The Housing Bubble

The Herald News reports from California. “Now that the housing market is undergoing many difficulties nationwide, how will that affect Fontana? Fontana City Manager Ken Hunt said the situation is not good, but there’s no reason to panic right now. ‘The economy is going through a cyclical correction period,’ Hunt said. ‘How long will it last? How deep will it go? We don’t know.’”

“John Husing, a prominent area economist, said that there is no question that the Inland Empire’s residential real estate markets have joined those throughout Southern California and the nation in experiencing a major downturn.”

“‘The issues are what it will mean for prices and when will it end,’ Husing said in the report. ‘Here, there are as many theories as analysts. Why? Because the current housing situation has no clear historical precedents.’”

“In the short term, however, home sales have declined significantly in Fontana and elsewhere as prices remain high. ‘So far, the sales declines show no sign of abating as buyers have reacted to high prices and a belief and/or hope that they will fall significantly,’ Husing said. ‘Even with lower prices, buyer skepticism and higher rates will push the return to normality into mid to late 2008.’”

From Inman News. “In Hemet, a Southern California community that is about 90 miles east of Los Angeles, the market has hit a near-standstill, said John Occhi, a Realtor for Mission Grove Realty.”

“‘The market started to change back in March,’ he said. ‘Since then we have been a seeing a decline, decline, decline.’”

“‘I wish I could tell you about the buyers — I haven’t met one yet. Everyone is pretty much holding back and waiting to see what happens. Everyone is being cautious,’ Occhi said.”

“Prices in the Hemet area have dropped to about 2002 levels, Occhi said, and he expects investors to reinvigorate the market. The housing market downturn will likely have a large ‘ripple effect,’ Occhi said. ‘It’s a vicious, vicious place we’re in now.’”

“Meanwhile, in Long Beach, Calif., Chun Liu of Keller Williams Coastal Properties said, ‘Many people who were poised to be purchasing homes at the beginning of this year can’t now because of the new requirements.’”

“And in the Northern California community of Santa Rosa, Ron Street of RE/MAX Central said he had one house under contract three times ‘and then the (buyers) just disappeared off the planet. I think a lot of this is driven by fear more than anything else. I’ve seen people who are ready, willing and able to buy. It’s like there is some immediate change in them. I think everybody is afraid that they’re going to make a mistake.’”

From KGET.com. “Local troubled real estate has been making the news lately, but what about mortgage fraud? In Bakersfield’s super-heated real estate market several years ago, public records indicate there was a lot of property flipping going on, among other things.”

“Appraiser Gary Crabtree said there’s been incredible pressure exerted on appraisers in the last several years to ‘hit the number’—appraising homes far above their actual value to bring additional profits to the players.”

“‘A lot of the appraisers are actually employed by the lenders, or are threatened by the lenders that if they don’t hit the number, they won’t get any more work,’ Crabtree said.”

“‘I intend to ask Sen. [Mike] Machado, who chairs the Banking Committee, to come to Kern County in late September to hold a true oversight hearing on lending practices here,’ said Sen. Dean Florez. ‘We need to hear from the Crisps and Coles, from folks who need to come out in the open and talk about how we got to where we’re at.’”

“Crabtree said he would love to be part of that discussion, and said the system is broken. According to the Department of Real Estate, there is one enforcement officer for every 3,000 realtors. On the appraisal side, there is one officer for every 2,500 appraisers.”

The Orange County Register. “A global credit crunch continued to roil mortgage companies Wednesday, with Lehman Brothers shuttering its Irvine-based subprime unit BNC Mortgage, and Impac Mortgage Holdings, also in Irvine, cutting about 44 percent of staff.”

“The investment bank said market conditions have forced ‘a substantial reduction in its resources and capacity in the subprime space’ and it’s closing BNC as a result. BNC stopped funding loans, except for those already approved.”

“‘We are not in the ninth inning of this game; we are not even in the seventh inning,’ said Susan Wachter, a professor of real estate and finance at the Wharton School at the University of Pennsylvania.”

The Mercury News. “Erin Murphy thought last week that she had a good shot at landing a job to process home loans, until she found out she was one of 60 people who had applied for the post at a local company.”

“Murphy is one of more than 600 workers who have lost jobs in the East Bay’s mortgage industry this year. Until Aug. 3, Murphy was working in the Concord office of American Brokers Conduit, a unit of American Home Mortgage, and she has been hunting for a job in the mortgage industry since.”

“‘Out of the 30 people in our office when it closed, I think only two or three of them have found jobs,’ Murphy, a Brentwood resident, said Wednesday. ‘And I don’t think the jobs are in the mortgage business.’”

“The East Bay’s mortgage-related job losses are so severe that the Alameda-Contra Costa region has become a hot spot in the nationwide mortgage meltdown. During the 12 months ended in July, the East Bay lost 1,500 jobs in an industry called credit intermediation, which primarily consists of loan officers, underwriters and mortgage agents.”

“Veterans of the local home-loan business said they have not witnessed a downturn this severe in their industry in at least a decade.”

“‘We have never seen anything to this extent with entire lender business lines being closed and companies shutting their doors with 15 minutes’ notice,’ said Ginny Ferguson, CEO of Pleasanton-based Heritage Valley Mortgage.”

“Industry insiders say they have no idea when the turbulence will be over. ‘It’s like we’re in the eye of the storm, but nobody knows which direction the wind is coming from,’ said Christopher George, president of San Ramon-based home loan vendor.”

From KCBS.com. “Many Bay Area real estate agents are feeling the squeeze. When the housing market was hot, some people abandoned their jobs to get a real estate license.”

“‘The sad thing is I also have lender friends and title and escrow friends who have lost their jobs that are out looking for full-time jobs,’ said American Canyon realtor Erin Heeley.”

“Things are tough even on the pricier Peninsula, where realtor Mike Karamitas sold his software consulting company four years ago after the bottom dropped out of the tech market, only to find another bubble bursting in housing.”

“‘I know there’s people in our office who are really really in trouble. I’m in trouble. I’m almost living hand to mouth. Some months it’s very lean,’ he said.”

The Daily News. “Six new million-dollar homes that have languished on the market for months will be auctioned off, at discount prices, as the developer tries to shake off the effects of a nationwide real estate slump.”

“Bargain hunters may anticipate cut-rate deals, but those in the know say the auction amounts to a turbocharged sales pitch.”

“‘We’re trying to focus and highlight our project over anything else in Santa Clarita,’ said Rhett Winchell, president of Kennedy Wilson’s Auction Group of Beverly Hills, which is handling the sale. ‘We want people to bid competitively.’”

“One home recently fetched more than $1 million, developer Mike Mitchell Jr. said, leaving six on the auction block. The minimum bid and reserve price for each is $595,000, about 60 percent of the original asking price.”

“‘We don’t think they’re going to go for that minimum bid,’ he said, declining to speculate on the ultimate price.”

The Rocky Mountain News reports from Colorado. “Sales of new homes in the Denver area were down more than one-third in the first half of the year from the first six months of 2006, as the market heads for a 13-year low in sales activity. The report by the Genesis Group shows there were 5,842 new-home sales in the metro area in the first six months, compared with 8,758 sales during the same period in 2006.”

“This is the largest percentage drop in sales since the 1980s, when Denver suffered a housing depression following the collapse of energy prices, said Mike Rinner of the Genesis Group.”

“‘This is not good news,’ said Tom Clark, head of the Metro Denver Economic Development Corp. ‘The home-building industry, in particular, is a bellwether for where the economy is going.’”

“Today’s woes can be traced to 2000 and 2001, when the Denver area lost tens of thousands of high-paying tech jobs, but builders kept constructing homes, Rinner said. Builders were able to sell homes because of the lowest interest rates in a generation, he said.”

“The so-called subprime market drove the first wave of the collapsing mortgage industry. ‘Denver really should have taken this hit to housing in 2001,’ said Jeffrey Willis of Berkeley Homes.”

“Economist Tucker Hart Adams said the slide in new-home sales likely will accelerate, especially with the continuing mortgage crisis. ‘Certainly, at least for the short term, it is going to be more difficult for anybody to get a loan,’ she said.”

The Denver Post from Colorado. “‘There have been significant layoffs among homebuilders,’ said Jeffrey Willis, with Berkeley Homes in Aurora. ‘They have scaled way back with their projects.’”

“Despite that ratcheting down, the inventory of unsold new homes was 3,632, up 3.8 percent from last year. Nearly one of every five new- home sales is getting canceled as buyers back out of contracts. Visits to new developments were at their lowest level since 1994.”

“The Denver metro area recorded 13,412 foreclosures in the first six months of 2007, up 40 percent from 9,574 in the first half of 2006. Foreclosures rose 62 percent in Denver, 50 percent in Adams and 41 percent in Douglas counties in the first half compared with the same period a year ago.”

“At the current pace, about 3.6 percent of all owner-occupied homes in the metro area will end up in foreclosure this year, not far from the record 3.8 percent of homes that entered foreclosure in 1988.”

“With inventories of unsold new and existing homes stabilizing, Rinner initially had hoped that the Denver housing market might be near a bottom. ‘We might have been at the bottom except for the credit crisis,’ he said. ‘This is not a good time to be without financing.’”

From KOAA.com in Colorado. “The recent troubles in the mortgage industry could hurt some homeowners in Southern Colorado. The Colorado Springs housing market is currently considered a buyer’s market, meaning over-extended borrowers will have a harder time selling their homes. Adding to their troubles, lending companies have increased loan requirements making refinancing more difficult.”

“‘If you can’t afford your mortgage payment and you can’t refinance out of it, with the housing market what it is, you’re not going to have the ability to sell very quickly,’ says mortgage broker Rebecca Hinds.”

The Coloradoan. “Faced with a mountain of delinquent loans, Norlarco Credit Union - the eighth-largest credit union in Colorado - has been taken over by federal regulators while it sorts out its financial woes.”

“‘We had construction loans on the books from around the country,’ including Florida, said John Olienyk, chairman of the Norlarco board of directors from 1991 until the NCUA took over in May. When construction tanked in Florida, Norlarco felt the hit.”

“Olienyk also blamed the problem on the overall housing slump, including subprime mortgage loans, rising interest rates, decreasing demand and record-level foreclosures. ‘All of those things combined to depress housing prices, so we got the slump in real estate that we are witnessing.’”

The East Valley Tribune from Arizona. “Scottsdale-based 1st National Bank Holding Co. laid off 351 mortgage-related employees Tuesday and announced an additional 190 positions will be eliminated through attrition.”

“In the national wholesale mortgage business, 1st National salespeople bought loans originated by other brokers and sold them to Wall Street, said Greg Smith, chief operations officer.”

“‘We discontinued the wholesale operation because the market where we would sell these loans had dried up,’ he said. ‘The investors had gone away. The prices that the loans were sold for was no longer a viable business. We just felt at this juncture that the market was not likely to come back anytime soon.’”

“Some 5,873 Arizona foreclosure filings were reported last month. That’s a 189 percent spike from July 2006, according to RealtyTrac.”

“Anthem will reach 9,100 homes at buildout with more than 20,000 residents, according to the developer, Pulte Homes. Last August, Pulte officials said they expected to reach that buildout by 2016 but earlier, in May of this same year, they had forecast buildout by 2012.”

“The timeline has been moved back slowly and now Brandon Jones, director of operations for Pulte Homes, said ‘buildout depends on the market.’”

“Local real estate experts said more distant communities such as Florence and Maricopa are feeling the brunt of the slow housing market because of resale market competition.”

“On Sandi Campbell’s street there are only a couple of occupied homes and several are being built that haven’t yet been purchased. She said she’s noticed fewer people moving in and buying homes ‘but that goes with anyplace that is selling homes right now,’ she said.”

In Business Las Vegas reports from Nevada. “The wheels appear to be coming off the Las Vegas land market for now. The number of acres sold during the second quarter, excluding the Strip, was down 61 percent from the second quarter of 2006 and was down 49 percent from the first quarter of this year, Applied Analysis reported.”

“With that softened demand in the second quarter, the price per acre paid was $718,500, 11 percent lower than the second quarter of 2006. That’s 9.5 percent below the first quarter price of $793,700 per acre, the firm reported.”

“What’s happening in the marketplace today is continued softening demand and prices falling even further, said Craig Cherney, director of a private equity land acquisition group that buys raw land and entitles it.”

“Cherney, who until recently was in charge of land acquisitions for Pulte Del Webb in Las Vegas, said the sticker price today is $700,000 per acre and property owners are lucky if they get $650,000.”

“The reason: major public builders have stopped buying land given the housing slowdown and the large balance of lots they have, Cherney said. That’s bad news for land owners, especially for those who bought in late 2005 or 2006 and are carrying debt, Cherney said. Land loans generally don’t exceed three years, and the buyers were speculating on appreciation.”

“That hasn’t happened and many of those land owners are finding themselves in similar situations as homeowners as evidence by the high rate of foreclosures, Cherney said.”

“‘They are either going to have to cut their prices or give them back to the bank just like homeowners,’ Cherney said.”

“Many loans will expire by the end of 2007 and into 2008 and 2009. If the banks take them over, they will be aggressive in their pricing, Cherney said. With that in mind, he said he expects the price per acre to fall to the high $500,000s by the fourth quarter of 2008.”

The Review Journal from Nevada. “More than 60 bank-owned and privately owned homes valued from $200,000 to $1.5 million will be auctioned Saturday.”

“Home auctions are becoming more common in Nevada as the number of foreclosure filings increases to a rate three times the national average. The state had 5,116 filings in June, about one out of every 200 households, RealtyTrac reported.”

“A recent auction held by Dallas-based Hudson & Marshall in which some 90 foreclosed homes were auctioned drew criticism from local real estate agents.”

“Eric Young of Liberty Realty said he tracked the auctioned properties through the MLS and only one property showed a change in status from ‘available’ to ‘pending’ in the first week after the Aug. 5 auction.”

“The MLS status for 16 of the 83 homes sold at the auction suggests that the high bidder at the auction may have met the reserve requirement of the banks, Young said.”

“Andrew Pugh of SellFastLV.com said the Marshall & Hudson auction may be more ‘hollow’ than he thought. ‘It looks like the banks are asking for higher bids from anybody on 16 of the properties that were supposedly auctioned off,’ he said. ‘I wonder if the winning bidders backed out or the banks are just fishing for more money?’”

Some housing bubble news from Wall Street and Washington. The Atlanta Journal Constitution, “Atlanta-based Beazer Homes appears to be struggling to avert bankruptcy. The troubled home builder filed a complaint Tuesday in U.S. District Court in Atlanta asking that the court prevent its creditors from calling for immediate repayment of about $1.3 billion in loans.”

“‘It’s clear that Beazer way overextended themselves during the boom period,’ said Barry Ritholtz, president of Ritholtz Research and Analytics.”

“Reports in Charlotte of unusually high foreclosure rates in Beazer communities sparked an investigation by the U.S. Attorney’s Office there into whether the company’s mortgage arm filed false loan documents so Beazer could sell houses to unqualified buyers who later defaulted on the payments.”

“That news was followed by an SEC investigation, as well as pending lawsuits by Beazer’s customers, shareholders and pension plan participants.”

“‘All the other improprieties have given these creditors no reason to cut these guys any slack. The creditors will get paid in full. They don’t care if the company goes belly up,’ Ritholtz said. ‘It’s heartless and cold, but, as they say on Wall Street, if you want a friend, go get a dog.’”

The Associated Press. “Moody’s Investors Services on Tuesday placed the credit ratings of three leading homebuilders under review for a possible downgrade. Moody’s said the review will look at whether the builders will be able to reduce their respective inventories of unsold homes.”

“Most homebuilders overbuilt during the five-year housing boom that ended two years ago.”

“Now that cancellation rates among potential buyers are rising again, ‘these physical industry reductions will be harder to achieve,’ Moody’s said. The agency will also review whether the companies can continue to generate positive cash flow, which they have done by selling homes at sharply discounted prices.”

From Reuters. “Countrywide Financial Corp. CEO Angelo Mozilo said Thursday the housing market is showing no signs of improvement and could lead the U.S. into a recession.”

“In a televised interview, Mozilo said, when asked if housing would lead the United States into a recession: ‘I think so … I can’t believe … that this doesn’t have a material effect … on the psyches of the American people and eventually on their wallet.’”

“There is a ‘very serious situation going on’ in the U.S. housing market, Mozilo told CNBC Television. ‘This environment is certainly not getting better.’”

“The cost to insure the debt of Countrywide’s home loan unit rose to around 187 basis points, or $187,000 per year for five years to insure $10 million in debt, after earlier trading at 150 basis points, according to data by CMA DataVision.”

“Fitch Ratings said Thursday it is changing the way it judges insurers’ credit risks to assume more borrowers will default on their mortgages, possibly leading to some downgrades of mortgage insurers’ credit ratings.”

“Fitch hiked the likelihood of default in its model by 20 percent to better reflect the risks of the current mortgage market, which has been marked by deteriorating home prices and decaying credit quality.”

“Moody’s Investors Service on Wednesday downgraded the servicer quality ratings of several mortgage servicers, including NovaStar Mortgage Inc., citing increasingly difficult market conditions.”

“Moody’s also downgraded Accredited Home Lenders Inc., Specialized Loan Servicing LLC and Fremont Investment & Loan.”

“German banks wrestled to break free of liquidity bottlenecks on Thursday amid talk that foreign lenders were not loosening their grip on cash. Money market dealers complained that the situation for German banks was still tight despite big inflows of central bank money aimed at smoothing interbank lending.”

“‘The people who require the money still can’t get the money,’ said a trader at a large bank. ‘The money is lying in the wrong place and wrong bank accounts. The people who have it aren’t lending it out.’”

From Bloomberg.”Outstanding U.S. commmercial paper fell 4.23 percent, the biggest weekly drop in almost seven years, as investors fled asset-backed debt and opted for the safety of Treasuries.”

“The decline in outstanding commercial paper was driven by a 6.8 percent fall in asset-backed commercial paper, which represents about half the commercial paper market and has been used to finance purchases of subprime mortgages.”

“Outstanding paper may slump by a total $300 billion, representing the entire amount of debt backed by home loans, said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co.”

“‘The shrinkage of the commercial paper market will force companies to obtain money elsewhere,’ Crescenzi said. ‘Some will be unable to obtain funding and will shut or scale back their operations.’”

“‘There is a significant amount of cash in the system, it’s just not getting to the parts of the market that need it,’ Conrad DeQuadros, a senior economist at Bear Stearns Cos., said.”

“U.S. banks and thrifts suffered the biggest increase in late loan payments in 17 years as more homeowners fell behind on mortgages, the Federal Deposit Insurance Corp. said yesterday.”

“Loans more than 90 days past due rose 10.6 percent to $66.9 billion in the period ending June 30, the largest quarterly increase since 1990, the FDIC said in its Quarterly Banking Profile.”

“Lenders set aside $11.4 billion for potential loan losses in the second quarter, up 75 percent from a year earlier and the most since the fourth quarter of 2002. The amount lenders wrote off for bad loans grew 51.2 percent to $9.16 billion in the second quarter from $6.06 billion in the second quarter of 2006.”

“Residential mortgage loans 90 days delinquent increased 12.7 percent to $27.5 billion in the second quarter from $24.4 billion in the first quarter.”

“‘Current conditions do underscore that regulators must be vigilant and banks need to follow sound risk-management practices,’ said FDIC Chairman Sheila Bair.”

From Fortune. “Judging by its cautious and finely-calibrated responses through a very ugly August, the Fed appears keen to put the Alan Greenspan years firmly in the past and take a much more orthodox approach to monetary policy.”

“‘I think Greenspan would have cut rates already. So I do think things are beginning to look different at the Fed,’ says Paul Kasriel, economist at Northern Trust.”

“In a June speech, Bernanke commented on the shake-out in subprime mortgages in a conspicuously neutral way, suggesting the Fed was monitoring housing problems, but was not unduly concerned by adjustments taking place in it.”

“‘I think the Fed is happy to see that risk aversion is increasing,’ says Kasriel.”

“The Federal Reserve’s strategy of increasing liquidity rather than resorting to a cut in the benchmark interest rate survived a third day.”

“Chairman Ben S. Bernanke wants to avoid an emergency easing of monetary policy, contrasting with predecessor Alan Greenspan, who cut the federal funds rate target three times in 1998 after the collapse of Long Term Capital Management LP.”

“‘We did use the fed funds rate and that may have been a mistake,’ said former Fed Vice Chairman Alice Rivlin, who voted for the 1998 rate cuts. ‘It might have been smarter to try what they are trying.’”

“Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., urged the Bush administration, rather than the Federal Reserve, to bail out U.S. homeowners to avoid ‘destructive housing deflation.’”

“‘This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard working Americans whose recent hours have become ones of frantic desperation,’ said Gross.”

“‘Even cuts of 200-300 basis points by the Fed would not avert a built-in upward adjustment of adjustable-rate-mortgage interest rates,’ Gross said. ‘Nor would it guarantee that the private mortgage market, flush with fears of depreciating collateral, would follow the Fed down in terms of 15-30 year mortgage yields and relaxed lending standards.’”

“If U.S. home prices fall by 10 percent, it would be the worst asset deflation in the U.S. since the Great Depression, according to Gross.”

“‘Now many of those that bought homes in 2005-2007 stand a good chance of resembling passengers on the Poseidon — upside down with negative equity,’ he said.”

The Washington Post. “Memo to the media: Everyone who is defaulting on a home mortgage is not necessarily a victim.”

“Some were undoubtedly pressured into buying by unscrupulous lenders. Too many greedy players on Wall Street got away with making shaky loans for too long. They sliced and diced mortgage debt into increasingly exotic paper and lost sight of the risks involved, figuring the Fed would bail them out if things got out of hand.”

“But let’s face it: Most of the people who took out home mortgages for no money down knew that this was a roll of the dice.”

“Who gets to buy a house without a down payment? And most of those who took out adjustable-rate mortgages knew that their rate would balloon in a couple of years, and could do so at a level that would be hard to afford. They took the risk anyway. No one forced these folks to take on big mortgages they could barely handle.”

“My colleague Michael Rosenwald owned up to this the other day, describing how he and his wife bought a $459,000 Maryland home with an interest-only, adjustable-rate mortgage just as the housing bubble was about to pop. Now he’s facing a difficult time, with a rate that could jump to 10.1 percent.”

“He’ll probably be okay; many others are not. Like people who raced to buy dot-com stocks of companies with no profits, folks bought houses they couldn’t afford because the escalator had been going up so quickly for so long that it seemed like a reasonable bet.”

“But when the mortgage meltdown pieces are written or broadcast, the lead is inevitably someone who is about to lose his or her house, with not so much as a nod toward the notion that these people might have overreached or bears any responsibility at all for their financial plight.”

“I’m not unsympathetic. And there’s plenty of blame to go around. But we shouldn’t let homebuyers completely off the hook just because it makes for a better narrative.”

The Dow Jones Newswires report on Florida. “One Bal Harbour may look like just another sign of excess in Miami’s oversaturated condo market, but to developer WCI Communities the luxury tower represents crucial cash. WCI launched the project during the housing boom, when developers rushed to fill what seemed to be an insatiable demand for housing, particularly condominiums.”

“In the time it took to earn approvals for and build the condos, the housing bubble popped. That has left Florida awash in a record number of condos. South Florida alone has about 65,000 listed for sale.”

“There’s been an 80% drop in new condo sales in the last year and tens of thousands of more units should flood the market in the next 24 months, leaving ‘many years’ worth of inventory,’ according to broker Mike Morgan. ‘From here on out, it’s just all downhill,’ he said.”

“Warned Alex Barron, an analyst with Agency Trading Group: ‘It’s going to be a bloodbath.’”

“Industry watchers wonder if the building, which has already been delayed, will actually open on time. After touring One Bal Harbour Saturday, Morgan said a lot of work remains. ‘I did not see enough activity to demonstrate they are even trying to hit a September closing,’ he wrote in an email to clients. ‘With the overall market imploding, this is not a good sign for WCI.’”

The Naples News. “In a conference call, Jerry Starkey, WCI’s president and CEO, called it a ‘tough quarter,’ saying the company continues to focus on generating cash flow, reducing costs and moving inventory. ‘It continues to be a tough environment for homebuilders throughout the country and for WCI particularly in Florida — and more specifically in the tower business,’ he said.”

“In the quarter, WCI recorded impairments and write-offs of $36 million before taxes. New orders declined more than 50 percent. Over the past 16 months, WCI has reduced its work force by more than 33 percent, shedding 1,300 employees. More cuts are coming, Starkey said.”

“(An) upturn may not come for another four or five quarters, he said. The company has also ‘put the skids’ on land spending, Starkey said.”

“In the tower division, revenues declined 99 percent to $2.1 million from $214.4 million a year ago, in large part due to defaults. There were 68 defaults, far outnumbering the 11 new orders.”

The Orlando Sentinel. “A prominent South Florida developer with more than a dozen big condo projects under way in the Miami and Fort Lauderdale areas is pressing ahead with plans for a condo-hotel in Celebration near Walt Disney World, despite a slowdown in condo sales and projects statewide.”

“The Related Group will open a sales office this fall for the Icon Celebration, a 441-unit condo-hotel with hotel services, Chairman Jorge Perez said this week. The Related Group has more than 11,000 condo units under construction or in the final stages of preparation for development in South Florida, mainly from West Palm Beach south to Miami.”

“‘We have slowed down, but we are continuing to move forward,’ Perez said.”

“He said he will begin construction on the first of two buildings for Icon Celebration as soon as he has firm commitments for about 130 units, about 50 percent of the first phase. He said he could not predict how long it would take to sell that many units in today’s market, plagued by slumping demand and falling prices.”

“‘That’s the million-dollar question,’ Perez said.”

“One downtown project, the Lexington at CityPlace, recently filed for bankruptcy protection, while others have been put on hold as they compete for investors and buyers of conventional condos. ‘There’s just a lot of them out there,’ Anne Rogers, broker in Orlando, said of the condos now for sale.”

“Florida’s soaring home-foreclosure rate was still 78 percent higher last month than it was a year ago.”

“‘I don’t think the worst is here yet,’ said Dan Dowling, president of a mortgage brokerage in Altamonte Springs. ‘For many of them, there’s just no escape, no remedy,’ he said, other than to let the home revert to the lender through foreclosure.”

“Dowling said the level of frustration among those trying to sell their homes month after month in the face of record gluts of properties for sale is rising even in Central Florida.”

“The ‘credit crunch’ scare of recent weeks has made people even more fearful, he said, and some are beginning to sell their homes for 50 percent to 60 percent below the appraised value, in desperation, if they find a buyer willing and able to close quickly.”

“‘These are people with equity, and options, but they just need the money. There’s just a general sense of depression among a lot of sellers out there,’ Dowling said.”

From TC Palm. “Frank Lodico’s business has more than doubled in just a year. ‘We’re seeing more than five times the amount of foreclosures here,’ said Lodico, VP of (a firm) which serves foreclosure papers on Treasure Coast homes. ‘I just had (served) six this morning…and I’ve never seen it like this before in my whole 12 years here.’”

“‘On July 30, I surpassed what I processed during the entire year of 2006,’ said Nancy Bennett, supervisor of the civil division for the St. Lucie County Clerk of the Courts. ‘Now we’re having to come in on Saturdays to process them — last Friday alone 60 (foreclosure) cases went up before a judge.’”

“‘The biggest resets of (adjusted rate mortgages) will work its way through October and March,’ said Brad Hunter, director of the housing research firm Metrostudy in West Palm Beach.”

The Miami Herald. “If you’re in the market for a mortgage these days, you’d better have good credit and be willing to come up with a substantial down payment on your dream home.”

“‘Lenders are definitely demanding better credit scores, and they’re stricter with appraisers’ to avoid inflated home values, said Ines Hegedus-Garcia, a Realtor in Miami Shores.”

“Lenders have pulled back from these large loans if they exceed the threshold for purchases set by the government-sponsored entities Fannie Mae and Freddie Mac. ‘We are seeing a rolling credit crunch,’ said Kenneth Thomas, a Miami-based economist and banking analyst. ‘Money is still out there, but [banks are] going to be requiring a lot more’ to get loans done.”

“Carlos Fernandez-Guzman, senior executive VP of Neighborhood Banking for BankUnited, said the bank has reacted to the changing lending environment by requiring 20 percent down payments as well as escrow accounts.”

“‘We have tweaked the credit lines further,’ said Fernandez-Guzman, who noted the bank isn’t in the subprime business. ‘That’s not to say that there isn’t room always for tightening a little bit more.’”

The Associated Press. “The National Association of Realtors expects membership rolls to decline this year for the first time in a decade. The Florida Association of Realtors currently has about 154,000 members compared with more than 161,000 last year at this time, but expects flat membership by year-end.”

“Nancy Riley, president of the Florida Association of Realtors, said membership more than doubled since 2001 and stood at 169,434 last year.”

“‘Most people getting out got in just to make a quick buck,’ Riley said, blaming tax issues, insurance costs and the media for the perception that Florida’s real estate market continues to falter. ‘It’s not doom and gloom,’ Riley says, insisting the state is gearing up for another population boom.”

The Palm Beach Post. “Palm Beach County’s property appraiser on Tuesday mailed more than 620,000 property tax notices, and the preliminary bills show two things homeowners haven’t seen in years: Falling values and falling tax bills.”

“Of the 620,647 residential and commercial properties in Palm Beach County, fully 364,835, or 59 percent, are worth less this year than last, said John Thomas, assistant director of residential appraisal services at the property appraiser’s office.”

“Palm Beach County home prices have been in a slump since late 2005, as a speculative frenzy ended and the number of homes for sale continues to grow.”

“Thomas couldn’t say how much the average decline was, but some homeowners saw drops of 10 percent or more. Because the property appraiser’s values are based on the price on Jan. 1, Thomas predicted another drop in values on next year’s tax bills.”

“‘At least in my opinion, that’s just the beginning of the declines,’ Thomas said. ‘Unless things change radically, you’ll probably see it go down again next year.’”

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