February 20, 2008

Life Is Never Dull In California

The UCLA Newsroom reports from California. “In its fourth quarterly report of 2007, the UCLA Anderson Forecast holds steadfast to the basic tenet of a forecast they have been making throughout the year, that the national economy is not technically in a recession, nor is there a national recession on the economic horizon. There will be job loss in the construction sector, as well as real estate-related financial services, but not nearly enough to trigger a recession.”

“As part of his no recession forecast, UCLA Anderson Forecast Director Edward Leamer also notes that if declines in housing were going to trigger a recession, they would have done so already. Recessions have traditionally trailed a housing peak by no more than a year; at this point, the business cycle is trailing the housing cycle by seven quarters without a recession.”

The Daily Breeze. “Southern California will likely avoid a recession this year and next despite a grinding slowdown in the housing market, according to the forecast by the Los Angeles County Economic Development Corp.”

“‘It’s a two-track economy. You’ve got housing, finance, the auto industry struggling, but you’ve got other industries growing very slowly,’ said Jack Kyser, chief economist for the LAEDC. ‘We don’t look for housing to recover this year. It’s going to be 2009, so that’s going to be a drag on not only the housing market, but also home furnishing sales, building material sales and government finance, which depends on property taxes.’”

“In 2008, the number of overnight visitors to the county should increase by 1.9 percent to 26.3 million, largely a result of the weak dollar, an expected rise in Chinese visitors and several local attractions such as the new ‘Simpsons’ ride at Universal Studios Hollywood theme park.”

“The housing slowdown hurts on various fronts. ‘It’s terrible, and it’s getting worse every day,’ said Warren Snyder, who co-owns Torrance-based Carriage Realty & American Broker Loans as well as American Credit Repair. ‘People say we’re teetering on a recession. Most of those people who are connected to that type of business are already in a recession. This is just the tip of the iceberg.’”

The Daily News. “‘We feel that overall, Southern California should escape falling into a recession, but you are going to have spot recessions in some areas,’ Kyser said, noting that communities hit hard by the subprime mortgage crisis were particularly vulnerable.”

“‘Life is never dull in Southern California,’ he said.”

“The weakest sector in Kyser’s forecast - and the one getting the most attention - is the struggling residential real estate market. ‘Basically, the housing industry … is in a depression,’ he said. ‘And anything allied to this industry will continue to suffer.’”

“Kristina Theard of Porter Ranch is all too familiar with the crisis. She lost her job early last year in the collapse of mortgage lender New Century Financial Corp. She quit a commercial banking position at the beginning of this month and was at Tuesday’s job fair, sponsored by HireQuest, as part of her aggressive job search.”

“‘By the end of the month I’ll probably know where I will land, but I definitely want to stay away from mortgage management,’ she said.”

The Ventura County Star. “It came out of the blue. Loretta Altman was driving to work at Countrywide Financial Corp. in Simi Valley when she got a phone call from a friend.”

“‘She said, You’ve got boxes at your desk.’ I said, Does that mean …?’ Altman recalled.”

“Her friend confirmed that it meant that she’d been laid off. She went into the office on Madera Road, packed up what she was allowed to take and said her good-byes, leaving with a two-week severance package.”

“Altman said she thinks that she was among about 20 people at her office who lost their jobs Friday.”

“‘It was a complete side-swipe,’ Altman said. When the company went through a round of layoffs in October, people were informed ahead of time that cuts were coming. ‘This one was completely out of the blue,’ she said.”

“A former Countrywide employee who lost his Simi Valley job in October said the process then was very organized. He said it was very different from what he heard happened Friday.”

“The October layoffs occurred shortly after the Calabasas-based mortgage lender announced that it was slashing up to 12,000 jobs companywide because of the housing meltdown. That, combined with a drop in employee morale, inspired Altman, a systems analyst, to start looking for another job.”

“‘I took that as fair warning — start looking now,’ she said. She had received an offer letter for a new job Thursday, so when she got the call Friday, she was thinking: ‘OK, you’re OK, you got the offer letter.’”

“But it hasn’t been that easy. Altman found out Monday that her background check for the new job had been halted because Countrywide provided an incorrect date of hire for her. She said she’s been going in circles with Countrywide to get the issue addressed. She plans to call her attorney.”

“‘I may miss out on a great job because Countrywide refuses to fix this problem,’ she said.”

The Union Tribune. “Would you pay $69,300 for a two-bedroom home in Vista? Or $116,300 for a three-unit apartment building in the Barrio Logan neighborhood of San Diego?”

“Those are the starting bids for a few of the tax-delinquent properties the county plans to auction Friday in its annual effort to recoup unpaid property taxes.”

“Not every deal is as good as it looks. Some properties have tax or bank liens that may exceed the auction sale price and lead to post-purchase headaches for buyers. Still, it’s hard not to be amazed at the rock-bottom opening bids.”

“The two-bedroom home in Vista with an opening bid of $69,300 has a market value of about $335,000, according to an Internet real estate site.”

“The three-unit apartment building in Barrio Logan starts at $116,300, but similar-sized buildings have sold in recent years for $400,000 to $575,000. Zillow estimates its value at $526,000.”

The North County Times. “With an estimated 5,000 properties going into foreclosure by the end of 2008, city officials took action Tuesday to curb blighted yards, unsafe neighborhoods and virtual welcome mats for squatters.”

“The City Council voted unanimously to approve an ordinance that would make banks responsible for the maintenance of properties of which they have taken possession.”

“During the presentation, Linda Mejia, a senior code enforcement officer, told the council that of the 26,283 single-family residences in the city, nearly one out of 23 homes is in foreclosure. By the end of the year, code enforcement officers expect about 5,000 homes will be bank-owned.”

“‘We’re having one of the worst foreclosure rates in the Riverside County,’ she said. ‘It doesn’t matter how beautiful or big your vacant home is, all neighborhoods are vulnerable.’”

“Gary Lupo, a Realtor in Riverside, said cities facing a large number of foreclosures have only themselves to blame. ‘The biggest problem and the whole reason why this occurred is because everybody was greedy,’ Lupo said.”

“He contended that mortgage lenders were greedy in seeking commissions, home buyers were greedy in signing for homes they couldn’t afford and cities such as Murrieta were greedy for the revenues they receive in allowing ‘McMansions’ to be built and sold, referring to vast tracts of large cookie-cutter-style homes.”

“‘You guys approved it,’ he told city officials.”

The Press Enterprise. “One in nine Murrieta homes is either in foreclosure or in the preliminary stages. Many neighborhoods have homes with dying lawns and broken windows. The law is meant to prevent ‘the broken window syndrome,’ where vandals and squatters choose homes to party or live in by finding signs of abandonment.”

“The city can assess as much as $100,000 per parcel or structure that will be tacked on as a tax lien and paid to the city when the property is sold. The program is expected to begin in April. The city’s proposed blight law is a variation of others used in Chula Vista, Orange County and Riverside.”

“Gene Wunderlich, president-elect of the Southwest Riverside County Association of Realtors and an agent in Murrieta, said the association supports the new law.”

“‘Anything the city can do to help keep home values up is beneficial to us,’ he said.”

The Desert Sun. “The First Time Buyer Housing Affordability Index analysis is considered the ‘fundamental measure of housing well-being for first-time buyers in the state,’ according to the California Association of Realtors.”

“New figures show 38 percent of households in the Coachella Valley can afford an entry-level home here…more than at the end of 2006 - when affordability registered at 33 percent.”

“The analysis, released Tuesday, also shows the desert area is more affordable than California overall, where the housing affordability index is up to 33 percent. In the Coachella Valley, a person would have to make a minimum of $57,300 to qualify for a $285,970 entry-level home.”

“Assuming the buyer puts 10 percent down and has an adjustable interest rate of 6.21 percent, officials say that translates into $1,910 monthly payments, including taxes and insurance. That’s mathematically speaking. Real life doesn’t always add up that way.”

“‘Everybody has their own story to tell and everybody who makes $57,300 a year doesn’t necessarily fit into that program,’ said Kurt Handshuh of California Home Loan in Palm Desert. ‘If they have a car payment, or child-support issues, or a credit card payment every month, that drives the price of a house (one can afford) down.’”

“At the height of the market, affordability in the desert was 11 percent to 13 percent.”

“The Coachella Valley relies on the tourism and hospitality industry, and resort jobs don’t always pay enough for employees to afford a house, says Greg Berkemer, executive VP of the California Desert Association of Realtors.”

“‘You’re finding the jobs in the desert won’t allow you to buy in the desert,’ Berkemer said.”

“Entry-level homes in the Coachella Valley are generally considered anything priced under $500,000. Average prices in that market dipped almost 4 percent in 2007 and sales of those homes were down 24 percent from 2006.”

“‘Not everyone at $57,300 can make that work,’ Handshuh said of affording an entry-level home. ‘Not everyone is going to qualify.’”

“Two years after Palm Springs City Council approval, the city’s first new mixed-use project is nearly ready for occupancy. ‘It makes it look like something’s really going on here, finally,’ said Tony Larcombe, owner of Dwight Polen Design in uptown Palm Springs.”

“803 N. Palm Canyon offers Palm Springs its first new retail and housing combination in the uptown/downtown area. ‘People say they can’t wait to come home from work and walk to dinner,’ owner/builder Wally Hrdlicka said Tuesday as he toured the project.”

“There are currently about 20 mixed-use projects approved and in various stages of construction and planning in Palm Springs, according to the city’s Development Projects Update. While these projects are still drawings on paper, 803 N. Palm Canyon will be ready to move into by April, said Hrdlicka. Prices hover around $700,000.”

“Hrdlicka said he sees a predominantly gay market interested in purchasing the townhouses as second homes, as well as yuppie hipsters from Los Angeles. Units facing Palm Canyon Drive, which may be noisier than the homes that face the mountains, will draw a younger clientele, he said.”

“‘They are the ones who stay out at night and are from L.A. and maybe live in a loft already,’ Hrdlicka said.”




When You’re In A Hole, You Quit Digging

Some housing bubble news from Wall Street and Washington. CNN Money, “New construction of single-family homes fell to a 17-year low in January, according to a government report. Starts of single-family homes fell to an annual rate of 743,000 in the tenth straight monthly decline. The level of single-family home building is down 5 percent from December, 34% from a year earlier and 60% from the record high reached only two years ago.”

“Building permits for single-family homes - often taken as a sign of builders’ confidence and a better look at the future of the market - fell to an annual rate of 673,000. That also marked the tenth-straight month of decline for that measure and, like the single-family starts, was a 17-year low.”

“A separate Census Bureau report showed a record 195,000 completed homes for sale at the end of December, the supply of all new homes available for sale, including those under construction and those not yet started, stood at a 9.6 month supply. That glut of new homes for sale is cutting into the value of both new and existing ones.”

“The January level for housing starts is down an annualized 40.4% versus the fourth quarter average. This result indicates that residential investment will be a significant drag on 1Q real GDP growth, according to Gary Bigg at Bank of America Securities.”

“Builders have been aggressively cutting both prices and starts of new homes but tighter mortgage lending has been working against them. ‘We’re not even taking in 50-60% of the people who inquire,’ said Bob Munson, president of the Americana Mortgage Group.”

“Even as the Fed has been cutting its target Fed funds rate, the rate on an average 30-year fixed rate loan has gone up three quarters of a percentage point, so Munson says ‘I think the worst is yet to come.’”

The Associated Press. “The U.S. thrift industry on Wednesday reported a record $5.24 billion loss in the fourth quarter of 2007 - the biggest quarterly loss since federal regulators first started collecting quarterly data.”

“The Office of Thrift Supervision said about $4 billion of the overall losses in the fourth quarter was tied to write-downs in the value of assets affected by the downturn in the housing industry. Another $2.2 billion loss was tied to a restructuring charge by a single institution.”

“The agency also said thrifts set aside $5.1 billion in loan loss provisions, or 1.35 percent of average assets.”

From The Star. “The Bank of Montreal announced it would begin 2008 with a $490 million pre-tax charge against its first-quarter earnings. It also pledged about $12 billion (U.S.) in financial support for its two struggling structured investment vehicles or SIVs.”

“The bank said in November that it would provide no more than $1.6 billion for its SIVs.”

“Karen Maidment, BMO’s former chief financial and administrative officer, told a conference last September the bank’s total exposure to structured vehicles was ‘under $300 million,’ both in terms of equity and liquidity.”

From Reuters. “Standard Chartered on Wednesday dropped initial rescue plans for its $7 billion Whistlejacket structured investment vehicle which was forced into receivership last week, drawing criticism from analysts.”

“Asia-focused bank Standard Chartered said its decision to drop the plans was the result of a number of factors including ‘the pace of continuing deterioration in the market for certain asset classes.’”

“Ratings agencies had given the OK to Standard Chartered’s plans to support the SIV, saying they would not affect the bank’s ratings or strain its balance sheet.”

“A Standard Chartered spokesman, however, played down talk of a reputational hit to the bank, saying: ‘Investors in Whistlejacket are mature investors and are aware they are just caught up in current market dislocation.’”

“Neville Kahn, the partner in charge of the receivership at Deloitte, said it would be exploring all the options available for Whistlejacket.”

“‘That includes alternative financing, whole book solutions or holding these assets to long-term maturity,’ Kahn said. ‘But I can confirm that there is no need for a fire sale of the assets. Absolutely categorically no need.’”

From Bloomberg. “SIVs typically invest in asset-backed securities and bonds sold by banks and insurance companies with high credit ratings.”

“Whistlejacket invested about 44 percent of its assets in financial company debt, according to Moody’s Investors Service. About 20 percent is in mortgage-backed bonds and 10 percent in collateralized debt obligations, notes that pool other securities.”

“Standard Chartered blamed the ‘impracticality of completing any proposal within the confines of the receivership’ for withdrawing its refinancing plan, in a statement today.”

“A year ago $20 million would have gotten Luminent Mortgage Capital Inc. access to $640 million in loans to buy top-rated mortgage-backed securities. Now that much cash gets the firm no more than $80 million.”

“‘There’s nobody out there trying to lend money on securities,’ said Luminent CEO Trezevant Moore. Six lenders are offering five times leverage on what the San Francisco-based company has contributed, while a year ago, 20 banks extended 33 times, he said.”

“‘The banks themselves, because they owned so much of this different kind of affected paper ranging from leveraged loans to mortgage-backed bonds, have simply got their snoot full,’ said Roy Smith, a former Goldman Sachs Group Inc. partner who teaches finance at New York University’s Stern School of Business. They ‘don’t have their usual amount of room to step up.’”

“The ability of mortgage bond buyers such as Luminent to use leverage with their investments has diminished.”

“Investors in the most senior commercial-mortgage securities could typically borrow 33 times the amount of their investment at a cost of 0.03 percentage points above the one-month London interbank offered rate in January 2007, according to a JPMorgan Chase & Co. report last month.”

“At the start of this year, an investor might only be granted 10-to-1 leverage, and pay 20 basis points above Libor.”

The Guardian. “Three mortgage lenders yesterday pulled the plug on deals that allow home buyers to borrow as much as 125% of a property’s value - the day after Northern Rock came under fire for offering similar deals.”

“Alliance & Leicester and Coventry Building Society announced within hours of each other that they were withdrawing their 125% mortgage products. Meanwhile, Abbey said a pilot scheme to test 100%-plus mortgages launched last autumn would end on Friday.”

“Melanie Bien, a director at mortgage broker Savills Private Finance, said: ‘The death knell for 125% loan-to-value (LTV) mortgage products was sounded when the government nationalised Northern Rock. How can the government be seen to encourage borrowers to take on such high LTVs, particularly when house price growth is slowing and prices are falling in some areas?’”

“She added that there was risk enough associated with taking on a loan that was more than 100% of the property purchase price when prices were rising, ‘never mind when they are falling and the risk of negative equity is so much greater.’”

The Wall Street Journal. “Sens. Hillary Clinton and Barack Obama sparred over housing policy yesterday, revealing some differences in their approaches to economic policy.”

“As the Democratic presidential candidates look to the March 4 primaries, when voters go to the polls in Ohio, a state hit hard by housing-market declines, Mr. Obama called his colleague’s plan to freeze mortgage rates ‘disastrous.’”

“Mr. Obama said the proposal was shortsighted because it would make lenders less willing to approve new loans or modify existing ones. ‘A blanket freeze … will drive rates through the roof,’ he said.”

“In regions of the country such as Ohio, where home prices are still declining, delaying foreclosure could force banks to watch home values drop further before they can seize homes.”

“‘Lenders are not going to recover their costs if it’s in an area of declining value or high unemployment,’ said Bud Carter, VP of a consulting concern that advises lenders. That could put further pressure on home values, experts say.”

“Obama said Clinton’s plan to freeze the monthly rate on existing adjustable rate mortgages did not target ’struggling homeowners’ who need help the most.”

“‘It will reward people who made this problem worse but it will also reward people who are wealthy and don’t need it,’ Obama told a small group gathered to discuss the economy in San Antonio.”

The Cherokeean. “In a campaign swing through East Texas last Friday, former President Bill Clinton…predicted that another one million ‘of your fellow citizens’ are facing foreclosures on homes because of the current mortgage meltdown.”

“Mr. Clinton called his wife’s plan the most aggressive of any of the candidates running for president. ‘She wants to freeze monthly payments for 90 days, and give $30 million to states,’ in order to implement a bailout plan.”

“‘We’ll tell the mortgage companies: you eat 20 percent, we (the government) will eat 20 percent, you won’t foreclose on these people,’ he said. ‘When you’re in a hole, you quit digging.’”

“For months, we’ve fretted about the Armageddon that will hit when subprime adjustable rate mortgages start resetting to much higher interest rates. What’s happening is even worse: Many of these loans are defaulting well before their rates increase.”

“Defaults for subprime loans issued in 2007 - none of which have reset yet - hit 11.2 percent in November. That represents perhaps 300,000 households, and is twice the default rate that 2006 loans had 10 months after being issued, according to Friedman, Billings Ramsey analyst Michael Youngblood.”

“Many borrowers were approved for mortgages that they had little chance of affording, even at the low-interest teaser rates. ‘I was rather shocked by the characteristics of the 2007 loans,’ said Youngblood.”

“These mortgages were doomed from the start. For instance, in both 2006 and 2007, well over 40 percent of subprime borrowers were awarded mortgages with either little or no documentation of their ability to pay.”

“And even when borrowers did go on the record about their earning power, it didn’t bode well. Both 2006 and 2007 saw a large proportion of loans with high debt-to-income ratios (DTI), which indicates the percentage of gross income required to pay debt. In 2007 subprime originations, the DTI hit 42.1 percent, up from 41.1 percent in 2006. Borrowers were simply taking on more debt that they could afford.”

“By late 2006, lenders knew that the housing market was heading south. And home prices began to drop. But instead of cutting back on risky loans, lenders kept lending. Why?”

“‘Because investors continued to buy the loans,’ said Doug Duncan, chief economist of the Mortgage Bankers Association.”

“Despite their quality, subprime mortgages were as profitable as any other for lenders like Countrywide and Wells Fargo, who were able to quickly securitize the loans and sell them in the secondary market. The loans sold easily because they carried the promise of high yields.”

“‘As long as you could sell the loan, you made the deal,’” Duncan said.”

“And, to outside analysts, there appeared to be nothing wrong with loan quality. ‘There were very few overt changes in industry underwriting guidelines,’ said Youngblood. What did change, he said, was that lenders made more exceptions to their standard practices, approving people with poor work histories or insufficient proof of income.”

“‘These exceptions generally amounted to no more than 5 percent [of subprime loans] before 2006,’ said Youngblood, ‘but they represented the majority of these loans issued in 2006 and 2007.’”

The Shelby Star. “With foreclosures skyrocketing, it’s hard to imagine that half the homeowners who stand to lose their homes through the process don’t try to stop it.”

“But according to Tim Adams, Mid-Atlantic District Director for NeighborWorks America, one out of every two homeowners who face foreclosure makes no effort to stop it.”

“‘You have to reach out and make a call,’ Adams said. ‘The banks don’t want to be in the real estate business. They would rather be in the lending business.’”

The Coloradoan. “One pocket of Larimer County is seeing foreclosure sales four times higher than the county average. Glacier View Meadows, a 5,000-acre mountain subdivision 35 miles northwest of Fort Collins, has suffered the last two years with rising foreclosure rates.”

“Forty percent of the 35 homes sold in Glacier View last year were either bank-owned sales or short sales, according to records compiled by Steve Koeckeritz of Lone Pine Realty.”

“Already this year, with 34 homes on the market in Glacier View, nine are being sold by the banks that foreclosed on the mortgages, Koeckeritz said. Many of the homes sold at auction last year were modulars and priced under $230,000, which is in the lower half of market for Glacier View homes, Koeckeritz said.”

“The subprime debacle, rising commuting costs and a sluggish manufactured home market have all contributed to the problem, Realtors say. Others walked away from their homes when they didn’t sell for the asking price, said Bob Isaacson, Realtor with Ponderosa Realty Associates, which has an office in Glacier View.”

“‘They set their expectations way too high. They see their home is not going to sell and they won’t take less and just say goodbye or go somewhere else. Foreclosure doesn’t seem to bother them,’ he said.”

“Steve Horsmon, president of the Glacier View Association, said the people going through foreclosure are primarily second-home owners who got in trouble with increasing gas prices, the long commute to Fort Collins and the cost of mountain living.”

“‘It got unmanageable, and they walked away,’ Horsmon said.”




The $100,000 Profit Is Gone

The Pocono Record reports from Pennsylvania. “Real estate appraiser Joseph C. Fisher and Realtor Eileen Chaladoff agree the Monroe County housing market didn’t perform as well in 2007 as in 2006. Total county home sales last year — 2,876 — were down 38 percent from the 3,972 sales the previous year, according to a statistical analysis prepared by Fisher. The average 2007 home price — $182,889 — was about 10.5 percent below the $202,140 average for 2006.”

“Though there were a record 1,253 county home foreclosure filings in 2007, Chaladoff, president of the Pocono Mountains Association of Realtors, said relatively few foreclosed homes were among the 2,341 homes sold by member Realtors. ‘Our foreclosure rate is only 7.5 percent compared to total sales,’ she said.”

“She said the average size of last year’s sold homes was a little smaller than the previous year. ‘The big McMansions — they’re sitting for awhile,’ Chaladoff said.”

“Fisher and Chaladoff both expect home prices to level off within the next few months. ‘Now when they’re selling they’re going to make their profit, but they’re not going to make a big profit like they used to,’ Chaladoff said. ‘The $100,000 profit is gone.’”

“Fisher points to a healthy mix of ranch homes, cabins, mobile homes and so-called McMansions in the Poconos. ‘It’s certainly not going to take a dive,’ Fisher said. ‘The market here is very different than in California, Nevada or Texas.’”

The Derrick from Pennsylvania. “Some real estate agents say 2007 was a good year, while others say it was sluggish. ‘I do think that some people are coming here to retire because it’s affordable and it’s a slower pace,’ said Joyce Woodard of Venango Real Estate.”

“More and more, people from places like California, where housing is considerably more expensive, are finding homes in Venango County with lower prices. ‘We get emails from people who want to buy five or six houses,’ Woodard said. ‘It’s like pocket change to them.’”

“2007 was a sluggish year in Venango County overall, according to Rebecca Bloom of Wilson Real Estate. She blames the slump on the national news about foreclosures. ‘People are afraid to buy houses because of the media,’ she said.”

“Although Cynthia Moon said 2007 was a good year at Gates & Burns Realty, she expects 2008 will be hard on new buyers. ‘I think a lot of people this year are going to be squeezed out of the market. I don’t think they’re going to be able to get loans,’ Moon said.”

“In recent years, it has been easy for new buyers to get breaks when applying for loans, but that ‘easy money led to a mortgage crisis,’ according to Moon.”

“In 2005, Realtors reported record sales of residential properties along the river. One of the priciest areas was Rockmere where homes were selling for $400,000 and $500,000, sometimes more.”

“But now, a lot of riverfront residences are sitting empty and out-of-town owners who are hoping to sell these properties for high prices can’t, Bloom said. ‘I think people just don’t have the extra funds right now,’ she said.”

The Philadelphia Inquirer from Pennsylvania. “Anthony and Lisa Grande’s house stands out in their Levittown neighborhood. ‘It’s the big house,’ Lisa said when giving directions.”

“The Grandes borrowed more than $100,000 - much of it on credit cards - to double its size four years ago because they wanted enough room for their five children and did not want to move.”

“But now, the Grandes are fighting to stay there, having repeatedly fallen behind on their mortgage payments, which climbed from $1,841 to $2,487.”

“When they refinanced in January 2004 from a $113,906 fixed-rate mortgage into a $220,500 adjustable-rate mortgage to pay off credit-card and other debt, they were told - like millions of others - that they could refinance before the interest rate jumped.”

“Then Anthony’s health fell apart, his plans to start a business foundered, and another refinancing did not come through.”

“‘It seems like a black cloud pulled over and stayed there,’ Anthony said during an interview last month, two days before he went into the hospital for the seventh operation in the last four years on his diabetes-stricken body. ‘To be quite honest, we were probably foolish also,’ Lisa said.”

“Lisa recalled a carpenter on their roof during construction stamping a broom and saying so many people went bankrupt expanding their homes. ‘I knew it then. It’s like he cursed us.’”

“Lisa said it’s been incredibly hard dealing with Option One Mortgage Corp. ‘You could never talk to the same person, and then whoever you had next tried to get more out of you,’ Lisa said. She recalled how one service representative told her: ‘I don’t want to hear your hard luck story. I want a check.’”

“Christine Sullivan, spokeswoman for Option One, a subsidiary of H&R Block Corp., said the company’s records show that it followed the proper foreclosure filing procedure for Pennsylvania. ‘We have worked closely with the Grandes since 2005, including offering them several workout plans,’ Sullivan said.”

“Option One has stopped taking loan applications, and its office in Trevose - where Anthony called to refinance - closed last summer.”

“The Grandes showed visitors a photo album that illustrates the construction project from start to finish. To pay for the additions, the Grandes used a $40,000 bank loan and credit cards.”

“In January 2004, they did what millions of Americans did during the housing boom to cope with ballooning credit-card debt: they refinanced, though they didn’t get enough to pay off their credit cards. The new loan - with no income verification, according to Anthony - increased their monthly payment from $950 to $1,841. The introductory interest rate was 7.75 percent for two years.”

“Despite the refinancing in January 2004, the Grandes still had $118,628 of debt on 24 credit cards, according to a bankruptcy filing in October 2005. ‘We probably lost track,’ Lisa said of the number of credit-card checks they used. ‘They just kept sending us checks.’”

“The whole affair has shattered Anthony’s sense of himself. ‘I was always hustling. I always worked. Now I can’t do anything. I feel like a jerk,’ he said.”

From KDKA.com in Pennsylvania. “For now, much of downtown Pittsburgh is under construction. There’s the North Shore Connector project, the PNC office, hotel and retail high rise and the Piatt Place transformation of the Lazarus building into condos and shops - pricey and ambitious projects aimed at revitalizing downtown’s long-decaying urban core of blight and vacant stores.”

“But there are also signs that condo sales downtown have hit a speed bump as more and more units come on market. With PNC adding more units, the Cultural District is delaying its plans for condo construction and according to real estate insiders, others are taking a wait-and-see approach.”

“And while owners have closed on more than half of the 83 units at 151 First Side, six of those units are already up for re-sale. ‘We’re confident that it will pick up. I mean obviously there’s a nationwide housing issue right now,’ Deputy Mayor Yarone Zober said.”

“Despite slower than expected sales, Zober doesn’t believe there’s a glut of condos on the downtown market. ‘We have a unique market, one. Two, we haven’t had traditionally much supply at all. So, any supply at this point to the outside observer might look like an over-supply, but I don’t think we have that at this point,’ he said.”

“At the Carlysle at Wood Street and Second Avenue, half of the 60 units are under contract, but about a third of those buyers are real estate investors and phase two of the project is currently on hold.”

“Buying downtown is not for everybody, especially at the prices these units are being offered - generally more than $200,000. Developers say these buildings are too costly to renovate and they can’t offer the units more cheaply.”

“Still, developers say they’re pleased with the sales and confident that prospective buyers will overcome their misgivings and take the downtown plunge. ‘Many of them are repeat visitors who need to time to adjust to a lot of the nay-sayers, family and friends, people who say, ‘You want to live where?,’ Liz Caplan, an official with The Carlyle, said.”

From WCVB TV in Massachusetts. “The foreclosure crisis is hitting a new demographic. No longer is it just homeowners swimming in debt. Now, those trying to lend a helping hand to those in need are feeling financial pains.”

“NewsCenter 5’s Shiba Russell reported Monday that a local nonprofit developer is working to provide affordable housing, but it’s feeling the crunch. It built 11 homes for $5 million in Newton. Their plan was to sell seven to moderate-income residents and the rest at market rate.”

“‘I think that they were not willing to pay what they thought was too high in a market that was changing,’ Citizens For Affordable Housing’s Josephine McNeil said.”

“Realtor Sandi Fromm said that she had no choice but to lower prices. In the end, its developer, Citizens for Affordable Housing, took a big hit. The market rate homes sold for $40,000 to $170,000 less than the asking price.”

“‘I think if they had come on the market six months sooner we would have been fine, but they didn’t,’ Fromm said.”

From The Day in Connecticut. “Ed Hillyer, still exuding confidence left over from an unprecedented six-year real estate boom, has no trouble talking up this three-bedroom home in the Crescent Beach section of Niantic.”

“It’s a beautiful modular built four years ago on a small lot not far from McCook Point Park, with a huge kitchen, propane-gas fireplace, gleaming wood floors and even a far-off view of Long Island Sound, all for $799,900.”

“But when Hillyer, who owns a Waterford real estate firm, turns to face Tamala Facas of Westerly to tell her about the his-and-her closets in the master bedroom, he does something he wouldn’t have imagined a few years ago, during the height of a local real-estate run-up that doubled the price of many homes in less than a decade.”

“Hillyer makes a concession. Without even being asked. ‘There’s a little issue,’ he says.”

“It turns out that one of the closets had been designed originally as a bathroom. Without an extra bathroom, the upstairs includes no separate area for guests to shower or bathe. So if Facas decides she has to have another bathroom, ‘The seller would take it off the price,’ Hillyer says.”

“Sellers in the region are making a lot more concessions these days. With the supply of houses swelling, buyers are taking longer to check out the market, waiting for the best deals and rarely competing to bid up home values, according to local real estate agents.”

“‘Clearly, we’re in a buyer’s market now,’ says John Bolduc, executive VP of the Norwich-based Eastern Connecticut Association of Realtors.”

“‘Are we in a buyer’s market? I really don’t know,’ says Hillyer. ‘I kind of feel like it’s a little dip in a long trend that’s been going up.’”

“‘Houses that used to be selling in 60 days, it wouldn’t be surprising for them to be on the market for six or nine months,’ says Norm Kraymen, owner of Realty Estates in Groton. ‘I don’t see anybody making full-price offers. People are looking for realistic prices and the best bargain. A lot of homes are still overpriced.’”

“Michael Costanza, a teacher at North Stonington Elementary School, can vouch for the fact that houses have been coming down in price, having spent the past eight months scouring the Internet and trudging through about 35 homes looking for a place to buy.”

“He just had an offer accepted on a three-bedroom home in Lisbon that he knows he couldn’t have afforded two years ago, and he has seen others drastically reduced in price since he started house-hunting in earnest last September.”

“‘One house I looked at was listed at $289,000, and now it’s come down to $259,000 and the owners seem anxious for offers,’ he says. ‘A lot of homes have come down $10,000 to $20,000 since I started looking. … A lot of houses have been around forever.’”

“Costanza says the key to getting a good price is waiting for the right opportunity. For instance, he made an offer $25,000 less than the listing price for his new home in Lisbon and had to wait a week before the seller responded. This was the fourth house on which he made an offer; the other offers fell through.”

“‘Given the market conditions, I was able to have patience,’ he says. ‘I knew the right house would come to me. There are plenty of homes to choose from. The situation is only getting worse for sellers.’”

The Advocate from Connecticut. “Despite a 12.4 percent drop in the number of single-family homes sold last year, Connecticut bucked a nationwide trend that saw the median price fall to $217,800, down 1.8 percent from 2006, the first decline since 1968.”

“Although tax bills are calculated according to property values, the state of the housing market doesn’t have a direct effect on property taxes, said Carolyn Nadeau, president of the Connecticut Association of Assessing Officers and tax assessor for Bethlehem and Watertown.”

“‘People think their taxes are going up or down, but taxes change based on the city’s budget. There is no difference if you do it in an upmarket or a downmarket,’ Nadeau said.”

“Some owners want their homes to be assessed at a higher rate because that could increase the asking price if they sell, Nadeau said. ‘Hopefully, people want to see their property values increase because that’s why we buy homes in the first place,’ she said.”




Bits Bucket And Craigslist Finds For February 20, 2008

Please post off-topic ideas, links and Craigslist finds here.