February 21, 2008

Blinded By The Allure Of Appreciation In California

The Voice of San Diego reports from California. “Lela Mazzeo rested an arm on a doorframe in the first home she ever owned and sighed. The two-story house on a large lot in Casa de Oro has been listed for sale for three months. The Mazzeos haven’t lived in it since 2003, when they bought and moved into a home in Imperial Beach. They kept the Casa de Oro house, renting it at first to friends and then to long-term tenants.”

“The last tenants moved out in December 2006, leaving the Mazzeos to 11 months and at least $75,000 of cleanup and renovating before they deemed it sellable. But even when they had tenants, the rent the house garnered — $2,000 to $2,100 — fell far short of the nearly $4,000 the Mazzeos paid each month on its mortgage and upkeep.”

“And since listing it for sale in November for $575,000, they’ve dropped the bottom of the asking price range to $499,000, less than they owe. They bought this house in 2001 and have accumulated four more properties, including the house in La Mesa where they live now.”

“‘It’s just a matter of how many we lose before we get to a place where we’re sound financially,’ James Mazzeo said as he waited for his appointment with a lender rep at a foreclosure clinic. ‘It’s been like a really long rollercoaster — just down. Just falling, falling, falling.’”

“While the Mazzeos say they’re not in danger of losing the home they live in with their two toddlers, they’re not sure how long they can hold onto this home in Casa de Oro, the two homes they own in Imperial Beach, and the condo in Oceanside. They admit they were blinded by the allure of appreciation. They speak frankly about their part in signing up for loans that were quite contingent on the market boom.”

“Even though the $500,000-range asking price is more than $200,000 more than they paid for it in 2001, selling it for that much wouldn’t let them break even, because of the repairs they’ve made and because they owe about $500,000 on it.”

“‘I don’t want to rent it back out and have it be a huge struggle for three or four years and get it back in bad shape again,’ she said. ‘We don’t want to throw good money after bad. When do you make the decision to say we have to cut our losses? Whatever we’re going to do, we want to do it now so we can just start digging ourselves back out.’”

The LA Daily News. “Foreclosures more than tripled last month in the San Fernando Valley, with the subprime loan crisis creeping into higher-priced neighborhoods, a research center said Wednesday.”

“‘It’s basically people who took out mortgages where they used a partial-pay option and now they are getting (interest rate) resets and can’t afford the new price,’ said Daniel Blake, the San Fernando Valley Economic Research Center at California State University, Northridge director.”

“Jim Link, executive VP of the Southland Regional Association of Realtors, said its records show January sales of previously owned houses and condominiums fell 40 percent last month to 751 units, and the median price dropped 28 percent to $465,000.”

“The Realtor numbers include transactions from Toluca Lake to Calabasas. ‘I hate to say it: It’s the same old story. Nobody is doing anything,’ Link said.”

The Antelope Valley Press. “Sheriff’s deputies on Wednesday ousted a family of alleged ’squatters’ from a house in the community. Property owner Michele Hill said a woman and seven children broke in, changed the locks and set up house in a residence she was trying to sell.”

“‘We’re in a mess over here,’ Hill said. ‘I’m just sick about it.’”

“The house, reportedly valued at $800,000, went on the market in November, she said. Further inspection revealed that the ‘For Sale’ sign had been taken down and meters for water, power and gas had been manually overridden, she said.”

“‘They took the whole lock off (including the real estate agent’s lock box) and replaced it with another lock,’ Hill said. ‘These people are pros at this. … We can’t even think of things like this, and these people (apparently) do it all the time.’”

“‘The last time this happened we had a lot of complaints,’ said Sgt. Steve Sylvies of the Lancaster Sheriff Station’s Community Appreciation Project team, referring to a real estate downturn in the 1990s.”

“Bob Schack, president of the Greater Antelope Valley Association of Realtors, said in homes without utilities, squatters can be especially destructive. ‘They don’t have water. The don’t have electricity, so they don’t have toilets, and you can imagine …,’ he said.”

The Fresno Bee. “The Fresno Association of Realtors sampled 350 of the more than 600 cases in which lenders obtained houses through foreclosure in the fourth quarter of 2007. In 51% of those cases, homeowners had refinanced their loans, sometimes multiple times, or borrowed up to $250,000 against their equity, or both.”

“The findings are significant because they show that many families used their house as an ATM, said Don Scordino, association president. The average family refinanced or took cash out twice before losing the house, the study found.”

“‘A new kind of currency was created’ during the boom years, Scordino said. ‘People spent a lot of money they didn’t earn.’”

“Higher-income households often used the extra money for vacations, cars and real estate, and lower-income families used it to stay afloat, sometimes trying to save the very house they were borrowing against, said David Mendoza, executive director of a nonprofit counseling service for home buyers.”

“‘The low-income are scrambling to keep the house. The moderate-income homeowners are refinancing, letting the house go into foreclosure and getting toys out of it,’ Mendoza said.”

“‘We’re a country of consumers,’ said Michael Gilmore, owner of The Mortgage Professionals, a brokerage in Fresno.”

The Contra Costa Times. “Jo Schliesman logged 30 years in the escrow business before the real estate slump took its toll. Laid off last January, the Brentwood resident found another post in June — only to have her entire office close in November.”

“‘I don’t know where everybody went, if they have jobs or not,’ she said. ‘There’s no severance, nothing. They come in, and it’s ‘Bye, see you.’”

“Now looking to switch careers, Schliesman finds most places she applies are overwhelmed with applicants. ‘I have been basically living on my 401(k),’ she said.”

“‘They were people who never saw this happening,’ said Dee Dee Rayfield, a life and job skills coach who runs Job Club in Contra Costa. By the time they arrived in Job Club, some were in danger of losing their homes and cars, Rayfield said. ‘Even though they needed money, they don’t want to start at the bottom; so it was a real challenge to keep their spirits up. They were looking at the jobs out there and saying, ‘I can’t live on this.’”

The San Francisco Chronicle. “More than 100 laid-off workers from the mortgage industry packed into a Pleasant Hill classroom on Wednesday to hear advice about finding new jobs. In many cases, that may mean switching to new professions.”

“‘You are all here because your jobs are no longer there,’ said Marian Woodward, one of half a dozen speakers offering tips and inspiration at the free workshop.”

“‘It’s a shock when it happens to you,’ said Debra Miles of Oakley, who worked as a mortgage customer relationship specialist. She was laid off two times in 2007 - first from Wells Fargo’s subprime lending division, then a few months later from a Concord firm that went out of business.”

“Despite the long hours and high stress, she misses the field, Miles said. Her career goals now are simple: a full-time position with benefits. ‘When you apply for a job, you find 400 other applicants,’ she said.”

“Tracey Brown-Carter, business and economic development coordinator for the Workforce Development Board of Contra Costa County, said that between 1,000 and 1,600 East Bay mortgage workers were axed in 2007, accounting for about 85 percent of local layoffs.”

“One big challenge faced by laid-off mortgage workers is salary cuts, Brown-Carter said. The workers had positions such as loan processor, closer, funder and pricing specialist, averaging about $25 an hour, she said. Loan officers, who received commissions, often pulled in six-figure salaries.”

“Making that kind of money is no longer feasible for many, she said. ‘They’re used to living a certain lifestyle, collecting a certain wage; now they have to make that shift to the income they can command,’ Brown-Carter said.”

“‘I saw a lot of young people get into the business because they heard there was money to be made there,’ said Peggy Green of Oakland, who was laid off in November from First California Mortgage of Petaluma, for which she conducted training seminars for mortgage brokers. Those people were there to make money at all costs. Unfortunately, some of them were the bad ones we hear so much about now.’”

“After 15 years in the industry, Green said, now she is leaning toward job hunting in a different area. ‘It’s so negative in the mortgage industry now,’ she said. ‘It’s like ‘who went out of business today?’ If I could stand on my feet that long, I would become a grocery store cashier.’”

The LA Times. “When Little Tokyo Lofts opened in downtown a few years ago, they were billed as the antidote to suburban living. Press materials lured buyers by promising luxury lofts in an about-to-be-gentrified ‘vibrant neighborhood’ — which just happened to be at the edge of skid row.”

“And buyers bought the condos, near the corner of 5th and San Pedro streets, hoping that the upscale amenities that had surfaced in other parts of town would follow them there.”

“So when residents of Little Tokyo Lofts noticed a few months ago that a tenant would be moving into the long-vacant, ground-floor retail space of their building, they got excited and started wondering who it would be. A new restaurant or coffee shop? A dry cleaner?”

“Then they learned that the space was to be filled by a mental health service provider.”

“The new neighbor has met with protests from some loft dwellers, who argue that their neighborhood has more than enough social services centers aimed at the homeless population and that what they need is more stores and eateries.”

“‘I know where we live,’ said resident Matthew Heller, who was the first person to buy a unit when the building went condo. ‘I know the homeless people, and some are friends with me. I understand the neighborhood I’m not saying not in my backyard. I am saying my backyard is already so full.’”

“Inside the six-story building, units that sell for $400,000 to $1.2 million each boast ceilings that are 12, sometimes 30 feet high, original steel casement windows and designer kitchens outfitted with stainless steel appliances and granite counter tops.”

“Outside, the street life reflects the neighborhoods that the building abuts. A green podlike toilet, installed for the use of homeless people who linger nearby, sits at the corner of 5th and San Pedro. A number of homeless service providers are on the block to the south, including the Union Rescue Mission.”

“Steve Lee, landlord of Little Tokyo Lofts’ retail space, wasn’t surprised by the residents’ reaction. ‘If I was living upstairs, maybe I wouldn’t like it myself,’ he said. But he noted that the residents ‘have chosen a very, very challenging place to live.’”

“Lee said that in the current economic environment, places where there are not a critical mass of housing, such as the area around Little Tokyo Lofts, would suffer because they do not have a built-in infrastructure to support the residents.”

“‘Hopefully, it will get better before it gets worse,’ Lee said. ‘But I don’t think it’s going to be pretty, particularly at this location.’”

The County Sun. “Those densely packed townhomes at the northwest edge of Victoria Gardens are a notch down from ‘urban.’ But if 30 more years turns Rancho Cucamonga into the urban magnet experts are predicting it’ll be, the neighborhood will fit right in with West L.A. and Long Beach.”

“24-Seven and Three-65 - two adjacent townhome/flat projects by Shea Homes - crowd Cultural Center Drive and offer a downtown Pasadena-type lifestyle without the busy street traffic and noise.”

“Much of the project is yet to be built. In a busted housing market, only time will tell how fast these multi-family dwellings sell out and how long the builder takes to finish the projects.”

“Phil Apodaca, his wife and child moved into a 1,740-square-foot townhome in the Three-65 community for $485,000 in November. ‘My fiancee (at the time) really liked how close it is to the mall,’ he said.”

“Of course, Apodaca has his own reasons too. ‘The fact that you can walk to the restaurants, get drunk and not worry about getting a DUI,’ he said, chuckling. ‘I’m going over to (Victoria Gardens) more often than I would if I hadn’t bought here.’”

“You’ll find BMWs, Cadillac Escalades, and Mustangs parked on the street next to outside patios filled with brand new furniture.”

“Apodaca isn’t sure where his neighbors are from. ‘If they’re from L.A. and Orange County, but they can’t afford those prices, then this is the closest thing,’ he said. ‘I’ll probably live here two years and then use it as a rental property. If I get some good renters, I’ll keep it.’”

“Mike Diaz, senior planner with the city, said Shea Homes isn’t building the rest of the townhomes as fast as originally anticipated. ‘It seems to me they’ve slowed up a little bit,’ he said.”

“Apodaca said he knew his home’s value would only go south, given a bum housing market. Talk about a major drop. Shea Homes is now selling his same floorplan for about $415,000 - a 15 percent plunge for him.”

“With the market for homes sagging, prices might drop even more. Nineteen foreclosures lie within a half-mile radius of 24-Seven and Three-65 townhomes - but outside the townhome project - according to RealtyTrac.”

“Besides those houses, another five are up for auction, and 23 neighbors are defaulting on their mortgage payments.”

“‘I knew it would drop, but I didn’t know it’d drop that much, especially when the sales manager said they wouldn’t lower the prices,’ Apodaca said.”




A Sign Of Buyer Sentiment

The Denver Post reports from Colorado. “Despite a concerted effort to reduce the tide of people losing their homes, foreclosures in Colorado shot up 40 percent in 2007 compared to 2006, according to a count from the Colorado Division of Housing. Public trustees in Colorado reported 39,915 foreclosures last year, including 10,955 in the fourth quarter. That is 11,400 more than the record set in 2006.”

“The report also found that a smaller percentage of homeowners were able to avoid a forced auction of their property once they entered foreclosure. There were 25,320 foreclosure sales last year, compared to 17,451 in 2006.”

The Coloradoan. “The proliferation of new home construction along the Front Range is a leading cause of the larger numbers motive behind larger numbers compared to counties outside of the Front Range.”

“‘Foreclosures are being partially driven by a very high inventory of newly-built homes,’ said Kathi Williams, co-chair of the Colorado Foreclosure Task Force and director of the Colorado Division of Housing, in a statement. ‘In many cases, in the Denver area, someone who can’t make his payments simply can’t sell his house fast enough to avoid that final foreclosure sale.’”

The Greeley Tribune from Colorado. “Banks and lenders filed foreclosures on 2,877 homes in Weld County in 2007, according to a Colorado Division of Housing report. Foreclosure filings increased in Weld by 38 percent, just under the statewide increase of 40 percent from 2006 to 2007.”

“‘I was expecting about a 30 percent increase, so it is very disheartening to see it up 40 percent,’ said Williams.”

The Daily Planet from Colorado. “Telluride real-estate sales racked up a record year in 2007, but the new year has opened on a darker note. This January, the dollar volume for all real-estate sales fell nearly 40 percent from last year, according to new data from Telluride Consulting.”

“Brokers say…it’s hard to dispute the conclusions of the new data: For Telluride real estate, last month was the worst January in four years — longer still, if you account for inflation.”

“Matthew Hintermeister, president of the Telluride Association of Realtors, said that a nationwide panic over sub-prime mortgages, lending crises and an overall housing and economic slump may have finally come home to roost in Telluride.”

“‘I think it’s more of a sign of buyer sentiment,’ he said. ‘Buyers are coming from all over the country, and in their home markets, the media pounds away at them that real-estate is a terrible investment, and that it’s not a time to buy. Buyers are coming to town, and they have this mindset that the world might be ending,’ he said.’”

“Even if the market in Telluride slows, we’re not likely to see the fire sales, cratering prices and parade of for-sale signs that have plagued some parts of the country. Telluride isn’t overbuilt like, say, Phoenix, and most sellers here would rather sit on their hands and wait for the market to pick up, rather than sell at a desperate discount.”

The Arizona Republic. “New-home building and sales dropped again in January, but it’s not likely metropolitan Phoenix’s housing market has hit bottom yet.”

“Single-family permits fell to 1,370 in January, according to RL Brown’s Phoenix Housing Market Letter. That’s the lowest monthly level since 1992. New-home closings fell to 1,848 last month, their lowest level since October 1995.”

“The median price of a new metro Phoenix home last month was $231,771, compared with $274,995 a year ago. The market hit a high in December 2005, when the median price of a new house climbed to almost $300,000.”

The Arizona Daily Star. “One of the largest new housing developments slated to be built in Marana has been put on hold after a falling-out between the project’s partners. Saguaro Springs is in limbo after KB Home and The Empire Cos. parted ways late last fall.”

“But officials with Marana say Saguaro Springs was stopped because Empire is attempting to exit the Arizona market, likely because of the housing slump, and the company is in the process of finding a buyer for its share of the project.”

“‘Empire is shutting down statewide,’ Marana Town Manager Mike Reuwsaat said. ‘Empire’s been shopping that project for several months.’”

“In the meantime, several hundred acres on the north side of Twin Peaks Road have been bladed, streets have been paved, utilities have been installed and three model homes are complete — though currently they are surrounded by a chain-link fence.”

“Reuwsaat said he is working with KB to negotiate how to keep the neighborhood maintained during the hiatus, the hope being that aspects such as landscaping would still be tended to. Doing so would keep the area from becoming ‘vandalized and torn up,’ Reuwsaat said.”

The Las Vegas Sun from Nevada. “In a sign the Las Vegas housing market continues to deteriorate, foreclosures in January surpassed the sales of new and existing homes for the first time during the downturn. SalesTraq reported that 2,177 homes were repossessed in January, surpassing the 1,962 sales in the new and existing home markets.”

“Sales usually outnumber foreclosures by a large margin, but that changed in January as foreclosures more than doubled from December’s 988. The previous high for a single month was 1,560, in November.”

“The median price of existing homes sold in January was $247,000, a drop of nearly 15 percent in the past 13 months. The median price was $289,500 in February 2007.”

“The median price of new homes and condos was $268,000 in January, a drop of $4,500 from December. Prices have fallen 25 percent since the new home market set a record of $355,435 in April 2006.”

“The MLS contained 23,803 available houses in January, SalesTraq reported.”

The Review Journal from Nevada. “Housing analyst Dennis Smith said residential land prices have peaked and even receded from historical highs, especially now that home builders are selling off excess lot inventory and cutting back on new home permits.”

“‘The big public builders are writing down their land holdings and they can do that,’ Smith said. ‘Right now banks are having a difficult time establishing land values. That means the appraisers are, too.’”

“Smith said he knows of one large builder that bought 3,500-square-foot finished lots from Engle Homes — whose parent company, Tousa Inc., filed for bankruptcy — for $55,000 each.”

“Last summer, Smith had a small builder client who had finished lots appraised at $130,000 in the same area, near Sam Boyd Stadium, and was trying to sell them.”

“‘I said at that time builders might give $100,000,’ he said. ‘It doesn’t matter what the appraisal is. It’s a piece of paper. I know what builders are willing to pay. Now you’ve got $55,000 lots. You’ve got distressed sales. That may be too strong. You’ve got discounted sales.’”

“Smith said part of the next phase of our housing cycle will be banks writing down their lots.”

“‘You have builders that are losing or giving the lots to the bank for nonpayment,’ Smith said. ‘What are they going to do with them? The banks want to move these lots. Who’ll buy them? Investors. The real issue is trying to establish what values are on these lots.’”

The Las Vegas Business Press from Nevada. “The economic picture isn’t pretty. Many observers seem convinced that a recession is imminent if it’s not already here.”

“Developer George Gekakis is building the 238-unit, $30 million Sonoma Palms affordable senior apartments during the worst housing downturn in Las Vegas history, at a time when a glut of rental homes has cannibalized apartment dwellers and pushed apartment vacancy rates to 8 percent.”

“‘That’s what’s hurting multifamily,’ he said. ‘They can get a home with a $3,000 mortgage and they can rent it for $1,000, maybe $1,200. ‘All you can do is stay lean and don’t own a lot of property. But it’s going to change. In three years, we’re going to have 100,000 jobs.’”

“‘If it wasn’t for big projects on the Strip, I’d be hurting,’ said Larry Monkarsh, owner of LM Construction. ‘I think the industrial market has been kept alive by the gaming sector because home builders don’t take that much industrial space.’”

“Economic pressure forced some companies out of business and others to pare operations to bare bones. Nearly 8,000 construction workers were laid off in Nevada, mostly from the residential sector.”

“Monkarsh said he’s constantly ’shopping’ for the best deals on materials and equipment. He’s also taking another look at all aspects of the company to see where he might save money.”

“‘For example, in order to save on varying interest rates, we’ve begun to restructure and consolidate our debt on vehicles and equipment,’ he said. ‘We’ve also gone back to our employees and requested to restructure their compensation packages.’”

“Southern Nevada’s economy is performing a ‘high-wire balancing act’ between a strong push of big investment spending along the Strip and the drag of falling residential construction and real estate sales, a UNLV economist said.”

“A 16.3 percent decline in November’s gaming revenue contributed to the downward trend. ‘Still, the six-month forecast remains flat, (with) no clear sign of an overall recession in the data, despite the veil of pessimism coming from the media,’ economist Keith Schwer said.”

“A separate index measuring Clark County business activity declined 1.7 percent from the previous month and 3 percent from a year ago. It’s the largest monthly decline in the past year, Schwer said.”

“The construction industry has lost roughly 4 percent of its work force, and conditions are not as strong as suggested, he said. ‘Looking ahead, jobs for completed projects may not be as easily taken up by the same number of jobs for new projects,’ Schwer said.”

Las Vegas Now from Nevada. “More than 600 people came to Cashman Center looking for help to avoid a foreclosure. Nevada leads the nation in foreclosures, with an average of 44 homes a day being foreclosed in Clark County.”

“‘I will be out on the street on the 27th of this month,’ said Edward Kasilag, who is facing foreclosure. Kasilag says he had such good credit, a realtor talked him into buying three homes last year and using the realtor’s lender.”

“‘Basically what he told me is after the close of escrow, you can get a home equity line of credit.’ The scheme would have Kasilag getting a line of credit on each home to pay the mortgages and then eventually sell for a profit but the bottom dropped out of the housing market leaving him in a financial hole.”

“Kasilag has since lost his job. The counselors at the foreclosure workshop said they could do little to help him.”

The Salt Lake Tribune from Utah. “Two new reports out Wednesday show that demand for new homes along the Wasatch Front has plummeted, leaving the area with a glut of unsold houses. Builders along the Wasatch Front took out permits for the construction of 242 homes in January, the lowest level since 1990, a report by Construction Monitor shows.”

“January’s total is down 74 percent from 937 in January 2007, said the service. In Salt Lake County in the fourth quarter, there were a record 1,037 completed-yet-unoccupied houses and condominiums, up from 340 units in the fourth quarter 2006, Newreach said.”

“Even with the drop in new-home construction, though, Newreach is estimating that it will take 10 months to sell the county’s inventory of new, unoccupied homes - even if no new homes were constructed during that time period.”

“At the Daybreak residential development in South Jordan, all but one builder - Richmond American - has agreed to participate in a Smart Buy program, designed to create interest among prospective buyers.”

“The program, which debuted in January and runs through April, offers buyers a price guarantee. If anytime between signing their contract to a buy a home and closing the base price on the model goes down, the buyer will be refunded the difference at closing.”

The Deseret Morning News from Utah. “‘There is a huge amount of vacant new home inventory,’ said Jason Eldredge, executive VP at Newreach. ‘The sky isn’t falling, but there are areas that are in trouble.’”

“Some of the hardest hit areas are in the southern part of the Salt Lake Valley, according to the Newreach report.”

“South Jordan had the largest number of unsold new single-family homes in Salt Lake County in the fourth quarter 2007 with 157 units. Herriman ranked second at 121 units, followed by Riverton in third at 110 units. Draper, with 106 unsold units, and West Jordan, with 78 units, rounded out the top five.”

“Eldredge said one of the major factors impacting the level of unsold new housing is affordability.”

“‘A lot of these homes are 4,000 square feet and are $450,000 and above, and yet there are still a few builders who are bringing them to market,’ he said. ‘The lack of affordable new product has forced potential buyers into the existing home market, attached housing units and rental properties.’”

“Eldredge said the best chance to see significant price reductions on new homes could be in the higher-priced inventory above $500,000 or $600,000. ‘Builders will essentially have to decide how long they can carry the cost of their unsold inventory before it becomes too much of a financial burden,’ he said.”

“The rising levels of unsold new housing inventory have also hit neighboring counties. Utah County had 987 unsold new homes and condominiums sitting on the market in the fourth quarter of 2007, a 256 percent hike from the fourth quarter of the previous year. As of Dec. 31, 2007, there were 2,105 homes and condominiums under construction in Utah County, representing an eight-month supply.”

“Zions Bank economist Jeff Thredgold said builders sitting on unsold inventory typically have more incentive to move their properties. He also said the market will likely produce more price flexibility in new homes than in existing homes, which will help clear the market.”

“‘If you can get good financing, it is a good time to be a home buyer,’ he said. ‘You can be aggressive in trying to get a better value. It’s certainly become more of buyer’s market than a seller’s market.’”

From KUTV.com in Utah. “It almost sounds too good to be true. With the nation’s housing market in the dumps, some people are living in expensive homes, for just a fraction of a monthly mortgage payment; and its happening right here in Utah.”

“Autumn Marler plays with her three children while her husband is away from home, working two jobs. The Marlers live in a beautiful 4,000 square-foot home in Kaysville. The home is owned by a family who now lives in Massachusetts. It’s for sale for $349,000.”

“The Marlers are just ‘tending’ it. ‘I’m paying an awesome amount of rent to live here,’ says Autumn, ‘550-bucks a month. I’m getting a huge discount. That discount for me is income for my family that’s tax free and I don’t have to pay for childcare.’”

“Cathy Cardenas is the founder of Designer Hometending, a company out of Boise, Idaho that works with home owners to help sell vacant homes faster. Designer Home Tending has contracts with about 14 homes throughout the salt lake area up to 1.5 million dollars.”

“‘Usually you can get about 550 to 650 million dollar home. So, wanna move in?’ laughs Cathy.”

“But, of course, there is a catch. As wonderful as the situation might seem, as a hometender, you always have to be prepared to pack up and move out. ‘They’re given about 10 days to move out from the day they get an offer,’ says Cathy.”

“Autumn and her husband had to go through the emotional stress of losing their own home in South Jordan. Now, they can take pride in someone else’s. ‘My husband lost his job recently and we lost our home for a foreclosure,’ says Autumn. ‘He loves the fact that he doesn’t feel like a failure because we’re still living in a nice home.’”




Has The Proverbial Boom Gone Bust?

The St Charles Journal reports from Missouri. “With the full results for 2007 in, St. Charles County evaded some of the more dramatic drops seen in other parts of the country in new home sales. ‘What those numbers are indicating is a logical slowdown in permits in the last two years as we are closing and occupying a supply of homes created in ‘04 and ‘05 that was in excess,’ said Joe Zanola, who owns a St. Louis housing market research firm, adding that ‘we have a bit of oversupply.’”

“Realtors in St. Charles County have undertaken a campaign to convince the public the situation is not as dire. During a news conference last week, St. Charles County Association of Realtors CEO Mark Stallmann tried to shift attention to the 2007 housing market’s performance in comparison to 2002, which he referred to as the ‘last normal market.’”

“In the midst of public concern about the health of the housing market, the Realtors association has characterized the period of 2004 through 2006 as years of unusual growth that should not be used to gauge the present situation.”

“Missy Palitzsch, marketing manager for Continental Title in St. Peters, said foreclosures in St. Charles County rose 10 to 15 percent in from 2006 to 2007. A great part of that problem, she said, was that several people who put all their money into adjustable rate loans got into trouble when rates reset.”

“‘By the third quarter, we’re hoping the correction has run its course,’ she said.”

The Chicago Tribune from Illinois. “With the housing industry locked in a deep chill and another Chicago-area builder, Kennedy Homes, showing signs of financial duress, some builders are trying a new tactic: freezing prices. Several local builders are offering new promises that if they lower prices within a specific time frame after a buyer steps to the plate, that buyer will still get the better ‘deal.’”

“Buyers ‘are totally afraid,’ said housing consultant Steve Hovany. ‘This is a way to calm them down.’”

“Lance Ramella, principal with Meyers Builder Advisors in Downers Grove, said a number of builders tried to adjust to the downturn first by reducing staff. ‘Pretty much everybody has laid off staff, up to 50 percent in some cases,’ he said. ‘Then they discounted the price of the houses, and then they shed excess land, and they’re still doing all those things,’ Ramella said.”

“He said the number of new homes sold in the Chicago region plunged from 46,000 in 2005 to 28,000 in 2007. ‘I had one builder, a medium-to-small builder, tell me their business plan for 2008 is to sell zero houses,’ Ramella said. ‘If they sell one house they will exceed their plan.’”

“To lure buyers, companies including KB Home, Ryland Group, Belgravia Group and Kimball Hill are offering price protection guarantees. It’s an issue because desperate builders are dropping prices.”

“Benjamin Brizuela bought a house reduced by $40,000 from struggling builder Neumann Homes. He paid $266,000 for the four-bedroom home at NeuFairfield, an uncompleted development on the far east side of Joliet.”

“‘I got a tremendous deal because the developer was headed for bankruptcy,’ he said. ‘I wasn’t upset, because I knew the builder was in a lot of trouble.’”

From Medill Reports in Illinois. “While Illinois’ January housing figures are not yet available, Chicagoland homebuilders said they’re seeing a housing recession.”

“‘We haven’t seen numbers like this since the early 1990s, and that’s the last time we’ve been in a housing recession,’ said Bill Ward, director of government affairs for the Home Builders Association of Illinois. ‘Most of what has occurred has occurred in the metro suburban area.’”

“The number of building permits for single family homes dropped 67 percent in Illinois over the past two years to 20,000 permits for single family homes in 2007, from 60,000 permits in 2005. ‘Basically, what it boils down to, if you have a 40,000 drop [in single-family building permits], you lose approximately 80,000 jobs,” Ward said.”

“‘It doesn’t look good, no matter how you slice it or dice it,’ said Chris Huecksteadt, director of the Chicago region for Metrostudy. ‘In a span of two years, this market’s been cut in half.’”

“Huecksteadt said new home contracts in January for Metrostudy’s Chicago region were down 40 to 45 percent over last year’s figures, and cancellation rates on new home contracts are running between 30 to 50 percent in the Chicago region.”

“‘Builders are not even confident about a signed contract,’ Huecksteadt said, adding that there are tales of customers who signed and even put down earnest money on new homes, but failed to show up for the home closing.”

The Daily Herald from Illinois. “Another landmark builder of the Northwest suburbs is laying off workers as it struggles to survive the worst housing depression in years.”

“South Barrington-based Kennedy Homes confirmed Monday it laid off 20 of its 32 employees on Friday and said it is unsure of its ability to start new home construction on undeveloped land.”

“‘We have a financial situation but … (we) intend on building all our homes under construction,’ said Stephanie St. John, Kennedy Homes comptroller.”

“‘There are about 30 homebuilders in the area that build 100 homes or more a year,’ said analyst Tracy Cross. ‘About one-third of them are in a similar situation.’”

From Model D Media in Michigan. “It’s clear the motor is running, but definitely not chugging along like it was just two years ago. Detroit needs a tune up, badly.”

“To wit: condo projects are being scrapped (The Griswold), converted to commercial (Mid-Med Lofts) and worst of all, sitting empty (Nine on Third). That’s not even mentioning the countless developments that while complete, are just not filling up. Which begs the question: has the proverbial boom gone bust?”

“The Detroit Investment Fund studied the evolution of Greater Downtown’s housing stock between 2000 and 2006 and found 2,500 new units of housing, a significant increase in sales prices (from approximately $140 -160 per square foot in 2004 to $198 in 2006) and a young, affluent, educated group of new residents. All good things, no doubt.”

“DIF’s Dave Blaskewicz characterizes the current market conditions as ’soft.’ High unemployment, jail-tight credit, an over-supply of homes for sale and – ouch – record numbers of foreclosures are all to blame.”

“The results? The absorption of new units has decreased, sellers are having trouble doing so, projects are failing, would-be purchasers are nervous and potential developments are finding financing more difficult to come by.”

“The bottom line is yes, everyone is hurting, from developers to builders to realtors to sellers. But a lot of people are digging in their heels and riding out the storm. ‘We’re all hurting a little bit right now,’ says Elizabeth Tintinalli…the mastermind behind Illuminate Detroit.”

“For Joy Santiago of Ralph Roberts Realty, it means she is making lemonade out of lemons. ‘[Foreclosures] are our largest source of business now,’ she says. It’s a buyer’s market, she says, ‘Everything is a really good deal.’”

“Ryan Cooley of O’Connor Realty & Development, says there are two divergent markets when it comes to foreclosures. In the condo foreclosure market, units are moving fairly quickly. On the other hand, when it comes to foreclosed houses, it’s a whole ‘nother animal. ‘They are in rougher shape than the condos,’ he says.”

From WLNS TV in Michigan. “A growing number of foreclosures in Jackson County is making it hard for some homeowners to sell their houses. The latest figures show foreclosures jumped 40% in just one year.”

“‘Tim Atkins, Realtor: ‘I sold one where there were 3 or 4 foreclosed homes on the immediate block, those homes sold for about $30,000 less than the I home I listed, so I heard comments, like why would I want to buy a home and pay a higher price for it?’”

The Green Bay Press Gazette from Wisconsin. “As was typical throughout 2007, year-end statistics show Wisconsin’s real estate market, albeit down, fared better than many other areas of the country. And Northeastern Wisconsin fared well compared to other regions of the state.”

“David Clark, an economist with the association, said the first quarter of 2008 will be interesting. He wouldn’t be surprised, as a result, if the first quarter was down and some of that business bumped into the second quarter. He expects median home prices to remain flat.”

“‘The median prices are not going down by any sizable margin. … There certainly is no strong evidence that we have any housing bubble issues, because if you had a housing bubble phenomenon taking place, you’d expect prices to be dropping pretty precipitously. But that isn’t happening here,’ he said.”

“It is still a buyer’s market, Clark said, especially for first-time homebuyers. However, potential buyers who are waiting for prices to sharply drop will be waiting a while.”

“‘If people are trying to time the market so they can pick up benefits of dramatically falling prices, then I just don’t see evidence to suggest that’s going to happen. That doesn’t mean there aren’t deals out there. There certainly are. Everyone is looking for the proverbial motivated seller,’ Clark said.”

“‘Quite frankly, an awful lot of people have a majority of their wealth tied up in homes. … a lot of sellers are saying, ‘I’ll take it off the market or leave it on the market at this price for the foreseeable future rather than take a significant cut.’ Especially, if they have any idea of moving up or trading up to a bigger home,’ Clark said.”

“‘Typically, they can’t afford to make serious concessions on the value of their current home if what they’re trying to is trade up. They need to capture whatever equity they can,’ he said.”

The Duluth News Tribune from Minnesota. “The number of foreclosures in the area is increasing and it’s a slow time of year for the real estate market, so a Duluth office of a nationwide mortgage company has come up with an idea that has gotten things moving in other places: foreclosure tours.”

“Anecdotal reports from real estate agents indicate 150 or more houses currently are in some stage of foreclosure in the Duluth area, which is why Mike Locker and Gloria Allan of Countrywide Financial, a nationwide mortgage lender, decided to experiment with a ‘Parade of Foreclosures’ tour in February and March.”

“Foreclosure tours are big in areas that have large numbers of foreclosures, such as California, but this is the first time the concept has been tried in Duluth, Locker said. ‘We’re kind of piggybacking on the West Coast,’ he said.”

“Tod Venberg, president of the Duluth Area Association of Realtors will lead the second tour. He said that some foreclosed homes ‘are really nice, but I’ve seen some that the people were really mad and they trashed the place out.’”




Bits Bucket And Craigslist Finds For February 21, 2008

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