December 28, 2007

The Cold, Hard Truth Is That Prices Must And Will Fall

It’s Friday desk clearing time for this blogger. “Joan Olsen is an example of someone who took out a mortgage she couldn’t afford. A retired welfare worker, she said she didn’t fully understand the loan terms when she refinanced her San Diego condominium 15 months ago with an option ARM. Olsen, 73, had a top-tier credit score of 760 but said she could afford to make only the minimum payment on her loan. Her loan balance is $289,000, up from an initial $272,000. If it hits $312,000, which it could do in 20 months, she’ll be required to pay more than $2,000 a month.”

“Meantime, home prices have tumbled: One condo in Olsen’s building sold recently for $251,000, so refinancing isn’t a viable possibility. ‘I have no one but myself to blame,’ Olsen said, ‘for signing off on something I didn’t understand.’”

“Olsen’s lender…said it was negotiating with her, trying to modify her loan so she’ll be able to stay in the condo, though she fears her retirement will have to end. ‘I think there’s no way around it,’ she said. ‘I’m going to have to work at least part time.’”

“A glut of houses for sale. Foreclosures. Stricter lending standards. Seems all we hear lately is the bad news in the housing market. But, there are some bright spots for sellers and buyers, both nationally and locally.”

“Andy Twisdale, a former president of the Hilton Head Area Association of Realtors, said potential buyers are returning to the local real estate market, but, with so many homes on the market, can be choosy. ‘We see many people make an offer and, if they don’t like the counter-offer, they go on to the next property,’ Twisdale said.”

“During the upcoming tax year, Berkeley County (WV) Assessor Preston Gooden, said the county saw a dramatic decrease in the number of homes with significant increases in property tax assessments. Assessments in many areas of the county appear to have stabilized, while others are decreasing slightly, he said.”

“‘We’re seeing a real significant difference from last year,’ Gooden said of the county’s assessments.”

“The decrease was because of the burst in the housing bubble and the fact that homeowners were trying to get as much as they could for their homes, Gooden said. Recently, he said, he heard of a property that was listed for $299,000. The homeowner eventually sold the property for $227,000, Gooden said.”

“The number of mortgage originators headquartered in Northeastern Minnesota declined by an eye-popping 50 percent this year, according to data provided by the Minnesota Department of Commerce.”

“First Minnesota Mortgage Corp., which was based in Duluth, is on the commerce department’s inactive list, but Jo Cady of Hibbing bought the company’s assets in August 2006 and formed a new company. With 15 years as a banker and four years as a broker under her belt, she is distressed that she must turn away business.”

“Lender requirements change from day to day. She said that one day in November she opened her e-mail to find that one of the lenders her company works with changed its requirements and five loans that were in process died at one time.”

“‘I start from square one every morning,’ Cady said. ‘This is the worst I’ve ever seen it.’”

“The Grade II listed former coach house and stables went on the market in April for £4million. But the price has now come down 25 per cent – as part of a wider trend that is seeing many property prices slashed.”

“Local estate agent Edward Naden said: ‘Buyers aren’t paying over the odds for anything. Properties have to be competitively priced.’”

“Turkey’s housing sector revived by declining interest rates as of 2005 seems stagnant nowadays. Primarily in Istanbul prices decreased 15 percent in some districts. Price of a house in Maltepe, for instance, was YTL 160.000 in 2006, but today buyers pay only YTL 135.000 for the same house.”

“Nabi Cücük, general manager of the Reha Medin Real Estate, says house prices in the second hand market dropped about 15 percent. Brand new houses, adds Cücük, are sold at 40 percent more of real value. ‘So prices should be lowered at least 40 percent. Quake proof, secure and descent houses in Istanbul should be around YTL 200.000. But it is impossible to find one at this price.’”

“More than 266,322 houses, flats and holiday homes lie vacant in the Republic — enough to house a million people, the Sunday Independent has learned.”

“Housing Minister Batt O’Keeffe claimed two weeks ago that much of the present problems in the housing market was caused by rogue builders who are ’sitting’ on finished properties as they wait for an up-turn in the market.”

“The figures are also surprisingly high in Galway where almost 12,000 houses were unoccupied while even commuter counties such as Kildare (5,363 houses) Meath 5,414) and Louth (4,692) are suffering.”

“Speaking to the Sunday Independent, Fine Gael’s Deputy Brian Hayes noted that the figures suggested that when it comes to the housing market there now appears to be ’serious issues of over-supply.’”

“Nevada’s nation-leading foreclosure rate has dumped a flood of bank-repossessed homes on the market, depressing prices and turning a hot market with tight supply a saturated ice-cold. New father Alon Natanel, a 32-year-old mortgage loan officer, got rid of his convertible BMW for a more affordable SUV recently.”

“It was better to transport an infant, he said, and suited what the slumping housing market has done to his income — which fell from six figures to four.”

“‘You cannot put a baby in a convertible,’ Natanel said. ‘Especially when you cannot afford the payments.’”

“‘It’s going to turn around,’ Natanel said. ‘It’s just a matter of time.’”

“Massachusetts single-family home sales in November slipped to the lowest level for the month since November 1994, according to the Massachusetts Association of Realtors.”

“MAR, which represents the state’s real estate agents, presented the data with its trademark optimism, encouraging renters — who do not need overcome the difficulty of selling an existing home before buying a new one — to take advantage of what it called a ‘buyer’s market.’”

“Imagine a scene on ‘Little House on the Prairie’ in which Merlin Olsen says to Michael Landon, ‘Howdy, Charles! Heard locusts are fixin’ to attack your wheat crop and you might lose the farm. Alright, well, see ya. Say hello to Half-Pint and whatever the blind one’s name is.’”

“Sorry, you can’t imagine this because Merlin Olsen had something called empathy.”

“Memo to everyone who didn’t buy a house in the last four years: Please stop talking about the housing crisis in front of those of us who did. We’re too busy to listen. We’re trying to figure out how we’re going to send our kids to school, or if we’re ever going to be able to retire.”

“And if you must talk about it, could you please at least pretend it doesn’t make you happy? Last weekend I was at a party, and a fellow guest spouted cheerfully: ‘Housing prices are going to crash, and all those rich jerks are going to be screwed.’”

“I’m certainly not rich. I’m probably not a jerk. If I am indeed screwed, I would prefer that whoever brings this to my attention does so with less obvious relish.”

“Look, I get it. If I didn’t own a home, I might feel similarly. But I hope that before opening my mouth, I would think: What would Merlin Olsen say?”

“In 2002, the median price of a single-family home in Los Angeles was $270,000 and the median homeowner’s income was $65,000. By 2006, the cost of that same house doubled, to $540,000 — pushed by unbridled speculation fueled by unparalleled access to mortgage capital. But median income rose a paltry 15%.”

“There are ‘experts’ out there who once preached that there was no bubble; they now preach that all real estate is local and that prices in your neighborhood won’t be affected by foreclosures and price declines elsewhere.”

“The cold, hard truth is that foreclosures are serving only to hasten the painful process of shifting housing prices back to a level the market can sustain. Prices must and will fall. Everywhere. Probably 25% to 30% from their peak.”

“2008 is the year when gravity will reassert itself. You should be adjusting your expectations of your home’s value so that it’s correctly aligned with market realities.”

Potential Buyers Don’t Care How Low The Prices Are

Some housing bubble news from Wall Street and Washington. Associated Press, “The Commerce Department reported Friday that new-home sales tumbled by 9 percent in November from October to a seasonally adjusted annual rate of 647,000. That was the worst showing since April 1995, when the pace of sales was 621,000.”

From Bloomberg. “Sales of new homes were down 34 percent from the same time last year, the biggest 12-month drop since January 1991. The number of homes for sale at the end of November decreased 1.8 percent to 505,000, the fewest in two years. Still, because sales dropped even more, the inventory of unsold homes at the current sales pace jumped to 9.3 months from 8.8 months in October.”

“Sales of new homes in November were 53 percent down from their July 2005 peak. Housing starts are near a 14-year low and have fallen 48 percent since their January 2006 peak.”

From Realty Check. “I logged onto each of the top 10 builders’ Web sites. Eight out of the 10 sites’ home pages made no reference whatsoever to the holiday season. I have to wonder why the builders aren’t jumping on the holiday season bandwagon. Lackluster sales everywhere else are spurring massive price cuts.”

“All I can surmise is: perhaps it’s not about price anymore. A mid-sized home builder, speaking off the record to a friend of mine, said that potential buyers right now don’t care how low the prices are, they simply can’t bring themselves to make the deal.”

“Unlike previous housing recessions…the builders are now finding that the main barrier to sale is not price or budget. Instead, it is an overwhelming sense among consumers that homes are fundamentally a bad investment right now.”

The “Builders are heading into 2008 facing a perfect storm of rising homeowner foreclosures, tightened credit markets and record housing inventories.”

“Many of these dangers are already well known, but there are also hidden issues that have yet to play out. Don’t be surprised if there are some big negative headlines in the first half of 2008, such as the first public homebuilder going bankrupt or a couple of joint venture investments blowing up.”

“Industry watchers say that it’s problems within joint ventures that could tip some builders over the edge next year. These joint ventures, whose financials are largely opaque to investors, are in danger of causing big losses for builders and potentially creating liquidity crises.”

“Already, Standard Pacific has been forced in recent quarters to supply capital to weak joint ventures in California. That was particularly bad news for a company already facing liquidity problems.”

“‘Joint ventures allowed [builders] to adhere to off-balance-sheet accounting rules and not have to consolidate all of the venture debt and the asset base on their books, so it made them look a lot leaner from a net asset base and have better debt-to-equity ratios than what was really out there,’ says Patrick Starley, president of Buffington Capital Holdings.”

“‘These big public homebuilders are in a pretty substantial cash crunch, part of which is a result of all this unconsolidated debt now causing big problems for them,’ Starley says.”

“ACA Capital Holdings Inc., the bond insurer that lost its investment-grade credit rating last week, agreed to give control to regulators to avert bankruptcy.”

“S&P sliced ACA’s rating 12 levels to CCC, casting doubt on more than $75 billion of debt the company guarantees, including $69 billion of securities such as collateralized debt obligations. ACA reached agreements to avoid posting collateral until Jan. 18 against credit derivatives it uses to insure the debt. The regulator held off filing delinquency proceedings while ACA seeks ways to raise capital.”

“‘ACA is still in deep trouble,” said Donald Light, senior analyst a financial research and consulting firm. ‘Unless it gets a capital infusion quickly, these recent moves are only delaying the inevitable.’”

“If ACA is downgraded below BBB+ and is unable to obtain long term forbearance agreements on its swap contracts resulting in ‘insufficient protection of ACA’s policyholders and creditors or to the general public,’ regulators may request ACA be placed under conservation, rehabilitation or liquidation, according to a consent order signed by Maryland Insurance Commissioner Ralph Tyler and dated Dec. 19.”

“Canadian Imperial Bank of Commerce said last week that it may write down the value of subprime securities it holds by $2 billion because they were insured by ACA. CIBC, Canada’s fifth-biggest bank said ACA insures about $3.5 billion of the bank’s U.S. subprime investments.”

“ACA has $1.1 billion to cover potential losses on $7.1 billion of bonds it’s insured, according to data on claims- paying resources or capital posted on its Web site.”

“‘It’s given them breathing room and a month to stave off bankruptcy,’ said Nigel Sillis, director of fixed income and currency research at Baring Asset Management in London, which oversees $15 billion of fixed income. ‘It still looks like bankruptcy is inevitable.’”

“When home sales soared this decade, bond insurers increased their guarantees of securities created from mortgages, including subprime loans to people with poor credit.”

“They guaranteed almost $100 billion of CDOs backed by subprime-mortgage securities as of June 30, according to an Aug. 2 report by Fitch. Most of those guarantees are in the form of derivative contracts. Unlike insurance, those contracts are required to be valued at market rates at the end of each quarter.”

The Wall Street Journal. “Even good banks foul up. That is the emerging consensus among analysts and investors now that Wells Fargo & Co. has been forced to write down the value of a chunk of home-equity loans and is battling falling home prices in some of its top markets.”

“The bank loans are concentrated - both geographically, in states such as California, Nevada and Arizona, and in lines of business, including home-equity and construction loans - in areas likely to see more problems, says Fred Cannon, an analyst with Keefe Bruyette & Woods.”

“And the bank does have subprime exposure, although it likes to downplay the risks. On Dec. 11, Richard Kovacevich, who stepped down in June as the bank’s CEO but remains chairman, told the Wall Street Journal that Wells held no subprime loans on its books.”

‘He then clarified, however, that he wasn’t counting about $24 billion in ‘debt consolidation’ loans - about 6 percent of the bank’s overall portfolio at the end of September - made to borrowers with lower-tier credit by the bank’s consumer-finance unit, because he doesn’t consider them as risky as many other subprime loans.”

“Competition during the height of the housing market caused even level-headed players like Wells to make risky bets. During the mortgage boom, Wells heavily promoted its home-equity loans as a way to add rooms to a house or redo a kitchen.”

“As more aggressive rivals cut into Wells’ markets the past several years, Wells adopted a riskier approach of making home-equity loans through brokers whose customers didn’t have any prior relationship with the bank.”

“That turned out to be a mistake, Kovacevich admits. The loans have gone bad at a much higher rate than similar loans made to Wells’ own clients. Wells no longer makes home-equity loans through brokers.”

“‘We should have known better,’ the chairman said in a recent interview with the Journal.’

From MarketWatch. “As a brutal year in the financial-services industry comes to a close, Ken Thompson believes Wachovia Corp. is prepared to weather the storm in the nation’s housing and credit markets. But the CEO of the nation’s fourth-largest bank admits his industry is in for another rough year.”

“‘I’m expecting a slower growth year than we’ve experienced anytime over the last five or six years, Thompson said Thursday in an interview. We’re still in the midst of a housing correction, which is impacting the real economy, but I do not expect a recession.’”

“Few foresaw the devastation inflicted on the nation’s financial markets in 2007 by the subprime-mortgage crisis, which has rippled across the globe and, Thompson said, will continue to exact a toll in 2008.”

“‘There’s plenty of blame to go around,’ Thompson said. ‘I think lenders made loans to people who should have not received loans. I think that brokers were scrambling to put business on the books that should not have been done.’”

“And in the capital markets, where many of the mortgages were packaged and sold as investments, ‘I think the rating agencies did a very poor job in rating those mortgage-backed securities,’ Thompson said.”

“Thompson admitted Thursday that the timing of the $24 billion Golden West deal ‘was not the best, because the mortgage market has been more troubled I think that anyone could have projected at the time we did the deal.’”

“‘I think, in general, the challenge is we are in a relatively early stage of a credit cycle,’ Cannon said. ‘We really have to get to a point where home prices will stabilize.’”

The Sacramento Bee. “For households mired in mortgage troubles, there’s one less worry this year. That’s the nasty tax consequence of avoiding foreclosure by selling a home through a ’short sale’ or other loan rearrangements.”

“A bill signed by President Bush last week lets homeowners off the hook for a little-known tax bite that occurs when mortgage debts are forgiven. The reprieve applies to households that use short sales or other mortgage relief efforts during 2007, 2008 and 2009.”

“It’s a temporary measure during this real estate slowdown and is only for loans involving a primary residence. It does not apply to investor-owned properties.”

“In the capital region, one short-sale specialist praised the move but said it won’t really bring much debt relief. ‘Many of these people weren’t going to pay the tax, anyway,’ said Scott Thompson, a partner in Mortgage Resolution Services in Carmichael. ‘There was a part of the tax code that granted them immunity if they were insolvent.’”

“The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans.”

“Despite the news waves of foreign buyers in many U.S. markets, few suggest international investors by themselves can entirely offset the nation‘s housing crisis, brought on by the failure of many subprime mortgage loans made to home buyers with weak credit histories.”

“Constantine Valhouli, a principal with Boston’s Hammersmith Group, stressed that the fact that international investors are helping to prop up some troubled housing markets only emphasizes the level of stress in residential real estate.”

“‘Relying on foreign real estate investors is fundamentally as risky as relying on subprime mortgages,’ he said, noting that both phenomena distort demand and can conceal the depths of the problem U.S. home buyers and sellers face. ‘Foreign buyers aren‘t going to save the U.S. housing market. They‘re just a temporary fix like a finger in the dike. Fundamentals matter.’”

From CNN Money. “Before you put much hope in forecasts for a 2008 rebound in the battered housing market, consider this: A year ago at this time many top economists were looking for that recovery to begin in 2007.”

“Instead, the year saw historic declines in nearly every measure of housing strength and home building, and left a trail of predictions from some of the nation’s top economists that look - at best - foolish.”

“‘It may be too soon to say that it’s over. It may not be too soon to say that the worst is over,’ said Former Federal Reserve Chairman Alan Greenspan in an October 2006 speech in Richmond, according to press reports.”

“In a November 2006 speech, his successor Ben Bernanke said he saw some ‘encouraging’ signs in recent housing reports.”

“‘Although residential construction continues to sag, some indications suggest that the rate of home purchase may be stabilizing, perhaps in response to modest declines in mortgage interest rates over the past few months and lower prices in some markets,’ Bernanke said.”

“Many other economists freely admit their year-ago forecasts missed the mark. And while many of those economists are again hoping the year ahead will bring a modest recovery, they are far from certain. ‘A lot can go wrong here,’ said David Wyss, chief economist at Standard & Poor’s.”

“‘I thought we’d have problems, but I thought it’d be a smoother adjustment,’ Wyss said about the problems that developed in mortgage-backed securities. ‘The financial side was much worse than I thought it was going to be.’”

“A year ago Wyss was forecasting a 7 percent drop in home prices from peak levels. Instead prices fell nearly 10 percent from the July 2006 record.”

“‘Everyone thought I was nuts. Now it turns out I was an optimist,’ he said.”

“The National Association of Realtors made a forecast a year ago that was far more optimistic than those by Wyss and many other economists. The Realtors expected only a 1 percent drop in the pace of existing home sales, and a 1 percent gain in median prices.”

“The group’s current forecast for 2008 calls for a 0.5 percent increase in the pace of sales, and a 0.3 percent rebound in prices. But Lawrence Yun, chief economist for the trade group, said that making forecasts is even tougher this year than it was a year ago.”

“‘I would not be surprised if home sales improves in 2008,’ he said. ‘At the same time I can also foresee a circumstance where buyers continue to pull back, the inventory sitting on the market continues to build and it causes prices to go down further.’”

Borrowers Did Not Plan For The Future In Florida

The Daily News reports from Florida. “The Daily News began tracking local foreclosures in August. Court records at that time showed that foreclosures in Okaloosa County had jumped by nearly 70 percent from 2005 to 2006 and are on pace to be about 83 percent higher in 2007 than in 2006. Santa Rosa and Walton counties also showed record numbers of mortgage foreclosures, far outpacing 2005 and 2006.”

“‘I don’t think we’ve reached the top as far as foreclosures,’ said Shirley Parker, president of Parker Mortgage Services in Fort Walton Beach. ‘I think it’ll continue probably through next year.’”

“Borrowers did not plan for the future, she added. ‘You can regulate people all day long, but if they want something, they want it,’ said Parker, who counseled many people out of buying more house than they could afford down the road. ‘I’d say to them, ‘At some point, this balloon is going to bust, and when it does, you won’t be able to afford this house note.’”

“One upside to the foreclosure crisis is the promise of some sweet deals in 2008. ‘You’re going to see a $300,000 house … and a lender willing to take $200,000,’ Parker said. ‘You’re going to see a lot of good deals on investment property.’”

The Orlando Sentinel. “Florida’s economy should hit its low point within the next three months and then begin a long, steady climb upward, according to the latest quarterly forecast from the University of Central Florida.”

“‘We see a dampening down of things going into the first part of 2008,’ said said Sean Snaith, director of UCF’s Institute for Economic Competitiveness and author of the quarterly Florida Forecast. ‘But we’re still in the [prediction] mode of a soft landing for the economy. The way we put it: ‘The runway has lengthened for when we take off again.’”

“In his quarterly Florida forecast, Snaith made no predictions on when housing prices would return to mid-2006 levels. But he predicted that annual housing starts, after bottoming out in 2008, would return by 2010 to the same levels seen back at the start of the decade.”

“‘People have been predicting an apocalypse. I see more of rapture than an apocalypse,’ he quipped. ‘There will be some rough quarters to get through, but the long-range economic outlook is an upward trend for the region.’”

“Florida’s population grew a measly 1.1 percent in the past year — just a little bit faster than South Dakota and a little bit slower than Oklahoma, according to census figures released Thursday.”

“The decline in the past year is largely the result of the housing slump and the mortgage crisis, said William Frey, a demographer with a Washington-based think tank.”

“What happened to Florida is the same for other ‘housing bubble’ states such as California, Texas, Arizona, Nevada and Georgia. Declining home values, foreclosures and the end of easy-credit mortgages put the brakes on people moving from state to state.”

“‘The bursting of the bubble means they can’t sell their house in New York and move to Florida. The credit crunch means they can’t buy a house in Florida,’ Frey said.”

“Orlando area complex owners put the brakes on the conversion-to-condos craze during the past year, and now the leasing side of the ledger is regaining a marketing advantage for them. RP Realty Partners, for example, decided in October against converting The Majestic of Downtown Baldwin Park to condominiums.”

“Marcus & Millichap’s recent third-quarter Apartment Research Market Update for the Orlando area found that ’supply and demand are still being realigned’ because of the ‘considerable number of condo conversions.’ The overall market’s vacancy rate is expected to be even higher.”

“In the Pine Hills neighborhood northwest of downtown Orlando, the Misty Oaks apartment complex is offering two months’ free rent for one-bedroom, one-bath units. That submarket is laden with apartments, and turnover in units is high.”

“Ali Muhammad, dressed in a Santa outfit, has been waving a bright yellow sign with the two-month-free deal at Misty Oaks. The complex is ‘also giving away a free iPod [digital music player] or $150 gift card. It’s not on the sign,’ Muhammad said. ‘Merry Christmas and Happy New Year.’”

From Builder Online. “After closing its doors in April and failing to sell its remaining inventory, Ponte Vedra Beach, Fla.-based Panitz Signature Homes has filed for Chapter 7 bankruptcy protection in the Jacksonville division of the Bankruptcy Court for the Middle District of Florida.”

“Citing the current downturn in the housing market, the luxury builder is calling it quits after operating in Northeast Florida for 27 years. At a May 19 auction, the builder was unable to sell any of its 11 homes, 25 home sites, or 32 townhome sites.”

The South Florida Business Journal. “Jorge Perez, CEO of condo developer the Related Group, is looking to create a fund to buy distressed units in South Florida’s saturated condo market. Matt Gorson, president of Greenberg Traurig, the law firm that represents Related, confirmed Perez is considering it.”

“‘The strong and smart developers would be wise to create funds and acquire distressed assets,’ Gorson said. ‘The Related Group would be in the mix.’”

“‘If he can purchase parts of a building or whole buildings for less than it would cost to build them, it’s a smart move,’ said Ron Shuffield, president of brokerage Esslinger Wooten Maxwell.”

“Perez joining the vulture investor ranks may further chill an already cooling real estate market, where foreclosures are rising and Miami-Dade County is saddled with between 35 and 40 months of condo inventory.”

“One unanswered question would be how Perez would deal with a potential conflict of interest if he ends up being the principal of a company negotiating to buy units at a discount from the Related Group.”

“Peter Zalewski, a former South Florida Business Journal associate editor, said groups buying blocks of units want a minimum of 100 units and ownership of at least 60 percent of a building, so they can control the association and rental rules.”

The Miami Herald. “The Standard & Poor’s/Case Shiller index says the South Florida region posted the worst decline of 20 major metropolitan areas it follows.”

“But Florida Association of Realtors sales data say median prices for single-family houses in Miami-Dade and Broward remained virtually flat at around $354,000 since October 2006 even as the number of homes selling plummeted.”

“‘Wall Street does not understand real estate,’ said veteran real estate analyst Michael Cannon, of the Case-Shiller index. Computer models, he said, can’t possibly account for all the variables that affect a home’s sale price or an overall real estate market. And the MLS that Realtors use accounts for only about 42 percent of the market, said Cannon.”

“So what is happening out there? Cannon, whose firm analyzes property valuations for banks, developers and government, says prices are declining from the overvalued peaks seen between 2003 and 2005 in certain segments. But, ‘overall, we have not seen any major decline.’”

“Homeowners who bought at the peak are probably losing money if they have to sell, but for the most part, homeowners are still ahead.”

“‘That’s why I call it a rollback, not a crash,’ Cannon said. ‘If there was a crash, you’d see tremendous price discounts being offered. You see all these sales pitches, but overall you don’t see sellers panicking.’”

“The average asking home price in Miami-Dade, says Ron Shuffield, president of one of the largest real estate brokerages in Miami-Dade and Broward, has dropped 44 percent since June 2005, from more than $1 million to about $600,000. The median selling price, he said, has fallen around 8 percent in that time. ‘Our sellers are becoming very realistic,’ Shuffield said.”

From NBC 2 News. “The Standard and Poor’s Home Price Index shows slashed prices and calls the state of the single family housing market ‘grim.’ But NBC2’s Patrick Flanary found out, the Southwest Florida market may not be in as bad of shape as you think.”

“If you take a look at the numbers over the last six years, Southwest Florida is doing OK. Some realtors say buyers are just fixated on the boom we saw two years ago.”

“Home prices are falling this winter, but Realtor Dick Truax says it’s not enough to attract buyers with the baggage they own up north. ‘They just can’t get rid of it up there. And they know there’s a great bargain down here, but it’s getting rid of the inventory they have there,’ said Truax.”

“He calls this year a roller-coaster ride in Lehigh Acres and he’s struggling to sell homes in the Majestic Golf Club. ‘I was going weeks where I wasn’t getting a single hit,’ said Truax.”

The News Press. “Housing permits continue to spiral in the wrong direction for builders, real estate agents and those impacted by the construction industry.”

“On its current pace, Cape Coral will issue fewer new single family home permits this month than it did during a record November, when only 12 were issued. Through Wednesday, only 5 permits have been issued for new single family homes.”

“Unincorporated Lee County, Bonita Springs and Fort Myers Beach also are not experiencing any kind of a holiday boost. Only 32 permits had been issued as of 4 p.m. Wednesday. In November, 60 were issued, compared to 357 in November 2006.”

“The declines, even for a slow time, are significant when compared to past Decembers. In December 2006, 90 permits were issued in the Cape, while 403 were issued in December 2005. The record is 858 for March 2005.”

“‘We keep thinking it can’t get any lower, and every month it gets lower,’ said Cape Coral spokesperson Connie Barron. ‘We just have to cross our fingers and know we have to get through this. It is just uncomfortable in the waiting room.’”

“The continued decline continues to surprise those in the industry. ‘I have never seen things get this low,’ said Sal La Spia, owner of European Construction of Southwest Florida.”

“La Spia has been in business in Cape Coral for six years, he said, through the most recent boom and bust. After building reached a zenith in 2004 and 2005, La Spia said he expected it to slow eventually, but he never expected this. ‘Property went up faster here than anywhere else, and then it went down faster,’ he said.”

“District 3 Councilman Bill Deile said the numbers were distressing. ‘That’s virtually down to zero,’ he said.”

“Deile figured the bust was coming in part because so many people in recent years have moved into homes they could not afford. La Spia agreed, citing high foreclosure numbers and a large inventory of unoccupied homes on the market today.”

“In the past year, actions have been filed on a more than 11,700 Lee County foreclosures.”

“Russell Weyer, a senior associate at Fishkind and Associates based out of Naples, said Cape Coral is suffering from an excess inventory, and doesn’t expect that probably to disappear overnight. ‘It won’t get absorbed overnight,’ Weyer said. ‘I would say there is about three years of inventory to work through.’”

“He said smart investors can weather the slump. ‘Now is not the time to put your house on the market unless you are in for a desperate sale,’ Weyer said.”

Bits Bucket And Craigslist Finds For December 28, 2007

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