The Housing Bubble

The Sacramento Bee reports from California. “DataQuick reported Thursday that 2,467 new and existing homes changed hands in October in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That’s more than 1,000 fewer than the same time last year. Sacramento County’s October median sales price fell to $299,500. That’s the first dip below $300,000 as the price slump continues and the lowest median price since April 2004. Sales prices have now fallen 22.6 percent from their August 2005 peak of $387,000, DataQuick reported.”

“Placer County registered an October median sales price of $402,500. That’s 23.4 percent off a December 2005 peak of $525,500.”

“The Bay Area and Southern California reported the lowest number of October sales since 1988 when DataQuick began tracking statistics.”

The Recordnet. “Pending home sales in Stockton are still down countywide from a year ago, according to the latest Coldwell Banker Grupe-TrendGraphix monthly sales report. Home prices continued to slide…in a brutal sales year characterized primarily by a growing mass of foreclosed homes throughout San Joaquin County.”

“Dave Thurman of Dave Thurman Real Estate in Stockton said the market still hasn’t stabilized, because buyers feel they can buy only below market value. There is the positive news, he said, in that it’s a great time for a first-time buyer to buy a home with prices between $100,000 and $150,000 less than two years ago.”

“According to TrendGraphix, the median selling price in San Joaquin County slipped from $325,000 in September to $319,000 last month. That was down almost 25 percent from a high of $425,000 in July 2006.”

The Daily Press. “In Victorville, 1,366 homes are in pre-foreclosure, indicating the owner has received a notice of default. There are 314 homes on the auction block and 659 owned by the bank as of Monday. By contrast, 442 homes were listed for sale in Victorville.”

“In Hesperia, 975 properties are in pre-foreclosure, while 225 were listed at auction and 471 were owned by the bank. By contrast, 198 were listed for sale.”

“Apple Valley had 729 properties in pre-foreclosure, 191 at auction, and 349 owned by the bank, while Adelanto had 488 in pre-foreclosure, 127 at auction and 211 owned by the bank.”

“‘This is the time to sit still if you can,’ said economist John Husing. ‘This is not a time to be selling your house unless you absolutely have to. This will get over. But it’s about another year and a half out and some significant difficulties in the meantime.’”

“More foreclosures are likely to arise, for about the next year and a half, Husing said. ‘There’s a lot of folks out there that know they’re looking at a cliff,’ he said.”

The Press Enterprise. ” It was the worst October for home sales since 1996 in Riverside County and the worst October since a tracking service started for San Bernardino County. In Riverside County the median home price fell to a three-year low.”

“News was also bad for foreclosure activity with the Inland region ranking No. 3 in the nation.”

“Andrew LePage, an analyst for DataQuick, said in the past two years, buyer psychology has reversed. ‘People were rushing to buy before they got priced out, and now we believe a lot of people have concluded it pays to wait,’ LePage said.”

The Orange County Register. “A decline in jumbo home loans continued to gum up sales for Orange County’s priciest residences last month, driving price averages down and cutting transactions to their second-lowest level in at least two decades, DataQuick reported.”

“The median selling price of an Orange County home was $573,750 last month…down 8.2 percent from a year ago, effectively erasing 2 ½ years of price gains. Just 1,700 home sales closed in October, down 42 percent from the same month a year ago. October became the 25th consecutive month in which sales fell below levels from the year before.”

“‘It was dramatically more expensive to finance properties in Orange County in October than it was in June or July,’ said Michael LaCour-Little, a finance professor at Cal State Fullerton. ‘You’re seeing fewer high-priced homes selling. That’s going to drive down the median.’”

“Jumbo loans declined 61 percent in Orange County since the credit crunch, compared to a 6.4 percent drop for conventional loans, DataQuick reported. As a result, sales fell by more than 50 percent for homes selling for $600,000 and above.”

“Anthony Glenn suspects that buyer reluctance is hurting his chances to sell his ocean-view home in Laguna Beach, even though he’s dropped the price by more than $200,000.”

“His current price of $1,699,000 is only slightly more than the home’s appraised price when he bought it two years ago. But after 51 days on the market, he’s had just three buyers come by to look at it.”

“‘The buyers are there, and people have money. People have trust funds,’ said Glenn, an unemployed high-tech salesman who is selling to take a new job in Santa Barbara. ‘I think the reason people aren’t acting … is they read the paper. They read the news, and it’s all bad news.’”

“Banks foreclosed on 530 homes in Orange County in October, the highest monthly total in more than a decade, DataQuick figures show. The total was up 410 percent from a year ago and 19 percent from September.”

“On Nov. 1, short sales and REOs totaled 3,059, or roughly 17.5 percent of all properties for sale, according to Steve Thomas at Re/Max Real Estate Services in Aliso Viejo. (Thomas just starting tracking this statistic, so he doesn’t have historical data.)”

“‘It’s going to take the better part of 2008 to digest all these short sales and foreclosures,’ he said.”

“Paul Scheper, a VP with (a) mortgage company in Aliso Viejo, said a credit crunch that accelerated in August is leaving some struggling owners without options. Perhaps as many as 40 percent of struggling owners want to refinance and keep fighting for their homes, but just can’t find a loan, Scheper said.”

The North County Times. “San Diego County home prices fell to a 3 1/2-year low in October. The overall median for October stood at $460,000, 6.1 percent lower than October 2006’s $490,000, according to DataQuick. The latest figure represented an 11.1 percent decline from the peak of $517,500 reached in November 2005.”

“October sales totaled 2,327, the Union-Tribune reported. October sales figures were 32.5 percent lower than year-ago levels and marked the 41st consecutive month of year-over-year declines.”

The Union Tribune. “There was a turnaround of sorts in other data for San Diego County released yesterday by DataQuick. The number of defaults in the county for October totaled 2,119, up from 1,858 in September. But the 106.7 percent jump from October 2006 was the lowest year-over-year increase since June 2006.”

“The 831 foreclosures last month were up from 691 in September and 228 in October 2006. But the year-over-year 264.5 percent change was the lowest since September 2005, when there was a 50 percent increase.”

“However, analysts caution against drawing any conclusions based on just one month’s data.”

From KPBS. “Thousands of people living in San Diego are losing their homes because they can’t afford to make their mortgage payment. Many more are months behind on their payments. Chances are if it’s not you, it’s probably one of your neighbors.”

“We take a tour of some foreclosure properties with a realtor who now specializes in them. They range anywhere from the one bedroom condo to the million dollar mansion.”

“This little condo in south bay was someone’s American dream. When these apartments were converted into condos, many of the renters bought in. Now, so many are trying to get out. This is one of Eric Weichelt’s listings. He has 500 listings – all foreclosed homes in San Diego County. He’s selling this one-bedroom for under $100,000. Less than half what the original owner paid.”

“Weichelt: ‘If your intent is to not move, who cares if it goes down to $100,000, you still need a roof over your head. If you can afford it, that’s the thing, whoever purchased this could they afford it, I don’t know, but apparently not.’”

“Weicheldt says some homeowners used their equity to buy rental properties as investments. But if they got in too late, their investment became a huge liability.”

“Weicheldt: ‘When your double-digiting appreciating for five years you can’t sustain it, so the tail end of the purchasers who may have gone in over their head, and started feeling the crunch and then all of sudden they said we can’t handle this.’”

“This house looks pretty good right now, it’s clean, a new paint job, even carpet. But it didn’t look this way when Weicheldt inspected it just after the foreclosure. The previous owner spray painted ‘civil matter’ all over the walls.”

“Weicheldt: ‘We don’t get the full story, we only hear parts of it, but we knew they were foreclosed on another home.’”

“Like so many homes that sold a couple years ago, this house was 100 percent financed. The buyers paid no down payment. Most of the loans that went into default last quarter originated between July 2005 and September 2006. And the loans median age before default was just 18 months.”

“As soon as you walk into this stately home in Chula Vista, you notice something unusual. There are no doorknobs, no light fixtures. Weicheldt: ‘They took all the fixtures and they took all the knobs, they took the doorknobs, they took the queen palms that are outside, it’s like what you do. Not clear – at least on paper.’”

“Weicheldt says he’s seen this before. The previous homeowners were either so mad at the bank, they took what they could or so desperate to hang on to what little they had left.”

“Weicheldt: ‘You see some sad stuff you really do, but the one thing, if anything can be looked at in appositive light, at the end of the day, this house was probably a burden on this person and their family, you know what, start fresh, get your stuff, don’t take stuff, that’s yesterday news.’”

The Dallas Morning News reports from Texas. “Almost 43,000 Dallas-Fort Worth area home foreclosure postings were recorded for 2007 – up 10 percent from last year and near a record. Home foreclosures in the D-FW area have grown by about 50 percent in the last five years, due in large part to lax lending standards, analysts say. The number of homes facing foreclosure for December’s sale is up 14 percent from the same month of last year, Foreclosure Listing Service reported Thursday.”

“This biggest jump is in Collin County, where the number of houses threatened with foreclosure next month is up by almost a third. Foreclosures are also up 23 percent in Denton County.”

“‘I think it is safe to say that the postings for the Dallas-Fort Worth area are at all-time highs,’ said George Roddy, president of Foreclosure Listing Service.”

“‘The problem loans that were made between 2003 and 2006 are coming back to bite us,’ Mr. Roddy said. ‘Bad, or better said, ill-conceived loans are going to be a thorn in the side of the D-FW economy for years to come.’”

“Much of Middle America – including most Texas cities – will dodge the worst of the housing downturn, the top Realtor economist predicts. Many areas of the country, including North Texas, are holding up well, Lawrence Yun, chief economist with the National Association of Realtors, said.”

“Sales in the Dallas-Fort Worth area are running about 7 percent below the year-ago pace.”

“‘The first thing you have to look at in your marketplace is what is the change in new listings,’ said housing analyst John Tuccillo. ‘The market will not recover until the new listings in your market begin to fall.’”

“Through the first 10 months of the year, new listings are down 1 percent from the same period of 2006, according to the North Texas Real Estate Information System. However, the time it takes to sell a house in the Dallas-Fort Worth area has crept higher.”

“‘The days on market must begin to fall’ before the market can recover, Mr. Tuccillo said.”

“Realtor executives (meeting this week in Las Vegas) did their best to blame media reports for much of the market’s woes. But the real estate agents themselves aren’t blameless for the excesses that now plague the home market.”

“‘Realtors and mortgage brokers make the deal, get their check and walk away,’ Mr. Tuccillo said. ‘The system is set up so that in times of excess, the front end automatically makes bad decisions.’”

“Mr. Yun said many housing markets stretching ‘from the Rocky Mountain states to Appalachia’ have undervalued home prices and won’t be clobbered by dramatic price declines. ‘In Salt Lake City and Austin, Texas, for instance, we are seeing double-digit price appreciation.’”

The American Statesman. “The Monarch won’t emerge as condos after all. First planned as apartments and then changed to condominiums, the 305-unit residential tower that is under construction in downtown Austin has been switched back to apartments.”

“ZOM Texas Inc. said the decision was based on timing rather than demand, with uncertainty in the mortgage markets a factor in slowing buyers’ decisions. ‘The buyers are there, just not at the pace we needed by early 2008,’ when the project opens, said Steve Buck, chief operating officer of ZOM Cos.”

“Prospective buyers had put 20 percent of the units under contract in the past two months, said Kevin Burns, a broker (who) had been marketing the units. But John Faulk, development manager for ZOM Texas, said the volume of sales had slowed to such a point that ZOM didn’t think it could meet its internal goal of selling 70 percent of the units by April, when the 29-story building on West Fifth Street is scheduled to open.”

“‘The demand was clearly there,’ Faulk said. ‘We just got caught in this time crunch.’”

“The sales goal was roughly the amount needed to pay off the project’s construction loan, Faulk said.”

“ZOM will refund earnest-money down payments of 10 percent on the units, which were priced from $229,000 to $1.75 million. ZOM will start leasing the units as apartments in February; monthly rents will start at $1,650.”

“‘We have had a little pessimism in the marketplace,’ Burns said. ‘People are dotting their i’s and crossing their t’s before making a decision to purchase. This is a psychological issue right now. This is not a bellwether of our market.’”

From KXAN. “Attorney General Greg Abbott said the rate of foreclosures in Texas is a crisis. He also warned that some lenders are contributing to the problem.”

“‘In part, because a lot of these homeowners were misled into entering into these loans to begin with, that we’ve been involved in bringing legal actions against some of these sub prime mortgage lenders, such as Ameriquest,’ Abbott said.”

“KXAN Austin News spoke with two realtors Monday, who said that the foreclosure rate in Travis County is actually down 15 percent, compared to this time last year. Carl Shurr, a real-estate professional, said that foreclosure rates could be about to increase.”

“The fallout from the sub prime debacle, which had new homeowners with lower credit scores buying, has yet to make its impact. The problem with the market is that many new homebuyers are purchasing adjustable-rate mortgages.”

“‘If inflation continues and rates keep increasing, adjustable rate mortgages are going to go right with that. Even though foreclosures are down 7 percent since last year, they’re up 112 percent since 2001,’ said Shurr.”

The Herald Tribune. “Waco Town Square has been tweaked to include 164 loft-style residences called the Austin Avenue Flats, spread over 150,000 square feet — more than twice the housing space developers first considered. They say they’re only responding to demand.”

“‘Our studies show people want to live downtown,’ said Michael Wray, of Waco, who will oversee development of the lofts.”

“The group now says it will build nearly 150,000 square feet of lofts, compared with the 60,000 square feet it once considered.”

“Meanwhile, proposed office space has dropped from 68,680 square feet to about 10,000, while restaurant/retail space has fallen from 61,880 square feet to about 34,000.”

“‘From my standpoint, the more people downtown, the better,’ said City Manager Larry Groth. ‘If we can create developments that put bodies here 24/7, that goes a long way toward overcoming the perception of a crime problem downtown, and it really is only perception. People also drive demand for other services, and they use public spaces.’”

From KFOX News. “El Pasoans have begun to see the national foreclosure problems hit along the Borderland. Because of all the recent foreclosures, mortgage companies have decided to tighten up, giving fewer people loans, and as a result, fewer people are buying homes.”

“KFOX met up with one Far East El Paso family that has decided to move out of their own home, but not by choice. They’ve been forced out by foreclosure.”

“‘Time went by and all of a sudden, just I don’t know, $8,000 into the hole, and the next thing I hear is foreclosure, so now I got to take care of the whole situation,’ said Jorge Pina who owns the home.”

“Pina rented out his home to a family that got behind on payments on a high interest loan they received from a mortgage company.”

“‘It was pretty much a 10 percent loan, pretty much this whole deal was rushed in there. It could have been done at a lower percentage, but since the tenant was kind of urging to get it fast, get it quick, then that’s what caused the original problem,’ said Pina.”

“‘Mortgage companies are having hard times qualifying people, they are asking for more prerequisites to qualify buyers,’ said Rosalinda Medina with Success Realty.”

“What may only compound the problem is homes are selling for significantly less than what they’re worth, and what the homeowners originally paid for.”

“‘Houses used to sell like this one, used to sell for like 195, now it’s only like, 175, 180. It’s like $10,000 or $15,000 less than last year,’ said Medina.”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Barclays Plc, the U.K.’s third- biggest bank, wrote down about 1.3 billion pounds ($2.7 billion) of credit-related securities tied to the U.S. subprime-mortgage market collapse. Barclays booked a gross writedown of 1.7 billion pounds on subprime-related assets and loans for leveraged buyouts.”

“The charges and writedowns in October reflected ‘rating agency downgrades on a broad range of CDOs and the subsequent market downturn,’ the bank said.”

“‘We have taken the opportunity to draw the line’ on the bank’s riskiest credit-related securities, Barclays President Robert Diamond said. ‘The issues in subprime are deep.’”

“Barclays has marked its securities to markets ‘where we can find them,’ said Finance Director Chris Lucas said on the call. The bank has ‘ongoing exposure” to U.S. subprime assets, Lucas said. ‘Where there is no market, it has valued them at fair value, he said.”

“The writedown of 800 million pounds in October is to accommodate ‘triggers’ that may result in further declines in the value of credit-related securities later this year and in 2008, Diamond said.”

From MarketWatch. “Subprime mortgage lender NovaStar Financial Inc. reported a $598 million quarterly net loss late Wednesday and said that its shares may be de-listed from the New York Stock Exchange.”

From Reuters. “In its quarterly report filed with securities regulators, Kansas City, Missouri-based NovaStar outlined several scenarios under which it might seek bankruptcy protection for creditors. These included a failure to extend a waiver expiring November 30 of a net worth covenant under its financing agreements with Wachovia Corp.”

“They also included margin calls, big legal expenses, and other ‘unforeseen adverse liquidity events (that) could cause the company to exhaust its cash balances.’”

The Kansas City Business Journal. “With the loss, the company’s shareholder equity figure was at a deficit of $80.7 million. As of Tuesday, the company said it owes $83.9 million to Wachovia. NovaStar said there is no assurance it can obtain additional waivers or be able to repay its outstanding debt to Wachovia, which could cause NovaStar to file bankruptcy.”

“‘Accordingly there can be no assurance that we will be able to continue as a going concern,’ NovaStar said in the SEC filing.”

“Outside investors have pulled $600 million from a General Electric Asset Management fund struck by losses in mortgage-backed securities, the company said Thursday… leaving GE’s pension the sole participant in the fund with an unrealized loss of $200 million.”

From Barron’s Online. “Outside institutional investors therefore face a 4% loss on their holdings. Based on information on GE Asset Management’s Website, the enhanced cash fund has about 27% of its assets in home-equity asset-backed securities, 23% in residential mortgage securities.”

“In response to the Barron’s inquiry, GE Asset Management said in an e-mail statement that it has ‘ceased taking new investments’ in the fund “based on our belief that recent extreme conditions in the credit markets, including liquidity concerns and value dislocations, will continue in the foreseeable future.”

“Finance company GMAC’s Residential Capital home mortgage unit may be close to violating certain debt covenants due to a plunge in its net worth, the Wall Street Journal reported in its online edition on Thursday. ResCap is the second-largest independent U.S. mortgage lender after Countrywide Financial Corp.”

“ResCap is now burdened with loans that are rapidly declining in value, the Journal said, adding the situation has triggered concerns its lenders will demand immediate payment or force the unit into bankruptcy protection if GMAC or its owners don’t step in with an equity injection or other measures.”

“A Bear Stearns investment fund hurt by the decline in the subprime mortgage market and facing creditors’ complaints about its management asked a Delaware judge to allow it to dissolve and liquidate its assets.”

“‘The partnership can no longer operate in the manner contemplated’ by the agreement that created it, Bear Stearns lawyers said in their request.”

“Bear Stearns said in securities filings that the company’s losses from funds included a $200 million write-off of its investment in the fund and anticipated fees. Other investors may have lost more than $600 million as a result of the funds’ meltdown.”

“Sumitomo Trust & Banking Co., Japan’s fifth-largest bank by market value, said first-half profit fell 41 percent on higher provisions for bad loans, including credits linked to defaults on U.S. mortgages.”

“Losses linked to the record defaults in the U.S. mortgage market will probably increase to about 20 billion for the full year, from 9 billion in the first half, Yutaka Morita, president of Sumitomo Trust, said. The bank added 36.1 billion yen to provisions for loan losses in the period.”

From Fortune Magazine. “Investors might want to take a closer look at Fannie Mae’s latest earnings report. Lost in the unsurprising news of the mortgage lender’s heavy losses was a critical change in the way the company discloses its bad loans, a move that could mask that credit losses that are rising above levels that the company predicted just three months ago.”

“It all comes down to what’s known as the credit loss ratio. The credit loss ratio expresses bad loan losses as a percentage of Fannie Mae’s loans.”

“Management acknowledges that credit losses are mounting. During an analyst call last week, Fannie Mae CEO Daniel Mudd warned that the company’s loss ratio could rise to eight to 10 basis points in 2008, due to a worsening housing market. It’s not clear whether that forecast is based on the old or new methodology.”

“The company may already be exceeding that 2008 guidance. Based on the old methodology for calculating the loss ratio for the third-quarter alone, the company’s annualized loss ratio is already at 14 basis points. If so, Fannie Mae’s mounting losses are disturbing.”

“Yesterday, following a month of inquiries by Bloomberg News to Florida officials, Governor Charles Crist held a public meeting disclosing that 4 percent of the state’s short-term investments, including those in the state pool, had been downgraded by credit rating companies.”

“State officials have no business putting taxpayer money into debt investments that have baffled even the most seasoned Wall Street executives, says Joseph Mason, finance professor at Drexel University and a former economist at the U.S. Treasury Department.”

“‘Municipalities shouldn’t be playing like they’re expert investors, squeezing the last penny out of SIVs,’ Mason says. ‘They’re making a giant jump into a new product area which has unknown, unforeseen risks.’”

Dow Jones Newswire. “Michael Milken, widely regarded as the founder of the junk bond market, believes defaults from mortgages will be greater than in high-yield bonds.”

“‘Today many AAA-rated mortgage securities will have higher default rates than single-B industrials,’ Milken said.”

“The crisis of confidence in bond insurers may cost investors as much as $200 billion. The AAA ratings of MBIA Inc., Ambac Financial Group Inc. and their five smaller competitors are being reviewed by Moody’s Investors Service and Fitch Ratings.”

“Without guarantees, $2.4 trillion of bonds may fall in value and some issuers would get shut out of the capital markets.”

“‘We shudder to think of the ramifications,’ said Greg Peters, head of credit strategy at New York-based Morgan Stanley, the second-biggest U.S. securities firm by market value. ‘You have politicians, taxpayers, municipalities, states. It just opens up a Pandora’s box. That is a huge destabilizing force.’”

“TOUSA, Inc. today reported a net loss for the three months ended September 30, 2007 of $619.7 million. Adversely impacting net income is $530.6 million of pre-tax charges resulting from goodwill impairments and the write-down of assets.”

“Of this amount, $63.3 million of inventory impairments are related to active communities, $441.2 million are related to land impairments, deposit write-offs and abandonment costs.”

“The Company’s gross profit margin, excluding impairment and related charges, decreased to 17.7% in the third quarter of 2007 from 22.8% in the third quarter of 2006. Home sales gross profit was primarily impacted by higher incentives, which increased to $45,300 per delivery for the third quarter of 2007.”

“The Company’s sales orders cancellation rate was approximately 47% for the three months ended September 30, 2007. The Company attributes the unusually-high cancellation rate to the dramatic tightening of the credit markets, buyer’s inability to sell their existing home, diminished consumer confidence, the oversupply of new and existing homes available for sale, increased foreclosures and downward pressure on home prices.”

“As of September 30, 2007, the Company had stockholders’ equity of $48.3 million. Based on the foregoing, the Company believes there is substantial doubt about its ability to continue as a going concern.”

The Street.com. “With the heat on from its creditors, troubled Florida condo developer WCI Communities is scrambling to look as healthy as possible. While the company can’t hide its weak cash flows, it may be employing unusual accounting assumptions to delay large land impairment charges that would reduce book value further.”

“Nearly all of WCI’s impairments to date have been for finished home, not raw land or homes/communities under development. This differs from many other homebuilders such as Lennar and D.R. Horton, which have recorded meaningful impairments of raw land and communities under development.”

“For example, in its most recent quarter D.R. Horton said about 75% of its impairment charges nationally were recorded to residential land and lots and land held for development.”

The Associated Press. “Wells Fargo & Co. President and Chief Executive John Stumpf said Thursday the housing market is experiencing its worst decline since the Great Depression.”

“Stumpf said…that rapidly declining housing prices are likely to put even more pressure on delinquencies and defaults. ‘I don’t think we’re in the ninth inning of unwinding this,’ Stumpf said, relating the declining housing market to a baseball game. ‘If we are, it’s going to be an extra-inning game.’”

“Stumpf said the downturn resulted in part from ‘froth, unscrupulous lenders, (and) borrowers who got too greedy. In 2006 the music stopped.’”

The Herald Tribune reports from Florida. “North Port and neighboring Charlotte County, each with tens of thousands of vacant lots, are now home to 1,200 abandoned construction sites, yet another aftershock from region’s real estate market collapse. North Port and Sarasota County combined have about 540 of these sites, including about 200 in North Port. Charlotte, with far more vacant lots, has an estimated 1,000.”

“‘The city issued too many permits too quickly/ for building homes, said Mary Heins, whose North Port house sits across the street from an abandoned homesite.”

“Skyrocketing real estate values in recent years meant frenzied buying and building of houses across the region. Some builders, confident that the high volumes would continue, overextended themselves, taking on too many projects and without enough money to finish them when the buying stopped.”

“Some speculators saw the market turn sour and just walked away rather than take greater losses paying to complete homes that had dropped in value.”

The Miami Herald from Florida. “Hollywood home builder Tousa, which posted a $622 million loss in the latest quarter, said there is substantial doubt about its ability to remain in business.”

“The company is weighing whether to follow Fort Lauderdale home builder Levitt and Sons into Chapter 11 bankruptcy reorganization.”

“The home builder is shedding its home sites to account for the weak demand for housing. It abandoned rights to buy 9,400 home sites, forfeiting $167 million in deposits.”

“Whether Tousa can continue operating will depend on its ability to exchange a large portion of $1.7 billion in borrowings for equity stakes in the company, according to Wednesday’s filing with the Securities and Exchange Commission.”

“The industry is ‘going to be a shadow of itself once we get through this downturn,’ said Mark Zandi, chief economist at Moody’s Economy.com. ‘Everyone was too optimistic.’”

The St Petersburg Times from Florida. “One builder’s stock trades at 25 cents. Another suffered cancellations that chopped two-thirds of its business. A third builder is $2-billion in debt. Those three builders - Tousa Inc., Beazer Homes and Standard Pacific Homes - have been important props in the economy of the Tampa Bay area.”

“In the recent housing boom, thousands of their homes spread out over the suburbs of Hillsborough, Pasco, Hernando and Pinellas counties. Now they’re all the subject of bankruptcy rumors.”

“Tousa said it ‘faces many challenges and is considering all available restructuring and reorganization alternatives.’ Translation: Bankruptcy is a possibility.”

“Standard Pacific is the No. 3 builder in the Tampa Bay area. Corporate analysts have soured on the company’s $2-billion debt. The builder also suffers from a narrow focus on three highly stressed housing markets: California, Florida and Arizona.”

“Other builders prominent in the Tampa Bay area, including Centex and Pulte Homes, aim to survive an industrywide unraveling by selling houses at bargain prices and slashing jobs.”

“Tampa Bay area housing analyst Marvin Rose predicts the slow market, home starts are down more than half this year, will claim the scalps of more builders. It’s happened before…in the recession of the early 1990s. ‘There were a ton of builders that left the market. They just pulled out of town,’ Rose said. ‘I suspect there will be a few this time that decide to leave or go bankrupt.’”

The Bradenton Herald from Florida. “According to the Manatee County MLS, the glut of homes on the market appears to have plateaued and has been ebbing downward since the high-water mark in March. In March, there were 5,968 homes on the market. In October, that number had been reduced to 5,362.”

“By contrast, in October 2005, there were 2,095 homes for sale. That same month, there were 242 sales. In October, local Realtors reported 104 sales, and the median price was $277,000, down from a median of $333,366 the same month in 2005.”

“The number of homes on the market needs to fall dramatically before a true correction can occur, said Dan Forbes, broker (in) Bradenton. A healthy market has about a six-month supply of inventory, compared to the current 36-month supply, Forbes said.”

“Forbes stresses that pricing a home appropriately for the market will save both the seller and the agent time and money. ‘Realtors are their own worst enemies when they take overpriced listings,’ Forbes said.”

“Sunday’s big headline in the Herald must have sent everyone’s blood pressure through the roof: ‘Area property values to dip; but taxes up?’ What?”

“But that’s the report from the Manatee County Property Appraiser’s Office. On next year’s tax bill, property values could fall by 5 percent on single-family homes. That’s right, next year’s taxes are determined by this year’s property values, so you won’t see the current drop in value until tax notices are shipped out in November 2008.”

“Try to sell your home now for just a 5 percent drop in value, and all we can say is good luck with that.”

“Realtor sales figures for the Bradenton-Sarasota market show the median price plunging $43,300 to $244,300 over the course of a year, from September 2006 to 2007. That’s a 15 percent tumble - nowhere near 5 percent.”

From First Coast News in Florida. “You see them on the rise, but some condos and other development projects are starting to halt their upward movement. The Shipyards development and a new Publix in San Marco are all pushed back. ‘Unfortunately, the people of San Marco are going to have to wait a long time for a Publix,’ says Raymond Rodriguez with the Real Estate Strategy Center.”

“‘Well, the demand is not there right now for presale construction. People are sitting on the fence waiting to see what’s happening,’ says realtor Paul Pierce.”

“According to the Strategy Center, since 2000 more than 12,000 apartments have changed to condos in Jacksonville. Now, 22% of those condos are empty.”

“‘At one time the market was great, they made the announcement for condos. The market changed, they reversed themselves and went back to apartments,’ says Rodriguez.”

“‘The good thing is…we did not go crazy overbuilding these high price condos like in south Florida. We just made a lot of announcements which never came to be,’ says Rodriguez.”

The New York Post on Florida. “Miami’s once-sizzling realestate market has certainly cooled off, but perhaps not by as much as redicted. In a city oozing with the vested interests of owners, renters, potential buyers, investors, brokers and developers, it’s difficult to get an honest assessment of the market.”

“‘I think that you’ll see prices coming down to the 2004 level, but not much below that,’ says Dr. William Hardin, a real-estate professor at Miami’s Florida International University. ‘We’re going to have to forget 2006 and part of 2005. I would try to make a transaction at 2004 or 2005 price points - they would be a good starting point for negotiations.’”

“Karla San Emeterio, a 28-year-old teacher, bought a 582-square-foot studio this past August for just $149,000, or about $250 a square foot, at Loft 4, a 440-unit building in downtown Miami.”

“This price point is quite an aberration even for downtown Miami, which has more affordable condos than what you’ll find in South Beach. Smaller studio apartments in nearby new buildings such as One Miami or 50 Biscayne are on the market with asking prices in the mid $200,000s.”

“‘This type of thing wasn’t advertised very much at first,’ she explains. ‘I felt like it was very word-of-mouth, and you almost had to really look for [great deals] like this. And, of course, give up certain things, like parking.’”

“San Emeterio was required to put down just 5 percent when she signed the contract; she’ll pay another 5 percent at groundbreaking. She’s hoping her credit score will be good enough to get zero-percent-down financing at closing.”

“‘I know the market is bad … but, I mean, how much more is it really going to go down?’ she says. ‘Am I ever going to get a better deal than $150,000 in the heart of Miami? Sure, now may not be the best time to buy, but you can’t let a good opportunity pass you by.’”

The Daily Business Review from Florida. “Residents of the Club at Brickell Bay Plaza condominium came home one day to find they had no cable or Internet service, the result of the condo association falling months behind on payments to provider Primecast.”

“It was the latest service snafu for the troubled building and its association, which is struggling to make ends meet as many unit owners fail to make their monthly maintenance payments.”

“We are victims’ of speculators who bought condos intending to flip them but got stuck with the units after the prices peaked, said Diana Ospina, association president at the Club at Brickell Bay.”

The Daily Report from Georgia. “A ground breaking for One Museum Place, a super luxury condominium project slated for Peachtree Street in Midtown Atlanta, has been postponed indefinitely until the credit market loosens up and ‘we know where the economy is headed,’ said the project’s developer, John Wieland.”

“‘We decided to put it on hold until we get past the credit crunch,’ said Wieland, CEO of one of Atlanta’s largest home builders. Wieland said 15 buyers who placed $50,000 deposits on units will receive refunds. Wieland said he hopes to revive the project in a year or two.”

“Wieland said his team was negotiating financing for the $350 million project but didn’t have it in place before the credit market tightened six weeks ago in response to the collapse of the subprime mortgage lending industry.”

“‘That kind of building needs to be built in an upswing instead of a downswing,’ Wieland said about One Museum Place.”

“One Museum Place is one of at least six condo projects planned to bring a total of at least 175 $1 million-plus condo units to Atlanta. David Haddow, president of a real estate consulting firm, said it’s hard to tell how well this wave of luxury condo projects will perform, but said the sales pace for $1 million-plus condos in Atlanta hasn’t been good historically.”

“With the exception of a few projects…most of the condo projects with units carrying a $1 million-plus price tag built over the past decade have struggled, Haddow said.”

“‘It may change,’ Haddow said, adding that nobody knows how deep the demand is for that market. ‘The fact of the matter is, when you’ve got a million dollars to spend on a home, you’ve got all the choices.’”

The Atlanta Journal Constitution from Georgia. “Lenders have scheduled 5,244 metro Atlanta properties for public foreclosure sales next month, according to statistics released Tuesday by Equity Depot.”

“The monthly total is the second-largest monthly figure ever posted for the 13-county area of metro Atlanta.”

“The failing mortgages tend to be high-interest, adjustable-rate loans, said Barry Bramlett, an Equity Depot vice president. ‘It’s still a subprime problem,’ he said. About one in four metro Atlantans who purchased a home in recent years took out a high-interest mortgage, according to federal data.”

“Bramlett said he is also seeing an increase in the number of construction loans facing foreclosure. But he said these loans make up a small portion of the total.”

“So far this year, 53,365 foreclosure sales have been scheduled in metro Atlanta, well above the 44,971 total for all of 2006. This month’s total represents a 36 percent increase over the total for November 2006.”

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