOs down the road. Now, the real question is, where did all that refi money go?’”




We Have Not Reached The Point Of Stabilization: CEO

Some housing bubble news from Wall Street and Washington. MarketWatch, “Technical Olympic USA Inc. reported a first-quarter loss Thursday. The financial results showed that the Hollywood, Fla.-based company continues to struggle with a difficult housing market and with an investment in a joint venture. ‘These are challenging times for homebuilders,’ said Antonio Mon, the company’s CEO, in the earnings release.”

“The company reported a first-quarter loss of $66 million. The latest results included a $78.9 million estimated pre-tax contingency loss related to the potential restructuring of the Transeastern joint venture, as well as $42 million in charges resulting from inventory and land impairments.”

“‘Currently it is difficult to gauge the timing of a potential housing recovery, as conditions continue to vary greatly. Affordability is improving largely because of lower net pricing driven by extensive use of sales incentives and changes in our product mix,’ the CEO said.”

“‘We are concerned that housing inventories appear to be on the rise again in most of our markets, and sales in March and April were disappointing. This leads us to believe that we have not reached the point of stabilization as we had previously anticipated and that the difficult conditions could persist for the foreseeable future,’ said Mon.”

“The Company’s gross profit margin, excluding impairment and related charges decreased 550 basis points in the first quarter of 2007 to 20.5% from 26.0% in the first quarter of 2006. Home sales gross profit was primarily impacted by higher incentives which increased to $36,400 per delivery for the first quarter of 2007 from $12,000 per delivery for the first quarter of 2006.”

“During the three months ended March 31, 2007, the Company abandoned its rights under certain option agreements which resulted in a 7,600 unit decline in its controlled homesites and approximately $150.0 million in cash savings on future land takedowns.”

“William Lyon Homes today reported pre-tax income for the three months ended March 31, 2007 of $5,804,000, down 87%, as compared to the comparable period a year ago. Consolidated operating revenue decreased 33% for the three months ended March 31, 2007.”

“The Company incurred impairment losses on real estate assets of $3,554,000 for the three months ended March 31, 2007. The impairments were primarily attributable to slower than anticipated home sales and lower than anticipated net revenue due to softening market conditions. Accordingly, the real estate assets were written-down to their estimated fair value.”

“During the first quarter of 2007, the average sales price of homes closed (including joint ventures) was $457,700, down 13% from $529,100 for the comparable period a year ago. The lower average sales price reflects a change in product mix and reduced sales prices and an increase in the use of sales incentives due to the slowing of new orders and competitive pressures.”

The Detroit Free Press. “Shareholders of Pulte Homes heard a downbeat assessment of the nation’s homebuilding market Wednesday at the firm’s annual meeting. ‘The worst may not be behind us,’ Richard Dugas, Pulte’s president and CEO, told shareholders in Birmingham.”

“Later, speaking to a reporter, Dugas said he saw no signs yet of recovery after the worst housing slump since the early 1980s. ‘I think January and February appeared to be on the road to recovery, but after the subprime mortgage issue hit, consumer confidence took another hit, unfortunately, so I’m not sure there’s any light at the end of tunnel right now.’”

“He added, ‘I think the problem right now is that consumers don’t believe that housing is a good value today. What we have is a lot of people on the sidelines.’”

The Philly Burbs. “Toll Brothers Inc. executives expect the Horsham-based luxury homebuilding company to turn a profit for the second quarter of 2007, but it will not meet projections for the year.”

“The company’s prime selling season is drawing to a close, said Chairman Robert Toll, who indicated each month’s performance was worse than the previous one this spring. The number of new home contracts slipped 25 percent from last year’s second-quarter performance, he added.”

“The news did not surprise A.G. Edwards & Sons Inc. analyst Gregory Gieber. ‘Anyone who looks to buy one of these houses is already living in a nice house,’ he said.”

“There are two key reasons why the market has not turned around and they are directly connected, Gieber said. ‘You hear a lot about excessive inventory, but the other thing is that the pricing got too damn high,’ he said. ‘Builders and sellers have to understand that they aren’t going to get the prices they’re expecting.’”

From Business Week. “The company’s second-quarter cancellation rate fell to 19% from the prior quarter’s 30%, but this number is still much higher than the 9% cancellation rate in 2006.”

“And ‘it’s not like they’re comparing themselves to tough comps anymore,’ notes Morningstar analyst Eric Landry. Roughly 70% of second-quarter cancellations came from contracts signed more than 30 months ago, Toll added.”

‘”The initial take is that things are still ugly, and there’s no sign of any turnaround anytime soon,’ says Landry, who doesn’t expect to see an upturn for homebuilders until 2008 at the earliest. ‘There’s just too much inventory out there.’”

“For now, homebuilders are still slashing prices to generate more volume, which, Landry says, is the right thing to do. ‘Volume is more critical than price at this point,’ he explains. ‘Many homebuilders have decided that we need to cut prices to get homes sold.’”

“The downturn in the housing market has caught the nation’s homebuilders by surprise, leaving many overextended with costly land they can’t develop and unfinished homes they can’t sell. The financial strain is starting to show. From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months.”

“And in late April, credit analysts at Moody’s Investors Service warned that a number of large homebuilders could fall out of compliance with their debt agreements later this year, leaving them at risk of default unless lenders come to their rescue by agreeing to rework their loans.”

“Some builders are so desperate, in fact, that they’re even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.”

From Reuters. “U.S. mortgage finance company Fannie Mae said on Wednesday that it could not present a timely quarterly report due to unresolved accounting problems.”

“Fannie said it believes its ‘exposure to the Alt-A and subprime mortgage loans… is limited.’ The company said it expects about $1.1 trillion in adjustable-rate mortgages ‘to reset at least once during 2007, with an additional $400 billion scheduled to reset in 2008.’”

The Orange County Register. “ImpacMortgage Holdings Inc. became the latest local lender to falter amid rising loan delinquencies Wednesday as the company laid off 120 workers in Orange County.”

“‘It’s just in the normal cycle of the business. Volumes are down everywhere. We recognize that and we have to let people go,’ said Joseph Tomkinson, Impac’s CEO.”

“Although Impac’s taxable profits and loan volume plunged last year, company officials had insisted the company would weather the downturn because their loans targeted so-called Alt-A borrowers.”

“The company’s announcement did not bode well for the mortgage industry. But many experts thought the move into the Alt-A tier was inevitable as fewer borrowers could qualify for loans.”

“Tomkinson told the Register on March 21 that ‘the sky is not falling’ for the lending industry, which he said was being stampeded by Wall Street investment bankers.”

“At that time, Tomkinson said his company had the funds to cover any loan losses, even though Impac’s percentage of late payers doubled last year from 3.1 percent of the company’s holdings to 6.2 percent.”




Tightening Credit Disrupts The Real Estate Food Chain

The Boston Globe reports from Massachusetts. “The meltdown in the subprime mortgage sector is making it harder for first-time and other home buyers with little down payment money to get even conventional loans, adding more troubles to a slumping real estate market. These are typically buyers who once easily got 90 to 100 percent financing for a home, but now either have trouble getting loans or are paying more for them.”

“‘It’s a knee jerk reaction to what happened with the subprime market,’ said Rosella Campion, loan officer in Boston.”

“Ryan Mulvoy is shopping for a new condo, but may not have much money left over from the sale of his current Quincy one-bedroom unit after he pays off a few bills. He was able to buy that first condo with just 5 percent down; now, anticipating he might need 100 percent financing, his agent, Joe Clancy Jr. in Weymouth, said Mulvoy might have a harder time getting a loan.”

“The Warren Group estimated that roughly 30 percent of Massachusetts home buyers last year bought houses with little or no down payment. ‘A deferral of home purchases by even 10 percent’ of buyers, said Warren chief executive Timothy Warren, ‘would mean fewer sales and further pressure on prices.’”

From Bloomberg. “The U.S. housing slump has hit New York City’s richest suburbs. The average price in Westport, Connecticut, fell 8.2 percent to $1.56 million in the first four months of 2007 from the same period last year, according to MLS data.”

“The tightening of credit in response to rising subprime defaults has disrupted the real estate food chain, bringing the national housing slump to Manhattan’s doorstep. Prices fell as much as 18.8 percent this year in 15 of the 24 areas in which data was collected.”

“‘People who may have bought their first home may not be able to do so now, and that stops some of the movement,’ said Doug Werner, a broker in Darien, Connecticut. ‘Whales eat plankton. If the plankton disappears, what will happen to the whales?’”

“First-time home buyers are more likely to be subprime borrowers. Every purchase of an existing house by a first-time buyer triggers four other sales in the housing market, said Jeffrey Otteau, president of Otteau Valuation Group in East Brunswick, New Jersey.”

“‘They are largely trade-up purchases,’ Otteau said. ‘The buyer of the $300,000 house enables the seller of that home to buy a $450,000 house, and up the line until you get to a luxury home. None of that can happen unless the first-time buyer makes the purchase.’”

“David Smith just sold his 11,000-square-foot Westport home on two acres for $5.9 million, about $600,000 less than originally listed. He said he took a loss.”

“‘It’s a buyer’s market now,’ said Smith. ‘There’s so much to choose from, you don’t get them to focus. Their attitude is, the longer I wait, the less I have to pay.’”

“The biggest price declines are along the Metro-North Railroad line in Westchester County, New York, just north of New York City. Prices fell in eight of the 11 areas in which data was collected.”

“Larchmont and Mamaroneck experienced a drop of 18.8 percent to $1.08 million. In Armonk, prices declined 17.3 percent to $1.39 million. In Bronxville, the slide was 12.4 percent to $1.34 million.”

“At the peak of the northern New Jersey real estate boom in 2005, the inventory was between one and three months, meaning that the ratio of buyers to sellers was about one to one, Otteau said. A year ago, inventory had swelled to 5.6 months of homes, and now it’s 7.3 months.”

“‘Some sellers took their homes off the market,’ Otteau said. ‘That’s made the picture look brighter than it actually may be.’”

The New Haven Register from Connecticut. “Single-family home sales in Connecticut sank nearly 9 percent in March compared with a year ago, The Warren Group reported Wednesday. The 2,740 homes sold in March marked an 8.6 percent decline from the 2,998 sold in March 2006. The median sales price also fell, dropping 2.8 percent, from $272,250 a year ago to $270,000 in March.”

“‘I was a little surprised,’ said CEO Timothy Warren Jr. ‘It just didn’t pick up as much as everybody wants it to.’”

“The peak spring home-buying season, which typically begins in March or April, seems delayed this year, said John Cuozzo, partner at Press/Cuozzo Realtors in Hamden. ‘The uncertainty that was looming in the market in the fall and winter’ is causing many would-(be)-buyers to ‘drag their feet,’ he said.”

“Looking ahead, Warren said he hopes the state’s housing market will rebound as the year goes on, but for now, ‘It’s looking like it’s not heading in the right direction.’”

The Morning Call from Pennsylvania. “Average Lehigh Valley home sales continued to fall and the amount of time it took to sell houses lengthened.”

“It was the 11th consecutive month of falling home sales, compared year-over-year, according to statistics released this week by the Lehigh Valley Association of Realtors. April’s results show a continuation of slowing trends that started last year after three years of a boom market.”

“The high number of homes for sale is slowing the pace of transactions, and possibly depressing prices. New listings rose 25 percent last month to 1,713 units.”

“‘Our inventory is skyrocketing,’ said Loren Keim, who owns Century 21 Keim Realty in Allentown. ‘There are a lot of reasons for that. [Sellers] think this might be the end of the good market. The good market ended last spring.’”

“The market has been bolstered by strong demand from buyers moving to the Valley from more expensive towns in New York and New Jersey. Some real estate agents say the influx of New York and New Jersey buyers is slowing. ‘What I have heard personally is, ‘Connie, I can’t take the drive. I won’t have as much house but I won’t have to get up at 4:30 in the morning,’ said Connie Ulans, with A. R. Ulans Realty in Allentown.”

“National builders have said they are facing a glut of unsold homes. At the conference Tuesday, an executive with the National Association of Home Builders said there are 1 million to 1.5 million vacant new homes. The official, senior staff member David Crowe, said the statistic is ‘troubling.’”

“‘Something’s got to give. The economy can’t sustain itself with this number of homes on the market,’ he said.”

“Chuck Hamilton, the local association’s executive officer, said some of the national builders with subdivisions in the Lehigh Valley have had to offer incentives here. The local association does not publish statistics.”

“Hamilton said the impact of changing market conditions has been significant, and ‘almost all builders have noticed a slowdown in demand.’”

“Local real estate agents are beginning to see the impact of higher default rates among sub-prime loans. The rash of failing lenders has prevented some transactions from closing in the Lehigh Valley.”

“Keim said at his firm’s Allentown office, 18 sales fell through in February because the lenders involved had closed, or no longer offered the mortgages the clients had qualified for.”




Bits Bucket And Craigslist Finds For May 10, 2007

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