The Housing Bubble

The Press Democrat reports from California. “Sonoma County home prices fell back to $500,000 for the first time in three years as the region’s housing decline deepened in November, according to the latest Press Democrat real estate report. Sales dropped 24 percent compared with a year ago, and the number of listings on the market stuck near historic highs for the month. Home sales have been falling more than two years in annual comparisons.”

“Prices now have declined 17 consecutive months in annual comparisons. In November, the price of a typical home sank to $500,000, down 11.5 percent compared with a year ago. It is the lowest since May 2004, when the median stood at $490,000.”

“The slide has knocked the price of a typical home down by 19 percent since the median peaked at $619,000, reached in both August 2005 and January 2006.”

“Price reductions for houses offered at less than $475,000 have been twice as deep as cuts for homes priced at more than $622,000.”

“‘The low end is hammered. There’s a lot of people that have been hanging on that can’t hang on any further,’said Karl Bundesen, owner of Century 21 Bundesen Realty in Petaluma. ‘I don’t think we’ve seen the worst of it. We have a lot of inventory and foreclosures to clear out before we get this thing turned around.”

“Buyers likely will offer less than the listed price for a home as a hedge against prices continuing to fall. They also expect sellers to pay closing costs, make repairs and other concessions.”

“‘For a lot of buyers, it’s the only way that they will start the conversation,’ said Lori Sacco, an agent in Sebastopol.”

“Santa Rosa mortgage broker Darren Seliga completed a recent loan for a buyer who renegotiated the price on a home because of a foreclosure sale in the same neighborhood.”

“‘I’m starting to see that happen with more buyers and sellers,’ he said. ‘Those hurt the market. It’s like mini-explosions all over in different neighborhoods.’”

The Contra Costa Times. “The Federal Reserve moved Tuesday to protect home buyers from dubious lending practices, its most sweeping response to a mortgage meltdown that has forced record numbers of people from their homes.”

“Jay Damato, a mortgage broker in Walnut Creek, said that although some people weren’t aware of all the risks in their loan, his clients were. ‘I made sure they understood all the risks, but it didn’t change their behavior,’ he said. ‘Unless you make a law that all loans are now 30-year, fixed-rate loans with 10 percent down, this problem is not going away.’”

“Damato said that it would be impossible to find a lender for almost anyone who wanted a loan without income documentation, so many of the laws are already out of step with the current market. And, that market changes weekly and sometimes daily.”

“‘I could do stated (undocumented) income loans on conforming loans until last week. … Now I can’t,’ he said. ‘It’s changing every day.’”

The Ventura County Star. “When asked if the Ventura County housing market is enduring one of its worst sales years ever, Bill Watkins, executive director of the UC Santa Barbara Forecast Project replied: ‘We just had one.’”

“Sales of new and existing houses and condominiums from January to November plunged 27.9 percent in Ventura County, compared with the same period a year ago, DataQuick reported. Sales last month stood out as the lowest total for any November in DataQuick’s records, which date back to 1988.”

“November marked the 24th consecutive month that Ventura County has posted year-over-year decline in sales. Ventura County’s median price fell to $521,250 in November, a 9.7 percent drop from $577,500 last year, according to Dataquick.”

“Watkins said he believes California could be weaker economically than the rest of the United States for the first time in a few years. The state’s budget crisis also means the government is going to reduce spending and raise taxes, which will have a negative effect on economic growth, Watkins said.”

“What does that mean for the residential housing market? ‘It means there’s no hope for an immediate turnaround,’ Watkins said. ‘There’s currently no sign that would give someone a reason to believe it would pick up.’”

“Realtor Mike Plisky says sales are off 35 percent at Aviara Real Estate in Westlake Village compared with last year, but he’s seen a recent spike in activity. A lot of the buyers on the market are investors. ‘This is not a great time to sell, but it’s a great time to buy,’ he said.”

The North County Times. “Riverside County home prices in November remained near recent lows, with growing numbers of bank-owned properties drawing bargain hunters and first-time buyers.”

“Houses and condominiums sold for a median $356,500 last month, a 17 percent decline from November 2006, according to DataQuick.”

“Agent Chris Parent said lenders find themselves paying more than expected in property taxes and maintenance costs after they seize houses from delinquent buyers. It’s a bonanza for many of the 150 bargain-hunting investors and potential owner-occupants Parent represents, he said.”

“‘They know they’re walking into a phenomenal deal,’ Parent said. ‘It’s the end of the quarter and taxes are due and banks are getting rid of the (houses).’”

“One couple Parent represents bought three houses in Murrieta last month, including one for $312,000, or $223,000 less than its most recent sale in August 2005. The couple are renting out one of the houses and have put the other two back on the market for substantially more than what they paid.”

“Builders have been scrambling to sell off hundreds of empty tract homes across the county and the region, another factor that DataQuick cited for the lower prices in October and November.”

“The average sale price of existing houses in Southwest County has plunged 22 percent since November 2006, to $375,200, according to The Californian’s analysis of sale prices from a database that real estate agents use. That’s a level last seen in March 2004.”

“‘It’s the time for investing,’ said Troy Smith, who paid $478,000 last month for a house near Murrieta Valley High School that a lender had seized and then listed at $635,000 in March. ‘Nobody has that crystal ball. Nobody knows when it’s going to hit bottom.’”

“Ever larger numbers of homes are falling into foreclosure after owners default on their loans. Lenders now own 1,852 properties in Southwest County, according to The Californian’s analysis of data from foreclosureradar.com, a database for banks and investors. That represents about 29 percent of houses listed for sale locally.”

The Daily Bulletin. “San Bernardino County home prices fell by 13.2 percent in November, according to DataQuick Information Services, but that wasn’t the worst report for Inland Empire sellers. No, Riverside County prices fell even more, dropping 16.5 percent from November 2006 to the same month in 2007.”

“Redlands-based regional economist John Husing said the federal government needs to figure out a way to alleviate the foreclosure problem.”

“‘We definitely have the potential for an economic downturn right now,’ he said. ‘With what is happening in the housing markets and the slow growth at the ports, we may see a downturn in the Inland Empire next year.’”

The County Sun. “Home builders are pulling less than half the number of single-family detached building permits in San Bernardino County this year as they did in 2005. It’s no surprise for an area claiming one of the nation’s highest foreclosure rates and a huge inventory of empty houses.”

“It’s a situation that doesn’t bode well for local governments because a major drop in home building means less tax revenue from new construction, said Mason Gaffney, an economics professor at UC Riverside who studies real-estate business cycles and land-resource economics.”

“As far as the housing slump goes, ‘this one is right on schedule,’ Gaffney said. He said some builders were too busy constructing homes during the housing boom and didn’t notice the market’s cycle coming to an end.”

“Compared with other Southern California home-building slowdowns throughout history, the current one is ‘pretty extreme,’ Gaffney said.”

The Press Enterprise. “It was the third consecutive month in which sales of new and existing homes in Riverside and San Bernardino counties increased, rising from a combined 3,717 in September to 3,980 in October and 4,222 in November.”

“‘There has been a small increase in demand thanks to discounts, particularly in the new-house market,’ said Andrew LePage, an analyst with DataQuick.”

“November’s 7,671 foreclosure-related filings in the Inland area represent a 62 percent increase from a year earlier.”

“Leslie Appleton-Young, chief economist for the California Association of Realtors, said although deals seem to be giving home sales an unusual push during the holiday season, ‘we are not expecting the market to bottom out anytime soon.’”

“Chris Thornberg, an economist and principal at Beacon Economics, contends that buyers are smart to wait.”

“‘If anyone thinks there are bargains in this market, they are fooling themselves,’ he said. ‘We have two years of falling prices ahead of us.’”

“Efforts to make mortgages more plentiful, Thornberg said, won’t solve the main problem, which is home prices that rose much faster than incomes have and will have to decline until houses are more affordable.”

“‘It is just a function of time. Painful, painful time,’ he said.”

“Mike Dwight, senior VP of Frontier Homes, based in Hesperia, said a downsizing in home designs and falling land prices will result in less costly houses hitting the market about the middle of next year.”

“To recharge the industry, builders need to produce houses priced in the $200,000s for first-time buyers, he said. ‘At the end of the day, it is the first-time buyer who drives the market,’ Dwight said.”

“Appleton-Young said she hopes the federal government will take action to make mortgage financing more available. But she said a rebound in home sales also will require an attitude change among potential buyers, who have been waiting for prices to fall further.”

The Press Telegram. “Riverside and San Bernardino were the only counties in the region where the median price below the federal conforming loan limit of $417,000. DataQuick noted that…compared to a year ago, conforming loan purchases fell 31.2 percent in November, while jumbo sales tumbled 69.3 percent.”

“Jumbo-financed purchases represented nearly 40 percent of sales this year before the August credit crunch, while last month they accounted for 22 percent, the company said.”

“‘It’s still pretty gloomy,’ Jack Kyser, vice president and chief economist at the Los Angeles County Economic Development Corp. said of the market. ‘I think you are going to find some very motivated sellers out there.’”

The Sacramento Bee. “At a town hall-style event here, Paulson and Gov. Arnold Schwarzenegger spent more than an hour listening as local officials, loan counselors, community members and borrowers described the troubles they were having getting help from their lenders.”

“‘Unfortunately, there (are) all too many stories like yours in the country,’ Paulson told one borrower who said she could no longer refinance her home and would almost certainly lose it. ‘This is why we’re trying to find solutions.’”

“More than 1,100 homes in Stockton and neighboring cities of San Joaquin County were repossessed by banks in July, August and September, according to DataQuick.”

“Paulson promised to investigate the claim of one borrower who said her lender had refused to offer any solutions and would not talk with her until she had defaulted. ‘In June I’m staring down the barrel of an $8,000-a-month mortgage payment,’ said the woman, who declined to give her name.”

“Paulson and Schwarzenegger said their programs aren’t designed to help everyone. ‘Some of these people won’t have the capability to be homeowners and will become renters again,’ Paulson said.”

“Schwarzenegger told the audience to focus on the long term. ‘This crisis is not going to last,’ he said. ‘It’s a bump in the road. Eventually, the market will take off again.’”

Some housing bubble news from Wall Street and Washington. MarketWatch, “Hovnanian Enterprises Inc. reported a widened fourth-quarter loss, as home builders continue in vain to search for a bottom in the residential housing market. Hovnanian said it incurred a total of $383 million in pretax charges including land and intangible impairments. The company said similar charges in the same period a year earlier totaled $322 million.”

“The company said its net loss for the period ended in October increased to $466.6 million. ‘Our industry is currently experiencing a cyclical correction,’ said CEO Ara Hovnanian. ‘While the factors that created this downturn are different than any other throughout our 48-year history, we know that stronger demand for new homes will return. What is not known is how long the market will take to rebound.’”

“Hovnanian delivered 19% fewer homes during the October quarter compared to the year-earlier period. The cancellation rate rose quarter-over-quarter to 40% of gross contracts, up from 35%.”

The Associated Press. “Morgan Stanley, the No. 2 U.S. investment bank, reported a $9.4 billion writedown on Wednesday from bad bets on mortgage-related debt, leading it to take a $5 billion infusion from an arm of the Chinese government.”

“The writedown, nearly triple what Morgan Stanley warned of in November, pushed the investment house to the first quarterly loss in its 73-year history.”

“Morgan Stanley said it had about $1.8 billion worth of subprime mortgage exposure left on its books at the end of the quarter on Nov. 30, down from $10.4 billion at Aug. 31. The equity units the Chinese fund purchased from Morgan Stanley will yield 9 percent per year before they are converted into common shares.”

“The company’s total announced write-downs since the third quarter now stand at $10.3 billion, a sum that ranks third among banks taking losses stemming from the turmoil in the mortgage market.”

“Morgan Stanley blamed the $9.4 billion total write-down on ‘the continued deterioration and lack of liquidity in the market for subprime and other mortgage-related securities since August.’ About $7.8 billion of the fourth-quarter loss came from U.S. subprime trading positions.”

The New York Times. “Officials from Merrill Lynch, Bear Stearns and other major banks are in talks to bail out a struggling bond insurance company that has guaranteed $26 billion in mortgage securities, according to two people briefed on the situation, because the insurer’s woes could force the banks to take on billions in losses they had insured against.”

“The insurer, ACA Capital Holdings, which lost $1 billion in the most recent quarter, has been warned by Standard & Poor’s that its financial guarantor subsidiary may soon lose its crucial A rating.”

“If it did, the banks that insured securities with the ACA Financial Guaranty Corporation would have to take back billions in losses from the insurer under the terms of the credit protection they bought from the company.”

“The troubles at ACA could also serve as the first real test for credit default swaps, the tradable insurance contracts used by investors to protect, or hedge, against default on bonds.”

“‘The hedge is only as good as the counterparty, or the other party, to the hedge,’ said Joseph R. Mason, a finance professor at Drexel University and the Wharton School. ‘This is part and parcel of the financial innovation that has grown very rapidly in recent years.’”

“Analysts note that about $10.7 billion of the mortgage-related C.D.O.’s the company has insured contain lower-rated, or mezzanine, securities that are most vulnerable to losses from falling home prices and rising foreclosures.”

“‘Some of the ratings that were being used don’t reflect the true credit quality of these various securities,’ said Sean Egan, a managing director at an independent credit-ratings firm.”

“Mr. Egan and other analysts also note that ACA more than doubled its credit default business in the last 12 months; it had contracts outstanding on $70 billion in bonds on Sept. 30, up from $30 billion a year ago.”

“The timely use of credit default swaps this summer helped large investment banks like Goldman Sachs and Lehman Brothers avoid huge losses on mortgage securities as others had billions in losses.”

“‘It’s a zero-sum game,’ said Jim Keegan, a portfolio manager at American Century Investments, noting that the gains at the investment banks buying the protection have to eventually result in losses for the firms they hedged with. ‘If you put trades on that worked so well that you bankrupt your counterparty, you will not collect on those trades.’”

From Bloomberg. “More than $174 billion U.S. of collateralized debt obligations tied to U.S. mortgages were under review for downgrades by Moody’s Investors Service at the start of this month, according to the ratings company, suggesting the subprime crisis may deepen.”

“Moody’s downgraded $50.9 billion of CDOs made up of structured-finance securities in November, or about 9.4 per cent of the total, the New York-based company said. Standard & Poor’s, which yesterday lowered ratings on $6.7 billion of the debt, has so far downgraded or placed under review $57 billion of the debt.”

From Business Week. “When is the last time ‘central banker’ and ‘creative’ appeared in the same sentence? The global credit crunch that originated in the U.S. housing market is forcing them to try things they’ve never tried before.”

“This week, the central banks of both Europe and the U.S. took a shot at brand new ways to thaw the freeze in lending between banks. On Dec. 18, in an operation that was both huge and unprecedented in its design, the European Central Bank made 16-day loans of $500 billion worth of euros to European banks.” “The significance of 16 days is that it means the banks won’t have to borrow again until after Jan. 1.”

“‘Central banks here, quite frankly, are experimenting. They’re in a little bit of uncharted territory,’ says ays Joshua Feinman, chief economist at the mutual fund division of Deutsche Bank Asset Management.”

“Bert Ely, a banking consultant in Alexandria, Va., who’s known for his irreverent declarations, puts it differently: ‘These guys are flying by the seat of their pants.’”

“ECB President Jean-Claude Trichet said the coming weeks may be ‘challenging’ for financial markets. ‘Given the uncertainties, the adjustment process in the financial system in the coming period may be challenging and we have to be prepared to the materialization of risks at any time,’ he said.”

“The bank’s attempts to ease financial-market volatility and deliver price stability would remain separate, Trichet said. ‘These two responsibilities are clearly distinct and should not be mixed.’”

Dow Jones Newswires. “Sumitomo Mitsui Banking Corp. President Masayuki Oku implied that his institution won’t be participating in the U.S. subprime rescue fund as requested by its U.S. backers, according to published reports.”

“‘We must consider this matter extremely carefully,’ he said at a regular news conference for the Japanese Bankers Association, which he heads. In Japan, use of such phrases often indicates that no action will be forthcoming.”

“Japanese bankers are far from novices when it comes to subprime loans and credit crunches. The Japanese financial world underwent its own real-estate-centered crisis after the property bubble burst in 1989. Japan’s banks were unable to raise funds in the short-term money markets and were forced to cut lending to corporate clients.”

“Japanese companies weren’t able to borrow from banks or raise funds in the capital markets, and the economy entered what is now known as ‘The Lost Decade’ of stop-and-go sluggish growth and contraction, until a banking-sector cleanup began in earnest in 2002.”

The Washington Times. “The Federal Reserve Board yesterday voted unanimously to ban ‘liar loans,’ inflated home appraisals and other abusive practices that led to the housing bubble and today’s foreclosure crisis.”

“In its first major rewrite of consumer-protection laws since the 1970s, the Fed laid down nine tough principles that lenders nationwide must follow.”

The Palm Beach Post. “On Tuesday, the Federal Reserve announced new regulations for the mortgage industry. The news isn’t the plan. The news is that Alan Greenspan didn’t do any of these things. Maybe he was reading his press clippings.”

“(Also) on Tuesday, The New York Times finally began to deflate the myth of Mr. Greenspan that Beltway helium had kept pumped up for so long.”

“The paper reported how other members of the Federal Reserve, Treasury Department officials and members of not-for-profit groups regularly warned Mr. Greenspan about the growing subprime mortgage loan crisis and the housing bubble and urged him to intervene. But the Fed chairman who retired in January 2006 - just as the bubble he created began to burst - did nothing.”

“The man whom author Bob Woodward called The Maestro, the man whom two Princeton economists said could be ‘the greatest central banker’ in history, protested to the Times that the Fed was not set up to regulate lenders. In fact, the Fed had been given new powers to do just that.”

From Elliott Wave International. “The guy had been in retirement going on two years. Even so, the media was still repeating the same abysmally stupid cliché as recently as this past September: ‘For 18 years as chairman of the Fed, financial markets hung on his every word, and in both major policy pronouncements and brief utterances, Greenspan could literally move markets.’ (ABC News).”

“That quote is now three months old, having appeared in a story about Greenspan popping up everywhere to promote his book. And of course, at that time the media was clueless about the scale of the subprime debacle.”

“But that was then. Now the time has come to point fingers instead, and America’s newspaper of record did exactly that in today’s page one story, ‘Fed Shrugged as Subprime Crisis Spread.’”

“Here’s most of what you need to know about the article: ‘Mr. Greenspan and other Fed officials repeatedly dismissed warnings about a speculative bubble in housing prices. In December 2004, the New York Fed issued a report bluntly declaring that ‘no bubble exists.’ Mr. Greenspan predicted several times — incorrectly, it turned out — that housing declines would be local but almost certainly not nationwide.’”

“Yes, the New York Times has un-deified the deity it helped create (like when it ran a columnist in January 2006 who said, ‘If we had been lucky enough to have Alan Greenspan at the Fed in the fall of 1929, there might well have been no Great Depression’).”

From Marketplace. “Scott Jagow: There just isn’t an easy solution to the subprime mess. And they’re probably shouldn’t be. No pain, no gain, as they say. But let’s talk about some of the proposed ’solutions.’”

“Christopher Thornberg: ‘Most of the people who look for this kind of help actually don’t qualify for the help, because they cannot be refinanced. When you actually look at their income, look at how much they borrowed. It’s clear that these people can’t afford these houses, period.’”

“Thornberg says for homeowners whose loans can be made manageable, there could be a whole different problem: ‘You’ve saved this person from being foreclosed on, and as a result of that, they lost 20 percent of their equity and they’re in a deeply underwater position. Have we really helped this person?’”

“Thornberg says we can expect to see up to $3 trillion of home equity disappear over the next few years.”

The Palm Beach Post reports from Florida. “Earlier this year, megabank National City Corp. aggressively entered the Florida market, buying Fidelity Bank & Trust in January and Harbor Federal Savings Bank in April for a total of $2 billion. On Monday, National City announced it would set aside $700 million in loss reserves to cover delinquent loans. It also said it would take a $200 million charge in the quarter related to mortgage securities.”

“‘Company officials previously reported its biggest problems were in Florida and Michigan. ‘It’s not fun being a banker in South Florida today,’ said Ken Thomas, a banking analyst based in Miami.”

“It’s not just bankers who are balking. Loan customers have disappeared as houses sit on the market and potential buyers wait for prices, which have fallen dramatically, to drop further. ‘Demand is way down,’ said Dennis S. Hudson, CEO of Stuart-based Seacoast Banking Corp.”

The Daily Business Review. “Gary Laurash surveyed the numbers showing the vital signs of South Florida’s community banks and offered a plainspoken bottom line.”

“‘It’s not a happy time to be a banker,’ the chief financial officer of Great Florida Bank said. ‘In general, the numbers indicate we’re in a very difficult credit market right now in South Florida, especially on the residential real estate side.’”

“Overdue loan payments at South Florida community banks have tripled in a year. The value of foreclosed property held by South Florida banks soared by 21 times in the year ended Sept. 30, according to a Daily Business Review analysis of Federal Deposit Insurance Corp. data.”

“The banks with foreclosed real estate held property worth a combined $77.6 million as of Sept. 30, up from only $3.6 million a year before and $49 million at the end of June. At the same time, loans and leases more than 90 days overdue more than tripled regionally to $686 million from $184 million. And the banks’ cumulative net income dropped 28 percent.”

“‘The number and amounts of these properties is startling now, but given the sheer size of the downturn we haven’t seen the worst of it yet,’ predicted Luis Salazar, an attorney at Greenberg Traurig. ‘I think we’re going to see an uptick of these properties’ after the first of the year because many banks are holding off on foreclosures for accounting purposes.”

“As the next wave of condominium projects are completed, the financial strain will get worse.”

“‘A lot of these buildings are coming on line now in the next six to eight months,’ said Raymond Miller, an attorney with Gunster Yoakley & Stewart in Miami who specializes in foreclosures. ‘They’re going to start calling people and saying, ‘OK, we’re going to close in 90 days, 60 days, 30 days.’ That’s when you’re really going to find out in the very local market what is happening.’”

“‘There’s a price for all of this property,’ Miller said. ‘Finding out what it is right now is going to be a continual task.’”

“Bank of America is eager to recover $20.5 million it lent to Boca Raton-based developer Sterling Communities to build a luxury community of single-family homes in Lake Worth.”

“But the giant lender, which filed a foreclosure suit in Palm Beach Circuit Court, is only the biggest of dozens of creditors seeking payment from Sterling.”

“Derrick Griffin, of Griffin & Wilson Stucco, a plastering and lathing contractor who worked on the Talavera development for nearly two years, said Sterling owes him more than $100,000 for his services. ‘They were supposed to pay me when I finished,’ Griffin said. ‘And they never did.’”

“Griffin has liens against at least six houses in Talavera, according to county records. Griffin, who has been in business for about 20 years, said Sterling is not the only builder that owes him money, but would not disclose the names of the other companies.”

“A subcontractor, who spoke on condition of anonymity, said Sterling paid him for his services but the checks bounced.”

“Several homebuyers who had deposits to purchase Talavera houses are also named in the lawsuit. One is Stella Hermesh, who said she heard Sterling was having financial difficulties and asked to transfer the deposit she had on a house that was under construction to a house that was finished. She paid $1 million for the house.”

“‘It was frightening,’ she said. ‘I figured they wouldn’t be able to finish the houses a couple months ago and said, ‘I know you have a few houses for sale and you are not going to finish my house.’ So I closed on another house, a bigger one — and I know I did a good deal.’”

“But buyers with pending deals may be running out of time. Depending on the terms of their purchase contracts, buyers who haven’t closed on their Talavera homes risk losing their deposits if Bank of America takes over the unsold houses, said Alan Rosenthal, a partner at Adorno & Yoss in Miami, who focuses on business litigation including real estate and lending. Rosenthal is not involved in the case.”

“‘If the developer is not able to deliver, one would expect the deposit would be returned,’ Rosenthal said. ‘But if the developer doesn’t have any money to pay for it, they could be protected under terms in the contract. It all depends on what’s in the contract.’”

“Deposits on homes in Talavera, with prices as high as $1.5 million, could total as much as $300,000, based on a typical 20 percent preconstruction deposit.”

The Herald Tribune. “It did not take long for the new owner of Coast Bank to get roped into the legal battle with disgruntled borrowers. First Banks Inc., which took over Coast on Nov. 30, is being sued by customers who were stuck with mortgages and unfinished homes in the loan debacle that brought down the Bradenton bank.”

“Sarasota attorney Alan Tannenbaum said he will file 11 lawsuits against St. Louis-based First Banks on behalf of Coast borrowers. He had filed 162 lawsuits against Coast for borrowers who want to get out of their loans. First Banks, as the owner of Coast, will be named in those as well.”

“Tannenbaum said he is disappointed that First Banks rebuffed his request for a meeting to discuss the lawsuits. ‘We are anxious to resolve them,’ he said. ‘Once they can be resolved, we can get these folks on a permanent path, either as an owner of a lot or finishing a house.’”

“In an interview last week, First Banks President Terry McCarthy said it would take ‘a couple of years’ to clean up the bad loans left behind by Coast.”

“One of the primary builders, Construction Compliance Inc. of St. Petersburg, could not handle the nearly 500 construction contacts from Coast borrowers. The company stopped building, leaving many borrowers with unfinished homes.”

“In one case, borrower Richard Pachino of New York has a CCI home in south Sarasota County that is 90 percent complete with a $185,000 mortgage balance, Tannenbaum said. Pachino has more than $8,000 in liens against his property.”

“Coast filed a foreclosure suit against Pachino last month.”

“The suits allege that Coast improperly disbursed money to CCI for work that was not performed and allowed the builder to commingle borrowers’ funds for work on other homes. Borrowers want the banks to rescind the mortgages and to pay damages.”

The Chicago Tribune. “In typical Floridian fashion, the squat condominiums of Carrollwood Lane encircle a tiny man-made lake. This is the unlikely picture of the economic crisis that threatens to spin Florida and the nation into recession and shake up an already turbulent race for the White House.”

“Lenders foreclosed on 10 homes on Carrollwood Lane over the last year, according to statistics compiled by RealtyTrac.com, along with more than 90 others in the surrounding ZIP code. The working-class neighborhood mirrors subdivisions throughout the city and its suburbs, where foreclosures more than doubled this year and housing prices fell further than any major metro area in the country.”

“Political scientists say Tampa is a bellwether metro area in perhaps the most bellwether of big states.”

“‘In 2004, people looked at the election in terms of [national] security,’ said Susan MacManus, a political science professor at the University of South Florida. ‘This time out, people are going to look at every dimension of the election in terms of the economy and their own pocketbook.’”

“Tampa, more than most of the country, has a job market dependent on housing, according to Moody’s Economy.com. So when home prices fell 11 percent in Tampa from Sept. 2006 to Sept. 2007 and foreclosures jumped 140 percent, the entire regional economy suffered.”

“Construction laborers worked less and spent less. Homeowners tapped less equity to buy cars or boats. Several planned downtown condo projects, including one by Donald Trump, ground to a halt.”

“‘It’s bloody,’ said Allen Crumbley, who runs one of the largest commercial real estate companies in the Tampa Bay area.”

The St Petersburg Times. “The economy hasn’t been great of late. Higher gas prices, higher housing costs, higher insurance bills, the slumping construction industry and real estate market - what all that means for food banks, food pantries and soup kitchens is this: Supply is down, need is up.”

“What’s most striking, though, to the people who run the Volunteer Way and other food banks around the Tampa Bay area, is who’s in their lines.”

“‘I think the face of hunger has changed just in the last six months, and dramatically,’ said Lester Cypher, the CEO of the Volunteer Way. ‘There are some people who come here who have two jobs.’”

“One recent morning, Heather Pannell, a young, married mother from Holiday, walked into Volunteer Way on Congress Street. She had her 9-month-old son, Trenton, in her arms, and her 4-year-old daughter, Madison, clinging to her thigh. This was her first time at the food bank.”

“‘I just lost my job,’ she said. ‘Last week. Lennar Homes. I was a permit coordinator.’”

The Tampa Tribune. “New York’s Fifth Avenue, London’s Oxford Street and Chicago’s Magnificent Mile have nothing to fear from downtown Tampa.”

“Although Channelside Drive, the Arts District and the Franklin Street corridor have begun to show some retail stirrings after years of stagnation and promises, few would agree that downtown Tampa has yet to show its potential as a vibrant urban center for shopping, dining and entertainment.”

“A handful of new condominium buildings, mostly towers, have just been completed. The new condominium buildings create demand for new shops and restaurants by bringing new residents to downtown Tampa.”

“The Towers of Channelside opened earlier this year; it has 257 units in two 29-story towers. About 100 units, representing 200 tenants, are now occupied.”

“A few blocks north, the 127,000 square feet of ground-level retail space at Grand Central at Kennedy is still empty.”

“In 2007, developers completed 1,500 new condominium units in downtown Tampa, according to the Tampa Downtown Partnership. In comparison with this year’s condo crop, developers completed 720 new condominium units in downtown Tampa from 2004 to 2006, according to the partnership.”

“Retail expert Lee Nelson, a senior associate at CB Richard Ellis in Tampa, said restaurants and shops will ‘flock’ to the newly built space. But it will take years - not months - for the vacancies to be filled.”

“‘Retailers have to have customers,’ she said. ‘Until those condos are full of people, the retail will not come. Then it will be vibrant and exciting.’”

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