The Housing Bubble

The Ledger Dispatch reports from California. “For the past three months, Pine Grove resident Michael Scott has been pretty picky. He and his fiance have started to search for an Amador County home to permanently call their own, but it has been a slow process. ‘We’re trying to find the perfect situation both price wise and something that fits both of our needs,’ Scott said. ‘We’re not in any kind of hurry; we’re trying to be patient.’”

“In the last few years, 40 percent of transactions were non-owner occupied or second homes, according to John Bonfiglio, the owner of Argonaut Mortgage Inc. ‘As far as Amador County goes, we definitely have more inventory,’ Bonfiglio said. As a result, buyers have more choice and are subsequently more cautious when selecting a home for purchase.”

“Currently, the buyer’s market includes more affordable housing with some property in the centralized cities of Amador County being sold for under $300,000, Bonfiglio said, which means great opportunities for first-time buyers.”

“‘It’s not a terrible market,’ Bonfiglio said. ‘It’s just things take longer now because we’ve just come from times of craziness. The market was superheated in the last several years and now things have slowed.’”

The North County Times. “San Diego County’s economy hit an unfortunate milestone this summer: job losses in construction and real estate pushed the local unemployment rate above the national rate for the first time in seven years.”

“In California, construction and real estate represented just over 8 percent of the jobs in 2006 and 30 percent of the jobs gained since 2002, more than any other state. ‘No other state came close to California’s reliance on real estate as an engine of growth,’ University of California, Los Angeles, economist Ryan Ratcliff noted in a recent report.”

“On top of that, the San Diego region relies on construction and real estate related jobs more than the rest of the state, according to figures from the state Employment Development Department.”

“In the first six months of this year, 36 percent of all mortgages were orginated in San Diego County required borrowers to pay only the interest or actually allowed the debt balance to increase each month, according to First American.”

“Out of those, the share of such ‘alternative’ mortgages in the San Diego region that were at risk, two months delinquent or heading into foreclosure, was 19.5 percent, just under the Riverside/San Bernardino area and less than Stockton and Sacramento, Chris Thornburg, a principal at the Beacon Economics consultancy, found.”

“In San Diego County, the volume of foreclosures per month has tripled over the past year, according to Default Research Inc. However, the rate per capita over the last four months here is half that in Riverside and two-thirds that in San Bernardino counties.”

The Voice of San Diego. “Local economists are growing increasingly concerned about the effects of the slumping housing market on the health of the general economy, as real estate and construction sectors continue to contract payrolls and consumer confidence dwindles.”

“But of greater concern, they say, is how amorphous the trouble is; government payroll data could only be showing part of the unemployment picture.”

“Among those factors: an assumption that much of the region’s construction work was completed by undocumented day laborers. But more significantly, they consider the fact that self-employed workers greatly populate many real estate related professions.”

“‘Independent agents are probably still considering themselves employed,’ said Kelly Cunningham, chief economist for the San Diego Institute for Policy Research. ‘But if they haven’t had any income for a while, are they still employed?’”

“There were an average 5.81 transactions per San Diego Association of Realtors member in 2000. That figure has dipped to about 1.59 transactions per SDAR member this year, a 73 percent decline. ‘That’s probably not showing up in job loss,’ said local economist Alan Gin, professor at the University of San Diego. ‘They have lost in terms of income but they’re still employed.’”

The Orange County Business Journal. “The outlook for business growth in Orange County for the fourth quarter hit a four-year low, according to California State University, Fullerton’s quarterly business expectations survey.”

“It marks the third straight quarterly drop in the index, and the first time since the 2003 start of the Iraq war that sentiment has dipped below the 50 mark.”

“Survey respondents ‘are more uncertain and fearful,’ said Anil Puri, dean of the College of Business and Economics at Cal State Fullerton.”

The Orange County Register. “Market watcher Steve Thomas at Re/Max Real Estate Services in Aliso Viejo notes the impact of distressed properties in his biweekly summary of housing supply.”

“‘After finding a new way to search for short sales and foreclosures on the market and in escrow, the new findings are disconcerting. Currently, short sales and foreclosures in Orange County account for 12% of the active inventory and 15% of all escrows opened within the prior month.’”

The Press Telegram. “Chances are, if you are a seller, you aren’t ecstatic with either the time it’s taking to sell your home, or the prices you are being offered.”

“It’s a buyers’ market. Some sellers are content to wait things out. Others continue to drop the price on their home to get it sold.”

“But one home seller thinks the down market has little to do with the problems he’s had with selling his home. James Hobelman has a newly remodeled, spacious four-bedroom home atop Signal Hill, a hotbed of real estate activity for the past few years.”

“But Hobelman’s home has been sitting for several months, and he’s had no offers on it. He believes his Realtor is partially to blame. But the agent’s real estate firm has a solid policy prohibiting sellers from breaking their contracts.”

“Hobelman’s agent, Mike Murphy says he’s held seven open houses for Hobelman, and that he’s given the home top billing in brochures, spending thousands of dollars on advertisements and brochures that were in color.”

“He’s also had to put up with Hobelman adjusting the price on his home at least four times, an action that can turn off buyers’ agents by making them suspicious of the sale, Murphy said.”

“Experts say they see growing frustration from some sellers, which is why more agents are starting to turn down listings they think they may have trouble selling in a down market.”

“‘What we’re seeing more is the agents are being a lot more careful in qualifying the seller,’ said Colleen Badagliacco, 2007 president of the California Association of Realtors. ‘Many are turning down listings. There’s no amount of balloons or open houses or banners that can create a sale for a home that’s either overpriced or not meeting the market.’”

The Mercury News. “A red banner stretches across the block wall encircling Paseo West, beckoning bargain hunters into the brand new subdivision a 90-minute commute from Silicon Valley: ‘Anderson Homes AUCTION, 34 New Luxury Homes MINIMUM BIDS from $285,000.’”

“One-third of the houses in Paseo West will go on the auction block Saturday, houses that are sitting eerily empty in tidy rows along newly paved streets, houses that wouldn’t sell even though Anderson Homes cut prices by $100,000 and offered free granite countertops and big screen TVs with surround sound.”

“‘What was that movie? ‘Pleasantville?’ Where everything looked so nice?’ a man within the walls of Paseo West asked. ‘It’s like that,’ he said, then paused. ‘But no one lives here.’”

“When the windy autumn days turn to night, lights flip on in two dozen scattered houses in Paseo West. There, anxious homeowners, many of them Silicon Valley refugees, are staging a revolt.”

“The homeowners, like customers who spent $600 on the first iPhones, are demanding rebates. ‘It’s going to leave us - I can’t say anything but - in the gutter,’ said homeowner Joseph Leon.”

“Builders like Anderson Homes, who have catered to these buyers with homes in the $500,000 to $600,000 range, are stuck with a glut. On Sunday, at the Dolce Hayes Mansion Resort in San Jose, Anderson is also auctioning 25 homes in a Los Banos subdivision.”

“Since the auction advertising blitz of Paseo West was launched three weeks ago, foot traffic at the sales office has tripled, infuriating homeowners who see potential bidders as the enemy.”

“Homeowner Randy Brown tried to scare off investors one day by raising his garage door, pulling out his jacked-up truck painted with green flames, cranking his music and revving up his motorcycle.”

“‘I bought my house on August 16,’ Brown said. ‘If one of these houses goes for the minimum bid, I will have lost $155,000 in six weeks.’”

“Jackie Flores, who moved to Paseo West with her husband and two small boys in May 2006, hates to think what the auction will do to the value of her home. ‘We bought it for - I don’t even want to say,’ she said. ‘$621,000 - ugh - it makes me sick just saying that number.’”

“The minimum bid on the empty house next door is $355,000. And, it’s bigger than hers at 3,310 square feet and loaded with upgrades and a finished back yard.”

The Dallas Morning News reports from Texas. “North Texas home sales plunged in September. The 19 percent drop in sales of pre-owned homes was the largest such decline in more than seven years. Local real estate agents sold only 6,031 pre-owned homes last month. That’s a big fall-off from August’s 8,480 sales and the lowest monthly total since February.”

“At the end of September, almost 49,000 pre-owned single-family homes were for sale in North Texas - an increase of about 4 percent from a year earlier. The outlook for October sales isn’t promising. At the start of the month, the number of pending home sales in the pipeline was down 17 percent.”

The American Statesman Statesman. “Richard and Andrea Flinchbaugh are building a bigger home in Round Rock and are trying to sell their home in the Forest Creek subdivision. It has been on the market since May, and they’ve dropped the price from $525,000 to $450,000. They’re getting worried that they’ll be saddled with two mortgages, now that their new home is near completion.”

“An investor bought a home in January in Northwest Hills and sank a sizable sum into extensive remodeling before putting it on the market in June. It hasn’t sold, and he’s antsy. He recently cut the price by $45,000 to $930,000 and unfurled a giant banner that declares: ‘Owner says: Bring Me an Offer.’”

“Across Central Texas, the number of homes for sale is growing and sales are slowing as national mortgage troubles begin to spread into the region’s still-healthy market. In August, 9,819 existing homes were for sale, a four-year high, and sales were down 10 percent, the third monthly drop in a row.”

“‘This is just the tip of the iceberg. We would be naive to think that if states like California, Nevada, Florida and Michigan have the flu, or maybe worse, that we couldn’t also catch the flu,’ said Ed Solter, a broker with Presidential Mortgage.”

“‘The overall negative national news is impacting the (local) buyer’s psychology,’ said Eldon Rude, Austin director of the real estate research firm Metrostudy. ‘It makes people more hesitant to buy now.’”

“The Flinchbaughs thought their home would sell quickly. Their new house, in the Lake Forest subdivision across the street, has five bedrooms and 5,600 square feet and will be ready in two weeks.”

“Richard Flinchbaugh said the mortgage situation might be a factor in how long it’s taking his home to sell. But there is also a large supply of new homes in the area, he said, making competition tougher for resales.”

“‘In the last three or four years, people were going nuts with building and buying, and it’s just finally slowing down. It had to slow down sometime,’ said Flinchbaugh.”

“‘Everything right now is sitting,’ said Michelle Perris, the broker…who has the Mesa Drive listing. ‘There’s a nervousness in the market. People may get scared when they hear what’s going on in California or Florida, even though the economy here is strong. People think that the prices are going to go down, so they are waiting.’”

“The reflection of the national picture is glaring in such subdivisions as Briarcreek in the Manor area. Sales have fallen from 25 to 30 a month to about five, developer Dick Rathgeber said. Rathgeber said 70 lots remain in the development’s first phase, which is about a year’s supply at the current sales pace. Before the mortgage crisis, 70 lots would have been about a three-month supply, he said. So Rathgeber has put the next section, with 220 lots, on hold.”

“‘We haven’t gone ahead because of the uncertainty in the market,’ Rathgeber said. ‘All the big builders are hurting.’”

“‘Our industry got spoiled with all the ‘no money down, no income’ thing that consumers, I think, took it for granted, or that down payment and income requirements were a thing of the past,’ said David Reed, president of CD Reed Mortgage Bankers in Austin.”

“‘The foreclosure pace may be slowing in the Austin metro area, but the road is still very long,’ said said George Roddy, president of Foreclosure Listing Service Inc.”

“He noted that most postings for October were on loans originated in mid-2003. ‘So without even considering the subprime factor in this equation, a tremendous amount of financing and refinancing has taken place during the last four years. That’s a strong indicator that we will continue to deal with this fallout for at least three to four more years in the Austin area, if not longer.’”

The El Paso Times. “On the first Tuesday of every month, the county auctions foreclosed properties. On this Tuesday, about 40 people have gathered at the courthouse, hoping to bid on the house of their choice.”

“Rosa Sanchez is able to score the highest bid on a house on the foreclosure list and up for auction. ‘The house is worth $125,000,’ she said of the four-bedroom, two-bath house for which she bid $80,000.”

“From July 2005 to June 2006, Texas led the nation with 36,362 foreclosures, a study by the Texas Department of Housing and Community Affairs shows. In May 2006, Dallas had the highest number of foreclosures with 6,107, while El Paso had 476 foreclosures, about 8 percent of Dallas’ total.”

“In 2005-06, El Paso had one foreclosure a month for every 1,861 mortgages in the county, the study found.”

“Realtor J.R. Fletcher said one reason foreclosures are up in Texas is that many people took out adjustable-rate mortages, for which payments can increase. He said that one client’s mortgage started with a 7 percent interest rate that but after a few years, the rate was 15 percent.”

“‘So after a few years, people think they’re going to have a nice payment of $600 a month. But the adjustable-mortgage rates mature, and guess what happens? Their payments go up from $600 to $1,900 a month,’ Fletcher said.”

“Fletcher said the financial institutions should have made loans more responsibly. ‘Personally, if people barely qualified, they should have never been allowed to have a loan,’ he said.”

“Lately I’ve been getting that déjà vu feeling. If you lived in Texas through the savings-and-loan debacle of the late 1980s, you probably have been, too.”

“What happened to houses in Texas back then may be the template for what happens across the country as the housing bubble pops today.”

“Back then, Texas had been in a long building boom fueled by rising oil prices. Housing prices had risen nicely for years. Many Texans who had started with next to nothing were enjoying a new feeling of wealth as they moved from one appreciating house to another.”

“The savings and loans were encouraged by changed accounting rules to make big development loans, booking unearned profit. Texas homebuyers were advised to put as little down as possible because Texas laws prohibited borrowing equity out of your house. As a result, many put only 5 percent down.”

“Back then, builders marketed houses by ‘buying down’ mortgage interest rates for a year or two. After that, the interest rate and monthly payment rose. Back then, construction employment loomed large in Texas. So did employment in finance and banking.”

“Houston, the first Texas city to fall in the oil bust, had its home price index peak at 108.5 in 1983. It also bottomed early, hitting 81.5 in 1987. But it was a long bottom – the index didn’t recover to its 1983 level until 1997. So recovery from the market top took 14 years.”

“San Antonio peaked in 1984 at 109.7, didn’t bottom out until it hit 82.5 in 1990 and didn’t recover to its old high until 1995, a period of 11 years. Austin peaked in 1986 at 100.1, falling to 72.7 in 1991 and reaching recovery in 1994, about eight years.”

“Dallas also peaked in 1986, at 110.1, bottomed at 94.3 in 1989 and regained its old peak in 1997, a period of 11 years.”

“That’s real history. It’s not hyperventilation from the Chicken Little chorus.”

“You should also know that big-time housing comedowns aren’t unique to Texas. Comedowns also hit other markets. It happened in La-La Land. Los Angeles peaked in 1990, bottomed in 1995 and wasn’t fully recovered until 2000. And it happened in Beantown. Boston peaked in 1988, bottomed in 1992 and hit its recovery number in 1997.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “St. Joe Co., Florida’s largest private landowner, plans to eliminate more than 75 percent of its workforce, sell about 100,000 acres of land and scrap its dividend to contend with the worst housing slump in 16 years. ‘This is not a fire sale,’ CEO Peter Rummell said today on a conference call. ‘We are not dumping stuff on the market and we are not going to make stupid decisions but there are things that we believe have reached their height in pricing.’”

“‘We’re not selling land now,’ Rummell said. ‘We’re carving it out and identifying it and we’ll sell at an appropriate price at an appropriate time. We have been able to articulate 100,000 acres that we think over a reasonable time frame is close to its reasonable value and based on pure economics it doesn’t make sense to hold on to.’”

The Financial Times. “JPMorgan Chase and Bank of America are expected to reveal losses of about $3bn on holdings of mortgage securities and leveraged loans when they report third-quarter results this month.”

“This would take to more than $20bn the total writedowns announced by the world’s leading banks as a result of the credit market turmoil over the summer.”

“JPMorgan is likely to unveil mark-to-market losses on leveraged loans of about $1.4bn, in line with those reported by Citigroup last week, according to Howard Mason, analyst at Sanford Bernstein. He estimates it will suffer a further $700m of writedowns on mortgages and mortgage-backed securities, for a total of $2.1bn.”

“For Bank of America, he estimates leveraged loan losses will be $700m and the mortgage writedowns $300m. Merrill Lynch last week said it had suffered $5bn losses. UBS said it had $3.7bn of writedowns, Deutsche Bank $3.1bn and Citigroup $2.7bn.”

“ANZ, the Australian bank, has decided against selling its wholesale mortgage distribution business, saying on Monday that it had struggled to attract a fair price for the division due to the volatility in global debt markets.”

“While the failure to sell the business will have a negligible impact on ANZ’s bottom line, the move highlights the continuing fallout the US subprime lending crisis is having on the Australian market.”

“A key stumbling block to the sale of the business was finding a buyer willing to take on Origin’s existing loan book, which stood at A$5.7bn and NZ$1bn in July.”

“ANZ’s decision follows Westpac’s deal last week to buy Rams Home Loans, the troubled local mortgage lender, and comes as at least two other non-bank lenders have decided to postpone tentative plans to list on the local market.”

“‘ANZ has a clear view on the fair value of the Origin business and an acceptable price is unlikely in today’s volatile markets,’ the bank said.”

The New York Times. “In May 2005, NYSE Magazine featured an article titled ‘American Dream Builder’ – a glowing profile of Angelo Mozilo, the chairman and CEO of Countrywide Financial, the nation’s largest mortgage lender.”

“The article portrayed Mr. Mozilo as a heckuva guy, a man from a humble background determined to help other people, especially members of minority groups, achieve the American dream of homeownership.”

“These days, of course, Mr. Mozilo doesn’t look like such a wonderful guy, after all. So far, nobody has accused Mr. Mozilo of breaking the law. Still, what we’re learning from the housing mess is that the crisis of corporate governance, which made headlines in the early years of this decade, never went away.”

“As The New York Times’ Gretchen Morgenson reported in August, Countrywide often led customers to ‘high-cost and sometimes unfavorable loans’ that, among other things, generated ‘outsize fees to company affiliates providing services on the loans.’”

“Countrywide made more questionable loans than anyone else – and its postbubble behavior does stand out. As Ms. Morgenson reported in Sunday’s Times, Countrywide seems peculiarly unwilling to work out deals that might let borrowers hold on to their homes, even when such a deal, by avoiding the costs of foreclosure, would actually work to the benefit of both sides.”

“Why block mutually beneficial deals? Countrywide can make money from the fees it charges on foreclosures, while the losses from mortgages that could have been saved, but weren’t, are borne by others.”

“The U.S. housing bust is like a leaking ship. Will the home market continue to sink or is it just bobbing around waiting for buyers to rescue it?”

“In August, housing prices posted their biggest drop in almost 40 years and pending sales fell the most on record. New- home sales declined to a seven-year low. There are more than 5 million homes sitting unsold.”

“The behavioral economics of this market are tugging buyers to the sidelines for now. And with the possibility of 2 million more homes coming on the market due to foreclosures, the supply is outpacing demand.”

“Mass psychology anchored home buyers to the myth that homes were endlessly appreciating wealth vehicles. Now the sentiment has shifted.”

“As Yale University economist Robert Shiller wrote in a recent paper, home buyers fell prey to a ’social epidemic’ and a ‘widespread perception that houses are a great investment.’”

“Shiller found that ‘residential investment as a percentage of gross domestic product has had a prominent peak before almost every recession since 1950.’”

“In the last quarter of 2005, he notes, home investment rose to 6.3 percent of GDP, ‘the highest level since 1950.’”

“Will this downturn be like the 15 percent decline between the third quarter of 1989 to the fourth quarter of 1996 or the 42 percent rout in Los Angeles between December 1989 to March 1997?”

The Palm Beach Post. “The worst housing slump in 16 years has produced a subprime mortgage meltdown, widespread layoffs and record foreclosures. It also has produced Larry Leggett, a Vero Beach homeowner who wants to make his monthly payment — he just doesn’t know where to send it.”

“That’s because HomeBanc, his mortgage company, filed for Chapter 11 bankruptcy protection in August. As of Thursday, the only thing he had received was a form letter…and this: ‘As a reminder, effective Oct. 1, 2007, all checks will be made payable to the new mortgage company that will service your loan. If you have any questions about this transfer, please contact your new lender on all matters concerning your loan.’”

“Unfortunately, HomeBanc didn’t tell him who his new lender is. Or how to contact it. Or where to send his mortgage payment. So Leggett called its Palm Beach Gardens office. No answer. ‘It didn’t even ring,’ he said.”

“‘I’ve got really good credit, and I don’t want to damage it,’ he said. ‘It seems very weak for these large banks to expect everyone to chase them around to learn where to send money.’”

“Accounts said Freddie Mac wanted a $1 billion slice of HomeBanc’s loan portfolio. Others said Countrywide was the new lender.”

“Leggett tried to reach his mortgage broker, his builder and even his homeowners association. He left a message on the HomeBanc director’s cellphone.”

“He did hear from Chase again, speaking at length with Audie King, who ‘explained a few things, none of which put us at ease,’ he said. ‘We are not comfortable just sending Chase a check,’ Leggett said. ‘If they truly had control of our title, wouldn’t they be notifying us?’”

“That’s what Chase is doing. ‘We will be sending welcome letters to homeowners whose loans we will be servicing,’ Tom Kelly said by e-mail.”

“Leggett is waiting. ‘We were making it through this horrible, tough time,’ he said, ‘and then this happens. I am just trying to make my payment.’”

The Miami Herald reports from Florida. “Since 2005, home buyers in Miami-Dade and Broward counties have signed so-called ‘exotic’ mortgages at twice the rate of borrowers in the rest of the country. Roughly one in five mortgages written in Miami-Dade and Broward counties between 2005 and July 2007 fell into one of those categories, according to data from McDash Analytics.”

“Tim Kingcade is a Miami bankruptcy and foreclosure attorney whose practice is booming lately. One of his clients, he said, is a pizza deliverer living in a Brickell condo who came to him only after getting a notice that his mortgage payment was about to jump more than $2,000 a month.”

“‘The uglier the mortgage, the more abusive the terms are to the customer, the more money the banks make on the secondary market,’ Kingcade said.”

“Joel Aresty, another Miami attorney, said he has had a ‘parade’ of people streaming into his office in recent months with devastating mortgage problems. ‘It’s all the same story,’ Aresty said. ‘The broker told them to lie about their income’ to qualify for bigger loans, often for four or five properties. ‘The brokers told them nobody would check,’ he said.”

“Many lenders offered ’stated income’ loans. The people who took those loans ‘will lose the properties, they’ll lose their credit, but the real losers will be the financial institutions,’ Aresty said. ‘I don’t think there’s any way out. There’s going to be a huge shakeout, down to the very foundation of the financial system.’”

“Randall Whitney, a Sunny Isles Beach mortgage banker who makes his living selling exotic mortgages, said business has crashed with the concerns about the credit market and the downturn in home sales. ‘This industry is like the airlines after 9/11,’ Whitney said.”

“Whitney blames other lenders who sold the products to unsophisticated borrowers for the loss of faith. But in the right hands, Whitney said, the option ARM is a great tool. ‘I applaud it,’ he said. ‘I put my own mother into it, literally. Most of the brokers who sell it have one themselves.’”

The Ann Arbor News. “For a deposit of $5, Sharon Gray said, she became a member of Ann Arbor-based Huron River Area Credit Union. In fact, Gray has never set foot in Michigan. She lives and works in Oklahoma.”

“Gray said she was encouraged to join Huron River to obtain a construction loan for an investment home in Florida through a real estate education group, Millionaire University. It, along with Huron River and Howell-based The Construction Loan Co. Inc., is now the target of a lawsuit alleging fraud.”

“The suit alleges the defendants intended to sell the properties, most in Lehigh Acres, near Fort Myers in Lee County - at ‘inflated prices with excessive fees and commissions paid to the various defendants.’”

“‘I couldn’t function and I didn’t sleep for days,’ Gray said of learning she and her husband owed at least $35,809 on a $208,800 Florida home she said they were told wouldn’t cost more than the $1,995 they put down at the beginning. ‘I said, ‘my God, I don’t have that kind of money.’”

“As the housing market in that part of Florida deflated, the value of such newly constructed homes did too. In some cases, homes are likely worth less than the construction loans taken out to build them, and some buyers are refusing to close, like Gray.”

The Palm Beach Post. “In a sign of the times, Seacoast National Bank has sued to foreclose on downtown West Palm Beach properties once slated for condos.”

“The Stuart-based bank claims The Leap Group and principal Rodolfo Gonzalez owe $4.5 million on two loans. Gonzalez had planned to build Skyline Lofts, 103 condos on two blocks along Sapodilla Avenue. But Gonzalez couldn’t make the deals work as the market crumbled.”

“‘I’m not surprised,’ banker Russell Greene said of the foreclosure action. He believes it is among the first commercial foreclosures in downtown West Palm Beach. Expect more as developers have trouble unloading properties and paying bank loans, said Greene.”

“The Eden condo is in limbo and so are the souls who own units in this unfinished condo conversion.”

“Things could get worse: If developer Ceebraid-Signal Corp. doesn’t get control of this Boca Raton property, the complex could wind up in bankruptcy court. That’s according to Roy Dickson, the project’s incoming white knight.”

“Dickson is telling Eden homeowners they better go along with a plan to remake Eden into an adults-only, independent living community of apartments. If they don’t, Dickson warned Eden could be placed into Chapter 11 bankruptcy protection by Ceebraid, sources say.”

“You think Eden is a nightmare now? Just wait! After finishing only one of four buildings, Ceebraid-Signal has given up on plans to turn the apartment complex on Palmetto Park Road into a luxury condo. To the chagrin of folks living there, Eden is a messy construction site.”

“Some people don’t want to sell. Either they don’t want to move or they think Ceebraid is not offering enough money. Ceebraid is willing to pay condo owners only the price they paid for their units.”

“Unfortunately, holding out might not be a smart play. Bankruptcy court will ensure the unfinished buildings remain that way for years, meaning current Eden condo owners will be stuck, with slim chance of reselling their units.”

The Times Union. “The Jacksonville area had the 21st highest rate of foreclosures among 100 major cities in the first half of 2007, according to Realty Trac. Jacksonville Area Legal Aid doesn’t have enough lawyers to take on all applicants as clients. In the past 10 months, the law firm has fielded 267 requests for representation and agreed to add 100 clients.”

“Dawn Lockhart, president of Family Foundation, said lenders are willing to negotiate, within limits, because it costs them big bucks to repossess foreclosed homes. ‘What we can’t do is miracles,’ she said. ‘If the consumer can’t afford the loan, there’s nothing we can do.’”

The Orlando Sentinel. “Central Florida’s bloated housing inventory is ‘a problem, any way you look at it,’ according to one of the state’s leading independent housing analysts.”

“More homes are available, and more are coming out of the ground, than the market can absorb, says Anthony Crocco, director for Central Florida and North Florida for MetroStudy.”

“Crocco, one of MetroStudy’s top Florida housing specialists, said both new-and-existing home inventory is too large to allow all the homes to be sold within a historically reasonable time frame.”

“The East Pasco Association of Realtors reports that in August its members had 13.8 months of unsold inventory. It reported the average days-on-market as was 120 days, reflective of a serious glut.”

“‘It’s bad everywhere,’ Crocco said. But many builders, he said, ‘are still building.’”

“Most county code-enforcement departments report an increase in unkempt yards this year. Through August, code inspectors issued 55 percent more citations for overgrown lawns in unincorporated Osceola, 72 percent more in Volusia, 200 percent more in Lake and about 15 percent more in Orange, compared with the same period last year.”

“Anecdotally, inspectors report they are handling more cases of abandoned and neglected foreclosed houses. ‘When a person’s about to lose a piece of property, the last thing they’re going to worry about is mowing the lawn,’ said Carol Kerrigan, Volusia code-enforcement manager.”

“Inspectors are finding overgrown lawns in lots of middle- and upper-income neighborhoods where they wouldn’t expect them. Walter Krujaick, Osceola building- and code-enforcement director, recently discovered several in one normally tidy subdivision off West U.S. Highway 192.”

“‘I was shocked when I saw them,’ Krujaick said. ‘The grass was up to my hips.’”

“Apopka engineer Wayne Mather and two neighbors periodically take turns mowing the grass and hacking the weeds at the vacant house on their street. The owner, who lives in Orlando, stopped paying her $239,000 mortgage in January, according to court records.”

“‘It devalues the neighborhood, and there’s a lot of people trying to sell their homes in this neighborhood,’ said Mather. ‘We’re trying to keep the neighborhood nice.’”

The Herald Tribune. “Wagner Realty is planning to hold a red tag sale this weekend that will give buyers a 10 percent discount on the list price of certain homes and condos in Sarasota and Manatee counties.”

“‘It’s something I picked up from car dealers,’ said David Eckel, Wagner’s president. ‘We’re going to our sellers and getting them to reduce prices by 10 percent on Oct. 13 and 14.’”

“‘We’ll see if this generates some traffic,’ said Wagner agent Polly Gaar. ‘If it generates some traffic, it might result in some offers. At least it gets people moving.’”

“Terri Elmy, Don Cantin and Larry Tenbusch have one thing in common: They chose to be tortoises rather than hares when it came to expanding their businesses during the recent real estate boom.”

“All three North Port home builders say they were freaked out by the number of investors who came by their sales offices in 2004 and 2005 with requests to sign multiple building contracts.”

“‘We’d had investors come in — arrogant as all get-out — and they would want to know how much it would cost for us to build five homes for them,’ Cantin said. ‘They would expect us to buy the land, and we were supposed to take their word for it that they would be there at the closing.’”

“Now these three builders are not sitting on scores of unsold homes like many of their competitors. What’s more, they are not hemorrhaging from the amount of interest they have to pay to banks for borrowed funds.”

“‘I’m real cautious about letting things get away from me,’ Tenbusch said. ‘I’m the tortoise rather than the hare. I don’t owe anything to anybody, and that’s what is going to carry me through.’”

“Elmy says she will have an advantage over other builders in North Port because she bought building lots when they were still selling for $2,500 each back in the 1990s.”

“‘I have 45 lots left,’ Elmy said. ‘I chose to take them off the market during the boom because I felt they would help sustain us in a downturn. We’re able to reduce our prices more than other builders and still make a profit.’”

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