The Housing Bubble

It’s desk clearing time for this blogger. “Real-estate developer Tony Porter and others at his company described his vision for a 2,000-lot residential and retail development called the Village of Penland. But the developer said he needed investors to launch the project in time to catch the real-estate wave. The suits allege they used inflated appraisals and phony down payments and performed other misdeeds to cheat investors and mislead the banks.”

“No houses have been built. Weeds are invading the lawn at the empty sales office. Payments stopped on many loans in April or May, according to borrowers and court records. ‘I feel like an idiot now,’ says Henry Gerrits, an engineer in Cary, N.C., who worked with Mr. Porter to borrow $375,000 and then invested it in Penland, purchasing four vacant lots.”

“It was an opportunity that comes along just once in while, a chance to get in on the Las Vegas-area real estate boom, a major development on valuable land in the Nevada desert. Investor Dr. Jonathan Horne says, ‘He promised truck stops, roads, electricity, water.’”

“Investors say they weren’t getting their promised returns and that deal with the Vegas mayor and others? Vescor defaulted on the loan. The land’s in foreclosure. Dr. Horne paid a visit to Vescor President Val Southwick. ‘We asked where the money went. He said it was gone,’ Horne says.”

“Poznan easily led the way in terms of price growth for flats in June with property values rising on average by 9%. The city broke another price threshold last month, according to data from redNet Property Group.”

“In contrast to the last few months, prices actually dropped in a few cities, although only in the case of Wroclaw was there any significant devaluation. Prices in Poland’s two cheapest large cities – Lodz and Katowice – rose by less than 2%.”

“The only major urban centre in June where flats could still be bought for less than PLN 5,000 (€1,333) per m² was Katowice, although this situation is not likely to last for long as it is precisely here that the highest price growth is expected in the near future. So far this year approx. 16,000 new flats have been built for sale in Poland’s main cities.”

“Up to 10,000 first-time buyers who bought homes over the past year are experiencing negative equity - meaning they now owe more than their home is worth. This means that up to 10,000 borrowers have taken out 100 per cent mortgages since the property market began to peak last summer, based on data provided by the Irish Banking Federation.”

“Rutherford County had 1,168 foreclosures in 2006 compared to 957 the previous year, a 22 percent increase. Tennessee had 36,796 foreclosures, (up) 33 percent from 2005. Real estate agent Betsey Taylor noted the rise of 100 percent loans. ‘They are getting the loans with no money down, and that sometimes creates a problem later,’ she said.”

“‘Low interest rates and sub-prime lending allowed them (individuals with a low credit rating and low incomes) to get into a home, but they didn’t think about the future,’ said Wendell Mandrell, CEO of Guaranty Trust Mortgage. ‘Now they are going to have to pay the piper.’”

“There’s no slowdown in the foreclosure wave hitting the Dallas-Fort Worth area. The number of homes facing foreclosure in North Texas was up 31 percent in the latest report. Some areas saw an even bigger spike. In Tarrant County, foreclosures were up 50 percent.”

“Just under half of the homes posted for foreclosure each month are actually sold at auction. ‘Some loans that were taken out a bit ago have yet to reset’ with higher payments, said Gail Cunningham of Consumer Credit Counseling Service of Greater Dallas. ‘We could just be seeing the tip of the iceberg.’”

“The number of defaulted properties in Nevada County has doubled in the past year, according to figures from the county recorder’s office. Since January lenders have issued 253 notices of default in the county. That’s up from last year, when lenders issued 124 notices during the same time period, according to recorded documents.”

“According to the Intermountain MLS, 1,047 homes were sold in the Valley last month, compared with 1,402 in 2004, a year that industry members say typifies a normal market.”

“‘What we saw in 2005 and 2006 was an aberration,’ said associate broker Shaun Tracy. ‘We’ve gone back in time (to 2004). That was calmer time — a time when people could say ‘I don’t have to make a decision today.’ That’s the way it was in 2004, ‘03, ‘02, ‘01 and for many years before that.’”

“Nampa Building Safety Director Dennis Davis blamed Canyon County’s falling median home prices on a ‘perfect storm’ consisting of a glut of homes on the market and the loss of outside investment capital.”

“‘It was time for a correction,’ Davis said. ‘And probably healthier, too.’”

“Aside from being Oregon’s capital city, Salem doesn’t have much to boast about. But, like Longview, the real estate market there is buzzing. For-sale signs litter front yards and the local paper is fat with ads for homes.”

“‘The Pacific Northwest was a little bit late coming to the party,’ said Andrew Leventis, an economist with a federal housing agency. ‘The extreme appreciation over the past five or six years in the country only just began in the Northwest a few years ago.’”

“Still, some observers caution smaller Western markets are far from immune from the same forces that have tanked housing markets across the country.”

“‘It’s pretty plain to me that the same patterns that have played out in all these other inflated markets are playing out in the Northwest,’ said Ben Jones, a consultant who runs www.thehousingbubbleblog.com. ‘It’s almost unavoidable. They (builders) are going to continue to build until there is no longer any profit in it.’”

“I write in response to letter from Gord Archibald, executive director of the Association of Regina Realtors, regarding ‘markets at work.’ I have been watching the letters about real estate over the past few months and agree with earlier writers that such drastic housing increases are not a good thing.”

“Archibald asks, ‘Can we just not accept that the real estate market reflects the confidence that newcomers are exhibiting in our community in the most tangible way by choosing to make Regina their home?’”

“I find it deeply disturbing that someone would say we should accept what someone says without question.”

“One needs look no further than our giant neighbour to the south to see what booming house prices can mean. It seems that the U.S. housing market was fueled by investors. House prices started to surge and people started to get the ‘wealth effect. Even builders jumped in to keep up with the demand.”

“But as usual, people get greedy and homes started becoming unaffordable. Values start to plateau and, in some cases, even drop. People are no longer feeling the ‘wealth effect’ and cool their spending habits.”

“So is this really ‘markets at work’? Or are we headed down the same path as the U.S.? I guess only time will tell, but to ‘just accept’ that does not seem like a wise option.”

The Tribune reports from California. “Sales of San Luis Obispo County homes slipped 6.4 percent in June year-over-year, but that was a significant improvement over the 30 percent drop registered in May, according to the latest information from DataQuick. However, it was the slowest June for home sales—a month that historically enjoys strong activity — since 1996.”

“Meanwhile, the overall median home price fell 9.4 percent, to $530,000 from $585,000 in June 2006. ‘The overall trend in (San Luis Obispo County) has demonstrated a bit of a correction,’ said DataQuick analyst Andrew LePage.”

“The median price for resale detached homes —which constitute the bulk of all home sales, was $569,500, down 4.6 percent from $597,000 the prior June.”

The Fresno Bee. “Home sales in Fresno County fell to a 10-year low in June as the real estate market continued to struggle, (Dataquick) reported. Prices also continued their decline, falling 12.2% from a year ago to a median of $276,500 in Fresno County. Tulare County’s median of $231,750 was a 12% drop from June 2006.”

“The prices are staying low in part because the supply of houses for sale is so high. In Fresno and Clovis, 4,167 single-family homes are for sale. With monthly sales averaging 350, that equates to an almost one-year supply of property on the market.”

“Fresno appraiser Carole Laval says (the price slump) averages about 1% per month.”

“Joan Jolly, a Fresno agent said she does have one client who is being transferred two years after buying a house and putting $80,000 worth of upgrades into it. ‘It’s just not there,’ she said of the profit.’”

“Jolly said, ‘Real estate was never meant to be a commodity you buy today and sell tomorrow.’”

The Press Democrat. “Greg Levy’s hopes for selling condominiums he converted from apartments have been dashed by Sonoma County’s housing downturn, forcing him to rent out the units with a turnaround still not in sight.”

“‘We just don’t have the demand. We’re not going to deal with this market anymore,’ he said.”

“Condo sales are slumping alongside houses in the county as the market’s decline nears the two-year mark. The typical condo sold for $375,000 in June, a 4 percent drop from the peak of $390,000 in October 2005.”

“A tightening rental market is an indicator that buyers are staying on the sidelines. Sonoma County’s apartment vacancy rate is dipping and rents are rising.”

“‘Properties are staying full. A lot of people are still choosing to rent because the affordability gap is so wide. Also, a lot of people the last six months or so have held off from making purchases because prices have been falling,’ said Jason Smith, an analyst with NorCal Commercial.”

The LA Times. “When Riverside County landlord Eloise Figueroa learned that her tenant was about to move out of her four-bedroom home in Perris and into a lower-priced rental house, she sprang into action.”

“‘I said, ‘Where are you going? What are you paying? OK. That’s your new rent,’ said Figueroa, who agreed to cut her renter’s $3,000 monthly lease by $150 to keep him.”

“Figueroa, who owns four homes in south Riverside County, has a plan to deal with the slowdown. She is giving new tenants the option to buy by applying their monthly lease payments to a mortgage that she’s willing to carry.”

“‘When you have a housing recession, this is the sort of thing that happens,’ she said.”

“In June, the typical monthly mortgage payment of Southern California home buyers was $2,430, up from $2,422 a year ago, according to DataQuick. That’s in contrast to the Southland’s average monthly rent of $1,400 for the apartments surveyed, RealFacts’ second-quarter report said.”

The Union Tribune. “The average monthly rent in San Diego County jumped 5.4 percent to $1,345 during the last quarter compared to a year earlier, reflecting a rental market that is seeing increased demand as home sales slow, foreclosures rise, and condo conversions retreat to rentals.”

“RealFacts’ survey may have a tendency to overstate rent increases in the San Diego market where move-in incentives such as one month’s free rent have been common, said Robert Pinnegar, executive director of the San Diego County Apartment Association.”

“‘I’m hearing that landlords are tightening their budgets because they don’t see a lot of rent growth going on,’ Pinnegar said.”

The Desert Sun. “Coachella Valley apartment renters paid $10 to $30 more a month on average in April, May and June compared with the same three-month period a year ago, marking a more modest increase than in previous quarters.”

“Coachella Valley apartment renters paid $10 to $30 more a month on average in April, May and June compared with the same three-month period a year ago, marking a more modest increase than in previous quarters. Second-quarter rental rates dropped in Indio, Palm Desert and Palm Springs.”

“There’s been a marked slowdown in recent months, said Carlos Campos, assistant manager at Andorra Apartments in Indio. Some renters have found good deals on homes as sellers trim their asking prices, while other tenants have lost their jobs, Campos said.”

“Many of the higher-paying residential construction jobs have disappeared, he said.”

“Dragged down by big losses related to the real estate slump, California’s employment engine ground to a near standstill in June with a net gain of 400 positions, state figures released today show.”

“Reflecting layoffs by troubled subprime lenders and the big chill in home building, the financial activities sector lost 5,700 jobs, while construction shrank by 5,300. By comparison, the other four declining sectors lost a total of 5,900 jobs.”

“‘Slowing state job growth has been primarily caused by the slowdown in residential building and resale activity,’ said Stephen Levy, senior economist for the Center for the Continuing Study of the California Economy. ‘A continuation of the slowing will cause problems for this year’s and next year’s state budget.’”

The San Gabriel Valley News. “In the face of an increasingly tough mortgage market, Pasadena-based IndyMac Bancorp. announced Thursday it is laying off about 400 employees, roughly 4 percent of its total work force. Most of the layoffs will become effective immediately, a company official said.”

“In an e-mail to the affected employees…CEO Michael W. Perry said the company ‘must take action in order to protect our business and remain competitive.’”

“Industry loan volumes and profit margins continue to be under pressure, he said. ‘While recently our pipeline has been recovering, we concluded that we needed to both right-size our work force to our current volumes and also be very hard-nosed in redesigning our processes,’ Perry said.”

The Bakersfield Californian. “Countrywide Financial Corp., one of the country’s largest residential mortgage lenders, shut its Bakersfield subprime branch, according to a company news release.”

“‘The subprime mortgage business is slowing,’ Countrywide spokesman Rick Simon said in the release.”

“Locally, the entire home mortgage business is slow, said Brian Dawson, president of American Financial Services, a residential lender. ‘I don’t know, I’m just not surprised,’ Dawson said. ‘I think you’ll see that closure. I think you’ll see other closures.’”

“Dawson, whose company has been making prime loans since 1985, called the nationwide upheaval in the subprime sector ‘a scary business.’”

The Contra Costa Times. “‘I think what most builders would tell you, both on and off the record, is that a substantial portion of (builders’) business came from less than perfect credit,’ said Bob Burton, VP of sales and marketing for the Hofmann Co., based in Concord. ‘I’d say upwards of 30 percent was subprime.’”

“Joseph Perkins, CEO for the Home Builders Association of Northern California in San Ramon, said he believed some of the blame resides with the Federal Reserve Board, which decided to raise interest rates, to the detriment of the housing industry.”

“‘You had a two-year campaign to ratchet up interest rates,’ he said. ‘That campaign ended up killing the housing boom. And what’s so interesting is that there were so many people out there who thought it would be a good thing. Now we see it hasn’t been.’”

From KCBS 5. “Contra Costa County residents who live near homes going through foreclosure are at higher risk for West Nile Virus exposure, according to the county’s Mosquito and Vector Control District.”

“Deborah Bass, a district spokeswoman, said people under financial distress because of foreclosures are more likely to abandon or neglect properties.”

“‘In Contra Costa County for example, there are 10,000 homes that are in some sort of foreclosure process,’ said Bass. “We can put a lien on the property.’”

Some housing bubble news from Wall Street and Washington. MarketWatch, “NVR Inc.’s second-quarter net income fell 52% from a year earlier, reflecting declining home prices as well as a land-related impairment charge, the residential builder’s financial results showed Friday. The company said orders for new homes fell 11% in the latest quarter, as sales and profit margins ‘continue to be negatively impacted by high levels of new and existing home inventories, affordability issues and declining home-buyer confidence.’”

“NVR said its cancellation rate held steady from the first quarter at 16%. Gross margin narrowed to 18.1% from 24.3% in the year-ago quarter. The company blamed the decline on lower home prices and land-deposit impairments of about $55 million.”

The Financial Times. “Beazer Homes will likely take a USD 100m-USD 200m impairment charge on land and land option write-offs for 3Q07, said two analysts.”

“Those charges should keep pressure on the company’s gross profit margin which have already shrunk to 5% for the second quarter ended March 2007 from 25% during the same period in 2006, said the two analysts and a buysider.”

From Reuters. “The chief executive of KB Home, the No. 5 U.S. home builder, said on Thursday he does not expect the overall U.S. home market to bottom out until the end of next year and that prices will not increase until well into 2009.”

“‘By the end of ‘08 it will start to stabilize,’” Jeffrey Mezger told Reuters. ‘Then it will start to go back up in ‘09. I think it will take a year.’”

The oversupply of existing homes on the market is thwarting efforts by U.S. home builders to spur demand by cutting prices, he said, adding that tightened mortgage requirements after the subprime mortgage crisis were not the chief reason for weakness in the U.S. housing market.”

“‘The bigger factor to me is how many of the markets have this huge resale inventory that has to clear and is going to keep pressure on pricing,’ Mezger said. ‘In a lot of the markets we’re in the new median price is below resale.’”

“He said that in Southern California, Las Vegas and parts of Florida, such as Orlando, the median price of a new home is less than that of an existing home.”

“‘In normal times in a market in balance, new homes carry about a 10 percent premium over resale,’ he said. ‘If today new homes are priced below resale and still not selling, and you have this huge glut of resale inventory, until those prices get back down and they could go low enough for new homes to go down again, we’re going to have an oversupplied market.’”

The Associated Press. “Bank of America recorded another profitable quarter yesterday, but gave investors reason to worry as it fattened its provisions for loan losses, an indication it sees lending risks growing.”

“Its provision for credit losses ballooned 79.2 percent to $1.81 billion, up from $1.24 billion in the first quarter and $1.01 billion in the second quarter of 2006. Net charge-offs, or bad loans, rose to $1.5 billion, compared with $1.43 billion in the first quarter and $1.02 billion in the year-ago quarter.”

“Like its peers, Bank of America’s second quarter results reflected the ongoing challenges in the loan environment. ‘(We) remain a little concerned about domestic consumption spending given the prolonged housing subprime issues and higher fuel prices,’ said Kenneth Lewis, Bank of America’s CEO.”

From Bloomberg. “Wachovia Corp., the fourth-biggest U.S. bank, said second-quarter earnings rose after the takeover of Golden West Financial Corp. Kennedy Thompson has tried to quell investor concern that Golden West, which focused on adjustable- rate mortgages, was purchased just as the five-year housing boom faded.”

“Today, Wachovia said its non-interest expense jumped 14 percent and predicted that net interest income will be at the low end of its 2007 forecast.”

“Wachovia’s total provision for credit losses rose to $179 million from $59 million a year earlier. Loans it couldn’t collect almost tripled to $150 million from a year earlier. They fell from $155 million in the first quarter.”

“JPMorgan Chase & Co. said so-called managed provision for credit losses doubled to $2.12 billion in the quarter from $1.05 billion a year earlier.”

The Journal Sentinel. “Profits rose for Marshall & Ilsley Corp. in the second quarter, but the bank missed Wall Street earnings estimates and boosted the amount set aside for loans that might go bad.”

“Loans and leases categorized as non-performing, those not being paid back according to the original lending terms, totaled $384 million in the quarter. That compared with $198 million in second quarter of 2006.”

“‘The largest increases came in the residential mortgage and construction and land development portfolios,’ Greg Smith, M&I’s chief financial officer, said of the non-performing loans.”

“The slowdown in the housing market led to ’stress for some borrowers in that segment,’ Smith told stock analysts.”

“Subprime mortgage defaults will increase this year and holders of securities linked to those home loans may record losses well into next year, JPMorgan Chase & Co. analysts said.”

“‘The worst is not over in the subprime mortgage market,’ analysts led by Chris Flanagan, the head of structured finance strategy at JPMorgan, said in a report. ‘We expect continued deterioration in subprime loan performance through the balance of this year, and it is likely to be well into 2008 before the problems in securitized portfolios begin to abate.’”

“‘Unfortunately I don’t think we have hit bottom’ in defaults, said Freddie Mac CEO Richard Syron, whose company is the second-largest source of money for home loans behind Fannie Mae. ‘Things are going to get worse.’”

“Flanagan, in a report titled ‘Subprime Meltdown, the Repricing of Credit and the Impact Across Asset Classes,’ said home price declines will lead to increases in defaults. Almost half of subprime borrowers won’t be able to refinance their loans when they reset in the next 18 months, JPMorgan predicts. Flanagan described conditions as ‘very bleak.’”

“The JPMorgan report said investors should not be optimistic that borrowers will forestall default through loan modifications.”

“‘Some borrowers may not qualify; for example, if the original loan was based on fraudulent reporting of income and the fraud is discovered when re-qualifying, modification would likely not be an option,’ the report said.”

“The increased risk of default prompted Moody’s Investors Service, Standard & Poor’s and Fitch Ratings to begin cutting credit ratings on hundreds of bonds last week. The ratings companies all warned that the housing slump is broadening.”

From Fitch Ratings. “CIT Group Inc. reported a 2Q007 pretax charge of $765 million in connection with the planned exit of the company’s home lending business. Although the decision resulted in a loss for the quarter, Fitch believes that exiting the residential real estate lending…may prove beneficial in the long run.”

The Australian. “Senior bankers have said the crisis enveloping hedge fund operator Basis Capital is serious, with warning signs flashing for local capital markets.”

“They have had their values slashed since May because of their exposure to the CDO (collateralised debt obligation) market, which in turn was partly exposed to the US sub-prime mortgage market.”

“Pictured is Mr Fowler collecting an award at the Asia Hedge Awards in 2006 at which the Basis Yield Fund was named Fund of the Year in the ‘fixed income, high yield and distressed’ category.”

“By an irony, the ‘distressed’ assets referred to are assets that have been acquired at reduced prices because their vendors have been financially stretched.”

“There are two main causes of the turmoil in the sub-prime market, and its increasing relevance for local investors. First, poor lending standards resulted in mortgage lending to risky customers with only a limited capacity to repay.”

“Second, and most important for Australians exposed to the crisis, the loans were repackaged through securitisation and sold throughout the world, finding their way into the portfolios of largely unsuspecting investors, according to Schroders.”

“This led to a complete disconnect between the originators of the loans and the eventual holders of the risk. The disconnect was further enhanced by complex structuring mechanisms, transposing the loan parcels into CDOs.”

“ANZ institutional boss Peter linked the cascading effect of turmoil in the sub-prime market to the wider debt market, particularly highly leveraged private equity deals. ‘Leverage is always the first thing that catches a cold first, and there’s probably been some pretty toppy multiples paid for some of those businesses,’ he said.”

“Foreign banks, including Lehman Brothers, Merrill Lynch, Citigroup, JP Morgan and Morgan Stanley, have the biggest exposure to Basis Capital.”

“The Basis Yield Alpha Fund (Master) has failed to meet margin calls and some of its lenders have declared the fund in default and are trying to seize its assets, Zenith Investment Partners, a research firm, wrote in a report on Thursday.”

“Basis warned that if its lenders seize assets of the Basis Yield fund and sell at ‘distressed sale prices,’ the net asset value of the fund could be halved compared to its May 31 level, Zenith’s report said.”

“Poor underwriting and investment decisions in subprime mortgage markets have led to the losses that are now even-handedly punishing lenders and investors, St. Louis Federal Reserve Bank President William Poole said on Friday.”

“‘I believe we should conclude that this year’s markets punished mostly bad actors and/or poor lending practices,’ Poole said in remarks prepared for delivery to a real estate group.”

“‘As is often the case, the market’s punishment of unsound financial arrangements has been swift, harsh and without prejudice,’ he said.”

“Poole said problems in subprime mortgage markets may have been unavoidable given the clash of new financial products and a cooling housing market. But while it was widely expected around 2004 that interest rates would rise, it was surprising that adjustable-rate loans were made so extensively to borrowers with shaky credit histories.”

“‘It is difficult to avoid the judgment that these ARM loans were poorly underwritten at the outset,’ Poole said. ‘It was imprudent for mortgage brokers and lenders to approve borrowers who likely could not service the loans when rates rose,’ he added.”

“Poole said the non-prime mortgage market, with originations in 2006 of about $1 trillion, is ‘clearly large enough to affect aggregate home-building activity and consumer spending.’”

Bloomberg reports from Florida. “In the middle of the biggest glut of condominiums in more than 30 years, Miami developers keep on building. ‘Florida is the epicenter for all the problems that exist in the housing industry,’ said Lewis Goodkin, a property adviser in Miami for the past 30 years, who also foresees a recession. ‘The problems we have now are unprecedented and a lot of people will get burnt.’”

“Thirty-seven new high-rise condos and 20,000 new units are being built in Miami’s 1,040-acre downtown, where sales fell almost 50 percent in May, according to the Florida Association of Realtors. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to (consultant) Jack McCabe.”

“‘Have you been to Miami lately?’ Florida Governor Charlie Crist said at a homebuilders’ conference last week in Orlando. ‘It’s like we have a new state bird: the building crane.’”

“Florida’s robust economy of 2001 to 2005 was driven by the thousands of well-paying jobs related to the real estate market and homeowners who used home-equity loans to pay for items such as boats and big-screen TVs, McCabe said.”

“‘All those jobs are going away now, and we’re seeing the trickle-down effect in declining sales in big-box retailers and home-furnishing manufacturers,’ McCabe said. ‘Florida is headed to a recession.’”

“Puig Development Group, a closely held company that converted rental apartments to condos, filed for Chapter 11 bankruptcy protection on May 29. The Hialeah, Florida-based Puig and its subsidiaries controlled 2,900 units in Florida, including 980 condos, worth about $210 million, said Ronald Glass of Atlanta-based GlassRatner Advisory & Capital Group LLC, chief restructuring officer for the Puig properties.”

“‘Puig got a little overzealous and a little overly optimistic, and was caught when the market slowed,’ Glass said.”

“Florida banks posted a 43 percent jump in the first quarter in loans no longer paying interest compared with the last three months of 2006, while the number for banks nationwide rose 13 percent, according to the FDIC.”

“Loan payments that were one to three months overdue to Florida banks increased 30 percent in the first three months of 2007 from the fourth quarter of last year.”

” Miami condo sales fell to 599 in May, a drop of 46 percent from a year earlier, according to the state realtors association. Condo sales in Orlando have plummeted 80 percent, said (economist) Mark Zandi. ‘The statistics are scary,’ said Michael Wohl, a partner in a Miami developer that has stayed out of the condo market. ‘There’s going to be a lot of blood in the water in the next 18 months.’”

“Lenders typically require enough advance sales to cover the cost of a construction loan. Customers’ deposits, however, don’t always mean the sales will close, said Ian Bruce Eichner, a developer whose latest Miami Beach condo tower is scheduled to open in November.”

“‘The market is as close to a depression as Miami has seen in 30 years,’ Eichner said. ‘There’s a gargantuan supply of homes and the overwhelming preponderance were built for speculators, not for people who are living there.’”

“As much as half of those putting down deposits for Miami condos are speculators looking to flip units, or sell them quickly for a profit without living in them, said McCabe.”

“With sale prices falling, McCabe said he expects up to 50 percent of them to walk away from their deposits in the next 18 months rather than complete the sales. ‘What’s going to happen to all those units?’ Eichner asked. ‘God only knows. You couldn’t give me a piece of property in Miami for nothing. I like sleeping at night.’”

“Condo developers encouraged short-term investors, whose deposits helped them secure funding, Goodkin said. ‘The developers didn’t get to start building until they had a certain number of contracts signed, so anyone putting down money was good for them,’ Goodkin said.”

“Many ‘flippers’ closed on their units and now can’t sell them, said Michael Cannon of Integra Realty Resources-Miami Inc., leaving completed condo towers with floors of dark windows and empty balconies.”

“The Jade Residences at Brickell is an example, Cannon said. The 338-unit, 48-story waterfront tower opened in August 2004 with buyers willing to pay as much as $5 million snapping up all the units. Now, the new owners have listed 112 condos for sale and 17 units totaling $15 million are in foreclosure.”

“The skyline of Miami is visible from Key Biscayne, the barrier island where John Rosser lives. Some nights the real estate broker scans the new buildings and sees more dark windows than lighted. ‘This is dumbfounding to me,’ Rosser said. ‘It’s a building boom in the middle of a housing bust.’”

The Naples News from Florida. “A standing-room-only crowd turned out Thursday night to tell Collier County officials, for nearly three hours, that a planning moratorium is premature. They may have been successful, or it could have been that planning commissioners themselves walked in questioning the intelligence of the plan. Either way, it was defeated.”

“Richard Davenport, of Waterways Homes, said Collier County is already in a de facto moratorium because of the business climate resulting from rampant real estate speculation a few years ago.”

“‘A planning moratorium ordinance sounded sort of innocuous. A planning moratorium ordinance is not innocuous. It’s playing around with peoples’ lives and livelihoods,’ Davenport said.”

“Developer Walter Crawford wondered why county officials believed the greater Naples area population is increasing.”

“A friend told Crawford to tell the county to ‘wake up and smell the recession.’”

“‘In my world, people are moving north…to Tennessee, to North Carolina, they’re moving to the mountains,’ Crawford said.”

“Lou Vlasho, VP of the Naples Area Chamber of Commerce, said this proposal would damage every business in Collier County. ‘The economy of this community is idling at best right now,’ Vlasho. ‘When you’re in a valley, that’s not when you turn off the gas.’”

The State from South Carolina. “Home sales are bottoming out in South Carolina, real estate experts say, and should rebound slowly starting next spring. In June, typically a hot home selling month, sales slipped in 14 out of 15 S.C. regions.”

“So far this year, sales statewide are down 8.3 percent. The coast continues to get hammered, while several other scattered areas also saw decreases.”

“‘I’m reluctant to label it a slump,’ said Mark Vitner, senior economist for Wachovia, the Charlotte-based banking giant. ‘The problem is, two years ago sales were unbelievably and unsustainably strong. In a slump, sales would have dropped another 50 percent.’”

“Despite consecutive months of double-digit statewide sales drops, Nick Kremydas, CEO of the S.C. Association of Realtors, said he expects sales to creep up in coming months. ‘It seems the worst of the soft landing has occurred,’ he said.”

“Todd Beckstrom, an agent in Chapin, said he is seeing more inventory on the market than normal because houses are being built faster than they are being sold.”

“Kremydas said the market, driven up mainly by investors along the coast two years ago, is continuing to normalize as speculators have pulled out en masse. With the investors gone, a more realistic home market is emerging, he said.”

“Beckstrom said another factor affecting the coast is the number of second homes there. ‘Second-home markets are affected first when people get a little iffy,’ he said. ‘I think it’ll come back. We’ve had a slight correction.’”

“Median home sales price — the point in the market where half the homes sold for less and half for more — slid 2.2 percent statewide in June to $166,000. Hit hardest last month was the Anderson area, which saw sale prices plummet 31.5 percent.”

“Kremydas said the overall market in South Carolina is still good, despite the declines. ‘There’s no signs or indications that we need to be panicking about anything. Going into the next year and as we round out this decade, I think we’re going to see just another explosion.’”

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