The Housing Bubble

The Appeal Democrat reports from California. “News about the housing-market downturn and the market’s future is of little relief to struggling sellers, but may bring some encouragement to bargain-hunting homebuyers. In Yuba and Sutter counties, the median home price for a single-family home had climbed from $99,000 in January 2000 to $300,750 in May 2006 before dropping to $268,000 in January, Realtor Lloyd Leighton said.”

“The median price rose to about $285,000 in April but drifted back to about $270,000 in May. The number of homes on the market is increasing, and Leighton said spring sales were ‘lackluster.’”

“‘My belief is the worst is behind us, but it’s still likely we will see some declines in price,’ he said.”

“Sellers are unhappy about the downturn, Leighton said. But some buyers are excited to find price drops not seen in years. ‘It’s like going to the 20-percent-off sale at Nordstrom’s,’ he said.”

“The market’s downturn is not abnormal, but intense national and regional attention makes it look that way, said David Burrow, president-elect of the Sutter-Yuba Association of Realtors. ‘It puts fear in the mind of the buyer,’ said Burrow. ‘They don’t want to be in the position of their friends who bought a home two years ago.’”

The Salinas Californian. “Inventory continued to rise as Monterey County’s median price for single-family homes fell by $70,000 in May, according to statistics compiled by the Monterey County Association of Realtors.”

“The overall county median price, the midpoint, with half of homes selling for more and half for less, was $695,000 in May, down from $765,000 in April, MCAR said. Total number of houses on the market increased from 2,493 in April to 2,707 in May.”

“The median price for single-family homes fell most dramatically in south Monterey County, from $480,000 in April to $394,000 in May, a nearly 18 percent drop. Ten south county houses sold, compared to six in April.”

“The price also dropped in east Salinas, from $560,000 to $519,000, down about 7 percent. Only one home sold in east Salinas in May, down from three in April.”

The Record Searchlight. “Meanwhile, the housing slowdown continues to plague residential building in Redding, where housing starts are down 30 percent in 2007 from 2006 and valuation is off 24 percent.”

“‘This is the slowest we have been since 2001,’ said Greg Moss of Moss Lumber & Hardware, which supplies about 60 percent of the homebuilders in Shasta County. ‘Part of the issue is that developers are sitting on high land costs and waiting out the economy to get a return on their investment on the land they paid for at the peak of the market.’”

“‘I know of one concrete contractor who moved to Idaho’ because there wasn’t enough work in Shasta County, said Brent Weaver of Hughes Discount Building Materials.”

The Sacramento Bee. “California’s economy will continue to struggle through late 2008 because of the impact of the soft housing market, UCLA forecasters say.”

“The latest quarterly UCLA Anderson Forecast, being released today, calls for ’sluggish economic growth in California through late 2008.’ It also sees ‘a continuation of the flat-to-slightly-falling prices and weak sales in the housing market through the entire forecast period.’”

“Economist Ryan Ratcliff said things are likely to get worse, with the unemployment rate ticking up to 5.5 percent sometime next year. This ‘will be the period when real estate weakness finally spills over into the job market,’ he wrote in his forecast.”

The Contra Costa Times. “A two-year-old bill is about to come due for the East Bay and the rest of California in the form of job losses triggered by the nose-dive in the housing market, a forecast being released today suggests.”

“Past experience points to a lag time of two years between a peak in home-building activity and a pronounced slowdown, or even job losses, for industries whose fortunes are linked to the housing market, according to researchers with the UCLA Anderson Forecast.”

“Somewhere around the summer of 2005, building permits in California hit a peak and then began to slump, said Ryan Ratcliff, an economist with UCLA Anderson. ‘Two years later is right now,’ Ratcliff said.”

“The East Bay alone suffered more than one-fourth, 27 percent, of all the construction jobs lost in California during that period, according to a Times analysis of state Employment Development Department figures.”

“About 1,200 East Bay jobs have vanished in the credit intermediation industry, which includes numerous jobs for loan officers and mortgage agents. Another 800 jobs have been erased in the East Bay real estate industry.”

“DataQuick said about 40 percent of California homeowners who found themselves in default last year actually lost their homes to foreclosure in the first quarter of 2007. That’s about four times as many as a year ago.”

“‘We are coming up on the peak buying and selling season,’ said Andrew LePage, analyst with DataQuick. ‘This is as good as it’s going to get for the year.’”

“‘There are three types of housing markets: abysmal, bottomed-out and booming,” economist Christopher Thornberg said. ‘We’re in abysmal.’ Thornberg predicts the housing market won’t stabilize until 2011.”

The LA Times. “The sluggish housing market is starting to drag down the rest of the economy, leading UCLA forecasters to conclude that although the U.S. is not actually in a recession, ‘it is certainly close.’”

“Randy Becker doesn’t need to read UCLA’s forecast to know the housing market is in a world of hurt. A Redlands-based subcontractor, Becker helps developers hook up their new homes to sewer lines. With the fall-off in new construction, Becker has laid off more than 40 workers, or about half his staff, since last fall.”

“‘Builders used to sell 14 homes a week; now it’s four a month,’ he said. ‘When I lay people off, I tell them it’s nothing personal, but I can’t make any promises.’”

“Last year, tKevin Panet was making close to $100,000 a year with benefits as a training manager for Ownit Mortgage Solutions Inc. of Agoura Hills. Then shortly before Christmas he was laid off.”

“Panet regrouped, obtained a real estate agent’s license and found another mortgage job six weeks ago. But this time he works as a loan salesman on commission. The big salary is gone, and he must pay for his own health insurance and marketing expenses.”

“‘Am I scared? Yes,’ he said. ‘But I got a great job for myself and I know that the real estate market goes in cycles.’”

The Press Enterprise. “Keitaro Matsuda, senior economist at Union Bank of California, said that many new home construction projects have continued around the state, serving to buoy construction jobs.”

“‘The developers are in a hurry to get those houses finished,’ he said. ‘They would rather have unsold inventory than an unfinished building.’”

“Though the Inland region has fared better than the state’s average job growth, the region has led the state in mortgage defaults and foreclosures. ‘The Inland Empire is holding up better that I would have thought,’ economist Ryan Ratcliff said. ‘Lots of people are still moving there. But the ‘glass is half empty’ perspective is that the mortgage industry looks kind of scary.’”

The Union Tribune. “Christopher Thornberg, a former Anderson Forecast economist, said the UCLA Anderson Forecast prediction was too rosy.”

“‘To think we’re going to get through this period with just a slight increase in unemployment is ludicrous,’ he said. ‘We have a situation in our economy which is absolutely unprecedented: rapidly rising rates of foreclosures when the economy is not already in a recession. This will take a toll on the U.S. economy. I don’t see how it cannot.’”

The North County Times. “‘The housing weakness is going to be contained,’ economist David Shulman said. ‘And part of the weakness in housing will be offest by an improvement in net exports.’”

“‘The rest of the world is growing faster than the United States, which wasn’t true three years ago,’ he said. ‘We were the locomotive of the world economy; now we’re the caboose.’”

“Not everyone agrees. ‘That’s pure guesswork,’ said Robert Campbell, an independent economist from San Diego who closely tracks the market and advises real estate investors. ‘I think that’s just wishful thinking. All the momentum is on the down side.’”

The Daily Sun. “Californians’ consumer confidence in the economy took a dive in the second quarter of 2007, plunging into the pool of pessimism by 19 index points.”

“Economist Esmael Adibi called the drop ‘astonishing,’ the steepest he’s seen since 2002 when Chapman University’s Gary Anderson Center for Economic Research of Orange County began sending surveys to California residents.”

“‘There could be even more of a slump in the next quarter,’ Adibi said.” “The 19-point drop, from 101.9 down to 82.8, is considered significant because the consumer confidence index hasn’t dropped this sharply since 2002 when the state budget was in flux.”

“Fred Bell, executive director of the Building Industry Association Desert Chapter, gasped a little at the news. The pinch on new housing starts for 2007, revised from 4,000 units down to a range of 2,500 to 3,000 units, has cut into construction jobs which account for 33 percent of the workforce, Bell added. And that affects the service sector, as well.”

“‘Real estate has been a way for many people in the valley to put bread on the table,’ agreed Adibi, director of the Anderson Center. ‘And it’s been difficult for those who want to sell, and can’t.’”

The Chicago Tribune reports from Illinois. “Every evening, Pat Wendelken goes online and peeks at the posted mortgage interest rates. She winces at what she sees. ‘I watch the rates going up every week,’ said Wendelken, who must decide soon the best way to finance a home she and her husband are building in Elgin. ‘I’m wondering where they’re going to go.’”

“‘I don’t think consumers are aware of what’s happening,’ said Dan Green, a loan officer in Chicago. ‘It’s just starting to become front-page news. Forty-five days ago, I was quoting 5.8 percent to people, and now I’m saying 6.6 percent.’”

“‘They don’t seem to be really moved by the fact that rates are going up. They figure that rates will come down again,’ said Oak Park agent Norma Rixter. ‘And the inventory [of homes for sale] is so high, they figure the homes will still be here.’”

“And at lower prices: Rixter and others say that after a disappointing spring season, sales have picked up somewhat in the past few weeks, though that’s likely due more to reduced asking prices inspiring buyers to make offers.”

“‘We’ve had 12 properties go under contract in the past week, and that’s double what we were seeing recently,’ Rixter said. ‘But 20 houses came on the market at the same time.’”

“Naperville appraiser Chip Wagner, whose firm compiles a monthly analysis of home sales around the Chicago region, said about 44,000 single-family homes were for sale here last July. It was about the same April 1. But on June 13, there were more than 58,000.”

“‘What really jumps out at me from the previous quarter is that we’ve seen the average listing price drop almost $27,000 in the region,’ Wagner said. ‘At the same time, we see all these new listings. That’s a scary number to me, 58,000 is a 9.2-month supply [of homes for sale]. I was taken aback when I saw it.’”

“In Chicago, developer R. Donahue Peebles, CEO of Coral Gables, Fla.-based Peebles Corp., dropped a $250 million mixed-use hotel project he was planning downtown. It was to have a hotel, retail, furnished corporate apartments and residential condominiums.”

“In the past two months, ‘The cost of money and the amount of leverage available for the deal started to work against us,’ said Peebles.”

“Peebles could only obtain a loan for 75 percent of the total development cost and interest rates are up almost 1 percent since he started planning last winter. Instead of only needing $25 million in equity on hand he now needed $62.5 million. Meanwhile, his profit margin would have been cut from about $50 million to about $36 million, he said.”

“Coupled with a less than prime location and a competitive luxury condominium market here, Peebles said, ‘We saw enhanced risk and depressed return.’”

“‘The last time I saw a collapse in the real estate markets like this was in 1998,’ said Dennis Trimarchi, CEO of Trimarchi Management, a real estate investment firm, adding that he believes the market will ‘work itself out in six to nine months.’”

From USA Today. “Home foreclosures in Minneapolis doubled in 2006 and are on pace to double again this year. The number of vacant buildings is rising in working-class neighborhoods with high levels of subprime loans. Some families are simply walking away from once-secure homes.”

“‘People are upside down; they owe more than their house is worth,’ says Glennis Ter Wisscha, deputy director of Neighborhood Housing Services of Minneapolis. Homeowners ‘can make it at the (initial) teaser rate, but the adjusted rate is going to go up $400, $800, $1,000 a month.’”

“‘This isn’t about the economy; it was a preventable problem, and that’s what makes me so angry,’ says Prentiss Cox, associate law professor at the University of Minnesota. Noting foreclosures have risen even as the state’s unemployment has fallen, he blames the problem on bad loans and bad regulation.”

“Dominic Tizzano, a single father of four in Willoughby, Ohio, is struggling to stave off foreclosure. Tizzano took out a subprime mortgage several years ago using a ‘2/28′ loan, on which interest rates adjust after two years, and every six months thereafter, up to a cap.”

“His lender says he can’t refinance into a fixed-rate loan until he clocks a year of on-time payments, a big task, because his monthly bill has jumped from $982 to $1,248, and he’s still not near his 14% rate ceiling.”

“‘I wasn’t a genius at it at first; I kind of got forced into doing this,’ says Tizzano.”

“Homeownership is ‘an American dream, but it’s also (become) an American right. This has led to wrong on both sides,’ says Lou Tisler, executive director of the Neighborhood Housing Services of Greater Cleveland.”

“‘They can walk out, look at an (ad), make a call and be in a house in 30 days,’ Tisler says. ‘We see them again in six months, when they’re in way over their heads.’”

From Minnesota Public Radio. “When Al Ynegis bought a house in Apple Valley three years ago, he knew what he was getting into…sort of. Ynegis says he knowingly signed up for an adjustable-rate mortgage, which would make his mortgage payments increase over time.”

“‘But I didn’t know it was going to adjust this much,’ he says now.”

“Ynegis started out paying about $1,645 a month. But in three years, his mortgage payments have climbed to $2,500 a month. That’s a figure he can barely afford.”

“‘I’ve seen four clients today, and everyone is losing their home. So it’s 100 percent today,’ says bankruptcy attorney Barbara May. She practices in Roseville and is known as a ‘fixer;’ she only sees clients who have been turned down by two other bankruptcy attorneys.”

“A lot of her clients’ problems stem from having an adjustable rate mortgage they can’t afford. ‘I haven’t had a case this year where someone wasn’t in trouble in their mortgage,’ May says.”

“Bankruptcy can only do so much for people facing a foreclosure situation. May says people are always coming into her office asking, ‘How can I save my house,’ or ‘What bankruptcy can I file?’”

“But those clients often mistakenly believe a bankruptcy attorney will help them magically afford their homes.”

“‘They can’t file a bankruptcy to generate money,’ May says. If you file Chapter 13 bankruptcy before you reach the point of a sheriff’s sale, where the lender buys back the mortgage, you can work out a plan to repay back payments on the house.”

“So, if you’re $10,000 in arrears, you can arrange to pay off that sum over five years’ time. But ‘Nobody does, nobody does, because what happens is people in this position never follow through with their commitments,’ according to Mike Aymar, a local mortgage broker who’s seeing a growing number of customers facing bankruptcy and foreclosure at once.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Housing starts in the U.S. fell for the first time in four months in May as interest rates rose, suggesting no early end to the recession in residential real estate. Builders broke ground on new houses at an annual rate of 1.474 million, down 2.1 percent from the prior month, the Commerce Department said today.”

“Record levels of unsold homes suggest the slump is far from over. Fed policy makers now say the housing recession may linger longer than previously forecast.”

“‘Builders are really worried now, not only by the credit tightening in the mortgage market, but now all of a sudden by an increase in the fundamental mortgages as well,’ David Seiders, chief economist at the National Association of Homebuilders, said.”

“‘Without a doubt, things have slowed since about March,’ said Ara Hovnanian, Hovnanian Enterprises’s CEO in an interview yesterday. ‘There is not a recovery that is about to happen.’”

From Reuters. “The report showed how hard the once-thriving housing market on West Coast had been hit. Housing starts there were off 38 percent in May from a year ago, the largest year-on-year drop since a 49 percent decline in March 1991.”

“‘Unwinding the dramatic rise in nonprime mortgages could have a noticeable effect on home construction beyond what we’ve seen through the first quarter,’ Dallas Fed economist John Duca said.”

“Duca noted some industry analysts believed home building could slow by another 10 percent to 15 percent. ‘With nonprime lending at nearly 40 percent last year, the effect could be even greater,’ he warned.”

The Street.com. “On a year-over-year basis, the May housing starts dropped 24.2%. Building permits, meanwhile, rose to 1.5 million units in May, up 3% from April but down 21.7% from a year earlier, the Census Bureau said.”

The Idaho Stateman. “A measurement of industry sentiment about the housing market fell in June for the fourth straight month to the lowest point in more than 16 years.”

“The slump in the housing market has taken its toll on the Treasure Valley, said Mike Riggs, president of Middleton-based Crestmark Custom Homes. Riggs placed part of the blame for the stalled building industry on out-of-state homebuilders who continue to construct single-family homes despite the downturn in sales activity, thereby adding to an already over-supplied market.”

“‘They just keep putting product up,’ he said. ‘They don’t care. They have the deep pockets to ride it out.’”

“Bids for the main index of subprime mortgage bonds dropped to a record low on Tuesday as concerns of losses at a hedge fund and weak housing suggest a deeper downturn for the debt.”

“‘Everyone is still pretty bearish in ABX space,’ said Chris Sullivan, chief investment officer for the United Nations Federal Credit Union in New York. ‘Shorts are being increased, it seems.’”

The New York Times. “After the first cracks in America’s sub-prime mortgage business appeared late last year, several large lenders were forced into bankruptcy. Now the stress is sending tremors down Wall Street as investment funds that bought stakes in those loans are starting to wobble.”

“‘Basically, Bear Stearns is trying to prevent the great unwind of their fund,’ said Janet Tavakoli, president of Tavakoli Structured Finance, a consulting firm that helps investors gauge risk. ‘The reason people are watching this carefully is because they’re wondering whether this is going to lead to others doing the same, or will this be contained.’”

The New York Post. “A foundering Bear Stearns hedge fund staved off collapse for another day, getting a 24-hour reprieve from angry creditors in order to allow Blackstone Group to implement a rescue plan.”

“Beset with nearly 30 percent losses and demands from lenders for additional collateral, known as margin calls, the Bear Stearns High Grade Structured Credit Strategies Enhanced Leveraged Fund is at the thin end of a very, very fat wedge.”

“What’s left is $2 billion in illiquid and arcane assets known as collateralized debt obligations that were already difficult to trade and are now rapidly losing their value.”

“The prospect of these securities being scooped up by the bond market was already dim, but with few trading desks likely to provide capital to a struggling fund, the losses could be driven higher.”

“If creditors don’t provide capital and the fund is forced to sell the assets, which no bond trading desk is anxious to bid on, ‘The world becomes very different, very fast for a lot of people,’ said a wary hedge fund manager.”

“In the old days of relationship banking, banks relied on credit quality control and huge balance sheets to ride out any problems, but collateralized loan obligations (CLOs) investors may be more short-term oriented.”

“Lack of credit quality control by some managers of CLOs is particularly frightening to veteran private equity investors.”

“‘What all of this will show, and it will show more as CLOs become more popular, is that risk management has not been very well practiced,’ said billionaire financier Wilbur Ross. ‘That’s going to hurt a lot of people, and will ultimately explode the bubble.’”

“Upcoming debt sales may prove the tipping point for market sentiment. Canceled deals or a lack of buyers could puncture investor confidence, pushing record low default rates higher.”

“‘You’re close to the peak of the cycle,’ said Anton Schutz, a portfolio manager at Mendon Capital, which focuses on financial firms. ‘For new collateralized debt obligations (CDOs) coming to market, the end buyers are going to say, ‘I just took a loss on these things and you want to sell me more?’ They’ll want to know more about what’s in this paper.’”

The New York Sun. “According to a recent presentation made by John Olert of Fitch Ratings, the past three years have seen $477 billion in high-yield debt issues, of which 67% was rated below BB. The amount of single-B and lower debt as a portion of noninvestment-grade debt issues has been steadily increasing since 2002.”

“These conditions almost guarantee a wave of defaults and restructurings down the road. Indeed, the Fitch presentation concludes, ‘The slide down the rating scale suggests the next default wave will be more severe than the 2001-2002 downturn.’”

“Last week Standard & Poor’s published a report titled ‘The Covenant-Lite Juggernaut Is Raising CLO Risks — And Standard & Poor’s Is Responding.’ The report details the growth in collateralized loan obligations being made with virtually no covenants, provisions that have historically required borrowers to meet certain financial tests dictated by lenders.”

“S&P points out that so-called cov-lite loan volume in the first quarter ‘exploded to $48 billion, a stupendous figure by any measure, from the $24 billion full-year 2006 total.’ It projects that ‘when the cycle turns (as is inevitable) lenders…will rue the day they gave up on maintenance covenants.’”

“The millions of Americans facing foreclosure on their homes aren’t the only victims of the housing market bubble. There are also many consumers who have been duped into participating in schemes to buy properties and sell them at inflated values.”

“Mortgage finance company Fannie Mae has seen a big increase in mortgage fraud over the last two years, particularly in the Midwest.”

“‘An alarming number of Fannie Mae’s recent investigations have found that otherwise honest consumers and real estate professionals are fooled into conspiring to commit mortgage fraud.’ William Brewster, the housing agency’s director of anti-fraud initiatives, said in prepared remarks delivered at a Federal Reserve hearing.”

From Dow Jones Newswires. “The foundations of Spain’s property market are looking increasingly shaky, and a sell-off in the sector just a few short weeks ago may well be a sign of more troubles ahead, analysts say.”

“‘The grounds for the panic were real enough and it will probably happen again,’ said Charles Dumas, director of Lombard Street Research. ‘The Spanish housing market has had it.’”

“Construction rates in Spain are running at roughly 800,000 new homes a year, noted Dumas, against demand for around 600,000 homes. That’s more than the total number of homes constructed in Italy, France and Germany combined.”

“‘Spain has more homes per 1,000 head of population than any other country in Europe and they continue to add to it, resulting in record levels of household debt,’ said Dumas.”

The News Press reports from Florida. “Lee County’s burgeoning skyscraper condominium market is a renter’s paradise, but a landlord’s hell. Experts say as increasing numbers of condo units pour into an already overflowing supply of residential real estate, renters can almost name their price for even the costliest luxury units.”

“Jim Simon, for example, recently moved into a condo in downtown Fort Myers, where the owners of its 105 units typically paid as much as $600,000 for the convenient riverfront location. But Simon, a commercial real-estate broker, is paying only $1,350 a month, barely enough to cover the taxes and condo association fees.”

“‘It’s like living in the Ritz-Carlton,’ Simon said. ‘It’s got great amenities, it’s clean, it’s safe, it’s got a beautiful view.’”

“With only about 20 people living there, he practically has the place to himself, and with a number of similar projects under construction around downtown, he expects the good times for renters to last for awhile.”

“The median condo resale price maxed out in February 2006 at $353,900, and by April 2007 the price had fallen to $244,100, down 31 percent, according to Florida Association of Realtors statistics.”

“As prices have fallen, so have rents. In late 2006 the average rent for a two-bedroom house was $940, down from an all-time high of $1,041 a year earlier, according to rental information service RealFacts.”

“In Lee County and around the country, home builders say the picture looks bleak for the next six months. The National Association of Home Builders/ Wells Fargo index of sentiment in the industry fell to 28 in June, the lowest since February 1991, the association reported Monday.”

“In Lee County, statistics show that ‘there have been dramatic layoffs,’ said Michael Reitmann, executive VP of the Lee Building Industry Association. ‘It’s finally being reflected in the unemployment figures. I think it’s a response to the actual market conditions.’”

“The home construction business locally is a shadow of what it was in the boom years of 2004 and 2005. Since December 2005, when the median price of an existing, single-family home resale reached an all-time high of $322,300 according to the Florida Association of Realtors, both the number of sales and the pace of construction have dropped sharply.”

“The median price was $283,200 in April, off 12 percent from the peak. Meanwhile, the number of single-family permits pulled by developers countywide fell from 1,422 in December 2005 to 424 in May, down 70 percent from December 2005.”

The Orlando Sentinel. “A statewide survey of real-estate experts released Monday showed that appraisers, brokers and other professionals are decidedly more pessimistic than they were earlier this year.”

“The second-quarter survey by the University of Florida’s Bergstrom Center for Real Estate Studies reversed a slightly positive trend noted in the center’s first-quarter outlook. Wayne Archer, the center’s director, said ‘the mood has grown more somber since January,’ with few signs of improvement in Florida’s real-estate markets overall.”

“‘The outlook for condo development remains poor, and weakening,’ the report concluded. For apartments, the survey respondents generally offered a mixed outlook, with stable occupancy rates and with rents keeping pace with inflation, except for rents at condos converted to apartments.”

The University of Florida. “Archer said he could be positive only about the prospects for buying newly built homes. The outlook for existing single-family housing is more pessimistic, and things look even worse for condos, according to the latest survey conducted in April of 306 experts in the field.”

“‘Perhaps the implications of the subprime ‘meltdown’ are creating a disquieting haze; perhaps anxiety over property taxes and high insurance rates are shrouding Florida’s otherwise sunny outlook. In any case, there are few signs of improvement,’ said Archer.”

“‘There is strong opinion among many thoughtful people that with existing homes many sellers are still expecting the kind of premium that they saw happen between 2003 and 2005 and they haven’t come to terms with the fact that price increases have cooled off,’ he said. ‘So you may find people asking for more than their houses are worth.’”

“Prices are shakiest for condominiums, which are in the worst shape, Archer said. ‘Condominiums have always been the most volatile component of the housing market,’ he said. ‘They’re the play things of the amateur investors and they seem to invite misjudgments and high-risk behavior.’”

The Sun Sentinel. “A large inventory of overpriced homes for sale is contributing mightily to Florida’s housing doldrums, according to the UF survey of 306 industry professionals conducted in April.”

“‘Things have gotten a little more sober,’ said Archer. ‘People are overly optimistic about the prices they can get and have not come to terms with the fact that we’re not having these huge leaps in price that we had in the past.’”

“Analysts and real estate agents were hoping for a market rebound once Florida legislators addressed the state’s property-tax crunch. While the new tax plan offers some immediate relief, many agents say it won’t be enough of a long-term fix to rekindle interest in buying homes.”

“‘I felt very positive that the lawmakers were going to do something constructive,’ said Sharon Castrillon-Harrington, an agent in Wellington. ‘But they let us down.’”

The Herald Tribune. “Grant Thrall was so convinced that state legislators understood the importance of real estate and home building to Florida’s economy that he predicted they would pass meaningful tax and insurance reform. Never happened, at least in Thrall’s view.”

“Most real estate agents and homeowners contacted by the Herald-Tribune agreed with Thrall’s analysis. Homesteaded homeowners are not likely to give up their protections under Save Our Homes legislation. That means they will stay right where they are and do nothing to stimulate the real estate market.”

“At the same time, snowbirds, landlords and small business owners on barrier islands may get so angry about being ignored by lawmakers that they will put their homes, rental properties and businesses up for sale, further contributing to the glut of inventory choking the Southwest Florida market.”

“Some, including Sarasota landlord Geraldine Holmes, believe the failure to provide relief to the groups most affected by rising taxes during the boom will send Florida’s already weakened economy into a tailspin.”

“‘I don’t know what they were thinking,’ Holmes said. ‘We’re already at the beginning of a recession, and this is going to push us in deeper.’”

“Peter Feuerstein, an Anna Maria Island real estate agent who caters to German buyers, said taxes already are causing his compatriots to sell their houses and head home. One of his clients just sold his Anna Maria house for $455,000 because he was paying $11,0000 in taxes and another $10,000 for insurance and maintenance.”

“‘He told me that for $20,000, he can travel all over the world,’ Feuerstein said.”

“‘This legislation is a joke,’ said Al Noyes, a Massachusetts snowbird who also owns two rental properties in Bradenton Beach. ‘I can’t keep rents high enough to pay insurance and taxes. So I lose money every year.’”

“Noyes, who has seen annual taxes on his two rentals triple to $23,500, said he would need rents of $1,000 per month to break even, but he can only get $800 per month. He is now trying to sell the properties, which were once valued at $1.2 million, for half that amount.”

“‘The problem is that no one wants to buy them because the taxes are too high,’ Noyes said.”

“‘Cheerleaders at the National Association of Realtors say we’re just a few months from the market turning around,’ said Scott Corbridge, who owns three rental property and manages 150 more. ‘But I think it’s going to take much longer. Landlords, who are getting the worst of it, will be bailing out and selling, which will further increase inventory and depress prices.’”

“What legislators should have done is roll back taxes to the pre-bubble years of 2002 or 2003, said real estate agent John Allaman. ‘Local governments should not be allowed to be greedy and keep the money that they raised during the bubble,’ Allaman maintains. ‘It is not their money, and they don’t deserve to keep benefiting when everyone else is suffering.’”

The Bradenton Herald. “Legislators had an opportunity to breathe new life into a sluggish real estate market with tax reforms but didn’t take advantage of that, according to local experts.”

“‘Insurance and taxes used to be incidentals, they never used to be deal makers or breakers,” said broker associate Patrick McGuire.”

“Rollbacks in taxes coupled with the rollbacks in housing prices may give the market more hope. ‘Prices have rolled back about 20 percent from the height of the boom, and lower prices roll back the tax amount and even the insurance amount,’ McGuire said.”

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