The Housing Bubble

It’s Friday desk clearing time for this blogger. “While Harvard has not escaped price adjustments on its real estate values, the foreclosure rate continues to remain relatively low in comparison to its neighboring communities in northern Worcester County, according to local real estate brokers. ‘The houses that have gone under agreement have had fairly dramatic price adjustments, some were more dramatic than others,’ said Rhonda Sprague, owner of Harvard Realty. ‘Most were sold for less than the asking price. But it is a market driven by price.’”

“Home values in Harvard and its surrounding communities were previously rising at a rapid rate, leaving sellers to believe their homes would continue to appreciate at 10 percent, resulting in a shocking adjustment in 2004 when appreciation dramatically stopped, said Eileen Fitzpatrick, a Harvard Realtor in Bolton.”

“‘There have been price reductions in Harvard by as much as a couple hundred thousand dollars,’ said Fitzpatrick. ‘Currently there is a home on the market originally listed at $1.6 million and is now listed at $1.2 million. All these houses are almost $300,000 less than they used to be.’”

“Real estate experts say housing prices peaked in 2006 post-Katrina, and New Orleans-area homebuyers will see more bargains on the market this year.”

“‘There was an artificial spike in sales after Katrina,’ said developers Matt Schwartz. ‘Now the sector that remains strong and will remain strong is the work force sector, the sector we are serving of people who are taking the jobs that will be created as the city recovers.’”

“The Houston area’s housing market continued to weaken in January as sales fell to their lowest level in three years and home prices dipped. Single-family home sales in the Houston area fell 12 percent last month compared with a year earlier, the Houston Association of Realtors reported.”

“While the decline wasn’t as severe as December’s 16.5 percent drop, home prices slid to their lowest level since January 2006.”

“Alfredo Bonfante’s real estate agent has suggested he drop the $210,000 asking price on his four-bedroom, 2,100-square-foot home in The Woodlands. In four months, Bonfante hasn’t gotten any offers. He thinks it’s because new homes nearby are selling for as little as $5,000 more than what he’s asking.”

“‘They’re giving all stainless-steel appliances, and instead of carpet they’re giving tile,’ said Bonfante, whose house is only about two years old.”

“Maxine Bates, president of the Norman Board of Realtors, told city leaders that the national hysteria over slowing home sales and a mortgage meltdown is comparable to Orson Welles’ infamous broadcast of War of the Worlds in 1938. The fictional broadcast panicked thousands of radio listeners into believing that Martians had landed on Earth.”

“‘This is not the case in Oklahoma, in metro Oklahoma City and more specifically here in Norman,’ Bates said. ‘Real, reasonable, manageable, sustainable growth — that’s Norman.’”

“In Norman, fourth quarter average sales prices were $157,517, with the Oklahoma City metro coming in at $153,196, according to statistics compiled by the Oklahoma Association of Realtors. Average sales prices for Oklahoma in the fourth quarter of 2007 were $121,492, up from 2006 at $115,332; 2005, $109,568; 2004, $100,409; and 2003, $94,570.”

“But Bates said the mortgage industry has taken a big hit. ‘Who could ever have thought it was a good idea to give a $500,000 loan to a farm worker making $14,000 a year or a 25-year loan to a 102-year-old man,’ she asked. ‘Well, someone did. In many markets there was a real estate bubble and it has burst with incredible force.’”

“Not long ago, it wasn’t uncommon for homes to sell for more than the asking price. Two or more buyers would make full-price offers, and one of them would bid up the price in order to secure the sale. Those days might be gone, at least for now, said Sheila Tom, president of the Black Hills Board of Realtors.”

“So is it a buyers market? ‘I’d have to say yes … in a way,’ Tom said. ‘There has been negotiation going on that is favorable to buyers, but sellers are not taking just anything.’”

“‘It has gotten slower in the past few months. I think a lot of that is attributed to a big oversupply of new construction for a while, but it’s being reabsorbed,’ said Gil Raben of Raben Real Estate.”

“‘We had a period when we’d have two or three offers,’ Raben said. ‘Now, we’re pretty close to the asking price — but you’ve got to be realistic.’”

“Local buyers seem a bit reluctant to take the plunge, according to Tom. They’re waiting for interest rates to fall. They’re waiting for prices to come down. They are waiting to see what happens to the economy.”

“‘Don’t wait too long,’ she said. ‘You might miss it.’”

“From HCMC’s suburbs to the heart of the Mekong Delta, land is in high demand everywhere, giving rise to exorbitant prices that keep spiraling further up.”

“A stately house stands near the people’s committee office in Long An Province’s Long Hau Commune. The house owner, known as Sau, is a well-known land dealer in the area. As your correspondents drop in on her door, saying they are on the lookout for some land, Sau exclaims, ‘You’re too late! There is nothing left now!’”

“She had just helped sell a 30m by 80m plot fronting a road for VND1.5 billion ($94,000). ‘A boat owner in Ho Chi Minh City’s District 7 bought it, did some work on it, and is now offering it at five times the price.’”

“Long Hau Commune’s agriculture chief, Nguyen Thanh Loi, said 1,000 square meters of farmland had cost around VND850,000 not long ago because it was unsuitable for growing rice. By early last year, the price of the same land had risen to VND25 million. ‘Prices have steadily gone up ever since,’ he said.”

“But actually finding someone ready to part with their property needs luck since most have stopped selling in anticipation of foreign investors coming to offer higher prices.”

“It’s partially covered in plastic sheeting and even the estate agent trying to sell it admits it’s ‘dilapidated.’ But this rundown shed in a top Welsh property hotspot has gone on the market for £150,000. The building’s dimensions are just 18ft by 15ft, though it does have water and electricity supplies.”

“Though based in the plush beach resort of Abersoch, in Gwynedd, the shed does not boast the kind of dramatic sea views that have seen similar properties marketed for up to £500,000. But estate agents Beresford Adams say that despite the absence of a stunning panorama, the shed has already attracted three bids in excess of the £150,000 asking price.”

“A spokesperson even hinted a bidding war could drive up the price to around £175,000 before a deal is reached.”

“‘The thing that caught my eye is that there is no view of the sea or beach and we have only seen those kind of higher prices for beach huts in the South of England,’ said Adams.”

“Some experts have said that house price falls in Northern Ireland were inevitable given how high prices had gone. Alan Bridle, of the Bank of Ireland, said: ‘In the last five years, maybe slightly longer, Northern Ireland and Belfast have gone from housing as one of the most affordable, to one of the least affordable.’”

“‘But it hasn’t been a normal market. It is not moving up by the people looking to buy housing just to have a roof over their heads, there was a strong element of residential investment,’ Bridle said.”

“Things in Rhode Island that drive folks crazy: Housing prices. Even a fixer-upper here will cost you hundreds of thousands.”

“I remember going to a top-end suburb of Cleveland — Shaker Heights — and was shocked to find houses are half what they’d cost here. A homeowner there from New England told me people in her neighborhood get to travel and dine out more than here because, as she put it, ‘we don’t kill ourselves to get into a house.’ People in Rhode Island do.”

“The street has never much cared for Wachovia’s 2006 purchase of Golden West Financial for $24 billion. Still, Herb and Marion Sandler, the husband and wife team behind Golden West, were legendary for their rigorous underwriting standards.”

“Herb remains a vociferous defender of his loans and says that if anything, his borrowers are suffering from the lax standards of other lenders in the form of rising foreclosures in their neighborhoods. ‘The answer to what went wrong was wild, irrational, volume-driven loans by people who didn’t give a damn about economics,’ he said.”

“The media and government’s knee-jerk reaction to the subprime mortgage mess is that the poor consumer is being taken advantage of, and the culprit must be found and things made right.”

“In reality, it is the consumer who is most at fault, with government oversight being complicit, and attempts to bail them out of their predicament will, in fact, only make things worse.”

“If we think that the government can possibly be a substitute for a skeptical, discriminating consumer, then we are grossly overestimating the power and benevolence of government.”

“Let’s take TV advertising as an example: The government has laws about truth in advertising. These laws are supposed to ensure that manufacturers do not make false claims about their products. In spite of this government oversight, does anyone think that the ads on TV are completely honest and truthful?”

“It is only under the cloak of government monitoring that their advertising has the illusion of credibility. Remove the cloak, and the emperor has no clothes. Consumers become skeptics, and the power now shifts from the seller to the wary consumer, and the burden of proof is now on the seller to warrant his product.”

“Thus it is with the subprime debacle. The problem was not the lack of government oversight, but with the illusion of government oversight. Remove the illusion, and you solve the problem.”

The Flathead Beacon reports from Montana. “With 252 foreclosures, Flathead County had the highest foreclosure rate of any county in the state last year, according to RealtyTrac. That meant a 66 percent jump over 2006’s 152 foreclosed homes. Local real estate professionals are short on answers for why Flathead would outpace other Montana counties with foreclosures, suggesting only that the incredible boom in growth in the past decade would naturally lend itself to an increase in foreclosures as well.”

“‘Is it quieter than it was? Yes, way quieter,’ said broker Mary Kay Myett. ‘But, to the point where a lot of foreclosures are on the market? No.’”

“‘One of the things looking out over the next few years is that we may still see more foreclosures as some more people get into trouble as they adjust up and can’t afford their new rates,’ Myett said. ‘If the market remains healthy though, they’ll hopefully be able to put their house up and sell and get out from under that.’”

“Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana, said Flathead’s foreclosure rate was ‘way above’ rural, eastern parts of the state and comparable to larger, more metropolitan areas like Boise and Spokane. Still, he said, Flathead and the state don’t compare to the worst-hit locales.”

“‘We have not avoided the foreclosure problems or the housing price bubble bursting, but they do seem less severe in this area,’ he said.”

The Idaho Statesman. “Dan Hernandez, the newly installed president of the Ada County Association of Realtors, now heads an organization of some 4,000 Ada County Realtors who are struggling to weather the worst sales downturn in recent memory.”

“Q: In your 14 years, have you ever seen a market as bad as this one? A: This is nothing. I was in Los Angeles when the market crashed in the beginning of 1990. The market almost died overnight and seemed to hit rock bottom. So this is nothing.”

“Q: But there are lot of things putting downward pressure on home prices nationwide. Why hasn’t it happened here?”

“A: Because Boise continues to be one of the most desirable places to live in the nation. I deal with quite a few out-of-state buyers. I’m going to have to use the C word here, but the majority are still coming in from California. The number of Californians who have been able to sell their homes has dropped off because that market is flat. But those that are successful in selling want out and are still moving here. Boise is their location of choice.”

“Q: What about those median prices? A: If you look at other areas, they mention having home appreciation of 35 percent or even 50 percent. We didn’t have that. We went up 20 percent. But averaged over five years, we’re a solid 10 percent a year.”

“People here ask me when is the housing bubble is going to burst. My response is that there is no bubble because what we’ve had was steady growth that has been relatively conservative compared to what we have seen elsewhere. When appreciation rates shoot straight up, they’re bound to come back down. And that’s what’s happening elsewhere.”

“Q: Was having so many outside investors here bad for the market? A: I can’t say yes and I can’t say no. But I look back at the level of investors we had, and it was bad for the community. I saw many transactions where the buyers were investors who wrote and offer on new construction with the expectation that by the time the transaction closed there would already be some equity there. And when it did not reach the level that they anticipated, I saw investors bail, giving up there ernest money just to get out.”

“Q: Will we see investors returning to the Treasure Valley? A: I think Californians are ‘flirting’ with the Idaho housing market.”

“Q: We’re seeing a lot of foreclosures locally. Won’t dumping that many homes on the market depress home values even more? A: As I mentioned before, I’m still selling homes - even with the high numbers of homes out there that are in default. I know many agents are working the default market and are doing quite well.”

“One recent Saturday, agent Edenn Jablonski spent two hours escorting potential buyers through Jeremy and Jennifer Higley’s home adjacent to the back nine at Hillcrest Country Club. The couple bought their 2,000-square-foot, four-bedroom, two-bath home in the Central Club Manor subdivision as a HUD repo for $84,000 on Sept. 10, 2001.”

“Since then, Jeremy Higley estimates he and his wife have invested $30,000 in the house, including new plumbing, handmade cabinets in the kitchen, and a master suite featuring walk-in closets, a jetted soaker tub, and French doors leading to a 20-by-10 deck.”

“The Higleys dropped their original asking price from $254,000 to $229,000, then again to $209,000.”

“‘We wanted to be aggressive, because we want to expand our business,’ Jeremy Higley said. ‘We need a place with acreage and plenty of garage space. Plus, we’re hoping to pick up a good deal in a bad market.’”

“But the Higleys have not come to terms with the lone offer on their house so far. The early results on their open house were not encouraging, either.”

The Oregon City News. “Nearly three months after liquidating 141 homes in what is thought to be the biggest housing auction in Oregon history, homebuilder Buena Vista Custom Homes plans to finish selling off its inventory with another auction.”

“On Saturday, March 8, Buena Vista will attempt to sell 44 homes and 18 buildable lots. Of the total 62 properties, 43 are in Happy Valley.”

“Fifty-eight Happy Valley homes sold during the Dec. 15 and 16 mega-auction. ‘The first auction was so successful,’ said Buena Vista spokesman Andy Lucich. ‘The goal is to clear the inventory so Buena Vista can be buyers again in this market.’”

“Twenty-five of the homes that will be up at this auction were sold at the last auction in December, but the sales fell through.”

“‘Some of the houses that were sold at the auction fell through at the title [signing],’ Lucich said. ‘In Beaverton where some of the homes were selling really well, one guy tried to buy like five and couldn’t afford that many, so those will be back up at this auction.’”

“Buena Vista reported that it sold 96 percent of the homes below its secret reserve price, a number that the company said reflects the builder’s costs. ‘I don’t think the public believed that we would sell the homes for the low prices that we did during the first auction and this time the deals are going to be even better,’ said Roger Pollock, owner of Buena Vista Custom Homes.”

“As was the case in the last auction, the homebuilder has set starting bids at prices considerably lower than the ‘previously valued to’ price. Starting bids for houses in Jackson Hills Phase II range from $129,000 to $299,000; listed values for those homes range from $468,950 to $584,950.”

“In the last auction, Sandy resident Luke Lyons had hoped to come home with a Hamilton Ridge purchase, but found that prices quickly skyrocketed past his predetermined price range and that houses sold in less than two minutes.”

“Real estate professionals and would-be homebuyers have criticized the auction for making it look like a bargain-hunting homebuyer’s dream come true, while Buena Vista enjoys frenzied activity in an uncertain market, as well as a decent haul for its efforts.”

“The company’s ‘previously listed up to’ price has come under fire for making certain homes appear to be more valuable than they would be in today’s market.”

“A 4-bedroom, 2.1-bath, 2,261-square-foot home in Hamilton Ridge was advertised in the December auction with a ‘list price’ of $348,950, while a nearly identical home down the street sold two months before for $267,950.”

“‘From a marketing standpoint, it’s kind of a genius way to get every potential buyer to the table in a tough market,’ said local real estate agent Jason Shuler, who had exclusive marketing rights in Hamilton Ridge until the first auction was announced.”

“‘They’re not trying to walk away with bags of money,’ Lucich countered. ‘It’s more about clearing the inventory.’”

The Kitsap Sun from Washington. “Lured by the promise of lower monthly payments, a couple in their 80s trade their 30-year, fixed-rate mortgage for one with an adjustable rate and terms they don’t pay much attention to.”

“Then life happens: big medical bills, the family needs help. Soon, the couple racks up $50,000 in credit card debt. They try to dig out by getting a home-equity line of credit. But the value of their home has plummeted in the slow market. With the new debt and a giant prepayment penalty on the ARM, they don’t qualify.”

“Today, they are close to bankruptcy and may lose their home. This real-life couple joins many others struggling with high-priced home loans they didn’t understand when they got them — and no longer can afford.”

“Marvelle Lahmeyer, a housing counselor with Kitsap County Consolidated Housing Authority, said she’s never seen it so bad. Dozens visit or call her Silverdale office each week. She expects quadruple that volume this year. The tissue box is hopping. ‘The majority of it is they just got a bad loan,’ she said.”

“Last month in Kitsap County, there were 49 bankruptcies, a 29 percent increase over January 2007. Bankruptcies rose 67 percent in Jefferson County, and 275 percent in Mason County.”

“To make matters worse, local employers — school districts, the Navy, retailers and restaurants — are laying off workers or cutting back their hours, Lahmeyer said. Suddenly, a mortgage can take up half their income, and foreclosure becomes a looming prospect.”

“Making it even tougher to get out of bad loans is the lack of appreciation — or depreciation — of the value of homes. ‘They’re upside down on their loans. They own more than the house is worth,’ Lahmeyer said.”

“A new study from the Washington Task Force for Homeowner Security estimates the number of high-priced loans in the Bremerton-Silverdale area at 22 percent, not unlike many other areas in Washington.”

“Kelly Maves, a mortgage-loan officer with Kitsap Bank, said the biggest mistake she sees is that clients simply want to know how big of a mortgage they can get without giving much thought to their monthly budget. She also suggests getting educated on the wide range of available loans and understanding the fine print.”

“‘It’s one of the most important investments you’ll make in your life, and they don’t understand the complications of the loans,’ she said.”

The Columbia Basin Herald from Washington. “Median home prices were up in Grant County as home sales and home prices in the state slipped the last quarter of 2007. The Washington Center for Real Estate Research reported last week the slips in Washington reflected a national downturn.”

“Median home prices jumped the most in Grant County, rising 20.6 percent from the fourth quarter of 2006, to $169,900. The median home sales price in Washington during the fourth quarter was $293,900, down 2.5 percent from the final quarter of 2006.”

“Center Director Glenn Crellin said he didn’t exactly know the reason for the jump in Grant County.”

“‘Obviously, any time we’re dealing with a price change in a relatively small geographic area, such as Grant County, sometime we get statistics that are a little bit of an aberration,’ Crellin said. ‘The sale of comparatively few expensive properties, even the median can be affected by that.’”

“Crellin was familiar with the economic growth going on in the area. ‘Certainly it would play a role,’ he said. ‘(We are) well aware there are several developers that are attempting to put in high-end homes up in the Quincy marketplace, probably more than I would have ever dreamed those data farms would have been able to support.’”

“Other places had ‘rampant speculation” in the housing market, Crellin said…where the amount of new construction was far beyond the population growth in the market places.”

“‘People were buying homes on the expectation it was going to be like any other kind of an investment, that they would be able to turn it around very quickly,’ Crellin said. ‘Once interest rates started to go up and they started to have the problems in the financial markets, everything just dried up at once. The investor-purchasers of that property now are trying to (figure out) what they could possibly do to keep from going bankrupt.’”

“‘I don’t think rapid price increases are going to be prevailing in the long term,’ he said.”

“Chelan County has been leading the nation for several quarters now in terms of price appreciation, Crellin added, so Grant County may be seeing some spillover from that region.”

“Moses Lake real estate agent Rich Engelmann said the rising median price is an indicator of a solid local job and housing market.”

“‘We’re hearing all this talk about how the housing market’s going down and all this gloom and doom, but in our area, the housing market is still good,’ he said. ‘We’re holding steady. That to me speaks good. We’ve got a good base to draw from, so the jobs are there. Everything else is supported, so we’re not going to lose jobs because of it.’”

“Engelmann said the increase is not going to stop. ‘Our housing market is strong, look for prices and stuff to go up this summer,’ he said.”

“Engelmann pointed to the government stepping in to help fund and increase loan limits. ‘The bad lending stuff is getting taken care of,’ he said.”

“‘If I was a home buyer (I) would buy,’ he said. ‘It’s a buyer’s market and it’s going to change by summer time. The next six months, we could see it taking off again.’”

The Associated Press reports from Florida. “Travis Munnerlyn just wanted to add on to his Orlando home to make room for grandchildren coming to live with him and his wife. A couple years later, Munnerlyn cannot make the increasing payments on his adjustable rate loan - not even close - and could lose the house. ‘Right now we’re seven payments behind,’ Munnerlyn said. ‘There’s one due today and I don’t have it.’”

“Many borrowers are told not to worry about increasing interest because they can refinance again before the higher rates take effect. That’s what Munnerlyn’s mortgage broker told him he could do when he refinanced his house to do the addition.”

“Only it didn’t work out that way. Munnerlyn’s income took a dip when his wife was laid off and he might not have been able to refinance anyway even if she hadn’t been. Only nobody explained that to him.”

“Now his payment is $2,500 a month on a 3-bedroom, 1,300-square-foot home, and he’s wallowing in late fees and his credit is ruined.”

“‘I can’t buy a box of matches on credit,’ said Munnerlyn. ‘It ruins people.’”

The Orlando Sentinel. “Despite the persistent slump in housing starts and sales, the Homebuilders Association of Lake County is upbeat about this year’s Lake-Sumter Parade of Homes.”

“‘Right now, basically there is a lot of inventory,’ Jean Kaminski, executive director of the association, said. ‘Builders have reduced their prices, they won’t go any lower.’”

“Single-family home builders are dropping their prices, and not just for standing inventory, said Jim Lewis, president of Charles Wayne Consulting, but developers of condominiums and other attached housing are cutting their prices even more.”

“Thousands of condo units remain on the market, he noted, and the lack of demand has brought construction and conversions almost to a halt.”

“According to Dan Fasulo, director of market analysis for Real Capital Analytics, apartment-to-condo conversions soared because investors saw an opportunity to undercut single-family sales as fast-rising land prices, construction costs and other factors drove single-family home prices to unsustainable levels.”

“In 2005, at the peak of the conversion craze, 65 apartment complexes were bought by converters for a combined $2.5 billion, creating a pool of about 20,000 would-be condo units.”

“‘That game is now over,’ he said. ‘Last year, there were zero apartment complexes sold in the Orlando market with the intent to convert to condos,. I’ve never seen an industry slam on the brakes faster than that.’”

“In what could go down as the great Hail Mary pass of 2008, the federal government will send consumers more than $100billion in tax rebates this spring, hoping they will spend freely and prevent the U.S. economy from taking a dive.”

“At Sam’s Music Bar Bistro in MetroWest, the familiar lunchtime din has trailed off a bit in recent months. Owner Kevin Dalgarno blames the dropping decibel level on the slumping economy, which he says has reduced the appetite to spend.”

“‘Customers are telling us that they are having more financial problems and they aren’t dining out as much,’ Dalgarno said. ‘We hope that we will get some kind of kickback from this, but I don’t have a lot of hope for the immediate economy.’”

“John Leahy, a salesman at Sound Advice on East Colonial Drive in Orlando, was pacing the specialty-electronics vendor’s showroom one afternoon last week, hoping for a customer. ‘The market has been in decline,’ Leahy said. ‘The housing crunch began around when I started here, and that’s hurting. You have all these guys who were building houses a few years ago who are out of work now and not spending as much.’”

“Leahy said people are worried about paying for basic needs and keeping up with debt payments. ‘It’s horrible,’ he said, and glanced at a wall of flat-panel televisions across the showroom. ‘These are nonessentials.’”

“Leahy said he personally understands the problem: His pay is based on sales and, in the current slow market, he is having a hard time affording basics. ‘I would like to buy a nice TV,’ he said, ‘but I have a car that I might not get another year out of to think about.’”

The Miami Herald. “At Key West’s quaint Tropical Inn on Duval Street, the communal microwave is heating a lot of food these days.”

“‘More guests have been bringing back leftovers from the restaurants,’ said Jane Lowe, owner of the inn. ‘Instead of going out for dinner and lunch the next day, they’ll eat those leftovers for lunch. We see a lot of people cutting corners.’”

“‘It’s slow on Duval Street, but it’s slow all over the country,’ said Virginia Panico, executive VP of the Key West Chamber of Commerce. ‘There are times when we don’t feel it, or are the last to feel it. But we are in the midst of a slowdown.’”

“It seems difficult to believe times are tough for Duval merchants by simply looking at the city’s main tourist drag. Since Christmas, there have been crowds of people on its sidewalks day and night. ‘But do you see any of them carrying bags?’ asked Tony Gregory, owner of an eclectic jewelry and T-shirt shop that has been at the same Duval Street location for 26 years.”

“There are 31 properties or businesses (about 10 percent of the total) for sale or lease on Duval Street, according to the Key West Association of Realtors. ‘No question the national economy is affecting it,’ said Claude Gardner, co-owner of Prudential Knight & Gardner Realty. ‘For too long, we believed that Key West is insulated from the rest of the economy.’”

The News Press. “Experts painted a picture at a conference Thursday of a Southwest Florida real estate market battered by excessive speculation but ready to recover next year - with an avalanche of baby boomer retirees not far behind.”

“But before that bonanza, there will be some hard times in the local home-building industry, said Michael Timmerman, Naples-based senior associate with Hank Fishkind & Associates.”

“‘Foreclosures are just beginning to come onto the market,’ he said. ‘We won’t see the full effect until the foreclosures flush through the system.’”

“About 1,000 houses a month have been going into foreclosure in Lee County in recent months, and there are about 16,000 houses on the market. The bottom line, Timmerman said, is that there will likely be no measurable change until early 2009 with a real expansion not in the works until 2010.”

“Low interest rates instituted by the Federal Reserve in 2002 and 2003 sparked the speculation that resulted in an over-supply of homes and a collapse of the market at the beginning of 2006, he said. ‘Real estate was the best investment because you got free money.’”

The Tampa Tribune. “The Polk County Commission rejected a pair of efforts to roll back the county’s impact fees during a contentious Wednesday afternoon hearing. Many supporters of the rollback wore red, white and blue badges and held signs reading ‘Save Our Jobs.’”

“Supporters proposed the rollback, billed it as a short-term plan designed to kick-start Polk’s home building industry.”

“A slightly smaller group of opponents of the rollback argued that the housing market slowdown is a product of overbuilding during a housing bubble and that impact fees are needed to help pay for the needs generated by the new residents who bought homes before the bubble burst.”

“A pair of county economists pointed out, however, there were more than 5,200 existing homes listed for sale in the county as of December. During that same month, only 250 sold. Based on that rate of absorption, it will take 21 months to absorb the inventory of existing homes.”

“Gordon Kettle, an economist with Polk’s economic development agency, said: ‘I don’t think cutting impact fees is going to make much of a difference. It’s not going to restore the housing market to what it was. We could lower impact fees to zero, and it wouldn’t change this housing market overnight.’”

The Ledger. “Commissioner Randy Wilkinson was skeptical of the builders’ claims that impact fees are related to the slowdown in construction. Wilkinson cited Duval County, which he said has no impact fees and still suffered a slowdown.”

“A procession of builders told commissioners how they have had to lay off employees because of the slow housing market. ‘Everyone’s running skeleton crews,’ said contractor Chuck Hunt. ‘Put our people to work.’”

“Contractor Doug Thomas said the impact fee cut is worth trying. ‘We won’t know until we try,’ he said.”

“Al Whittle from Florida Bipartisans criticized the proposal, calling it ‘the wrong solution to the right problem.’ Impact fees have nothing to do with the housing slump, he said, laying the blame instead overbuilding and unscrupulous lending.”

“Polk County recorded just 151 permits for new home construction last month, making it the lowest January total in Ledger records dating back to 1994.”

“‘It just shows that the activity is still slow and hasn’t picked up. It’s still declining,’ said Scott Coulombe, executive director of the Polk County Builders Association. ‘We’ve got people who are barely hanging on now, and if things don’t pick up, you’ll see people going out of business before the year is up.’”

“Ongoing price cuts and incentive wars among builders also have kept potential buyers on the sidelines. ‘Some people are still waiting for the bottom to drop out,’ Coulombe said.”

“Lakeland-based Southern Homes is specifically trying to lure cautious buyers with a recently unveiled program called ‘Price Guard,’ which makes customers eligible for any price cuts that occur during the construction of their home.”

“Jared Weggeland, Southern Homes’ director of sales and marketing, says the program should help determine the impact price anxiety is having on sales.”

“‘We don’t have any results yet, but we hope it will expose that objection as something that can be overcome,’ Weggeland said. ‘If that’s the reason people say they’re not buying, and we take away that reason.’”

The Herald Tribune. “Seven bargain hunters, most wearing shorts, slipped into a white stretch limousine Wednesday morning, hoping their adventure in luxury would lead them to a good deal on a home.”

“By the end of the three-hour tour of properties in foreclosure, two couples were considering a second look at a 3,500-square-foot, canal-front home with a pool and hot tub in Rotonda West. The asking price: $289,000.”

“Even the limo driver, Frank Rieck, became really interested in one property. It was a sea-green home in South Gulf Cove with a barrel tile roof, high living room ceilings and three bedrooms for $189,000.”

“The owner had bought the property to flip it, but by the time it reached the market it was too late, said real estate associate Pam Civitillo. The bank owns the property now, she said.”

“If the foreclosure tours help sell homes, the benefits to the market can be widespread, said Ken Wieand, a professor of finance who teaches real estate classes at the University of South Florida.”

“‘It sounds a little ghoulish,’ he said. ‘But it kind of makes sense to clear the market. By and large any effort to get the unsold inventory off the books is a good thing.’”

“Mark Maudlin of Bers & Co., an affiliate of Prudential Palms Realty, wrote in to discuss the foreclosure mess.”

“‘Homeowners usually struggle to retain their family home in any way they can, but it’s different for investors and speculators, who seem to be involved with a large percentage of the foreclosures,’ Maudlin said. ‘Present economic conditions give them no reason to hold on.’”

“‘One investor called us this morning about a $500,000 new construction home he has had under contract for two years. He’d made a $70,000 deposit but even before he could close, the developer and builder cut prices by $100,000 for other comparable new homes, and they included upgrades in the deal.’”

“‘Now he’s already lost $100,000 on the home’s value. If he closes, he’ll spend another $50,000 during the first year for principal, interest, taxes and insurance, plus about $12,000 in maintenance fees. If he tries to sell, transaction costs will add about $30,000 more to his expenses — for a property that’s already lost $100,000 in value if not more.’”

“‘In that context, he figures he’s ahead of the game if he gives up the $70,000 deposit,’ Maudlin wrote.”

“‘Based on the calls we’re getting, it looks as if foreclosures will continue for the immediately foreseeable future. We don’t see any soft landing at the bottom of this downturn.’”

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