The Housing Bubble

The Press Enterprise reports from California. “An economic forum dubbed ‘The Coachella Valley: The Last Urban Frontier?’ Wednesday had less to do with settling an untamed landscape and more to do with harsh warnings for the desert’s not-so-distant future. The country and the Inland region — ‘ground zero’ as Christopher Thornberg, founder of Beacon Economics, called it — burst amid a housing crisis that has since stung financial institutions.”

“‘The frenzy, the froth, is finished here as well,’ said Thornberg, referring to the Coachella Valley’s housing market.”

“Ray Osborne, managing partner of New Home Marketing Network in Rancho Mirage, said the number of homes built in the desert far exceeded the number of homebuyers. ‘This time I think we really overshot demand,’ he said.”

“Home builders, including national, publicly held home builders, would need to lower their prices once and for all instead of repeatedly dropping prices in increments, a practice that makes potential buyers wary, he said.”

“‘The downturn will be over when the industry says it’s over,’ he said.”

The Desert Sun. “Brace yourselves for a long ride, Thornberg said of the housing market. ‘We are in turbulent times,’ he said.”

“Thornberg posing these reasons: Housing sales have fallen about 25 percent over the same period last year. Fifty percent of all first-lien mortgages in the Inland Empire have subprime characteristics. Home vacancy rates are up.”

“Consumers are fueling the economy and have tapped into home equity to bolster their spending, as only half of the mortgage draws were taken to reduce debt. He forecasted a slow drop in prices of up to 25 percent throughout 2008.”

“Osborne said the housing industry long has responded to market demand. ‘I think we overshot that demand and got oversupplied,’ he said, citing an inventory of detached homes across the valley that represent about a nine-month supply.”

“‘I’m a silver lining kind of guy,’ so the solution will be to stop putting projects in the pipeline for a while and work through the situation in the first nine months of 2008.”

“‘There’s a lot of pressure right now on local retailers, and local government,’ said Thornberg, and the local tourism economy may feel the pinch.”

From The Sun. “Is the recent subprime fallout a bump in the road or a full-blown recession for residents living here? That question is a hard nut to crack, said Greg Hunter, economics professor at Cal Poly Pomona.”

“But he does know one thing: Local residents, just like people across the nation, are starting to spend less money on consumer goods.”

“‘The housing bubble created a lot of wealth for people, and that created a lot of consumer spending,’ Hunter said. ‘People are pulling back on their spending.’”

The Orange County Register. “More bad news from William Lyon Homes from Newport Beach. Net loss of $60 million for the three months ended Sept. 30. Impairment losses on real estate assets of $59 million. Net new home orders for the three months decreased 33% to 337 homes, compared to 2006.”

“Cancellation rate for the three months ended September 30, 2007 was 42% vs. 39% for the three months ended September ‘06.”

“Resulting in this: ‘In November 2007, the Company took additional actions to reduce its overall cost structure and improve operating efficiencies by reducing its Company-wide headcount by approximately 134 positions, or 25%. Since the beginning of 2007, the Company-wide headcount has been reduced by approximately 226 positions, or 35%.’”

“First American LoanPerformance pegged California as the nation’s worst housing market in August with a 10.66% drop in home values. That beat out Nevada at minus 8.35%. Hawaii was the best at plus 16.93%.”

The Sacramento Bee. “Now that the housing boom of 1999 to 2006 has cooled and become downright frigid, it’s an appropriate time to consider what this boom has brought the city of Sacramento.”

“In a mere eight years, developers have constructed 15,000 homes in north Natomas. That means a collection of neighborhoods planned for development over 25 years has materialized in a third of the projected time.”

“A financing plan that was supposed to make Natomas self-sufficient has become a major bust. It depended too heavily on developer fees that were later reduced by officials. The city also overestimated the property taxes that would come from office development.”

“The boom is over. Sacramento now faces budget deficits that are partly due to the downturn of development revenues from Natomas. The response of some city leaders is to push for more Natomas growth.”

“No doubt, the continuing deflation of the housing bubble will be brutal for local governments. But the city must be wary of repeating the mistakes of the past. The wrong reaction would be to increase the city’s dependence on residential developments that generate an immediate influx of tax dollars and fees, but don’t pay for themselves over the long run.”

The Recordnet. “The auction block is coming to San Joaquin County next week in what will be watched as a test of whether the buzz of the auction stage might boost sales of some of the many foreclosed homes clogging the area residential market.”

“Hudson & Marshall, is staging a series of auctions throughout the state next week to try to sell about 600 foreclosed homes in cities throughout Northern California. That includes an auction night for 60 homes in Stockton.”

“‘There’s so much in the pipeline right now that any method, even a departure from the traditional, would be good if they sell,’ said Frank Orello, a real estate agent in Stockton.”

“Orello, who has a half-dozen of his foreclosure home listings in the auction, said the houses set for auction are there strictly as a call by the banks after the homes failed to sell after several months.”

“He expects to see bargain-hunters mostly.”

“The auctions are reserve auctions, with no minimum starting bids, but sellers have the right to accept or reject any bid. Orello said he doesn’t expect the banks to play hard ball and not accept top bids.”

“‘I think they really just want to dump these properties,’ he said.”

“Ben Balsbaugh, residential sales manager in Stockton, said he isn’t sure whether the auction is a desperation move. The banks are finally realizing they have to cut prices to sell, he said.”

“More than likely, a home will sell at less than the listing price, he said. ‘It certainly is a good thing,’ he said. ‘The real estate community needs all the excitement it can get.’”

“Hudson & Marshall spokeswoman Crystal Wright said the homes up for auction have been on the market for three to 12 months, so the sellers are highly motivated to move the properties.”

“Most sales are significant savings off the current list prices, she said, and it’s not unusual to see a property go for 20 percent below its listing price.”

The Mercury News. “Here’s an unexpected consequence of the subprime mortgage crisis: a West Nile virus season that was worse than it had to be.”

“Officials blame neglected swimming pools at foreclosed homes throughout California that attracted mosquitoes that carry the potentially fatal disease.”

“In Santa Clara County, about 200 pools, green and black with algae, were identified this summer through aerial surveillance, at least three times as many as in 2006, Kriss Costa, spokeswoman for the county’s vector control district.”

“‘A lot of people are just walking away from their houses,’ Costa said. ‘We were getting calls from the public saying, ‘My neighbors just left.’”

The Rocky Mountain News reports from Colorado. “Denver-area home prices fell by about 5.4 percent in October from a year earlier. Broker Larry McGee isn’t worried that home prices were down in October from a year earlier. ‘That reflects a realistic price given all of the foreclosures,’ McGee said.”

“Jim McCloskey, owner of the American Real Estate College, noted there is about a six-month supply of unsold homes on the market. But that inventory includes more than 700 homes priced between $1 million and $10 million, and ultra-expensive homes take an average of three years to sell, he said.”

“At the bottom of the market, there are many ‘one-bedroom condos and townhomes that you can’t give away,’ he said.”

The Arizona Republic. “Voters looked at their rising mortgage payments, the empty houses on their streets and a shaky economy. Then, in 17 of 22 districts, they shot down proposals to maintain funding for Valley schools, deciding they couldn’t afford it.”

“School officials said they knew gloomy economics and still-high taxable home values would make voters leery of renewing tax rates, but no one predicted so many proposals would fail.”

“Arizona schools chief Tom Horne said that if the districts do not persuade voters to change their minds, they will face ‘catastrophic’ cuts.”

The Arizona Daily Star. “The city severed its agreement on Wednesday with developer Peggy Noonan to build Presidio Terrace, a seven-story condominium project just north of City Hall.”

“The cancellation notice says she failed to comply with a city deadline to find legitimate financing, among other requirements. Rio Nuevo Director Greg Shelko cited two specific faults with Noonan’s response. First, that she changed the plans to include 101 units of rental housing instead of condominiums.”

“‘That use is totally unacceptable,’ Shelko said, given that the city had talked for three years about developing the site with high-class condominiums.”

“In addition, Shelko said Noonan’s new financing plan called for the seven-story building with 300,000 square feet to be built for only $29.7 million, a number said Shelko said is not realistic for a luxury condo development.”

AZ Family from Arizona. “Foreclosures are at a record high here in Arizona. Jenny Celli’s trying to leave behind a foreclosure that she went through last year.”

“‘Well, your life is destroyed, really,’ Celli said. ‘Your life is destroyed and it’s humiliating.’”

“And it’s still humiliating because the foreclosure has virtually destroyed Celli’s credit. ‘Oh, I’m screwed,’ she said. ‘I’m screwed. I think my credit score is something like 569.”

The New York Times on Nevada. “As his wedding day approached last spring, Marshall Whittey found that his money could not keep pace with the grandiosity of his plans. But rather than scale back, he chose instead, like millions of homeowners across the country, to borrow against the soaring value of his home.”

“But now, in an ominous portent for the national economy, Mr. Whittey has grown tight with his money. His home is worth far less than it was a year ago, and his equity has evaporated. And like many other involuntary adopters of a newly economical lifestyle, he can borrow no more.”

“‘It used to be that if I wanted it, I’d just go and buy it and finance it,’ Mr. Whittey said. ‘I’m feeling the crunch, and my spending is down significantly.’”

“‘Everybody was basically using their house as an A.T.M. machine,’ said Dave Simonsen, a senior VP for an industrial real estate firm in Reno. ‘Now they are upside down on their house without that piggy bank to go back to.’”

In Business Las Vegas from Nevada. “Whenever a member of the national or international media wants to know about foreclosures in Las Vegas, they call Michael Krein, the owner of Nevada Real Estate Services, (and) president of the National REO Brokers Association.”

“Q: Why aren’t homes selling at courthouse auctions? A: The trouble right now with most of the houses on the steps is there is more owed on them than they are worth, so the investors are not purchasing them. One of the misnomers is the bank is going to sell it for what’s owed on it. That has nothing to do with it.”

“Once the bank owns the property, there is a new appraisal done. They will price it according to market conditions. Are they a little more aggressive about it? Absolutely. They have to move it and want to move it.”

“Q: Who owns the homes you have been foreclosing upon? A: The last two years, 80 to 85 percent of what we’ve taken has been investor owned…so far I have not seen that many homeowners put out. I had a few and some of those did not understand the type of loans they had. We have seen that a few times. They didn’t understand that — they didn’t read the fine print.”

“Q: Why will that pick up in the spring? A: A tremendous amount of three-year ARMs (adjustable rate mortgages) are going to start resetting. Some of them are coming up now…A lot were planning on flipping it and some thought (prices) would keep going up forever.”

“Q: Investors? A: Investors is the wrong term for what occurred here the last two years. It is amateur hour and these people were speculators. Unfortunately, a lot of the agents who sold them these properties did not have the skill set and shouldn’t have been representing these people.”

“It was amateur hour all around. Dealing with investment properties requires a knowledge of cap rates, rates of return, IRRs, vacancy rates, credit collection factors. You talk with most retail real estate agents, they could not tell you what those terms are, yet they were out there selling properties to investors, telling them what great deals they were.”

The Deseret Morning News from Utah. “Not all that long ago, St. George had been one of the hottest housing areas in the West, but it has definitely cooled, according to figures released by housing market research firm, Metrostudy.”

“‘St. George is going through the same struggles that the rest of the nation is,’ said Eric Allen, director of Metrostudy’s Utah/Idaho region.”

“Allen said the number of new homes sitting unoccupied in St. George and in nearby Mesquite, Nev., remains a concern. In St. George, finished vacant homes comprised 37 percent of the total new construction inventory, while in Mesquite, finished vacant homes comprised 38 percent of the total newly built inventory, the report states.”

“‘A healthy number is between 25-30 percent for those markets,’ Allen said.”

“Allen said developers are sweetening the pot for prospective buyers. ‘Builders are giving away a lot of concessions, using a lot of incentives,’ he said.”

From KUTV in Utah. “Bill Gephardt continues his series of special investigations into the business of questionable real estate deals. This isn’t just about one or two cases. This is about dozens of people pushed to the brink of financial ruin.”

“Dave Ormsbee has never been inside this Draper home, which he now owns. Dave says it was his good credit alone that bought a home in Draper and a house in St. George, both with no money out of his pocket.”

“Now at the age of 27, Dave owes more than a million dollars in mortgage loans. Sounds like he makes a lot of money, but quite the opposite is true. Dave is a college student and waits tables after school.”

“He makes maybe $11,000 a year, yet he bought the Draper house for more than $700,000. ‘You’re a server at a restaurant. How can you afford a $719,000 house? I can’t,’ says Dave.”

“Despite that, Dave was given mortgage loans on not just one but both of the homes. But how could a college student making $11,000 a year convince any lender to give him a million dollars in mortgages? Take a closer look at Dave Ormsbee’s loan application. It shows him as the owner of his own company, Ormsbee Graphic Design.”

“But there is no such physical company, it’s all created on paper, he says. ‘That’s the company that they had me make up,’ says David.”

“And the loan documents show David doesn’t make $11,000 per year, but $18,500 a month. ‘Do you make $18,500 a month? Nope. I don’t make that a year,’ says David.”

“Dave says he didn’t fill-out the documents. He admits he made the mistake of never looking at what he was signing. ‘There just so much signing going on that you just don’t care what you’re signing after a while,’ says Dave.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Toll Brothers Inc., the largest U.S. luxury homebuilder, said fourth-quarter revenue fell 36 percent and the cancellation rate rose to the highest ever as demand faltered in the weak housing market. In the three months ended Oct. 31, customers backed out of 39 percent of their orders, Toll said today in a statement. Signed contracts declined 33 percent.”

“Toll will have an expense of as much as $450 million for land writedowns and said demand worsened in October as excess supply held back customers. ‘We can’t predict how long this down period will last,’ Chairman Robert Toll said in the statement. ‘Many of our prospective clients are sitting on the sidelines watching and waiting.’”

“The number of contracts in the company’s western region of Arizona, California, Colorado and Nevada plunged to 17 from 131 a year ago. The number of contracts signed in the South region, which includes Florida and Texas, fell to 112, or 44 percent from a year ago.”

From MarketWatch. “‘Unfortunately, the pace of customer cancellations increased in this fourth quarter,’ said Toll’s chief financial officer, Joel Rassman. ‘We, and other reporting builders, have observed that October’s activity appeared weaker than September’s. These trends suggest that we still have challenging times ahead.’”

“‘We continue to think Toll needs to lower prices aggressively near-term to boost sales in order to maintain a minimal backlog and work through its long land supply,’ wrote Banc of America Securities analyst Daniel Oppenheim.”

“‘In a declining market, selling at what appears to be a low price today is better than selling at an even lower price tomorrow,’ he added. ‘More buyers fell out of backlog in the quarter likely given difficulty selling a previous home and lower confidence, as weakness at lower price points spread up the food chain.’”

“‘Demand has all but evaporated at most Toll communities, as shown by an order pace of only 656 in the fourth quarter,’ said Nishu Sood at Deutsche Bank. ‘Other builders have been far more willing to lower prices, but we think growing inelasticity will force all the builders to increasingly move to the sidelines.’”

“The analyst predicted Toll will ultimately have to throw in the towel and lower prices, ‘driving a longer impairment cycle than peers that have already dramatically lowered prices.’”

From CNN Money. “Toll…also had a less macroeconomic hope to help rescue sales. ‘Perhaps, as the presidential campaign heats up and moves to the front page, negative articles about housing will move off the front page,’ he said in the statement.”

“The latest S&P/Case-Shiller home price statistics for 20 of the nation’s largest metro markets showed a 4.4 percent year-over-year decline. ‘It’s important to keep things in perspective,’ said Brian Catalde, president of the National Association of Home Builders . ‘The current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. In most other markets, price declines have been pretty modest.’”

“‘To argue that home values will continue to decline and never recover, somebody has to make a convincing case that it will cost less to build a new home five years from now than it does today – and that’s just not going to happen,’ said Catalde. ‘Despite today’s housing slowdown, the cost of land, labor and materials required to build new homes continues to go up.’”

The Financial Post. “British Columbia’s lumber producers are flooding the U.S. market with cheap lumber and mowing down forestry companies in the rest of Canada, an Atlantic Canada sawmill president said yesterday as an East Coast versus West Coast yelling match broke out in the forests.”

“Dundee Securities analyst Richard Kelertas (said) everyone is losing money and while the East Coast may complain, at this point it’s every mill for itself. ‘With this kind of market it’s survival of the fittest, so somebody from the West would say [to the East], ‘too bad’,’ he said. ‘The West wants to be the last ones to shut down.’”

The Financial Times. “Morgan Stanley has lost $3.7bn on subprime mortgage-linked investments in the past two months after a big market bet went disastrously wrong, the bank revealed Wednesday night.”

“Morgan Stanley said the estimated losses implied defaults in the range of 40 to 50 per cent for outstanding subprime mortgages written in 2005 and 2006.”

The New York Times. “The American International Group, the world’s largest insurance company, said yesterday that it wrote down nearly $2 billion in investments related to mortgages in the third quarter and expected to write down an additional $550 million in the next quarter.”

From Reuters. “Merrill Lynch & Co Inc said on Wednesday its total exposure to risky collateralized debt obligations and subprime mortgages is $27.2 billion, or about $6.3 billion more than what the company disclosed late last month.”

“Merrill’s larger figure is mostly because of a deeper level of disclosure surrounding its banking operations. Mike Mayo, an analyst at Deutsche Bank, has estimated that Merrill’s additional write-down could top $10 billion.”

“Banks may be forced to write down $64 billion because of falling prices on collateralized debt obligations backed by subprime assets, Citigroup Inc. analysts said.”

“‘Of the many skeletons hiding in the subprime closet, writedowns on banks’ positions on CDOs of ABS are probably the scariest,’ wrote analyst Matt King in London.”

“The U.S. asset-backed commercial paper market had its biggest weekly drop in two months as $40 billion of mortgage-related writedowns by banks gave investors more reason to avoid buying the debt.”

“The market has fallen for 13 straight weeks, shrinking about 29 percent since reaching a peak of $1.18 trillion on Aug. 8.”

“Industrywide, banks may have to mark down $250 billion to $500 billion of assets primarily related to rising defaults on subprime mortgages, which are made to borrowers with poor credit, Royal Bank of Scotland Group Plc analysts said yesterday.”

“Moody’s yesterday downgraded or placed on review the credit ratings on debt sold by 16 SIVs that manage $33 billion. SIV ‘debt ratings continue to be vulnerable to the unprecedented large and sustained declines in portfolio value combined with a prolonged inability to refinance maturing debt,’ Moody’s said in a report.”

“SIVs have been forced to sell at least $75 billion of assets since July.”

“Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills. The largest U.S. savings and loan didn’t count on a housing recession.”

“The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.”

“‘Be careful what you wish for,’ Westbrook said. ‘They wanted to make sure that people kept paying their credit cards, and what they’re getting is more foreclosures.’”

“As losses have mounted, banks have seen their credit card businesses improve. The amount of money owed on U.S. credit cards with payments more than 30 days late fell to $7.04 billion in the second quarter from $8.37 billion two years earlier, according to data compiled by Federal Deposit Insurance Corp.”

“In the same period, the dollar volume of repossessed homes owned by insured banks doubled to $4.2 billion, the federal agency said.”

“New foreclosures rose to a record in the second quarter, led by defaults in subprime adjustable-rate mortgages, according to the Mortgage Bankers Association in Washington.”

“People are putting their credit card payments ahead of their mortgages, said Richard Fairbank, CEO of Capital One Financial Corp., the largest independent U.S. credit card issuer. Of customers who are at least three months late on their mortgage payments, 70 percent are current on their credit cards, he said.”

“‘What we conclude is that people are saying, ‘Honey, let the house go,’ but keep the cards, Fairbank said.”

“‘We have people walking away from homes because they can’t afford them even post bankruptcy,’ said Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys. ‘Their mortgage rates are resetting at levels that are completely unaffordable, and there’s nothing the bankruptcy process can do for them as it now stands.’”

The News & Observer reports from North Carolina. “Wendy Gilbert had high hopes for her University Park house. Buoyed by rapid sales and rising prices in the West Raleigh neighborhood, she and her husband paid $252,000 for the three-bedroom home in December. They planned for profit. They fixed it up and listed it in July for $429,000. It lingered unsold, even after a $14,000 price cut.”

“‘There were several people interested,’ said Gilbert. ‘But either they couldn’t sell their house, or they couldn’t get financing.’”

“So last month, she started courting another kind of house hunter: the renter. Gilbert is among a growing number of would-be sellers offering properties for rent, conceding to a glut of unsold homes and the prospect of cooling prices. ‘We weren’t planning to hold it for this long,’ she said.”

“The practice is creating a shadow market that masks the true inventory of unsold homes, which in the year that ended Sept. 30 climbed 22 percent to a four-year high of 17,929.” “‘You really have no idea of what supply will be hitting the market and at what time,’ said analyst Brian Reece.”

“This shadow is pressuring the rental market, because apartment owners had been expecting a surge of new business. There were 3,102 apartments built in the year that ended Sept. 30, according to the apartment association. That’s 86 percent more than the annual average in the previous four years. About 3,000 units are under construction.”

“‘I don’t really remember a time when our inventory has popped up like it has this year,’ said Sharon Schovain in Raleigh, who has been managing rentals for 23 years.”

“The new business comes from sellers who ‘got disgusted with the soft sales market’ and independent builders who have given up on selling some homes, turning to the rental market to soften the blow, she said. They are joining out-of-state investors who are ‘buying up houses like crazy’ in the Triangle, banking on the long-term prospect of rising values.”

“‘If you were living on the West Coast, imagine how cheap the real estate looks here,’ Schovain said.”

“At 5628 Keowee Way in northeast Raleigh, a ‘for sale’ sign and a ‘for rent’ sign compete for attention outside a three-bedroom home. Homeowner Mike Yoquelet expected the value of the five-year-old home to appreciate handsomely with the extension of Interstate 540. He paid $180,000 for the home in February 2006. He wants to sell it for $229,900 but would settle for a renter paying $1,295 a month.”

“‘At this point, I’m trying to do either so I can make my mortgage payment,’ said Yoquelet, a broker at Northside Realty.”

The Atlanta Journal Constitution from Georgia. “More than 6,800 properties in the 13 core counties of metro Atlanta were advertised for auction Tuesday — a record setting number, up 49 percent from the same month last year. From Gwinnett to Fulton to Bartow counties, an auctioneer reading from a sheet on courthouse steps became the public endpoint for private tales like the Smiths’.”

“‘We just wanted to find out how long we’ve got before we have to get out,’ said Amy Smith’s husband, who asked not to be identified.”

“Georgia’s foreclosure system rolls forward with the unemotional efficiency of a threshing machine mowing down wheat.”

“At the Fulton County courthouse, seven criers from MR Default Services read out bids simultaneously. Each crier from that firm, which represented 596 properties in Fulton alone, was assigned a chunk of the alphabet based on the names of those in foreclosure.”

“Dylon Ross, a veteran investor, was not shy about what he wanted. ‘I’m not looking for great deals. Now we are looking for steals.’”

“In the previous weeks, Ross and his partners drove by maybe 300 houses. ‘First thing, we have to make sure there really is a house there,’ he said.”

“Usually, the lender’s bid went unanswered and the lenders took back the house, looking to sell it again down the road, almost assuredly at a large loss. Most properties up for foreclosure these days have little or no equity — almost 75 percent of the loans being foreclosed in Fulton were made since the start of 2005.”

“Subprime loans are about 10 times more likely to fail than prime loans. ‘This is a crisis,’ says William Brennan, director of Atlanta Legal Aid’s Home Defense Program for the last 19 years and one of the first consumer advocates to warn Congress of the coming meltdown.”

“‘In metro Atlanta, every month thousands of families are losing their homes to foreclosure. On the courthouse steps today, more than 6,000 homeowners were facing foreclosure,’ says Brennan.”

“Nessia Jones lives on a small pension and disability income in the DeKalb County home she’s owned for 26 years. Combined, she and her daughter make $1,266 a month. Yet a mortgage broker doctored refinancing documents to reflect that Jones drew nearly $4,000 in Social Security disability income each month.”

“‘If I made that much money, I wouldn’t have needed to refinance to repair my house,’ says Jones. Instead of a single mortgage, Jones discovered later that the refinancing had saddled her with two mortgage loans and monthly payments of $1,500.”

“Before the refinancing, Jones had a credit score of 700; now it’s down to 400. ‘I can’t get credit from anyone now,’ she said.”

From ABC Action News in Florida. “Foreclosures are hitting every housing sector in the bay area, even high end zip codes are in trouble, creating opportunities for families to upsize or invest.”

“Jamie Rand is an investor and hard money lender in Tampa who says he has bought and sold more than one thousand properties in the Bay area. Jamie sold off his inventory during the boom of 2005. He says there are good deals in desirable neighborhoods adding, ‘between now and probably the end of 2008 you’re going to have some ideal times for the picking.’”

“For example, in the Enclave at Citrus Park, zip code 33626…a prime neighborhood. says this four bedroom, two and a half bath, 25-hundred square foot home, was purchased by an investor for 382-thousand dollars in 2006. Now, its on the market for 280-thousand dollars, more than a 100-thousand dollar price drop. And the seller may deal for less.”

“In the Carriage Point subdivision, a lot of investors came in here and got in trouble when the market turned so there are dozens of foreclosures. There are about 31 homes in foreclosure in this Gibsonton neighborhood alone.”

“‘That’s the best thing that you can have, with the homes that the grass is up to your waist, with the holes and the graffiti, those are the kind of properties that I salivate over,’ he said.”

“But, Jamie also has a warning for investors who get too emotional about the property saying, ‘people overpay, they buy a piece of property with the anticipation of appreciation, never do that, it’s the biggest mistake especially a young rookie investor can make.’”

The University of Florida News. “Florida’s population growth slowed considerably last year as the housing boom went bust, but it remained relatively strong and likely will stay that way for the next few years, the latest estimates from the University of Florida show.”

“‘There have been a number of news articles lately focusing on the idea that population growth has fallen off the table top in Florida and practically come to a standstill, and that simply isn’t true,’ said Stan Smith, director of the UF’s Bureau of Economic and Business Research, who led the research.”

“‘The housing boom certainly contributed to Florida’s growth in those earlier years, and the housing bust contributed to the slowdown this last year,’ he said. ‘It’s much harder for people to sell their homes in New York, Ohio, Michigan or some other state and move to Florida.’”

The News Press from Florida. “First Home Builders of Fort Myers had 1,200 employees two years ago. As of last week, it is down to 50 on the payroll. That’s 1,150 fewer people able to buy a car, finance a house, send their kids to college.”

“The trickle-down is devastating to the community. The loss of buying power ultimately means there will be even more lost jobs in other businesses and industries. It is all a part of the bursting real estate bubble, a fact of life Southwest Florida must deal with by adjusting and surviving.”

The Palm Beach Post. “Home builder WCI Communities said Wednesday it will cut 575 workers in six states, including about 30 in Palm Beach County. Two years ago, residential real estate was the high-octane fuel of Florida’s economic engine. Now, it’s the gunk gumming up the works.”

“Statewide, the construction industry lost 22,300 jobs between September 2006 and September 2007, the Florida Agency for Workforce Innovation said. And this year, for the first time since the 1992 recession, Florida has seen seven consecutive months of over-the-year declines in construction jobs.”

“‘The builders are cutting back because the last thing we need now is new housing,’ said Antonio Villamil of Washington Economics Group in Coral Gables.”

The Daily Business Review from Florida. “Miami-based mFm Construction’s financing offer is a new tactic to find buyers for three condominium projects it built in Little Havana west of downtown Miami.”

“Developers like mFm are reacting to declining sales and the prospect of projects plagued with unsold homes. Some people are holding out in anticipation of prices dropping more than they have.”

“‘We have contracts that were signed in 2005 and 2006 at below-market prices, and still some buyers are having problems with their lenders,’ said Daniel Kaskel, general counsel of Boca Raton-based E.B. Developers.”

“Architect Osman Ramos said he is considering moving from Fort Lauderdale close to his job in Coral Gables. But he would rather wait to see if prices in Miami drop some more before considering mFm’s proposal.”

“‘This plan is good for the buyer, but prices are still high to buy now,’ he said.”

The Bradenton Herald from Florida. “With a record number of foreclosures facing real estate agents, it wasn’t surprising that much of the focus of the Real Estate and Law Summit was helping them navigate the difficult environment.”

“‘Prices aren’t where they were and that has reflected on the courthouse steps,’ Michelle Gilbert told attendees Tuesday at the Sarasota Hyatt. ‘The whole state of Florida is backed up.’”

“At the end of October, 307 foreclosure cases had been filed in Manatee County, bringing the year’s total to 1,881, an all-time record.”

“Gilbert’s firm recently foreclosed on a $750,000 loan where the house is now appraised at $560,000. ‘It’s just amazing these loans were made,’ Gilbert said.”

“‘I wish I could be a bearer of good news and tell you there is light at the end of the tunnel, but I can’t,’ said Doug Pollock, president and founder of Information Data Services. Pollock, who specializes in mortgage fraud and forgery, said the crisis was caused by the explosion of subprime loans and greed.”

“‘Mortgage lenders set the stage for what has happened,’ Pollock said. ‘Mortgage fraud is going to be an increasing caseload for attorneys and lenders because we’re uncovering more of it.’”

“The industry, which helped keep the United States afloat in the post 9/11 confusion, has run out of time, Pollock said. ‘The only way we’re going to recover from this mess is for prices to return to 2003 levels,’ Pollock said.”

“As market values of homes and sales prices continue their descent, many homeowners have turned to short sales. Agents often end up having to settle for less commission for a sale that requires a lot more paperwork and red tape.”

“‘You have to decide if you like lemonade. Some people don’t, some people do,’ Golden Norris advised those considering joining the growing number of agents who are doing short sales.”

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