The Housing Bubble

The Guardian reports on California. “Alvin and Debbie Clavon have been caught up in the American sub-prime mortgage crisis that has rocked financial markets across the world. They bought their first home in south Los Angeles in April 2002 and in September 2005 refinanced to a mortgage at a fixed rate for 18 months, changing to a standard adjustable rate.”

“They are now selling, having to take a loss on the house, and moving to Alabama. Alvin explained what happened to them. ‘We were originally looking for a 30-year fixed-rate mortgage. The kind of loan that we ended up getting was adjustable rate, interest only. I should have gone back and found a new loan with a different company.’”

“‘If I’d read the fine print maybe I would have been able to steer away from this train wreck.’”

“‘We figured we’d refinance out of it as soon as possible. But then we found out about the penalties, and then I lost my job last July. We were still making payments but the adjustment was on its way. Right about then the company went under; they stopped communicating with us.’”

“The loan was 60% of the original value of the house. ‘At the beginning of this year the house was valued at $525,000. It’s a neighbourhood which is mid to lower income. Most of the buyers are going to be first-time buyers, so the area has been heavily impacted by the number of foreclosures.’”

“‘Morally, I think the broker absolutely is responsible. Legally it becomes a bit more grey. The lenders are supposed to be the ones to keep the brokers in check. The broker did some things and the lender just moved it through.’”

“‘It’s a socio-economic thing. I don’t believe it was racially motivated. The only colour they really see is green. They were just greedy at a time when so many people were getting new loans that they weren’t responsible in their lending. They would have taken advantage of anyone.”

The San Francisco Chronicle. “Some lawmakers are calling on Congress to stimulate the moribund jumbo-loan market by letting Fannie Mae and Freddie Mac purchase substantially larger loans on homes in high-cost metro areas.”

“Higher jumbo-loan limits would help borrowers in the Bay Area, where the median price for homes and condominiums in July was $665,000, according to DataQuick. In the first half of this year, 62 percent of home-purchase mortgages in the Bay Area were jumbos. In San Francisco, San Mateo and Marin counties, about 78 percent were jumbos.”

“Outside of the pricey coasts, higher loan limits could run into political opposition. ‘Does a reasonably wealthy American who can afford an $800,000 to $900,000 homes have a right to cheaper mortgage financing than the private market allows them? Do they deserve a mortgage subsidy?’ says Keith Gumbinger, a VP with HSH Associates.”

“If Congress doesn’t act soon, the conforming loan limit could actually go down next year. That’s because it’s indexed to home-price inflation nationwide and prices in many parts of the country have gone down.”

The Sacramento Business Journal. “Existing home sales dropped last month in the Sacramento region, and the median home price fell in three of the four counties, according to a report released Monday.”

“It was a mixed bag of mostly disappointing news for the hard-hit housing market, as home prices and sales dropped, and the number of homes listed overall reached a record in July, according to Trendgraphix.”

“All four counties have at least nine months of inventory of homes, with Sacramento topping the list at 12 months.”

“The median home price plummeted to $437,000, compared to $466,000 in July 2006. Elk Grove and Natomas have 20 percent-plus drops in value, said Mike Lyon, CEO of Lyon Real Estate. The county’s median-home price (was) off the $374,000 in July 2006.”

The Merced Sun Star. “The Merced City Council took aim Monday night at a growing nuisance: foreclosed properties falling into disrepair and blighting city neighborhoods. The move comes as Merced and other Central Valley cities top nationwide lists of communities with the biggest increases in foreclosure rates.”

“In the first six months of 2007, Merced County has seen a tidal wave of foreclosure-related activity that shows no signs of slowing. The county recorded 2,509 foreclosure-related filings during that period, an 850 percent increase over last year, according to RealtyTrac.”

“In the second quarter of 2006, a total of seven homes were lost to foreclosure in Merced County. During that same period this year, 240 homes met the same fate, according to DataQuick.’

The Voice of San Diego. “For my story today on foreclosures around the county, I spoke with a few local Realtors who sell homes that have been repossessed by lenders.”

“Bank-owned specialist Kristian Peter said all of the foreclosures in Chula Vista will mean two to three more years of price declines. He forecasted five to 10 more years before prices turn up again.”

“‘[Lenders and owners of] bank-owned properties and short sales really don’t care what price they sell at as long as they sell,’ he said. ‘It might sell for 10, 20, 40 percent less.’”

“Peter’s sense is that we haven’t seen ‘huge price reductions’ yet. ‘When do consumers feel it’s worth it to me to buy a home?’ he said. ‘We’ve got 30 percent [price decline] at least, especially in the Chula Vista area, before we hit that.’”

The Press Democrat. “North Bay home lender GreenPoint Mortgage is closing, a move that will eliminate 600 jobs in Sonoma and Marin counties as it becomes the region’s largest victim of the mortgage meltdown.”

“The layoffs impact 450 employees at the Novato headquarters, 94 workers in Santa Rosa, and another 60 in Larkspur. There are an additional 340 employees in seven other California cities, all of whom will lose their jobs, said Tatiana Stead, spokeswoman for Capital One.”

“GreenPoint’s demise surprised longtime mortgage brokers in the North Bay and is another blow to the region’s real estate industry.”

“‘It’s absolutely horrible. This was a pretty strong player,’ said Marty McCormick, owner of a Santa Rosa mortgage broker. ‘It’s going to hurt Sonoma County. That’s more jobs lost.’”

“The loans GreenPoint specialized in include Alt-A mortgages to buyers who don’t fully document income and assets, Jumbo loans that exceed the $417,000 limit set by national lenders Fannie Mae and Freddie Mac, payment option loans and other alternative mortgages.”

“‘They’re pretty good size. That is a surprise,’ she said. ‘That shows you how quickly these things can happen. It’s going to get a little bit worse before it gets better and we’re going to see more of these failures.’”

The Union Tribune. “Damage from the nation’s slumping housing market is evident throughout the economy and permeates financial markets. Add real estate agents to the growing list of victims, although they know few tears will be shed for them.”

“The National Association of Realtors expects membership rolls to decline this year for the first time in a decade. The group ended 2006 with nearly 1.4 million members – almost double the roughly 716,000 it had in 1997.”

“The California Association of Realtors is expecting its first decline since 1997, forecasting a year-end tally of 185,000 members compared with more than 199,000 last year.”

“Colleen Badagliacco, president of the California group, says many agents joining the last three years wanted to cash in on a hot market but weren’t prepared to endure what she calls the ‘ugly perfect storm’ that attracted more agents than a sagging market can support.”

“In California, applicants can get a conditional real estate license after taking one class, a loophole that will close after Sept. 30 when three classes will be required.”

“‘You had very inexperienced people doing very expensive transactions,’ Badagliacco said. ‘There is the opportunity to make a lot of money, but the downside is there are a lot of fixed expenses whether you’re earning money or not.’”

“Badagliacco said she knows people like to ‘poke fun at the Realtor in the nice car,’ but she expects there to be fewer objects for pokes and jokes in coming years.”

The Beacon Journal reports from Ohio. “Area home sales in July were down just slightly from a year ago and there still is a lot of inventory available. ‘Gone are the days when you could put a ‘for sale’ sign on your front lawn and the offers would start pouring in immediately,’ said Marc Hustek, office manager of Realty One in Cuyahoga Falls. ‘The housing market isn’t anywhere near what it was in 2003 and 2004.’”

“Hustek said foreclosures in a neighborhood might be affecting sales of homes nearby. ‘It depends on how long the home has been on the market. If it’s been on the market 18 months to two years, it could affect the overall numbers. It definitely affects the value of a home because lenders are trying to at least get what they loaned on it,’ he said.”

The Dayton Daily News from Ohio. “The current slowdown in residential construction could get worse before it gets better, according to a top official with the Ohio Home Builders Association.”

“In the Miami Valley, residential building permits filed through July were 36.6 percent behind last year’s figures for the same period, according to data from the Home Builders Association of Dayton and the Miami Valley.”

“‘The numbers aren’t great, and we’re seeing that across the state,’ said Charles H. Simms, president-elect of the OHBA. ‘The projections are for another potential 20 percent decrease for 2008 in Ohio.’”

“‘Right now, it’s kind of like a Bermuda Triangle of bad luck,’ he said. ‘When the stock market fluctuates, that makes the older buyers nervous. Then there’s the credit crunch, which cuts out the marginal younger buyers.’”

“Additionally, he said, the inventory of unsold homes remain high, further driving down the need for new housing stock.”

“‘It just creates more competition,’ he said. ‘The biggest potential problem is for real estate values to begin to decrease…but I don’t foresee a big drop in Dayton or in Ohio in our future.’”

The Times Online from Indiana. “At about 75 percent, Indiana has one of the highest homeownership rates. Yet it also has the second-highest foreclosure inventory rate.”

“Peter Novak, of the Greater Northwest Indiana Association of Realtors, (said) that low rates of appreciation on real estate values coupled with affordable housing and high loan-to-value loan ratios are major factors.”

“The fallout of yearslong subprime lending is occurring locally and nationally, Novak said. ‘I don’t have local statistics to prove that, but it’s common sense,’ Novak said. ‘Anyone with good credit who could afford a fixed rate and traditional financing would have done so.’”

“Tom Dinwiddie, of the Indiana Bankers Association, said it’s wrong to assign blame. ‘We’re a victim of success. Policymakers want to increase home ownership, but at some point you have to wonder if it makes any sense.’”

The Cadillac News from Michigan. “Nancy Crawford doesn’t remember much about the foreclosure paperwork when she first began working in the Registrar of Deeds office in Osceola County. In fact, there was no need to have more than a few copies in the drawer.”

“‘It wasn’t something that we dealt with on a day-to-day basis,’ Crawford said. ‘When I first came into the office, I think we had two copies in the drawer.’”

“It really didn’t surprise her to find that there has been a more than 200 percent increase in the number of foreclosures in the county since 2000. ‘It is a sad thing. But it isn’t just here, it seems to be everywhere,’ she said.”

“‘There are a lot of reasons out there attributed to the increase in foreclosures,’ said Vander Meeden, president of the Better Business Bureau of Western Michigan. ‘One of the real problems we have seen in the last five years is the creative financing.’”

“‘A big group of people who opted for adjustable rate mortgages when the real estate market was booming three years ago are approaching an interest rate reset point,’ he said. ‘Some lenders allow people who aren’t quite ready to get a home, to do just that. The problem is overaggressive lending practices of mortgage companies and banks.’”

From GM Today in Wisconsin. “Just a year ago, mortgage adviser Cathy Savaglio seemed to have little trouble finding a loan for most of her customers.”

“‘A year ago you could get a 80-20 loan with no money down,’ she said, referring to a type of mortgage that is split into two separate loans with different interest rates. ‘Now those are completely gone.’”

“‘It’s unfortunate. I’ve had situations where it’s hard to find loans for homeowners,’ she said.”

The Journal Sentinel from Wisconsin. “Housing has been rattled by the abrupt disappearance of investors who snapped up properties during the nation’s 2001-’05 sales boom and a tidal wave of mortgage foreclosures tied to what Marquette University economist David E. Clark called ’sloppy underwriting that wasn’t serving buyers well.’”

“‘An awful lot of foreclosures have already hit the market, and our prices seem to be holding,’ Clark said. ‘We may see some further price softening in the third quarter, however.’”

“Foreclosed properties are not factored in to the MLS sales counts used to determine median price, Wisconsin Realtor Association President Bill Malkasian said. But with 10,891 new foreclosure filings in Wisconsin the first seven months of this year alone, he said, it’s clear that distress sales are hampering market recovery.”

“‘There’s a ton of houses for sale out there. How can you raise prices when there are 10 other properties like yours looking for a buyer? And if there’s a $250,000 foreclosure down the street from you, how can you sell for $290,000?’ Malkasian said.”

“‘I know there will be more foreclosures coming,’ said Patrick Essie, executive director of Wisconsin Association of Mortgage Brokers, ‘but the crisis of people getting into loans they shouldn’t - I think that’s over. For the most part, those types of loans are no longer available.’”

“Wisconsin embraced ’stupid loans’ over-sized for borrowers’ means just like other states did, but generally on a smaller scale, said Stephen R. LaDue, president of Affiliated Mortgage Corp. in Wauwatosa.”

“‘Anyone who lets greed overcome their thought process pays for it. We’re seeing that sorting itself out across the country, and it’s going all the way up the chain to the securities dealers who made deals in the international market,’ LaDue said.”

“‘There are pockets of the country that will get clobbered now and lots of speculators getting their butts handed to them,’ the mortgage broker said.”

“‘True, some suburban markets had a price decline (and) if you overpaid by 20 percent for a house during the boom, it’s worth less now. But remember when home prices were in the toilet in the early ’80s and you could buy a house for $65,000 in Mequon? That house is probably worth $250,000 now. Sit in there long enough and you’ll be OK, too,’ he said.”

The Albert Lea Tribune from Minnesota. “Nationwide housing market reports show sales were low for the second quarter this year compared to a year ago, according to Realtor.org. Realtor Shawn McCarthy of in Albert Lea said the buzz around the country of a terrible housing market is skewing the ideas of the average buyer in Albert Lea.”

“‘Compared nationally, Albert Lea is doing very well,’ said McCarthy.”

“As of Friday, there are 275 residential property listings in Freeborn County on the MLS, according to Broker Bill Leland. He said that number is more than the area had at this time last year.”

“The large amount of homes available to purchase, Leland said, is creating a downward pressure on housing prices. Sellers are having to knock down housing prices in order to keep competitive.”

“This goes back to basic economics. With an increase in supply, if demand doesn’t keep up, then the prices drop.”

“There are a lot of vacant homes in the Freeborn County area — 89 out of 275 for sale — but not all are foreclosures. Houses in Albert Lea are sitting empty for various reasons, Leland said, and only 10 of the 89 vacant homes are due to foreclosures.”

“While it’s nice to know what is going on with housing markets on the national level, McCarthy said, buyers need to focus on the trend locally. Even when the housing industry seems to be struggling elsewhere in the country, Albert Lea is not seeing a dramatic decrease in sales, prices or foreclosures.”

“However, Leland said, ‘it’s a trend that I wouldn’t want to see continue because it could be tough.’”

Some housing bubble news from Wall Street and Washington. Associated Press, “Mortgage defaults are slamming the savings and loan industry. Troubled assets, loans that are 90 or more days past due, jumped to $14.2 billion last quarter, up from $9.2 billion in the same quarter last year, the Office of Thrift Supervision said. And troubled assets rose to 0.95 percent of total assets in the quarter, up from 0.62 percent in the second quarter of 2006.”

“The numbers are particularly attention-getting considering that thrifts, which take in savings deposits and make mortgage loans, are not big players in the subprime mortgage sector of loans made to borrowers with riskier credit.”

“Capital One Financial Corp. said Monday that it will cut 1,900 jobs and shutter its wholesale mortgage banking business. The McLean, Va.-based company will close 31 GreenPoint locations in 19 states and ‘cease residential mortgage origination’ effective immediately.”

“‘Over the past few months, we have experienced an unprecedented disruption in the secondary mortgage markets,’ Capital One’s CEO Richard D. Fairbank wrote in an internal memo to employees.”

“GreenPoint, based in Novato, Calif., specializes in no-documentation and ‘Alternative A’ mortgage loans. The decision to close GreenPoint will hit the company with an $860 million charge.”

The San Francisco Chronicle. “Headlands Mortgage was founded by Larkspur’s Peter Paul in 1986. Paul took the company public in 1998 and it merged with GreenPoint in 1999. Paul is considered by some to be the father of the mortgage market that serves the gap between prime and subprime.”

“‘These are strange times,’ Paul told The Chronicle. ‘In the last month there’s been a major change in liquidity for mortgages.’”

From Reuters. “Struggling subprime mortgage lender Accredited Home Lenders Holding Co on Tuesday said it agreed to sell $1 billion of home loans to an unnamed investor, a move it said would limit its exposure to margin calls.”

“‘If the market improves to a rational level, our intention is to repurchase these quality loans by mid-November and sell or securitize them,’ CEO James Konrath said.”

“Washington-based private-equity firm Carlyle Group has been forced to lend money to Carlyle Capital Corp. Ltd., a highly leveraged fund listed in Amsterdam that invests in residential mortgage-backed securities, to meet margin calls.”

“In a statement Tuesday, Carlyle Capital said Carlyle Group has extended a $100 million one-year loan to help it fund itself, and that it has already tapped the loan for $10 million.”

“The move underscores how sharp drops in the market value of asset-backed securities have raised financing costs for funds and institutions using these kinds of securities as collateral.”

“Carlyle Capital CEO John Stomber in a statement said the fair value of these assets has declined, ‘due to diminished demand for these securities in the market.’”

“At its listing, the company said it would set aside a liquidity cushion of around 20 percent, or about $176 million, ‘to meet reasonably foreseeable margin calls.’”

From Bloomberg. “Dexia SA, which owns U.S. bond insurer Financial Security Assurance Holdings Ltd., (saw) shares fall after CEO Axel Miller said he expects ‘months of uncertainty’ in the markets as the U.S. subprime loans debacle hurts more financial companies. ‘There is a lack of knowledge about who is exposed and for how much,’ Miller said in an interview today.”

“‘There’s a crisis of confidence, notably among financials,’ said Franck Hennin, a fund manager at Richelieu Finance in Paris, which oversees $5 billion in assets. ‘We’re having trouble estimating the damage for financial companies.’”

“Marsh Inc. the world’s largest insurance broker and risk adviser, on Monday warned financial institutions they may face more claims as a result of the subprime mortgage crisis.”

“Marsh said in a statement that insurers, banks and rating agencies could face greater liability claims under directors and officers and errors and omissions policies.”

“‘Although this market has been largely stable, if there are a high number of costly claims, the trend may reverse and costs rise,’ said Siobhan O’Brien, a senior VP of Marsh.”

“Countrywide Financial Corp., the largest U.S. mortgage lender, has already seen several lawsuits. Attorneys in the insurance industry agreed with the Marsh study. ‘This is a big deal,’ said James Wood, co-chair of the insurance practice at LeBoeuf, Lamb, Greene & MacRae in San Francisco. ‘We expect this to grow in terms of litigation.’”

From CNN Money. “Job cuts have begun at Bear Stearns and that could mark the start of a broader wave of layoffs across Wall Street as firms survey the damage caused by the recent downturn in financial markets. Some 240 employees at a Bear Stearns lending unit were laid off Wednesday, according to a company spokesperson.”

“Alan Johnson, managing director of a New York compensation consulting firm, expects layoffs in the mortgage and structured products divisions of the big banks before the end of the year.”

“Instead of splurging on Ferraris and fine art, Wall Street professionals may want to start saving. Johnson expects bonuses to start falling, by as much as 10 to 15 percent, in 2008, although others say it’s still too early to forecast a downturn.”

“‘A lot of the problems in subprime and mortgages, most of that is not going to show up until next year,’ said. That’s also when financial losses from loan-related write offs will start to pressure firm wide compensation at the brokerages.”

“The credit crunch triggered by a rout in the U.S. subprime housing market doesn’t pose a ’systemic’ threat to banks, Moody’s Investors Service said.”

“The Moody’s statement comes as it, Standard & Poor’s and Fitch Ratings come under criticism from fund managers and politicians who say the companies failed to provide timely warnings to investors about problems in the subprime market.”

“The credit assessors must ’shoulder some responsibility’ for the subprime debacle, Senator Richard Shelby said this week. Credit-rating companies face congressional scrutiny for an ‘inherent conflict’ in helping construct loan-backed securities, then issuing ratings on them, Shelby said.”

“Global financial markets and the world economy are at ‘panic stations,’ HSBC Holdings Plc, Europe’s biggest bank by market value, said in a report published yesterday.”

“‘Should the panic exhibited over the last few days turn into revulsion, the markets may never be the same again,’ wrote HSBC economist Stephen King and strategist Richard Cookson. ‘The implied liquidity drain might leave the financial system, and the broader economy, more vulnerable than we currently believe.’”

“Moody’s said the banking system may be more dependent on ‘episodic liquidity assistance’ from central banks than originally thought.”

The Denver Post. “Federal Reserve Chairman Ben Bernanke repeatedly told us our subprime woes would not spill into the broader U.S. economy. Now, the Fed is sandbagging the levee.”

“So why is the Federal Reserve so busy managing our economy? Or is it simply bailing out a bunch of high rollers who made bad bets on subprime loans? So what if Bear Stearns, Goldman Sachs and some of the biggest investors in the world are reeling from their own stupidity?”

“Who cares if Countrywide and other major mortgage lenders go belly up because of their risky lending practices? And if you can’t pay your mortgage or get a new one - well, geez, didn’t you ever play Monopoly as a kid?”

“I’m not sure he’s right, but I like what Richard X. Bove, a Florida-based analyst with New York investment-banking firm Punk, Ziegel & Co., had to say.”

“In a report cited by Bloomberg News, Bove opines that the Fed’s move may prevent a 1987-style stock-market crash, but it may also start a 1973-style recession. ‘I believe that the Fed acted precipitously to protect monied interests and bad business policies,’ he wrote. ‘It may have certified rather than prevented a recession.’”

“Earlier this year, a Wisconsin couple won a judgment against Chevy Chase Bank that said the bank deceived them over the terms of their mortgage. The judge ordered Chevy Chase to rescind the loan and certified the lawsuit as class-action, which could potentially release thousands of other borrowers who felt misled.”

“Chevy Chase is appealing the judgment, and did not respond for comment for this article.”

“‘It’s a three-part business cycle now,’ said Don Lampe, a partner with the law firm Womble Carlyle, whose specialty is mortgage matters. ‘Boom, bust and recrimination. We’re moving into the recrimination phase.’”

“‘Most claims will be against mortgage brokers for putting them into loans where they shouldn’t have been,’ said Dan Mulligan, a California-based real estate attorney.”

“Aside from bad advice, out-and-out lying also seems to have added to the mess. Borrowers often exaggerated income in order to qualify for larger loans. ‘We’re running into stated-income loans where brokers got borrowers to sign blank forms that the brokers filled in; they often did not accurately reflect the borrowers’ incomes,’ said Michael Seng, a professor with the John Marshall School of Law.”

“Richard Hagar, a veteran real estate appraiser and expert witness, also blames appraisers. According to him, many of them puffed up home values to make deals work. ‘We saw some really Mickey-Mouse things,’ he said, ‘A $200,000 house would come in at $300,000. When appraisers puff up values, they can be sued; I heartily recommend it.’”

The Sun Sentinel reports from Florida. “Investor Harold Stark paid $365,000 for a three-bedroom Boynton Beach townhouse last year. But the monthly mortgage payments soon started to feel like a noose around his neck. His property’s value dropped below what he still owed, $329,000. But rather than letting the townhouse fall into foreclosure, Stark worked out a deal in which he sold it for $285,000, and his lender forgave the difference.”

“Stark recently took a part-time job to earn extra money. Although his finances have taken a hit, he’s grateful to be out from under the strain of a hefty mortgage. ‘At least now I have peace of mind,’ Stark said. ‘I really feel good. If I had a little money, I’d go out and celebrate.’”

“Fort Lauderdale real estate agent Colleen Kelly has a client who owns a two-bedroom condominium in Oakland Park. She paid $160,000 in 2005 and still owes about $158,000.”

“Unable to keep up with the payments, Kelly’s client wants to sell, but the condo has lost value. She’s listing it for $142,000 but competing with dozens of other units in the same complex that also are for sale.”

“‘When we get an offer, we’ll contact the bank and see if they’ll accept it,’ Kelly said. ‘It’s unfortunate that someone earning a decent living finds herself in this situation. It’s not a fun thing.’”

The Daily News. “A sluggish real estate market paired with soaring property taxes and insurance premiums has driven foreclosure filings to an all-time high in Okaloosa, Santa Rosa and Walton counties, industry watchers say.”

“‘All three are combining to create the perfect storm,’ said David Braithwaite, city president of Compass Bank in Fort Walton Beach. ‘A lot of people are finding themselves in bad shape … developers, homeowners. It’s across the board.’”

“In Okaloosa County, foreclosures jumped by nearly 70 percent from 2005 to 2006. And if the foreclosure rate maintains its current pace, the total in 2007 will be 83 percent higher than 2006.”

“‘I knew it was up, but I didn’t realize we were running that far ahead at this time,’ said Okaloosa County Clerk of Courts Don Howard. ‘There were aggressive lending practices going on. I believe that some people got some very subprime loans.’”

“Howard estimated that 80 to 90 percent of the filings will go through the entire foreclosure process.”

“In Santa Rosa County, foreclosures increased 72 percent from 2005 to 2006. This year’s January to August foreclosures have already surpassed 2006 totals by 36 filings. In Walton County, foreclosures increased 63.7 percent from 2005 to 2006. Thus far in 2007, foreclosures have surpassed 2006 totals by 66 filings.”

“‘A lot of it is people assuming that the values were going to keep on increasing,’ said. ‘And they didn’t want to be left out. They figured if they didn’t buy a house today, they wouldn’t be able to afford it later on.’”

The News Journal. “Since last October, Jerry Tordeur has been laying off employees for the first time in Halifax Plumbing’s 21 years in business. He’s just one of an untold number of contractors and subcontractors who have been squeezed as the new-home construction industry nose-dived in the Volusia-Flagler market over the past year and a half.”

“‘I would say I’m down 60 to 65 percent for the last 14 months,’ said Tordeur, whose company focuses on new homes. ‘You can’t make it up. We’re struggling to keep things going until things turn around.’”

“Gary Tessero, a co-owner of Southside Plumbing in DeLand, said his company’s new-home work fell by about 90 percent. ‘It actually started in the third quarter of 2006 and continued on,’ Tessero said. ‘We went from maybe 50 new-home starts a week to about five. Nobody is building homes. Every big builder has inventory they’re trying to sell.’”

The St Petersburg Times. “As one of the epicenters of the housing boom, and the subsequent slump, the Tampa Bay area has suffered from a rash of loan officer layoffs for much of this year. First Magnus Financial Corp. officially ceased operations last week, taking an undisclosed number of local jobs with it.”

“The Tampa branch of H&R Block Mortgage Corp. laid off 141 in June, and on Aug. 10 HomeBanc Mortgage Corp. slashed another 59 jobs.”

“Capital One’s closing of GreenPoint Mortgage Funding, with operations in Westshore, appeared to strike unexpectedly. As late as last week, GreenPoint was prospecting for a new supervisor at its Tampa office. GreenPoint, based in Novato, Calif., specializes in no-documentation and Alt-A mortgage loans for borrowers with slightly better credit than subprime borrowers.”

“Employees at Countrywide’s offices in the Tampa Bay area funneled calls to its California headquarters. The lender said the layoffs would occur in its Full Spectrum Lending division, which runs an office in Tampa’s Westshore and serves borrowers with less-than-top-notch credit.”

“Westshore marks Ground Zero for a hotel building boom. Forty-one area projects are in the works - under construction, on the drawing board or somewhere in between, according to Lodging Econometrics.”

“Many won’t clear financing or regulatory hurdles. About half of lodging projects that haven’t reached construction never get built, says Duane Vinson, VP of Smith Travel Research.”

“Tighter lending restrictions resulting from the subprime home mortgage crash could sink marginal projects. Some analysts question whether a glut of new hotel rooms will outpace demand.”

“Weak demand for residential real estate has forced developers to reduce the number of condos from hotel projects or eliminate them altogether. Developer Dilip Kanji cut 20 condos from his Westin on Rocky Point when only a handful sold in six months of marketing.”

“Daniel Peek, (a) hotel consultant, says condos will make it tougher to obtain financing for a new hotel. ‘Projects where (condos) are a substantial component are raising a lot of questions,’ he says.”

The News Press. “Auctions are on the rise nationwide, according to a study. ‘People are starting to understand and see that auctions are an effective way of selling properties,’ said Troy Ayers, CEO of Premier Real Estate Auctions on Marco Island. ‘We literally get hundreds of calls weekly from people wanting to sell their properties.’”

“The flooded housing market is sparking auctions in Southwest Florida. ‘I think the thing that makes the auction process successful in bad times, it basically recreates what made us so successful in ’05,’ Ayers said. ‘The auction process assembles everyone together in one room and creates that excitement and creates this sense of urgency.’”

“Carla Bonten, a Bonita Springs real estate agent, got her auctioneer’s license in February. She held her first real estate auction on July 14 with 23 properties. No bids came in high enough to satisfy the sellers.”

“‘There was no competition,’ Bonten said. About 25 people attended, but only five bid. It was over in 45 minutes.”

“She said buyers can have fun and get good bargains while sellers can move their property. She said sometimes it’s better to take a loss or break even rather than potentially lose more on a property with mortgage, insurance, taxes and maintenance payments.”

“‘You have to be realistic. If you’re waiting for the price it was worth three years ago, it’s not going to happen,’ Bonten said.”

“Luxury Auction Group on Sanibel is holding fewer auctions in Southwest Florida than it did last year. ‘Auctions work better in a strong real estate market than they do in a slow real estate market,’ said broker/auctioneer Dan Mahaney. ‘We’re turning down 20 auctions a week in Florida right now.’”

“He said sellers have to be willing to let the market decide the price, even if it means taking a loss. ‘Most people that have bought their property in the last few years overpaid,’ he said. ‘They can’t rent it because there’s not enough renters for the number of people trying to rent.’”

“Mahaney has seen an uptick in auctions from a certain type of seller. ‘We’re actually getting more calls from lenders now that are prepared to do mass liquidation of properties all over the area.’”

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