The Housing Bubble

The Union reports from California. “In May, the median price for a house or condominium sold in Nevada County dropped slightly more than 5 percent to $460,000, down from $484,500 in May 2006, according to DataQuick. In Nevada County, an older, three-bedroom house that once would have fetched more than $400,000 now sells for well under that bar.”

“With more than three times the number of houses on the market than a year ago, frustrated sellers are reaching out to buyers with new incentives. Some sellers are paying closing costs and offering to buy down interest rates to sell houses that have been on the market for a year or more. Those who fear foreclosure are slashing their prices.”

“Some sellers of high-end properties have dropped prices by as much as $300,000 after watching them stagnate on the market for more than a year, said Marilyn Seolas of RE/MAX Advantage.”

“Chauncey Poston, president of the Nevada County Association of Realtors, talked with The Union this week about the real estate market downturn and its impact on the local economy. Here are some excerpts.”

“Q: What have been the effects of the downturn in the local real estate market? A: We have over 600 approved of- and yet-to-be-built-homes in Grass Valley, and that is largely due to the downturn in the market. They’re not pulling the permits to start because of the conditions out there. On a larger scale, the economy here in Nevada County and Grass Valley is very dependent on building. All the businesses really take a hit.”

“Q: Compare the number of homes being sold locally to the homes on the market. A: A couple years ago, homes didn’t stay on the market very long at all. We had the whole phenomenon of competing prices, where people would actually bid, but this is not occurring now. I think I heard a figure that there are more than 1,500 listings on the market right now. I can remember when there were only 400. Yes, the supply is way up.”

The Signal. “Sales of single-family homes in the Santa Clarita Valley are down sharply from a year agos. Sales in the SCV are down 21 percent this year compared to last year, according to real estate agent Pam Ingram.”

“The Southern Regional Association of Realtors reports inventory in the Santa Clarita Valley remains high, with 2,240 active listings in the month of May. A total of 179 single-family homes closed escrow during May, 23.5 percent down from a year ago.”

“The apparent violation of the law of supply and demand has created a recent increase in business for Debbie Penny, Realtor and broker in Santa Clarita. However, she says, ‘I don’t trust it’ll last. I don’t see this as being long-term.’”

“The bargain hunters are out there for those anxious to sell, said Ingram. ‘Right now, the buyers are looking for deals,’ she said. ‘They’re looking for the best house for the least amount of money, and unfortunately, the sellers are having to reduce their prices to be in the market.’”

The Desert Sun. “More homes sold across the Coachella Valley in May than any month this year, but sales volume still couldn’t keep pace with year-ago levels, a new report shows. May home sales were down 30 percent compared with May 2006, according to DataQuick.”

“The median price for resale condos dropped 5.7 percent to $349,000, while the median price for a resale home rose 4.7 percent to $450,000. Higher-end homes seem to be selling better than less-expensive homes, and those sales will likely be reflected in June closings, said Blair Alexander, with Pacific Union GMAC Real Estate in Palm Springs.”

“Although aggressive buyer incentives such as free pool packages helped push May new-home sales to 199 from 166 in April, sales volume was down 48 percent compared with May 2006, DataQuick reported.”

“New-home sales in the valley peaked in the third quarter of 2004, said Fred Bell, executive director of the Desert Chapter of the Building Industry Association. ‘We’ve actually been trending down every month since then on housing starts,’ said Bell.”

“The valley’s overall home inventory swelled to 8,896 in mid-May, according to the Desert Area MLS, prompting home builders such as Lennar Corp. to experiment with online auctions in Rancho Mirage, La Quinta and Indio.”

“Other builders competing in a crowded field of about 120 new home developments have slashed prices as the pool of potential homeowners face tightened lending requirements amid subprime mortgage woes and increasing default notices and foreclosures.”

“Sluggish new-home sales in the valley continue to put pressure on prices, which declined 5.1 percent in May to a median price of $375,000.”

The Record Searchlight. “Affordable Furniture & Oak in downtown Redding is closing. ‘The furniture business up and down California and Nevada is way down,’ said owner Jerry Daniels. ‘Since I moved here, six manufacturers have closed their doors. It’s just dead — scary dead.’”

“Daniels blamed the housing slowdown and the high cost of doing business in California for the decline in furniture sales.”

“Home sales in Shasta County have been down every month this year compared with the same month in 2006. In May, home sales dropped 13 percent from a year ago. The median sales price for a home in May was $275,000, down from $290,000 in May 2006.”

“‘The economy in California is really off, the housing market didn’t help at all,’ Daniels said. ‘There’s a glut of housing now. Three years ago, people were buying houses and buying furniture because they had money.’”

The Bakersfield Californian. “The latest sign of an ailing real estate market appeared Wednesday, when Richmond, Va.-based LandAmerica Financial Group Inc. announced the planned closure of its three Kern County title offices.”

“‘To manage our company responsibly, particularly in a slowing real estate market, we must continually find ways to streamline and reduce costs,’ the company said in a statement.”

“The local offices are ‘under-performing,’ the statement said.”

The Sacramento Bee. “A Dallas-based auction company says it will sell 175 bank-repossessed houses in Sacramento next month.”

“Banks and mortgage lenders, taking back houses after owners default on loan payments, are increasingly turning to auctions as a fast way to unload properties. Seattle-based lender Washington Mutual Inc., owns many of the homes being auctioned in July, according to descriptions on the auctioneer’s Web site.”

“Last month lenders took back 969 houses in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to Fair Oaks-based Foreclosures.com. About two thirds, 651 houses, were in Sacramento County alone.”

“Many are owners who bought at the height of the housing boom with little money down and fell behind on payments as housing values fell.”

The Contra Costa Times. “More than 20,000 Contra Costa County residents and 7,000 residents in Alameda and Solano counties will be eligible for property tax relief this September, county officials said Wednesday.”

“The majority of homeowners receiving the reduction in property tax in Contra Costa County will be in San Ramon, Antioch, Concord and Brentwood, said County Assessor Gus Kramer. The number of reductions is 10 times more than last year’s approximately 2,000 homeowners.”

“‘It was a little more than we thought it would be,’ Kramer said. ‘We found the average drop to be about 8 percent,’ he said.”

“‘Most of these people were those who recently purchased homes from the summer of 2005 and since,’ he said. ‘I’d say 90 percent.’”

“Russ Hall, chief deputy assessor for Alameda County, said that after the county reviewed around 35,000 properties, some 6,135 parcels will be given deductions for the coming fiscal year.”

“That number was higher than the 20,000 Hall estimated in May because Hall said they looked at all properties that changed ownership between June 2005 and December 31, 2006.”

“In Solano County, the county assessor and recorder reduced property taxes on close to 1,000 properties, but almost a third came from one subdivision, said Assistant Assessor and Recorder Lance Houser.”

“‘We had 300 properties that we reduced,’ he said. ‘The resale prices gave us the indication it was the hot spot (of the county).’”

“That subdivision, Trilogy at Rio Vista, provided the county easy appraisals when the developer dropped its prices to new home buyers.”

“Houser said the county assessor is already considering if reduction in property taxes will be needed in next year’s taxes. ‘Right now nobody’s sure what’s going on or if the market is going to continue to decline,’ he said.”

“Although Houser said the numbers weren’t available for all areas of Solano County, he ranked Rio Vista as having the highest number of reduced property taxes, followed by Vallejo and Fairfield.”

“Kramer said that homeowners who can expect a smaller property tax bill will be receiving a card in the mail from the assessor’s office by this weekend. But he downplayed any ideas that homeowners would be happy to see the card.”

“‘They don’t mind saving money, but most would rather see their home rise in value than fall,’ he said.”

The Jeffersonian reports from Maryland. “The national increase in mortgage defaults during the last six months has not spared the northeast area of Baltimore County. During the 2002-2006 boom years, as house values kept escalating, home owners could easily refinance, since rising appraisals gave their properties more equity than they had paid in.”

“But in mid-2006, the merry-go-round stopped whirling. ‘Many clients assumed the boom would keep going. But we (professionals) know from history that they never do. They always end,’ said Sherrie Brandquist, a housing counselor.”

“Some home appraisals are going down, and those homeowners find themselves with a house worth less than the amount they owe on the mortgage.”

“Brandquist said the boom times also encouraged a few lenders to make loans that would not pass muster today, as interest rates have risen and lenders clamp down on poorer risks. ‘It was greed at its finest,’ she said.”

“As an example, Brandquist mentioned a person earning $25,000 who was granted an adjustable mortgage for $300,000.”

“Joseph Banick, veteran agent with RE/MAX Elite Realty, said he has noted more clients telling him they could no longer afford their homes and needed to sell. Banick said they were often young couples under 35 living beyond their means and discovering that the ‘well has run dry.’”

“Banick joined the housing counselor in saying the current situation will get worse before it gets better. ‘A lot of people are going to be humbled in the next few years,’ Banick said.”

“The reason? Many adjustable-rate mortgages taken out by home buyers during the boom have passed their first two years at a fixed rate and stand to rise dramatically, often $500 or more per month, Banick said.”

“‘People assumed they could re-finance at a lower fixed rate, but it’s not there anymore,’ said Kevin Goodnight, a salesman who specializes in foreclosed properties.”

“Goodnight noted a statewide total of more than 5,000 bankruptcies awaiting court action. Most of those people will also lose their homes, he said, because filing for bankruptcy only stays foreclosure action for 30 days. Under new bankruptcy laws passed a couple years ago, a person’s house is no longer protected.”

The Frederick News Post from Maryland. “Tougher standards have made subprime loans more difficult to qualify for, and that means they will have little affect on reducing the number of foreclosures in Frederick County. Foreclosures totaled 809 in Frederick County for the 12-month period ending in May.”

“‘It’s been years since I’ve seen those numbers,’ said Michael Kurtianyk, director of residential sales for Tyler-Donegan Real Estate in Urbana. ‘The high numbers are a function of people buying homes above their means, and lenders giving money above their means. Now it’s time to pay the piper.’”

“Foreclosures in the county are at their highest level in 40 years, said Bill Poffenbarger, CEO of Millennium Financial Group in Middletown. ‘The government made it easy to buy houses because the rates were so low over the last six years,’ Poffenbarger said. ‘People were scratching to get into a house.’”

“The key factor during any loan application is when a lender seeks the applicant’s credit score, which ranges from 350, the lowest, to a perfect score of 850.”

“A score of 620 used to qualify a borrower for a subprime loan, Kurtianyk said, but in the wake of foreclosures nationwide, the bottom score has shifted to 640.”

“Frederick County (home) sales locally were up by 34 homes to 264, according to the Maryland Association of Realtors. However, the average price was down. The average price for a home sold in Frederick County in May was $349,718, down from $354,740 in May 2006.”

“‘The market is stabilizing,’ said Terry Fox, president of the Frederick County Association of Realtors.”

“‘We’re seeing a lot of people looking at the lower end of the market, below $500,000,’ said Stephen Mackintosh of Mackintosh Inc. Realtors. ‘At the upper end there is still a glut of inventory.’”

“That inventory is nearly 2,300 homes for sale in Frederick County, up from about 1,800 for May 2006.”

“‘Savvy home buyers are out there looking,’ Mackintosh said. ‘There is a great window of opportunity for negotiation. Sellers are getting realistic with pricing.’”

“The housing market stalled last year after a five-year run of soaring prices and buyers, many of them investors, lined up to acquire property. Higher mortgage rates, a slowdown in sales and the growing problem of foreclosures put the brakes on the market.”

“In neighboring Montgomery County, home sales fell by more than 330 to 1,001 from May 2006 to May 2007. Montgomery has nearly 6,000 homes on the market.”

The Virginia Pilot. “It may finally be a go for Granby Tower. Contractors have been given the green light to start building the 34-story, $180.5 million complex of luxury condominiums, offices and shops, developer Buddy Gadams said Wednesday.”

“The oft-delayed project will be the city’s tallest building, at 490 feet. The only work to date on the project, announced in July 2004, has been the driving of test piles and relocating underground utility lines.”

“Gadams referred questions about when work would begin to Turner executive Christian E. Jahrling, who did not return calls Wednesday.”

“The project has been beset by delays. Most recently, a May 9 groundbreaking came and went with no construction activity. Gadams attributed that delay to finalizing the building’s $145 million loan.” “A $22 million city grant will also help pay for the project, along with Marathon Development’s own funds.”

“When asked Wednesday if the financing was in place for the project, Gadams said he wouldn’t have told general contractor Turner Construction Co. to start work if he didn’t have the money. John Plunkett, a Stonington Capital managing partner, said the presence of the notice-to-proceed e-mail made it ‘probably safe to assume’ that the money deal was done.”

“On May 31, Gadams said about half the project’s 302 residential units, ranging in price from $270,000 to more than $1 million, had been sold. Now the project is getting off the ground amid a national housing slump.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “KB Home reported an unexpected second- quarter loss as sales fell to the lowest in three years and its chief executive officer said a glut of homes is hindering any chance for a rebound in the U.S. housing market. The company posted a cancellation rate of 34 percent. The average selling price slid 8 percent to $271,600.”

The Street.com. “‘Our second quarter results reflect the current oversupply of new and resale housing inventory, a difficult situation compounded by aggressive competition and continued weak demand,’ CEO Jeffrey Mezger said in a statement. ‘Housing affordability challenges and tighter credit conditions in the subprime and near-prime mortgage market have also exacerbated current market dynamics, keeping prospective buyers out of the market, slowing the absorption of excess supply and further delaying a housing market recovery.’”

The Associated Press. “KB reported a loss of $148.7 million for the period ended May 31. The latest period included a pretax charge of $308.2 million to reflect the decreased value of unsold homes on its books, and walking away from deposits on land it no longer wants to buy.”

“‘Given current market conditions, we are not able to provide an earnings estimate for the year,’ Mezger said.”

“Housing revenue plunged 41 percent to $1.3 billion, as unit deliveries slipped 36 percent to 4,776.”

From MarketWatch. “‘Pricing pressure intensified in many of our markets during the second quarter, compressing margins and requiring inventory-impairment charges in certain of our communities,’ Mezger said.”

“KB Home said it was using more price concessions and sales incentives ‘to meet competition.’ Meanwhile, the land charges were driven by ‘marked price reductions in housing markets across the country during the spring selling season.’”

“‘We interpret management’s tone as more cautious likely due to worsening trends toward the end of the quarter,’ wrote Banc of America Securities analyst Daniel Oppenheim. ‘However, we also think the company was aggressive in working to generate orders and likely found that, with the buyer fear at this point, lower prices do not always lead to increased traffic or sales,’ he added.”

“Separately, home builder Beazer Homes USA Inc. said in a filing late Wednesday that Michael Rand has been terminated as chief financial officer, ‘due to violations of the company’s ethics policy stemming from attempts to destroy documents.’”

“Analyst Stephen Kim said Beazer also stands out for its unwillingness to abandon land options.”

“‘We suspect that this unwillingness to walk from land options is due to the very large deposits the company used to hold those options,’ Kim wrote. ‘Thus, we suspect that Beazer may experience belated write-offs and/or a more sluggish margin recovery due to higher cost basis land than its peers.’”

“With many predicting the battered housing market will get worse before it gets better, home builders’ cash flows stand to take a further hit due to rising home-inventory levels and investments in risky land assets, according to analysts at Deutsche Bank.”

“‘Based on our detailed analysis of inventory trends, we do not think investors should be overly optimistic regarding the home builders’ ability to generate cash flow in the next 12 to 18 months,’ analysts wrote in a lengthy report this week.”

“By most accounts, the spring selling season has been a bust and hopes for a housing recovery are firmly on hold.”

“‘With housing prices declining, inventory rising and adjustable-rate mortgages resetting; we believe the probability the situation worsens is high,’ says Edward Maraccini, portfolio manager at Johnson Asset Management.”

The Wall Street Journal. “Caliber Global Investment Ltd., said it will return cash to shareholders after suffering losses from securities backed by U.S. subprime mortgages.”

“The company, managed by London-based hedge fund operator Cambridge Place Investment Management LLP, last month took a $15.1 million impairment charge and canceled its dividend after poor performance on securities backed by U.S. subprime loans.”

From Reuters. “Impac Mortgage Holdings Inc. said on Tuesday that its board has elected not to declare a second quarter dividend on its common shares.”

“‘In light of increased delinquencies, REO and loan losses, we believe it is prudent to aggressively liquidate REOs in this market,’ said CEO Joseph R. Tomkinson.”

“Carlyle Group, the private-equity firm that oversees $59 billion, cut the size of the initial public offering of a fund that invests in bonds backed by mortgages as damage from the slump in the U.S. real-estate market spreads.”

“‘The amount of headwinds in the market right now’ led Carlyle to reduce the offering, CEO John Stomber said.”

“Capital One Financial Corp., the largest independent U.S. credit card issuer, is cutting 2,000 jobs, or about 6 percent of its workforce, amid mounting loan losses and a slowdown in the mortgage industry.”

“Capital One will take a pretax charge of $200 million this year, including $90 million in the second quarter, to pay severance and other expenses, the company said in a statement today.”

“Capital One faced pressure to cut costs as new foreclosures set a record in the first quarter after it acquired GreenPoint Mortgage Funding Inc. through its $13.6 billion purchase of North Fork Bank in December.”

“The subprime mortgage problem will worsen over the next year and the rate of loan delinquencies could rise further, an influential fund manager specializing in mortgage backed securities said on Wednesday.”

“‘The subprime area is a total unmitigaged disaster and it’s going to get worse,’ (said) Jeffrey Gundlach, chief investment officer at the Trust Company of the West, who oversees about $60 billion in assets.”

“Moody’s Investors Service on Wednesday said it expects to downgrade more subprime-related collateralized debt obligations this year and next than it did in 2006.”

“‘Given what’s been said about this market, (and) as we see expectations of cumulative losses increasing, yes, I do expect to see downgrades,’ Yuri Yoshizawa, group managing director at Moody’s, told Reuters.”

The Financial Times. “The glut of credit in global financial markets, combined with excessive leverage, could all ‘end in tears’ when a big transaction finally goes wrong, Stephen Green, chairman of HSBC, warned on Wednesday.”

“His comments highlighted the widespread unease among banking executives after five years of benign credit conditions and the growing amounts of leverage in the financial system.”

“This has been particularly notable in the collapse of the subprime mortgage market in the US, which this year triggered HSBC’s first profit warning.”

“Mr Green said he was also concerned about the difficulty of bailing out institutions affected by a blow-up because risk was now so widely spread throughout the financial system.”

“He said: ‘When your risk has been parcelled up hundreds or thousands of times, it’s much more difficult to orchestrate a reconstruction of a difficult situation and, therefore, the write-off then risks being worse than it needs to be.’”

The Telegraph. “The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.”

“The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs.”

“‘Excess liquidity in the global system will be slashed,’ it said. ‘Banks’ capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing.’”

“Kia Motors Corp., South Korea’s second-largest automaker, canceled plans for a $500 million bond sale this week, joining at least seven companies abandoning borrowing as investors cut demand for riskier assets.”

“At least eight companies…pulled more than $3 billion of debt sales amid concern that losses from bonds backed by U.S. subprime mortgages will spread to other markets. Caliber Global Investment Ltd., a $908 million hedge fund, said today it will close after losses.”

“‘This may mark a tipping point in the credit cycle,’ said Robert Appleby, who helps manage $2 billion at ADM Capital in Hong Kong. ‘If we see a shakeout, it will be a healthy one because it will prevent deals from being priced incorrectly.’”

“The perceived risk of owning U.S. corporate bonds rose for the fourth day this week, according to credit-default swap traders who bet on creditworthiness. Contracts based on $10 million of debt included in the CDX North America Crossover Index increased $3,000 to $188,000 today, close to a 10-month high of $192,000, according to Deutsche Bank AG.”

“‘For so long, investors have been making excuses to buy,’ said Appleby at ADM. ‘Now they are looking for reasons not to buy. Psychology does change on a dime.’”

The Herald Tribune reports from Florida. “Real estate push has come to foreclosure shove in Palmetto. Roughly 200 individual property owners are finding themselves in the first step of a foreclosure because of a legal tussle between well-known Palmetto builder deMorgan Communities and the company that did roads, utilities, sewers and drainage for the development.”

“Real estate attorneys said that the neighborhood’s troubles could be a taste of what is to come as contractors in the state’s limping real estate market use every remedy available to them under Florida law to get developers to pay.”

“Already, a couple who bought at Oak View last year, have found out what it means to be caught in the middle. Christian and Erin Slager found a buyer for their deMorgan home, scheduled a closing for Friday, and were then notified by their agent at Opteum Title that they could not close, she could not issue them a title insurance policy because their home was subject to a $544,000 lien.”

“Because the lien names deMorgan, homeowners are not automatically notified that there is a cloud over their property. The way they find out is when they try to do something with their property.”

“But some Oak View residents have simply declined to get excited. Ray Bartro, a retired Marine who lives in Carpenteras, does not foresee any legal action affecting his ownership. ‘What are they going to do, tear up my home and cart it away? I don’t think so. I have an Uzi.’”

The Orlando Sentinel. “Will slumping home sales and rising gas prices push Florida, including the Orlando area, into recession? The latest forecast from a University of Central Florida economist concludes they will not, at least not without a lot of help. Other experts, however, aren’t so sure.”

“Some bankers, though, said they still worry that the problems of many subprime-mortgage lenders will seep into the broader economy. Chuck Owston, Central Florida president of Florida Capital Bank, based in Jacksonville, said that, with credit standards tightening, ‘people who are on the borderline financially are not being able to finance or buy a home.’”

“The resulting drop in demand has meant fewer builders building and fewer development loans, he said.”

“‘Land development and residential construction [have] slowed dramatically,’ he said. ‘Projects and loans that made sense 18 to 24 months ago don’t make sense anymore.’”

The Sun Sentinel. “Florida Atlantic University expects to be on track for modest growth in the coming years, following an unexpected decline last year.”

“The university’s fall enrollment was 25,657 last year, a slight decline from 25,994 the year before. It was the first time in decades that FAU’s population dropped. The university made $2 million in cuts, because it hadn’t expected the drop.”

“Officials attributed the declines to hurricanes, a depressed housing market and lower high school and community college graduation rates.”

The Palm Beach Post. “St. Lucie County officials got slightly better news about property values Tuesday than Property Appraiser Jeff Furst predicted recently, but the values still were way below the double-digit increases of the past few years.”

“The county’s soft real estate market and construction industries held the tax roll increases down.”

“City officials said they were not surprised and had planned for the housing bubble to lead to lower taxable values the next few years. ‘A lot of us have been saying the market would self-correct,’ Councilman Christopher Cooper said. ‘It’s been doing that for decades. There are good times and bad times.’”

“Vice Mayor Jack Kelly said he tried to tell state lawmakers the correction would lower property values and corresponding taxes without government interference, just as rising values lined city coffers the past five years.”

“‘The correction was built into our plan over the next four to five years,’ Kelly said. ‘We’ll have a bigger (value) decrease next year.’”

The Tampa Tribune. “Building in Tampa is about to get more expensive. For the first time in seven years, the city plans to raise permit fees. Mayor Pam Iorio embraces the philosophy of raising fees in the construction services division. ‘It is our goal to have that be self-sufficient,’ Iorio said.”

“If the city makes the building department self-sustaining, employees probably would have to brace for furloughs or layoffs if the building industry slows. ‘If those fees are what funds the department, when you have a complete construction slowdown, you will have fewer employees,’ Iorio said.”

“That’s what happened in Hillsborough County, which furloughed building employees this month in response to the downturn in the building market. Building offices are closed every other Friday.”

“In Florida, a statewide indicator of consumer confidence ticked up by one point to a reading of 83 in June, but that wasn’t a sign that Floridians’ outlook is improving. The slight rise was up from a 19-month low, reached in May, and it falls within the survey’s margin of error.”

“‘There are a lot of things weighing on consumer confidence,’ said Gary Thayer, chief economist at A.G. Edwards & Sons Inc.”

“In South Florida, builders have been slashing prices to lure hesitant buyers. DiVosta Building Corp. of Palm Beach Gardens and Levitt Corp. of Fort Lauderdale are among the local building companies to begin layoffs this year in response to the housing slowdown.”

“Lennar Corp.’s struggles may not be over any time soon as the troubled housing market shows no sign of recovery. The Miami-based company, one of the nation’s leading home builders, said Tuesday it stumbled to a second-quarter loss as inventories of unsold homes rose and it also cut prices and offered more incentives to attract buyers.”

“Lennar has cut jobs in Southwest Florida as it contends with the slow market. Lennar, Southwest Florida’s largest home builder, merged two local division into one entity and has cut roughly 90 positions since the beginning of the year.”

“In April, the company trimmed another 56 position in Sarasota-Manatee. Those layoffs, coupled with the 35 positions eliminated in late February, mean that the home builder has trimmed 40 percent of its local staff. Other big home builders also have been cutting positions.”

“The home builder has cut back on housing starts by more than 50 percent year over year as it unloads inventory, Lennar CEO Stuart Miller said.”

“Other industry challenges include restoring consumer confidence in the ultimate value of a home purchase and replacing demand that was lost with the recent problems with subprime lenders, Miller said. And, builders who have stopped construction are starting to register losses on land that’s just sitting there.”

“‘Market conditions have eroded so much over the past six months that we are now focused on limiting the loss for the year,’ Miller said, adding later that uncertain conditions make him ’suspect that we will not know that a recovery is coming until it is upon us.’”

The St Petersburg Times. “Florida’s proposed “super homestead exemption” would slash taxes by about 70 percent for the owner of a new median-priced house in the Tampa Bay area. But the super homestead exemption would be no cure-all to Florida’s housing woes.”

“‘My assessment, is, yes, this would help the real estate industry, but it’s not going to resurrect it entirely,’ said University of Florida economist David Denslow.”

“While tax reform may bring better times for the Florida housing market, economists caution, price declines of the past year stem more from an oversupply of homes than from rising property taxes.”

“In Pinellas, Pasco and Hillsborough counties, the number of homes and condos listed for sale in May stood at 41,600, quadruple the inventory of two years earlier. May sales disappointed, Realtors theorize, because buyers wondered how deeply the Legislature would cut taxes.”

“‘The tax plans means much of the uncertainty in the real estate market is now gone. In my view, that’s one of the best things about this: At least they’re doing something,’ said University of Central Florida economist Sean Snaith. ‘But I don’t think it’s an instant cure-all to the glut.’”

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