March 31, 2008

Money Out The Window In California

Radio Netherlands reports from California. “In Los Angeles, at the heart of the American dream, the economic malaise can be seen on the streets. There are For sale signs in the gardens all over the place. And on many of them the word ‘foreclosure’ has been added - forced sale. This is the case with a third of all houses on the market. And this problem looks likely to increase in the years to come. Forced sale was also hanging above the head of 60-year-old Nordik, originally from Armenia. (He does not want his surname published.)”

“There was a threat he would face forced sale after his mortgage payments increased to 4000 dollars per month. Luckily he was able to change his mortgage and now he only pays half this. But he has lost 100,000 dollars in one go because of it.”

“‘Yeah, Foreclosure. Real estate gave me no good mortgage, there was foreclosure, no good. 4000, just the interest. I lose a lot of money. Like I put the money out the window, that’s it,’ he said.”

“In Beverly Hills, the number of mansions for sale is conspicuous. Even a design house built last year has a For sale sign in its drive. The owner Harash is having trouble finding a buyer. Even after drastically lowering the asking price.”

“‘It was 2.4 I think, but it came down to 1.5. Well, for this property and the size and the way they built it, it’s a great prize, but there are so many big houses. You know, Malibu, Beverly Hills, so people have a lot of options for the same price,’ said Harash.”

“Two middle-aged ladies search in a trolley that has just come out of the store room. Life has become expensive, they say. Even in the second-hand shop prices have increased. Tracy no longer has any confidence in the US economy. That’s why - after forty years - she has decided to return to her country of birth: Ireland.”

“‘I’ve been here over 40 years, but I am going to go home eventually. Go back to Ireland. I am not going to stay here anymore. Because it’s safer. The economy in America is never stable. It’s always going up and down. The dollar is going to collapse,’ she said.”

“But not everyone can escape the malaise. Nordik, who saw 100.000 dollars go up in smoke, will just have to grin and bear it. Pension? The sixty-year old can forget about that for the time being. He has to keep on working, every day.”

From CNN Money. “Kent and Mysti Cope met and fell in love working for one of the nation’s top subprime lenders. Now, their life has been turned upside down after the sudden implosion of the subprime mortgage industry.”

“Mysti was one of the last people out the door at New Century Financial, once the nation’s No. 2 subprime lender. Kent worked for several of the firms that helped give birth to the industry.”

“‘We’re still both in shock that it could go from something so good to so bad so quick,’ said Kent, 59. ‘New Century in 60 days went from top of the heap to out of business.’”

“The two didn’t say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes. Today, they’re trying to get by on his unemployment benefits of about $450 a week.”

“Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live.”

“Kent estimates the mountainside home in San Clemente, Calif., which they bought in 2005, is worth 20% less than it was a year ago. And in the current market, he said he’s not sure he could sell it for even that amount.”

“‘We’ve used up most of our reserves, cashed in her 401K,’ said Kent. ‘We’re going Mach 1 into a wall. When we run into it, then we’ve got to decide what to do next.’”

“And they’ve made cutbacks: trading in Kent’s Corvette for a Suburban and getting rid of the gardener, for example. But the couple also has learned that it didn’t need everything it used to spend money on.”

“‘We used to eat out a lot. Now we are the leftover king and queen,’ said Kent.”

“Since he lost his job, Kent has gotten a real estate license and is trying to start a business selling the rapidly increasing inventory of foreclosed homes in Orange County, Calif.”

“‘You can’t run into someone who isn’t impacted by what’s going on,’ said Kent. ‘It’s very expensive to live in Orange County, and you pay a lot for your home and you can’t get what it’s worth now.’”

The Union Tribune. “Anyone who bought a home near the peak of the once-sizzling real estate market no doubt has found it painful to watch prices tumble with no end in sight. But in the case of one North County couple, it’s not the volatile market they blame but their real estate agent, who they say duped them into overpaying.”

“Tomorrow, Vernon and Marty Ummel, who purchased a $1.2 million home in Carlsbad three years ago, will try to convince a jury that their real estate agent defrauded them when he failed to inform them that similar houses on the same block were selling for more than $100,000 less than what the Ummels had paid.”

“Experts question whether the Ummels will be able to prevail, recognizing that ultimately, the Ummels were the ones who decided to pay what they did in 2005 for their two-story, 3,700-square-foot tract home. In those days, prices throughout the county were still climbing.”

“‘The real estate broker has an obligation in good faith to tell the buyers what he knows about pricing information and that there were houses selling for less than what the buyer was prepared to buy. And the buyers have an obligation to wake up and smell the roses before they buy and get as much information as they can,’ said George Lefcoe, a professor of real estate law at the University of Southern California.”

“‘As an agent, you’d have to basically lie and cheat on this one, and the buyers would have to be as innocent as angels,’ he said.”

“What angered the Ummels and ultimately led them to file their lawsuit was when they discovered a month later that two other homes on their street had sold for substantially less.”

“According to county assessor records, one of the Amante Court homes sold for $1,025,000 on July 29, 2005, the same day the Ummels closed escrow. The other had sold for $1,095,000 three months earlier. Each house is described as having the same square footage as the Ummels’ house.”

“Originally included as defendants in the Ummel suit were John Contento, who handled the appraisal for the loan, and Horizon Pacific Financial, the broker for the Ummels’ $300,000 loan. Earlier this year, Contento and Horizon Pacific Financial settled with the Ummels for $10,000 each.”

“San Diego appraiser Todd Lackner said many people in the industry are closely watching the Ummel case, and while Lackner said he believes the couple have a legitimate gripe, he doubts they will win in court.”

“‘I give the buyers an awful lot of credit. They’re sticking to their point, and most people couldn’t afford these legal expenses they’re shelling out,’ Lackner said. ‘But appraisals are subjective. Did they pay too much? Yes, they absolutely did. But they bought it willingly. No one forced them to purchase that house.’”

The Pacific Coast Business Times. “The Cameron Financial Group collapsed last month, joining the mounting ranks of California lenders undone by the subprime mortgage meltdown.”

“Doing business under the name 1st Choice Mortgage, the San Luis Obispo-based firm filed for Chapter 7 bankruptcy Feb. 19, declaring assets of $50,000 or less and more than $28 million in debts.”

“According to its Web site, the Cameron Financial Group offered subprime loans to customers with ‘bruised credit’ and so-called jumbo loans of up to $2 million for buying or repairing homes.”

“The list of companies demanding seven-figure claims reads like a who’s who of financial heavyweights bruised in the subprime crisis: Bear Stearns is owed $2.1 million, Countrywide Financial $2.7 million, Deutsche Bank $8.2 million, DLJ Mortgage Capital $2.4 million, Indymac Bank $2.6 million., Impac $2.4 million and Terwin Advisors $4.2 million.”

“In the months before the San Luis Obispo firm went under, financial titans who had purchased mortgage loans that were unlikely to be repaid began sorting out how they might be hurt, looking to loan originators. Once large institutions such as Deutsche Bank figured out where toxic bonds had come from, they began going after the originators of those loans in court.”

“Months before it crumpled, the Cameron Financial Group was being sued by Deutsche Bank for $8.2 million in one such suit. The Cameron Financial Group, Deutsche Bank alleged, was still obligated to buy back $8.2 million in loans that were in early payment default, but had not done so.”

“Part of the illegal scheme, the lawsuit alleges, involved a broker who placed the homebuyers in loans with the Cameron Financial Group. The lawsuit alleges the broker, who was not an employee of the San Luis Obispo firm, spoke only Spanish to the would-be homebuyers.”

“But the loan documents supplied by Cameron Financial were written in English only, the complaint alleges, and the lender provided no meaningful Spanish translation, a crime under California law.”

The Visalia Times Delta. “Sitting in folding chairs and armed with snacks and playing cards, six people waited in a small parking lot in southwest Visalia Friday afternoon.”

“They were waiting, but not for blockbuster-movie passes or tickets to a Hannah Montana concert. The Visalians waited to snag home lots in Impressions at Westpark, a Centex Homes development. The lots were to be released at 10 a.m. Saturday.”

“‘I got in line [for the nearby Woodbridge subdivision] and didn’t get it,’ said 25-year-old Joseph Rabago, who is looking to buy his first house. He didn’t want a replay, so he arrived at 7:45 a.m. Friday.”

“Throughout the state and country, ‘For Sale’ signs flourish and foreclosures are at a record high. But the Impressions at Westpark price range and location appear too good for some to pass up, Centex sales agent Alisa Satterle said.”

“Base-plan prices range from $170,000 to $215,000, according to the company Web site.”

“‘Pound for pound, they’re the best deal here,’ said Paul Howard, who moved to Visalia from Orange County about a year ago. ‘Plus, it’s the area. It’s the nicest part of town.’”

“Howard was in line Friday alongside friends Pam Luna and Arcy Alafa. The builder has been releasing lots in its various southwest neighborhoods every 30 days. The last two times, only five lots were released to new buyers — and lines formed both times.”

“‘This [many people camping out] is more than normal,’ Satterle said. ‘Usually we see somebody camping out because they have a particular site picked out. It’s their home, and they believe it is worth one night [in line].’”

It’s Like Playing Monopoly With Fake Money

Some housing bubble news from Wall Street and Washington. Bloomberg, “Northern Rock Plc, lost 243.5 million pounds ($483.4 million) in the 12 months ended Dec. 31, the company said in its annual report published today. ‘The 2007 results reflect the impact of deteriorating market conditions and the effects of significant liquidity and funding constraints on the company,’ the Newcastle, England-based bank said. The company doesn’t plan to erase losses until 2011.”

“‘If the mortgage market gets harder and the housing market gets softer, there is no question it will become more challenging for us,’ said CEO Ron Sandler. ‘We anticipate loan loss provisions will increase over time.’”

“The government nationalized Northern Rock, the first U.K. bank to suffer a run on its deposits in 140 years, in February after a five-month search for a private buyer failed. The bank owes nearly 24 billion pounds to the Bank of England, down from 26.9 billion pounds at the end of 2007, and said it plans to repay the emergency aid in 2010.”

“Sandler, who took over as chairman after the bank was nationalized, plans to sell half of Northern Rock’s assets and cut about a third of its workforce to repay the government’s loans and return the bank to private ownership.”

The Evening Standard. “London house prices are no higher in real terms than they were a year ago, new figures show. Chartered surveyor Anna Jolly, 29, put her three-bedroom flat in Battersea Square on the market for £400,000. A few weeks later she received an offer at £25,000 below the asking price.”

“She said: ‘I remember it clearly because it was the day that Northern Rock crashed. At the time I thought I could do better so I hung on for a few more weeks. We had a lot of viewings but no more offers, so I eventually accepted the original offer. I realised the way the market was going and realised it wasn’t bad under the circumstances.’”

“In Sneath Avenue, Golders Green, the owner of one four-bedroom house has had to cut her asking price by a fifth in less than three months. She put the Thirties property on the market for £750,000. A month later she reduced it to £729,000 and three weeks later to £699,000.”

“Today, estate agency Moreland cut another £100,000 off. Edward Gilbert of Moreland said: ‘It’s gone from being ridiculously overpriced to being very, very competitive. We expect to sell it within days.’”

“Ed Stansfield, property analyst at the Capital Economics consultancy, said: ‘Hopes that the housing market is experiencing little more than a short-term wobble look increasingly forlorn.’”

“Howard Archer of analysts Global Insight added: ‘There are fewer mortgages available and they are more expensive. “We expect house prices to fall by at least five per cent both this year and in 2009. If the economy suffers extended weak growth, this will trigger a sharper fall in prices.’”

“‘If both sellers and buyers start expecting prices to fall sharply, there could be a flood of sellers putting their houses on to the market,’ he said.”

The Associated Press. “The Bush administration Monday proposed the most far-ranging overhaul of the financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression.”

“The plan would change how the government regulates thousands of businesses from the nation’s biggest banks and investment houses down to the local insurance agent and mortgage broker.”

“It would ask Congress to establish a federal Mortgage Origination Commission to set recommended minimum licensing standards for mortgage brokers, many of whom now operate outside of federal regulation. Treasury Secretary Henry Paulson rejected charges that it was lax regulation of mortgage brokers and the financial industry that had led to the current problems.”

“‘I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil,’ he said. ‘I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years.’”

“Senate Banking Committee Chairman Christopher Dodd said in an appearance on CBS’ ‘Early Show’ that it was not a failure of the regulatory scheme but ‘a failure of leadership’ that led to the current crisis.”

National Mortgage News. “For three months now a source familiar with the situation has been telling us that Carrington Capital Management — which bought the servicing platform of now-defunct subprime giant New Century Financial Corp. — has been having (shall we say) some financial challenges.”

“This past week it was reported that Carrington, the brain child of former Salomon Brothers executive Bruce Rose, is trying to persuade investors to lend it $200 million to replace its current bank lines. The obvious question is this: Have his current lenders become ‘risk adverse’?”

“Readers (have) been kind enough to share their thoughts on a variety of topics affecting the mortgage industry. ‘Over the past 12 to 18 months the mortgage brokers of this country have been slandered, defamed and egregiously designated the scapegoats of ’subprime-gate.’ They have lost their jobs, their businesses and their industry as a result of selling exotic mortgages created and distributed by big banks and Wall Street.’”

“‘The banks created, packaged and sold their subprime products through far reaching and sophisticated sales channels. The facts are that these people stole the broker industry. They created the Ameriquest’s of the world and they encouraged everyone to sell their programs. If you didn’t sell it, the company down the street did…The fallout from this mess will not only cripple the broker industry and its people, it will hurt borrowers more than one can imagine.’ — Joe Adamaitis, Direct Mortgage.”

The Denver Post. “When Torrence James was finished serving a federal prison sentence for dealing cocaine in 2004, he took one of the few white-collar jobs then still available to convicted felons. He became a mortgage broker.”

“Last week, Chief U.S. District Judge Edward W. Nottingham sentenced James to 12 years in prison for mortgage fraud. Many of the luxury properties that James and six other defendants skimmed became party pads as they fell into foreclosure, devastating local property values.”

“One of the companies James and his crew defrauded was New Century Financial Corp. of Irvine, Calif., which is now under federal investigation for fraud itself.”

“New Century is in bankruptcy after paying its executives millions in bonuses and stock options. Its three founders made more than $40 million selling stock between 2004 and 2006 as the company apparently made loans to anyone with a pulse. When the company is liquidated, its shareholders will receive a penny to 25 cents on the dollar.”

“New Century had a ‘brazen obsession’ with making subprime loans, turning ‘a blind eye’ to a ‘ticking time bomb,’ according to an independent report released last week that was commissioned by the Justice Department.”

“New Century wrote $357 million worth of mortgages in 1995, the year it was founded. In 2006 it wrote $60 billion. How did it grow so fast? Liar loans.”

“The 580-page report from examiner Michael Missal, which was more than five months in the making, concludes that New Century’s auditor, KPMG, failed to exercise due care in reviewing the books, leading to misstated financial results.”

“KPMG has said it ’strongly disagrees’ with the report’s findings.”

“‘It’s an Arthur Andersen re-do,’ said Lynn Turner, the former chief accountant for the U.S. Securities and Exchange Commission, who now sits on the U.S. Treasury’s committee on the auditing profession. ‘We’re right back where we were in pre-Enron days.’”

“‘Some things blow up occasionally,’ said John Bazley, a professor at the University of Denver’s Daniels College of Business. ‘People make mistakes.’ In the case of New Century, KPMG may have had to constantly re-value complex securities stuffed into Byzantine portfolios, Bazley explained.”

“‘It’s a Wall Street issue more than an accountants’ issue,’ said Bazley. And a very complicated one at that. Meantime, it’s a good thing they got that Torrence James guy. What a menace to society he was.”

The Boston Globe. “The bellwether spring housing market is around the corner, but the nation’s credit crunch means it’s more difficult for buyers to obtain mortgages. Timothy Warren Jr., CEO of a Boston real estate and research firm founded by his great grandfather, Willard Warren, answered questions about Massachusetts’ market for Boston Globe reporter Kimberly Blanton.”

“Q.What do you expect for foreclosures this year? A. The number of foreclosure deeds filed in 2007 was 7,653. The number of petitions, the first stage of the process, was 29,607 - a record. I expect both numbers to continue to climb. And the number of people entering the foreclosure process increased dramatically in the second half of last year…Distressed properties are dictating the whole market in many communities.”

“Q. Is the credit crunch on Wall Street making it harder for everyone to get a loan? A. Yes. It’s due to tightening loan standards and less liquidity. Lenders don’t want to take risks anymore…The number of single-family home sales was down about 10 percent for all of 2007, though the pace accelerated at the end of the year. It wouldn’t surprise me if this year it’s double that.”

“Q. Could government have prevented this crisis?”

“A. In hindsight, the government made a lot of mistakes. Perhaps the Federal Reserve fueled ‘irrational exuberance’ in real estate prices by keeping interest rates low. The easy money, low interest rates with low documentation requirements, and 100 percent financing just made it too tempting for people to jump in. People assumed prices were going to keep rising and refinancing was going to solve any problem they had of meeting their mortgage payments. It’s like playing Monopoly with fake money.”

The Vicksburg Post. “For Vicksburgers facing foreclosures, futures appear murky. Most houses up for foreclosure are vacant, regardless of location — whether their owners lived beside the manicured lawns of the county’s most expensive subdivisions or packed tightly within central Vicksburg’s oldest neighborhoods.”

“Some of them reflect the financial world’s ‘teaser-rate’ mortgage loans, which have fluctuating interest rates depending on financial markets. Those loans usually start out lower and increase over time.”

“But local attorney David Sessums said the adjusted ratings are not necessarily the cause of the foreclosures in which he has acted as trustee. Instead, he said, they reflect a downturn in the fortunes of homeowners.”

“‘Three years ago, you saw a really nice occasion. Young couples were happy about getting a house,’ Sessums said, adding details on loan terms are often overlooked — buried inside ‘an inch- to an inch-and-a-half-thick’ stack of paperwork when people sign for a house.”

“‘He who has the gold makes the rules whether they read them or not,’ Sessums said.”

The Tennessean. “While the housing slowdown has caused many homebuilders to pull back, Centex Corp. has kept building.”

“On the edges of popular Middle Tennessee communities — Brentwood, Hendersonville and Franklin — the Dallas-based homebuilder is forging ahead with a strategy that takes aim at the market for homes priced at $250,000 and below, a portion of the local market it views as underserved.”

“‘We’re servicing the family buyer,’ said Wes Patterson, the company’s division president. ‘Our price points start in the 130s ($130,000). … It’s difficult to match that price in the places where we’re building.’”

“Often ignored during the housing boom, these lower-priced homes could now become a potential life buoy for the struggling construction industry, some believe.”

“Two years ago luxury homes priced at $500,000 and above drove Nashville’s construction market, as homeowners stretched their finances or cashed in on rising prices to move into fancier abodes.”

“Now homebuilders say their best sales — or at least, the smallest declines — have been in moderately priced homes.”

“‘They have buying power, they’re well-funded, and they made some huge decisions competitively,’ said MarketGraphics President Edsel Charles.”

“Centex’s focus toward lower-priced housing in Middle Tennessee is part of a nationwide strategy to shift its focus back to its longtime strength — starter and first-time move-up homes, said Jay McCanless, a housing industry analyst in Nashville. Many other companies are doing the same.”

“‘You saw a lot of builders who saw prices appreciate and try and stretch themselves a little bit,’ McCanless said.”

“Several owners who bought into Concord Place during the housing boom have opposed plans to expand their neighborhood. The new section of homes will have layouts similar to their houses, but with prices that have been reduced to reflect the slower housing market. They fear this will undermine the value of their homes.”

“‘I love my home,’ said Christopher James, who bought a four-bedroom, three-bathroom house in Concord Place for $290,000 in September 2006. Now, Centex is advertising similar homes for $220,000.”

“‘If they start selling for that price, I will be upside down,’ he said.”

“Patterson said the pricing in the new section reflects smaller lot sizes and a weaker real estate market. ‘Pretty much everyone … is facing the same thing,’ he said.”

“Other companies are expanding with projects at similar price points. Reston, Va.-based NVR Inc., which does business locally as Fox Ridge Homes, plans to start construction soon on communities in Sumner and Rutherford counties where the bulk of the homes will be priced $250,000 and below.”

“Atlanta-based Beazer, meanwhile, has communities in Bellevue and Hermitage aimed at lower- and middle-income buyers. Neither firm said it has intentionally taken aim at lower-priced homes, as Centex has done. But, as the economy has soured, both expect those will be a greater part of their sales.”

“‘It’s not any conscious effort on our part, but our sales are generally coming out of that price point,’ said David Hughes, Beazer’s Nashville division president. ‘We’re not (speculating), but if we were to, we would definitely (speculate) in that.’”

The Unwinding Of This Housing Boom

The Boston Globe reports from Massachusetts. “More than 700 properties in Boston fell into foreclosure last year, about three-quarters of them in Dorchester, Roxbury, Hyde Park, and Mattapan. The city’s Homeowner Foreclosure Prevention Workshop workshop was one of a host of efforts the city has made in the past two years to contain the crisis. Carol Anderson,who lives in Dorchester, said she and her husband make $70,000 to $80,000 a year combined and borrowed $465,000 to purchase their home with no down payment.”

“To finance it, they agreed to two mortgages with rates of 11 percent and more than 9 percent. ‘I wanted a house,’ she said. ‘That was the best opportunity.’”

“The total monthly payments of about $3,400 were just barely affordable, she said, until one day she opened her bill and was stunned to learn that the larger loan was adjustable. Now her payments are more than $4,800 a month. This winter they kept their gas heat off and made do with electric space heaters.”

“She came to yesterday’s workshop hoping to speak with her mortgage servicer, but the company was not there. She did speak with a counselor, though. ‘I’m hoping I can get a mortgage I can pay,’ she said.”

“Two months ago, Lisa and Eric Jacobs of Brockton attended a regional seminar on how to avoid foreclosure, hoping they would soon see their way clear. Two weeks ago, they gave up.”

“Buried in debt, with a condo worth far less than what they owed in mortgages, the Jacobses figured it made more sense to let the bank foreclose. They owe $180,000 and believe their two-bedroom in Madrid Square is worth $140,000.”

“With a combined annual income of about $60,000, they figured they could afford to pay about $1,100 a month - but monthly payments on a first and second mortgage, as well as condo fees, were about $1,800 a month.”

“‘We’re in this predicament and there is no end in sight,’ Lisa Jacobs said.”

“They purchased their two-bedroom condo in 2000 for $82,000. As the value of the condo increased, as it did for most real estate in the state, the Jacobses dipped into the equity, spending money for fun. They refinanced several times through August 2004, to pay off credit card debt, until finally their mortgage debt had mushroomed to more than $100,000 and their total monthly payments had nearly doubled, to about $1,460.”

“‘It was my fault,’ said Lisa Jacobs, who had had financial problems before and had to file for bankruptcy in 2001. ‘I just bought stuff for the sake of buying.’”

“Normand Grenier, executive director of the Neighborhood Housing Services of the South Shore, said he knows a bus driver, making $10 an hour, who was qualified for a $250,000 mortgage, which the man could not possibly afford.”

“‘It’s very sad,’ he said, adding that the agency has calls from more than 300 people. ‘We try to help people, but the news we give them is very difficult.’”

“The Esplanade was supposed to be Ed Cobb’s last home. Cobb chose the over-55 complex specifically to avoid generational deja vu: teenagers outside on skateboards, late-night parties, hallway commotion, and the other sort of high-spirited chaos that comes with younger families.”

“But harsh economic realities have prompted the Esplanade’s developers to break a fundamental promise made to Cobb and dozens of his neighbors. MP Development LLC is petitioning Hudson officials to reverse the residential age restrictions so they can sell Esplanade units to anyone.”

“Cobb and dozens of other residents who bought up 90 of the 140 Hudson units, mostly at boom-market prices between $250,000 and $290,000, say they feel betrayed in what they describe as a housing bait-and-switch.”

“‘It’s like buying a car, and then two years later they come and remove the engine,’ said Cobb. ‘That’s how major it is.’”

“With more than 20,000 new over-55 units built statewide since 2000, developers in Wellesley, Holden, Hanover, Hingham, and Sharon, are saying that age restrictions, formerly a hot marketing tool, are now hampering sales.”

“The red-hot trend toward over-55 buildings worried the Citizens’ Housing and Planning Association, an affordable housing group, as far back as 2005, when an agency survey found how many senior-oriented units were online, and saw that new complexes were being permitted seemingly every week, said Aaron Gornstein, executive director of the agency.”

“‘We would not be surprised to see more developers coming forward asking for this,’ he said.”

The Rutland Herald from Vermont. “Home sales in Rutland County fell last year following a national trend driven by the subprime mortgage crisis and a weakening economy. There’s no question home prices have fallen nationwide over the past year or so and Vermont is no exception.”

“Economist and University of Vermont professor Arthur Woolf said home sales statewide will continue to decline again this year. ‘We’re basically seeing the unwinding of this housing boom that we experienced in Vermont as well as many parts of the nation,’ said Woolf.”

The Redding Pilot from Connecticut. “Even to those who have weathered economic storms before, some say the recent wave of foreclosures is something they have never witnessed. The Pilot’s sister paper, The Wilton Bulletin, recently reported 20 notices of lis pendens. The Weston Forum, also a sister paper of the Pilot, reported five lis pendens and two foreclosures since Jan. 1.”

“‘When you have this many foreclosures, we’ve got a problem; people are going under,’ said Redding resident Joan O’Neill, who owns Joan O’Neill Real Estate.”

“To put the number of foreclosures into perspective, Ms. O’Neill said when she came to Redding, there were only about a dozen houses for sale in town. ‘In the 1970s it was tough, but I have not seen it like this in all my time here,’ she said. ‘There were times when I remember paying a 22% mortgage interest; I didn’t sleep at night. But I’ve never seen anything like this ever in my career.’”

“Randi Hutton, a Redding resident and Realtor agreed. ‘I’ve been in the market for 11 years, and I have not seen this kind of fear,’ she said. ‘Banks loaned more money than they should have loaned, and they gave people higher expectations. It’s a shared responsibility.’”

The Providence Journal from Rhode Island. “In recent months, foreclosures have touched some of the most affluent communities in Rhode Island, including Barrington, East Greenwich, Jamestown, Lincoln, Little Compton, Narragansett and Newport.”

“A corporate-owned house in Tiverton is an example of the wild ride house prices have taken since the housing bubble burst. Purchased in July 2006 for $438,000…then sold it for $645,000 in November 2006, the contemporary Colonial with an in-ground pool is now on the market for $420,000.”

“Brian Marvelle, an in Providence who specializes in selling foreclosed properties, said many properties don’t even involve evictions, because the owners just stop making payments and move out before the legal process is completed.”

“‘Most of the people are just up and leaving,’ Marvelle said.”

“‘It hasn’t eased at all. It’s magnified,’ Manfredi said of the foreclosure situation in Rhode Island. ‘I’ve got better houses right now than I’ve had in a long time.’”

“No deals were made at a real estate auction yesterday. Of the 24 properties offered at the sale, 15 did not attract any bids. And all the high bids for the rest of the properties were below the reserve prices set by the sellers, according to representatives of the auctioneers.”

“Even the most luxurious house offered at the auction — a contemporary colonial in Newport, a block from Newport Harbor — failed to attract a high enough bid to secure an immediate sale. The high bid for the property was $700,000. Reserve prices were confidential, but 72 Harrison Ave. was recently listed on the market for $1.25 million.”

“Danielle Ventura, 20, of Middletown, was the high bidder for a three-bedroom, two-bath ranch in Middletown. But her bid of $200,000 also did not match the reserve price. She said she was offered a price of $290,000, but she responded, ‘no way.’”

“Builder Mark Carpenter who attended the auction… said he was interested in the land that was offered at the auction — half-acre lots in Portsmouth — but he thought the prices were too high.”

“‘Land is at a premium on Aquidneck Island,’ he said. Sellers ‘don’t want to give it away.’”

“The Rhode Island economy has slipped into recession twice over the past 20 years, most recently when the bubble burst in 2001. Back then, the housing market was soaring, and within a year the state labor market had recovered.”

“Now, the economic data suggest that Rhode Island is in another recession, and one economic forecasting firm predicts this one will last through 2009.”

“‘Right now, it looks like the recession will probably be almost as long as 1989-91 recession,’ said Andres Carbacho-Burgos, an economist for Moody’s ‘So, it’s going to be bad.’”

“In Rhode Island, the current recession has already cost the state close to 8,000 payroll jobs during the last 12 months — nearly twice as many jobs as were lost during the 2001 recession, state Labor Department data show.”

“The current house-price declines are shaping up to look more like the 1990s, when single-family house prices in the state fell more than 10 percent from 1990 through 1993. Prices did not begin to rise again until 1996.”

“Rhode Island’s median household income as of December was $58,000. An ‘affordable’ mortgage is generally considered one in which the monthly payment represents 25 percent to 30 percent of the borrower’s annual income. By that measure, a household at the median income could only afford a mortgage that cost $14,500 to $17,400 a year, or $1,200 to $1,450 per month.”

“‘Generally, someone at the median household income in Rhode Island is barely able to qualify for a mortgage,’ said’s Carbacho-Burgos.”

“The lack of affordability helps explain why the state has had among the highest concentrations in the country of subprime mortgages –– and now more delinquencies –– than most other Northeast states.”

The Daily Gazette from New York. “According to a report released by the Greater Capital Association of Realtors, the sale of single-family homes regionwide in February plunged 29 percent to 431, compared with a year earlier.”

“Kelly Greco said homeowners have stopped using the equity in their homes to pay to hire Stands Under the Son to build new countertops for remodeling efforts, even if the paper value of a house has note eroded.”

“‘We had grown progressively every year. This past year was the first we didn’t grow since 2000,’ his wife Sherill said. ‘We knew how things were going at Christmastime. We’re usually really, really busy, and we weren’t.’”

Bloomberg on New York. “New York City’s residential real estate market is showing the first signs of fallout as U.S. banks and securities firms cut the most jobs in seven years.”

“Manhattan apartment sales fell in January and February from a year earlier and new properties came to the market at the fastest pace since at least 2000, according to data from real estate appraiser Miller Samuel Inc.”

“At developer Ian Schrager’s 40 Bond St., the avant-guard lofts aren’t holding their prices. The Corcoran Group recently cut the price of a three-bedroom, 2,600-square-foot apartment by about 8 percent to $5.5 million.”

“JPMorgan Chase & Co.’s planned buyout of Bear Stearns is rattling buyers and sellers now, said Gregory J. Heym, chief economist for Terra Holdings LLC. ‘The amount of uncertainty, at least as long as I’ve been following the market, is unprecedented,’ said Heym.”

“The market is changing for what Brown Harris Stevens broker John Burger calls the ‘middle luxury’ category of $3 million to $7 million apartments. Many brokers are scaling back sellers’ expectations.”

“‘In 2006 and 2007, they looked at the last 12 months’ worth of sales and priced their apartments at 10 percent more,’ Burger said. ‘Today they are sitting down with the soon-to-be listing broker and saying `Do you think we can get what they got in ‘06?’”

The Courier News from New Jersey. “The message from K. Hovnanian’s marketing department in February was almost euphoric.”

“‘We sold 100 homes in New Jersey, New York and eastern Pennsylvania on President’s weekend,’ said Doug Fenichel, the company’s chief media man. ‘And we did it with a very small incentive, offering the public the same discount we offer our employees.’”

“Sue LaRue, sales manager at Hillsborough-based Country Classics, said the company redefined its incentives at the end of February. ‘We didn’t think we needed them, but we had to offer them to stay competitive with Toll Brothers and Beazer,’ she said about the firm’s biggest competitors in Hillsborough.”

“The Hovnanian 10K report explains how the company is planning to weather the storm, by walking away from options it has on undeveloped land and redesigning its offerings to meet today’s market. In an effort to ‘right-price’ homes, the company has slashed prices on some offerings, bringing them to the builder’s cost or below, just to raise cash.”

“‘For the first time in my memory, resale homes are costing more than newly constructed ones,’ Fenichel said.’”For builders, it’s all about managing the balance sheet, and they need cash for future opportunities.’”

“Andrew Zatsko, a real estate broker in Middlesex County, has a listing relationship with two builders in South Brunswick. Charter Oak has only three homes left: the model…in the high $900,000s, and two homes…on speculation in the mid $900,000s. Zatsko said that the Charter Oak model is loaded with extras and the builder had hoped to sell it for more than $1 million.”

“‘But you have to listen to the market,’ Zatsko said. ‘And the market won’t support that price right now. Look at all the inventory out there. It’s not selling because it’s mispriced.’”

“He mentioned a buyer who wanted to buy a new home from one of his builders. ‘Sure, they’re not going to get what they would’ve gotten a couple of years ago, but they’re also getting a new home today for less than they would’ve paid a few years ago, so it evens out,’ he said. ‘The only people who are in trouble are the ones who are over-leveraged, the ones who bought in the last couple of years or the ones who used their homes as a cash cow.’”

The Times from New Jersey. “Otis Boone describes his housing problem as ‘a funny situation,’ but stories like his have become common in Mercer County. In August 2005 he and his wife moved out of Trenton and got a zero-down loan on a newly built home in Ewing Township. Boone hurt his back the following year, went on disability and saw his income cut in half.”

“Putting the place up for sale brought no offers, so last August the couple moved out of their home, which remains unoccupied, and moved into an apartment in Hamilton.”

“‘At the time when I wasn’t making the payments, something like this never happened to me before,’ said Boone. ‘I wanted to get an apartment before my credit really got bad. I don’t know where I can get the money unless I get a miracle.’”

“As years of unrealistic subprime loans collide with job losses, personal misfortune and the slumping housing market, hundreds of Mercer County residents face similar crises.”

“The number of county properties entering foreclosure hit a recent peak in January, and mortgage counselors who try to help people keep their homes say they see no end in sight.”

“‘The numbers for us continue to rise,’ said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, whose Trenton office has been overwhelmed with homeowners seeking help. ‘We’re at overcapacity and we see nothing letting up.’”

“E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said the subprime market is ‘essentially dead.’ ‘What you’re going to have now is the most conservative approach to underwriting, whether it’s 20 percent down or whatever, and also watching the ability to pay,’ he said.”

“Levy also defended the subprime industry, saying that about 85 percent of its borrowers have been paying off their loans according to their terms. The others, he said, made the mistake of relying on a ‘crazy housing market’ and fell victim to a confluence of economic factors.”

“‘The whole concept was to make housing more affordable and find a way to provide loans to people who wouldn’t have been able to access the market,’ Levy said. ‘Subprime shouldn’t have been a dirty word.’”

Bits Bucket And Craigslist Finds For March 31, 2008

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

March 30, 2008

It’s No Longer An Extraordinary Situation In California

The Times Herald reports from California. “Most homes for sale in Solano County are classified as “distressed,” which likely means a change is coming to the area, real estate experts said Friday. ‘This is the first time in my 20 years in the industry that the distressed properties are driving the market,’ said Beth Brittenbach of Vallejo’s Century 21 Schutjer Realty. ‘They are putting downward pressure on prices and have created what seems like the beginning of an accelerated buyers’ market.’”

“‘As of March 26, there were 3,892 residential properties of all types and price ranges countywide on the market or under contract, Brittenbach said. Of those, 1,319 (34 percent) were listed as foreclosures and 1,056 (27 percent) are listed as short sales.”

“‘Many of the short sales will never go through because the owners won’t qualify, the bank will take so long to respond that the interested buyer will disappear, or the agent has set a list price that is unrealistic and not acceptable to the bank,’ Brittenbach said. ‘But they do give us a hint of what is to come when those homes in distress are foreclosed upon and become (bank-owned).’”

“Trying to sell a non-distressed home will likely be difficult for a while, Brittenbach said.”

“‘Individuals can’t compete with the banks,’ she said. ‘People will have to be willing to deal, to give the buyers credit. They may be surprised to see how much the market has changed. We advise anyone who doesn’t have to sell their home right now, to wait.’”

The Monterey County Herald. “In 2005, when a group of developers started looking to buy the Mahara Townhouse apartment complex in Monterey for a condominium conversion, the condo market was hot. The median price for a condo in Monterey had reached $585,000, and, on average, condo units were selling in just 28 days.”

“By the time the deal closed a year later, those same condos were taking twice as long to sell, while the median price had dropped to $440,000. And more than twice as many condo listings were on the market.”

“After investing $10 million into renovations, the developers are only three-quarters of the way through the work, four months past their initial target date for completion of the project. Overly cautious buyers and the collapse of the subprime lending markets have left nearly half of the newly remodeled condos sitting vacant.”

“So April 13, 41 units at Cypress Park Monterey Bay — including some furnished model units — are going on the auction block. Minimum bids start at $225,000 for a one-bedroom, one-bath 551-square-foot condo; the largest units — two bedrooms, one bath and 920 square feet — have starting bids of $265,000.”

“Previous pricing for those same units ranged from $335,990 to $479,990.”

“Forrest Corral, owner of Cypress Park Monterey Bay, said that letting buyers determine the market value of the properties is a better option than waiting — and hoping — for sales to pick up.”

“Those unsold units are costing money — to the tune of $10,000 a month, said Corral — and infringing on the ability to complete the final phase of renovations.”

“‘The market is in disequilibrium,’ said Ken Stevens, CEO of the company handling the auction. ‘The developer is essentially trusting the market to bid the property up to where they feel is appropriate.’”

“‘We’re basically trying to sell a year’s worth of inventory in a day,’ he said, ’so I think, clearly, the buyers are going to get a good buy.’”

“‘It may bring buyers in that wouldn’t normally buy here and, all of a sudden, everything will change,’ said Bob Chorney of Pacific Home Lending. ‘That’s going to shake things up big-time so far as the market is concerned, because it’s going to establish comparables that are going to shake up all the other appraisals.’”

“Agent Joy Jacobs said she expects to see a ripple effect pushing condo prices down as a result of the auction. ‘The way condos are priced now, you can go down the road to Seaside and get a full house for that price,’ said Jacobs. ‘We need to get prices down.’”

“Craig Anapol, an agent in Carmel, has tried to steer some first-time homebuyers toward condos, but dropping single-family home prices in some communities have made some of those lower-end properties more enticing in buyers’ minds, he said.”

“Last week, 177 single-family homes were on the MLS in Seaside and, of those, about 20 properties had dropped under $300,000. One 650-square-foot house had even dropped to $149,000, he said.”

“‘Those are prices that are cheaper than the condos,’ said Anapol. ‘If all those 41 sell, it will have a domino effect and other condo prices will fall in the county.’”

“The Cypress Park condo auction isn’t the only auction Accelerated Marketing Partners is handling in Monterey County. The company was scheduled to auction off 22 new single-family homes in the Tuscany at Monte Bella development in Salinas on Saturday. Minimum bids on those properties were starting at $295,000, compared to previous asking prices of more than $800,000.”

“Carmel appraiser Alex Hale said the market has changed the way appraisers look at the current market. Rather than disregarding distress sales as irregularities, as they used to do, these days it would be impossible to avoid them when establishing comparable market prices.”

“‘With so many houses on the market, and so many foreclosures, and auctions for foreclosure properties and banks selling foreclosed properties, it’s no longer an extraordinary situation,’ said Hale. ‘It’s the market.’”

“He and many other appraisers are looking back over a shorter time span — three months as opposed to six months or even a year — because it would be too hard to adjust for rapidly changing economic conditions, he said.”

The Whittier Daily News. “Standing at his second-story bedroom window, Gilbert Campos looks out at a lot of dirt. An empty cement swimming pool and unfinished recreation center lie tauntingly in his line of sight. He said he waited 12 years to buy a Rosedale home and finally moved in Sept. 18, and although he does not regret the move, he and many other residents are frustrated.”

“‘I went to Houston on a business trip, and when I came back everyone was gone,’ he said. ‘They promised us (the construction) would be done in February of this year and here we are, still waiting.’”

“Campos, his wife and infant daughter are one of about 60 families that have moved into what will be the 1,250-home Rosedale development in northeast Azusa. But since mid-January, officials said, two of Rosedale’s four builders have stopped construction.” “Officials attributed the halt to a faltering housing market that has plagued the overall economy.”

“‘The economy always comes back, the pendulum always reverses, but the tough part for (the residents) and the developer is that wait,’ said Tom Adams, owner of 21st Century Adams & Barnes in Monrovia. ‘They’re living, to some degree, in a no-man’s land.’”

“Campos said he and many residents are frustrated with the lack of amenities and progress, coupled with high HOA fees. He said nearly all his neighbors have children who have nowhere to play.”

“‘There are supposed to be nine parks,’ he said. ‘We don’t even have one park.’”

“‘It’s affecting everybody in residential construction,’ said Azusa City Manager Fran Delach. ‘Right now a lot of builders are having trouble getting money from their lenders to continue.’”

“‘Prices are down substantially, inventory is up and interest rates are down,’ Adams said. ‘You can buy the same house that a couple of years ago (cost) at least 20 percent more.’”

The Recordnet. “The Central Valley Association of Realtors, a trade group covering Stanislaus County and much of San Joaquin County, was expecting a huge membership loss this year as more and more agents dropped out of the sales market.”

“But instead of an expected drop from 2,900 to 1,700 year to year, the association has seen membership shrivel to about 1,200. Cliff Coler, the group’s interim chief executive officer, said declining membership and revenue have meant a cutback in staff from 13 to four.”

“‘Some of the numbers hit us in the face like a cold bucket of ice water,’ said Karl Enzmann, Realtors group president-elect.”

The Press Enterprise. “Massive jumps in payments on home loans and an economy that’s taking a beating are creating work for auto repossessors, say those who lend money on vehicles.”

“Tom Kontos VP of Adesa Analytical Services, which owns auto auctions in Mira Loma and San Diego. He said repossessions are up about 15 percent from last year.”

“‘In part it’s a thing you’d naturally see because of an economic slowdown,’ Kontos said. ‘But there are some unique aspects to this economic cycle related to subprime financing.’”

“He said some borrowers find themselves without enough money to make payments on both their home and their car. ‘There are cases where people say the lesser of the two evils is (to default on) the car.’”

“‘A lot of the people who are now delinquent have never been delinquent in their life,’ said Gene Shabinaw, senior VP of lending at Arrowhead Credit Union in San Bernardino. ‘And, frankly, they’re afraid to talk about it.’”

“He said the real estate meltdown is also leading to repossessions in other ways, such as borrowers who lose their jobs in related industries.”

“He said while all types of vehicles are being repossessed, the rate of repossession seems to be highest among gas-guzzling pickups and SUVs, some purchased by people employed in construction or other fields.”

The North County Times. “As some real estate agents struggle and mortgage brokers close up shop, one real estate industry is booming: foreclosure advice.”

“The proliferation of foreclosure companies has troubled some housing advocates, who point to government-sponsored agencies that provide the same services free.”

“‘It’s motivated by greed and desperation,’ said Daniel Scott, director of an Oceanside nonprofit that provides assistance to families facing foreclosure. ‘People are desperate for something that sounds like it will help them, and people who are greedy look to benefit from it.’”

“Over the last three months, banks purchased almost 4,000 foreclosed homes in San Diego County, a 250 percent increase from the same time a year earlier, according to a Discovery Bay tracking service. And in February alone, more than 3,000 homes received notices of default, the first step in the foreclosure process.”

“Ernesto Castillo said he could not keep up after the interest rate on his adjustable mortgage jumped and his payments increased by $1,200 a month to $4,700. Castillo decided to let his Florida home fall into foreclosure and move to Chula Vista as a renter.”

“It takes about one month to secure an appointment with Community HousingWorks. Adelina Enriquez, the sole counselor, has file cabinets stuffed with hundreds of folders for the cases she juggles. She said she spends at least an hour simply transcribing information from the 60 voice mails she gets every day.”

“‘It’s very intense. Can you imagine a 60-year-old man crying on the chair in front of you? That’s stressful,’ Enriquez said. ‘In the beginning, I didn’t know what to do.’”

“Enriquez said she counseled 215 families in the first six months she was assigned to the job. Of those, she kept 28 families out of foreclosure by modifying the loan, she said.”

“Castillo now rents in Chula Vista and is working to repair his credit so he can eventually buy another home. He said he owed too much to even consider a loan modification.”

“‘It was an emotional roller coaster. We bought a home, put in a pool and had the American Dream,’ Castillo said. ‘But it’s life. Now, we’re getting our credit fixed.’”

They’re Going To Have To Give Them Away In Florida

The Herald Tribune reports from Florida. “The crowd filed in to the large white tent behind the Bahia Mar resort for Friday’s real estate auction organized by Sotheby’s and Daniel DeCaro Auctions as a four-piece jazz band played a peppy rendition of ‘I Feel Good.’ Only a handful of the properties would be selling absolute, where any bid would be accepted. The rest carried a non-disclosed reserve, or minimum bid. The auction, which was anticipated to take four to five hours, wound up clocking in at barely two.”

“The first property out of the gate was not a good omen: auctioneer Daniel DeCaro tried opening the bidding for 1850 South Treasure Drive in Miami Beach, a waterfront lot, at $1 million. There was no response.”

“He then tried to get something started at $500,000, but again, no dice. $250,000? Still dead air. $100,000? Silence. At that point, DeCaro threw in the towel and passed the property by.”

“‘Please come see us afterwards,’ he told the crowd.”

“By the time it was over, 67 of the 99 properties on the block had no bids. ‘This was a disaster,’ said Fort Lauderdale broker Paul Merlesena following the auction. ‘They’re basically going to have to give them away now.’”

The Bradenton Herald. “Realtor Don Schroder said some of his clients are floored by the prices currently available on Anna Maria Island.”

“‘If people haven’t been to the island in two or three years, they are finding prices are way, way down,’ he said. ‘The prices on Anna Maria Island are down probably to 2002 or 2003 levels…Even the homes on water are starting to stabilize. I know there is a canal front property on the island that I saw the other day that is under $600,000, which is extraordinary.’”

“With approximately 575 homes and condos on the market on Anna Maria Island, broker Jesse Brisson said wealthy buyers have the opportunity to be more selective.”

“‘In the past, when a buyer would come in the door and say, ‘I am looking for a three-bedroom house on the canal with a 10,000-pound boat lift and a pool,’ it would be hard to find,’ he said. ‘But now, I can say, ‘Here is six.’”

“Real estate broker Marie Franklin said she has seen a lot of changes in the market since she first began selling homes in 1974.”

“‘The condos that people are amazed they can now get for $200,000 to the mid-$200,000, do you realize that in 1973 when those things were built they were going for $8,000 and $11,000?’ Franklin said. ‘People don’t realize it but we are just going back to where we should be. So have we increased in value? Of course we have. It is just that we aren’t the inflated market we saw in 2004 and 2005 where people were going crazy.’”

The News Press. “The narrow slice of east Fort Myers is sandwiched in between Palm Beach Boulevard and the Caloosahatchee, stretching from Royal Palm Park to Riverside Community Center, near downtown. Eclectic is an apt description of U.S. Census tract 3.01’s inhabitants and its homes.”

“Rental housing is plentiful. Some of the empty rental units in the tract belong to Charlie Walters. Walters said he has apartments and single-family homes for rent in 3.01 and that his vacancy rate has skyrocketed over the last year, as the economy has faltered.”

“‘I’ve cut the rents on almost everything I have from $100 to $400 bucks a month and I’ve got more vacancies than I’ve ever had,’ he said.”

“‘Roofers who don’t have anything to do now, they’re on their way to Alabama, Louisiana and Mississippi,’ he said.”

“He has a building with seven, one-bedroom apartments on Veronica Shoemaker Boulevard where three of the units are empty, despite the fact he’s lowered rent to $450 from $600. ‘I’ve had it for about three years and I never had this problem before,’ he said.”

“Bonnie Gaschk and her husband Harry have lived in 3.01 for three years, in the gated-development The River. ‘We moved here from Wisconsin and we think it’s a paradise,’ said Gaschk.”

“She said they considered some of the waterfront high-rises closer to downtown, ‘and for the value and the price, we could get three-to-four-bedrooms and four bathrooms, approximately 2,400-square-feet, with a boat lift on the river for approximately $300,000.’”

“Gaschk said they love life there, but have their home on the market for $289,900, so they can move to a single-family home they own in the Waterway Estates community in North Fort Myers. She said they plan to make their departure a temporary one, by selling the Waterway Estates house to purchase another unit in The River.”

The Daily Herald. “With the nation’s housing market in a slump and the mortgage market in disarray, many home builders are putting up fewer supersize homes and offering smaller floor plans. That seems to be what buyers suddenly want in an era of high prices and tougher financing.”

“In some cases, home builders are making the shift to smaller, less costly homes in existing subdivisions, angering homeowners who bought large homes during an earlier stage of the project’s development.”

“David Raidman moved into his 2,760-square-foot lake-front home in Fort Pierce, Fla., last fall in the first phase of a gated community developed by Lennar Corp.”

“Raidman said he was told that his home would be surrounded by similarly sized and priced homes. But when he heard Lennar was planning to build much smaller homes in his neighborhood, he and other homeowners fought the company’s plans.”

“‘Our biggest concern is what it would do to the value of our homes,’ said Raidman, who doubts he can sell his home today for the $300,000 he paid for it last year. Standing on his back porch, he can look out across the lake and see at least six newer, smaller homes. ‘The garage looks bigger than the house,’ he said.”

The Miami Herald. “Seth Gissen is a process server, a sworn court officer called upon to deliver official notices to homeowners that their lenders have filed foreclosure. As the mortgage meltdown hits a critical mass in South Florida, it seems that his presence in neighborhoods throughout the region is becoming almost as common as that of the mail carrier or meter reader.”

“About a year ago, business from foreclosures started to pick up. In the last two or three months, it has become a deluge. Last month, 7,499 foreclosure actions were filed in Miami-Dade and Broward counties alone.”

“As the workload grows, the Gissen & Zawyer firm must hire. The firm is glad to be in a position to hire. Many recent employees have come from the real-estate industry — agents, mortgage brokers, appraisers and support-staff members driven out of work by the slowdown.”

“‘We have people that were without jobs for six, seven months,’ Sean Zawyer said. ‘They were dying. I feel like a few of them almost cried when we offered them a job. They were so happy.’”

“‘Most of them aren’t surprised,’ Zawyer said. ‘Most of the time, they’ve already been sent letters or been contacted by the banks and I guess they know it’s coming, or know it’s inevitable.’”

“That’s when the firm actually serves a homeowner, which has become increasingly hard to do in recent months. In eight addresses that Gissen visited Thursday night, three tenants were served, but not a single homeowner. A few of the properties seemed vacant.”

“Census figures show that Miami-Dade County had among the highest home vacancy rates of major U.S. metropolitan areas at the end of last year — about 4.4 percent, up from 1.6 percent in 2001. The national average is 2.8 percent. A lot of that is perhaps due to new construction.”

“‘Some of the people are walking away from their houses — they’re upside down,’ Zawyer says. ‘A lot of them were investors.’”

“When he steps into the lobby of Jade, a luxury condo building, Gissen says he is not optimistic about serving Raul Reina, who owes $1 million on a unit. Reina’s listed phone number in New Jersey was disconnected.”

“‘This is about the eighth time we’ve come here,’ Gissen says. ‘The people in this building, they’re never here. Everyone we’ve done here has been an investor.’”

“The concierge knows the routine; he answers no questions. The security guard, Yoel Estrada, also knows the routine. The man who works the 7 a.m. to 3 p.m. shift does, too. He takes Gissen to the 45th floor. Gissen knocks. Nothing. ‘It sounds empty. It sounds hollow,’ Gissen says.”

“Estrada nods. ‘These people think they can live a lavish lifestyle, but they can’t even pay the maintenance fees,’ Estrada says.”

“Gissen glances at the service papers. The party behind the foreclosure: Bear Stearns.”

Local Market Observations!

What do you see in your housing market this weekend? Price cuts? “James Matey, a Cape Coral builder, leans on the granite counter of an empty riverfront house he built for New York real-estate marketer Ted Kurz. Mr. Matey says the 5,139-square-foot house, with five bedrooms, wood-coffered ceilings and river views, was advertised at $4.2 million three years ago. The asking price is now $2.4 million — which covers only the cost of land and construction.”

“‘At this point, we’re just dumping it,’ Mr.Matey says.”

“Mr. Kurz says he’d like to hold on to the house for a few years until the market turns, but that would cost him more than $200,000 in interest, taxes and other expenses — money he doesn’t have now that the market has collapsed. ‘I’ll entertain any offer,’ he says.”

Or foreclosures? “Suffolk and Nassau counties accounted for 33 percent of subprime loans that were made in 2006 in New York State and that are now in foreclosure, according to a report. At the same time, Long Island has 30 percent of all subprime loans scheduled to be reset before October 2009, according to the study of subprime loans given out in 2006.”

“‘When you drove around two or three years ago, on every corner there was a new mortgage broker or a new mortgage banker,’ said Adrian Fassett, chief executive of the Economic Opportunity Council of Suffolk.”

“While Alaskans aren’t seeing the number of failed loans as some places in the Lower 48, plenty of people in the Matanuska-Susitna Borough are feeling the pain of bad home-buying decisions.”

“The number of people seeking foreclosure counseling — mostly linked to subprime loans — at the Anchorage office of the Consumer Credit Counseling Service of Alaska rose sharply in recent months. ‘The Valley is one area in the state where foreclosures are definitely increasing,’ said Wendy Romberg, for the nonprofit credit counseling service.”

Housing fallout? ” A nationwide slump in new home construction has hit one of Ashe County’s largest employers, Leviton Manufacturing Company, and prompted the closing of one of its three local manufacturing plants, according to company officials.”

“‘I think this is going to be a very severe housing downturn that’s going to last well into next year,’ said Lou Lovelace, the company’s general manager of North Carolina operations. ‘We had been clearing out that plant to develop and implement a new wall plate line, and it just became apparent that this is not the time to be making multi-million-dollar investments the way the housing market is right now. So we decided to just indefinitely suspend that project.’”

Legal charges? “Mark Strodtman, a Greeley developer who owns close to 400 acres in Mesa County, was indicted Tuesday on 23 felonies, including racketeering, a Class 2 felony.”

“A Weld County grand jury indicted Strodtman and two others who were involved with him in a mortgage fraud scheme that left many Greeley area families in foreclosure, reduced property values of neighboring homes and defrauded lenders, according to the Weld County District Attorney’s Office.”

Slower sales? “Sales of Central Texas homes dropped for the eighth consecutive month in February, and a bigger slowdown could be ahead. Pending sales plunged 49 percent, the greatest decrease on record, according to the Austin Board of Realtors.”

“‘It’s plateaued,’ said Mark Sprague, Austin partner of Residential Strategies. ‘But all that said, it’s going to be the third best year in new-home starts and probably the third best year in resales. It’s not as good as it was two years ago, but it’s better than it was five years ago.’”

Knife catchers? “During the housing boom, investors flocked to metro Phoenix and climbed onto buses that took them to the Valley’s fringes. Now, the bus tours to those edge suburbs are starting again. But this time, home buyers are looking for foreclosure properties they can flip for a fast profit.”

“Last month, 2,500 homes in metro Phoenix were foreclosed on, the highest monthly tally since the real-estate recession of 1990. One bidder at the auction, Saul Grotstein of Los Angeles, said there was more competition for the properties than he expected.”

“‘We aren’t done buying in Phoenix,’ said Grotstein, who was heading to Florida for another foreclosure auction.”

“‘Last time around, it was the amateurs who believed the infomercials and used all the home equity in their own homes to buy rental properties,’ said Jay Butler, at Arizona State University Polytechnic. ‘Now, many of those houses are in foreclosure and selling to a similar group of investors.’”

“Diane Drain, a Phoenix bankruptcy and foreclosure attorney, said she is working with two to three investors a day who are going to lose homes to foreclosure because lenders won’t negotiate with them.”

“‘If it’s money you would take to Vegas and drop on a table, then invest it in foreclosure properties,’ said Drain. ‘But if it’s your retirement account or home equity, don’t touch it. I am seeing too many people now who are losing everything because they invested in homes they thought they could flip for a profit.’”

Bits Bucket And Craigslist Finds For March 30, 2008

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

March 29, 2008

Land Is A Liability In California

The North County Times reports from California. “Homeowners in the new Shady Grove subdivision said Friday they were concerned that their upscale houses will plummet in value if the developer of the neighborhood is allowed to shrink the size of most of the homes that are still in the planning stages. Meanwhile, real estate industry analysts said the decision by KB Home to downsize the Shady Grove houses is just the latest example of a regional trend.”

“Shady Grove resident Mickie St. Pierre said that the 3,285-square-foot home she and her husband bought there cost more than $700,000 last year. After extensive upgrades, she estimated it would now be worth about $1 million, if the market recovered to where it was before the downturn.”

“While it is uncertain what effect the smaller houses would have on the value of existing homes in the development, St. Pierre said she cringes when she thinks about it.”

“‘You’re talking about homes right around the corner that would go for $300,000 or $400,000, so (ours) would probably go down into the $700,000s or $800,000s,’ she said. ‘It’s a huge loss.’”

“Nicole Dennison, president of the Shady Grove Homeowners Association, said she and her husband bought their ‘dream home’ at the hillside development last year, and that they were dismayed by the builder’s plans for plainer, cheaper homes.”

“‘I’d love to see KB Home stick it out and keep offering the original models they advertised,’ Dennison said. ‘I understand that it’s business, but they’ll cut the legs out from under the homeowners. (The owners) will never recoup what they’ve put into these houses.’”

“Alan Nevin, an analyst for real estate tracking firm MarketPointe, said Friday that the Shady Grove case ‘is not isolated at all.’ ‘We’re seeing it throughout Southern California, primarily in areas where the homes that were being built were much larger than the homes throughout the general neighborhood,’ Nevin said.”

“‘The reality is that firms like KB Home will probably wind up building those new (smaller) homes and making little, if any, profit, just to use up the lots,’ said Nevin. ‘In the world of publicly held builders, land is a liability, not an asset, so they try to remove themselves from heavy lot positions, and one of the ways they can do that is by downsizing their homes.’”

“‘Shortly after we moved in, they dropped the price of the homes, and we understood that. It was a hard pill to swallow, but that was the market,’ said St. Pierre. ‘The homes they’re proposing to put in, they’re all just boxes. They don’t have anything to offer as far as character or design.’”

“‘We’d like to see the values of our homes increase when the market increases, and not decrease because of KB Home’s decision to change the demographics of this community,’ she said. ‘We’ve all put a lot of money into our brand new homes —- for most everyone here, the investment is over a million dollars, and to turn more than 60 percent of this community into $300,000 homes … is not right, it’s not fair.’”

The Daily Pilot. “Bettershelter, a Costa Mesa developer dedicated to building affordable housing, opened the 1.7 Ocean condominium complex last summer on the Westside to help revitalize a sometimes blighted area. The first 10 units sold within a few months, but the last two, which are mostly identical to the others, have yet to change hands.”

“Earlier this year, bettershelter owners Steve Jones and Pete Zehnder advertised a ‘Live Free’ package in which residents could purchase the condominiums for $519,000 each and pay nothing for the first six months.”

“That offer got a few interested callers but no buyers — so, this week, bettershelter slashed the price to $499,000 and offered an additional $10,000 incentive for people who purchase the condos before April 15.”

“Zehnder said he suspects many people are waiting for the costs to bottom out. ‘I think they [home buyers] have a tendency to wait a little bit,’ he said. ‘These people are not experts. None of us are experts. But it’s a shame, because there’s really great deals out there and people sit on the sidelines, and by the time they decide to make their decision, everyone else is making a decision already.’”

“Jones, the association’s president, noted that a number of people have capitalized recently on falling home prices, even in such wealthy neighborhoods as Mesa Verde, and that he intended the latest discount at 1.7 Ocean to lure those who still needed an extra incentive.”

“‘That sort of deal would not have existed a year ago,’ Jones said.”

The Desert Sun. “The 48 homes sold last month are more than monthly sales the city (of Indio) has recorded in recent months, according to DataQuick. DataQuick’s analysis of the local housing market also reveals a total of 570 new and resale homes were sold valleywide last month. That’s down 29.6 percent from the same month last year but consistent with the past several months of desert sales.”

“The median price for the valley was $350,000 in February. In Indio, the median was $268,000 - a decline of 27 percent from the year before. The median price per square foot in the city was $156. Valleywide, it was $204.”

“With about 1,100 homes in foreclosure in Cathedral City limits, officials are considering implementing an ordinance requiring abandoned properties to be registered with the city and maintained.”

“The topic has brought Cathedral City’s Code Enforcement staff a barrage of complaints about abandoned homes and swimming pools, according to the report.”

“‘This can’t hurt us,’ Mayor Kathy DeRosa said about the ordinance. ‘I think this can help us to preserve and protect property values (for) those who have been able to keep their homes.’”

“‘This is something that’s going to continue as more properties go into foreclosure,’ Art Gregoire, a Realtor in Cathedral City, said Monday. ‘With the increasing numbers, something has to be done.’”

The Bakersfield Californian. “Leticia Avila’s blood pressure plummeted when she saw what partyers had done to her south Bakersfield home. The scene was all the more shocking to Avila because she had put the home up for sale only about a month before, and was living just a few blocks away when police and neighbors say a large, unruly party broke out at the house.”

“By the time police arrived to break it up, a young man had been beaten unconscious and two others were badly hurt. ‘It can’t continue like this,’ she said.”

“What’s new, local authorities and real estate people say, is that the troubled housing market has widened the selection of empty homes, and so the parties are taking place in nicer, larger homes in more affluent neighborhoods.”

“Other than keeping up lawns, making sure the property is secure and checking up on the home in person or through contacts with neighbors, real estate agents say there is little they can do to keep out partyers.”

“‘Every time I hear it on the news, I have to listen for the address to be sure it’s not one of our properties,’ said Janet Staat-Goedhart, a property manager at Karpe Real Estate.”

“Ultimately the owner of a property — a mortgage lender, in some cases — is responsible for what happens there, including making sure it does not become a nuisance.”

“Avila, owner of the home on Yellow Rose Court, said the efforts to date have been insufficient. Some of her frustration stems from the fact that she and her husband spent $650 and four days cleaning up the house after receiving a written warning from a city code enforcement officer that she had 48 hours to repair the property or face a fine.”

“She thinks the people who attend the parties, or their parents, should be forced to pay for the damage. She also wants the police to do more to catch the trespassers.”

“‘In a while,’ she said, partygoers ‘are going to do bigger things.’”

The Contra Costa Times. “Earlier this year, Eight Orchids was marketed as an upscale, Asian-influenced part of the revitalization of Oakland’s Chinatown. Developed by BayRock Residential, the 157-condominium project, priced the 770- to 1,645-square-feet homes starting at $550,888.”

“Now the developer will start auctioning 41 of those condominiums at $245,000 on Sunday.”

“In the 94607 ZIP code, four new homes sold ranging from a low of $374,000 to a high of $518,000, each most likely condominiums, according to DataQuick. On, a one-bedroom, one-bath resale condominium at Eight Orchids had an asking price of $349,888.”

“‘If these were exceptional properties in an exceptional location they would be selling like hotcakes,’ said DataQuick analyst Andrew LePage. ‘Although not much is selling like hotcakes these days.’”

The Sacramento Bee. “Less than a year ago when the first big foreclosed-home auction came to Sacramento’s Cal Expo, hundreds of bidders registered to buy 107 houses. Now, whenever Irvine auction giant Real Estate Disposition Corp. comes to town, there are almost four times that many.”

“Bidders will have a crack at 397 homes. And that’s just the Sacramento region. In total, more than 1,500 houses in Sacramento, Stockton, Merced, Fresno, San Jose and Oakland will go up for auction in April and early May.”

“That’s not the only distressed home auction in town next month. Auctioneers from Beverly Hills-based Kennedy Wilson will take bids for an Elk Grove condominium conversion project.”

“In November the auctioneer sold 34 units in the project. On April 20, it will sell 36 more in downtown Sacramento. Minimum selling prices at the former apartment complex that converted to condos at the height of the housing boom in 2005 – and priced units as high as $261,000 – are $85,000 to $145,000, says Kennedy Wilson.”

“What’s it all mean for the market? Experts talk about a forest fire clearing out the underbrush so the green grass of a healthier market can reappear. This is the forest fire.”

The Eureka Reporter. “The Humboldt County housing affordability index released by the Humboldt Association of Realtors this week, shows steady gains in the number of local residents who can afford to buy a home.”

“‘The figures just released for January 2008 show the highest percentages since May of 05,’ reported HAR President Tom Hiller.”

“According to an HAR news release, ‘The recent slowdown in the real estate market has created more buying strength for our local market. Those adjustments include steady inventory, softer prices and very good interest rates.’”

The LA Downtown News. “There have been a couple of articles in another publication during the last few weeks that have questioned the viability of the Downtown Los Angeles renaissance and housing market. We think that it is important to get all the facts out there and create a balanced picture of Downtown.”

“The real estate fundamentals of Downtown L.A. are impressive and bode well for our real estate values.”

“Downtown that is no longer a ‘9 to 5′ place…Babies and dogs are being walked by new residents on the streets of all our Downtown neighborhoods, creating a wonderful sense of community.”

“Eight thousand residential units have been built since the Adaptive Reuse Ordinance was passed and another 8,000 are being built now. We have been giving housing tours of Downtown twice every month for the last six years. We continue to be filled to capacity with more than 50 people per tour.”

“Has the market slowed for all of residential real estate during the last year? Yes. Are we doomed to a catastrophic decline in value in Downtown Los Angeles? No.”

“We say that any person who is planning to spend the next five or 10 years in Downtown should consider buying now. Even if the market were to go down in the short term, we are confident that the value will return over time.”

“After all, God has stopped making land in Southern California.”

Tightening Credit?

Readers suggested a topic on current credit trends. “Tightening Credit? Is anyone seeing/feeling this in your area. Some of our local banks are still pushing zero down 100% home loans with a good credit score. Chase is still pushing 0% C.Cards on transfers up to 15 months… 6.9% fixed.Just had that offer last week. COFED Bank of Colorado is sending out a big push for first time home buyers.”

From a lender. “Well, there are loan-peddlers, and then there are lenders. I could shut down my lending window for a number of years, so long as my clientele don’t all simultaneously decide to pay off the principal. Loan-peddling, an occupation even more unproductive than mine, is dying a well-deserved death.”

One had this, “We cut up the last credit card 2.5 years ago, and if I want a TV I have to save up to purchase it. Of course I won’t roll in there and spend 5K on a TV, because when you pay in cash you feel the ‘pain of purchase,’ and suddenly you start thinking things like ‘hmm, I can buy a 1k TV, take a 1K trip, throw 2k in savings for the kids education, and buy new laptops for the whole family for 1K.’”

“Nobody would make those stupid purchases if they made them with cash.”

“The really crazy thing is how would we measure the economy if we didn’t measure it based on ‘public sentiment,’ which is really just how willing people are to go into slavery to Visa for poorly thought out purchases.”

Another has this strategy, “We married with simple, thin wedding bands. (Eloped to boot!) When meeting my add-on family, my SILs asked, ‘Where’s the rock’?”

“I just smiled. Hubby and I were saving for the diamond, and we decided used furniture was a better fit. Yes, we saved for a rock, it’s modest and I actually prefer other jemstones to the ice.”

“We still save and often change our minds on any given designated purchase(s). Saving is addictive. I’ve been able to keep our principle and earn a modest return.”

Another noted, “Was in BofA today. 30 yr. fxd @ 6%. home equity @4.75%. New gimmick started today; seems when an indivdual makes a purchase with a debit card the bank rounds the amount up to the nearest dollar, transfers the difference from checking into savings AND matches the deposits for one year.”

“I asked the teller if the bank is now encouraging saving. He just chuckled. This bank is actually encouraging the use of debit cards.”

One from Georgia. “I saw some income demographics for one of the suburban Atlanta markets that has seen a lot of new home building during the bubble. Most of these new houses are in the $600K range, but quite a few are over $1M. The median household income for this area is $78K.”

“Guess how many people had a household income of $200K or more that could actually afford (using pre bubble 3X income qualifying) that $600K house ? ONE. That’s right, ONE family out of almost 8000 in a 3 mile radius can really afford that new house they bought.”

From Reuters. “Office of Federal Housing Enterprise Oversight director James Lockhart said that government-sponsored enterprises Fannie Mae and Freddie Mac were taking steps that should help keep mortgage rates lower. Regulators eased capital requirements for the two biggest U.S. mortgage finance sources so they can provide more funds for stressed mortgage markets.”

“In response to questions, Lockhart said he supported the idea of consolidating the regulation of Wall Street investment banks and other financial market participants that have come under criticism as credit markets have come near seizing up.”

“‘I think that’s a good idea,’ he said, adding Fannie Mae and Freddie Mac need a strong regulator as they keep growing.”

“One reason they need to be strongly regulated is to prevent the possibility that, should they get in trouble, they could cause problems for the whole financial system.”

“‘Systemic risk is a big issue with these two companies. When you have 76 percent market share in just two companies, obviously they are the system,’ Lockhart said, calling that ‘a key reason’ for legislative action to tighten regulation.”

From MortgageOrb. “The Office of Federal Housing Enterprise Oversight (OFHEO) has transmitted to the Federal Register a final Examination Guidance - Conforming Loan Limit Calculations.”

“The final guidance addresses the handling of decreases in the house price data used to set the conforming loan limit as well as procedural matters relating to calculation of the limit that determines the size of mortgages eligible for purchase by Fannie Mae and Freddie Mac, OFHEO explains.”

“Based on comments received in two public comment periods, OFHEO is issuing a final guidance that provides that the conforming loan limit would not decrease from its current level of $417,000 in 2009 and subsequent years. However, OFHEO adds, the conforming loan limit will not increase until cumulative increases in house prices exceed cumulative decreases since the $417,000 limit was first reached.”

A Demand Slowdown At The End Of A Wild Ride

A report from the Virginia Pilot. “For the first two months of this year, the number of Hampton Roads individuals trying to hold onto a home or other major asset by means of a Chapter 13 bankruptcy jumped 84 percent to 373 from slightly more than 200 for the same period last year, according to the U.S. Bankruptcy Court’s Eastern District of Virginia.”

“Jeffrey Flax, a Norfolk attorney who handles personal bankruptcies, witnessed an increasing number of homeowners squeezed by rising costs while their incomes failed to kept pace. ‘Some people got into houses they really couldn’t afford,’ Flax said. ‘Home values have gone down, rather than up,’ and these homeowners ‘are stuck.’”

The News Journal from Delaware. “Delaware real estate agents are scratching their heads about a report that mortgage insurers have marked Kent County as a ‘distressed or declining’ market and have tightened standards for insuring home loans there.”

“‘It’s very confusing,’ said Ann G. Riley, president of Wilmington-based Gilpin Mortgage. ‘We read it and said, ‘That’s news to us.’”

“‘That conjures up a picture of nothing going under contract, nothing selling at all,’ said Cynthia Witt of Woodburn Realty Company in Dover. ‘I don’t see it that way.’”

“Based on the 335 deeds she collected in January and February, the median home price in Kent County so far this year is about $233,000, down from $239,900 in 2007. ‘Based on that, it has gone down a trifle. But the problem with looking at Kent County is the amount of data is so small, you can see some false trends,’ Witt said.”

The Daily Times from Maryland. “The Hagerstown metropolitan area is Maryland’s fastest growing, according to new data from the U.S. Census Bureau. However, Washington County Planning Director Michael Thompson said development has declined since the census analysis.”

“Development peaked in Washington County between 2004 and 2006, by Thompson’s estimation. Census data supports him — from July 2005 to July 2006, the metro area’s growth rate was 2.7 percent.”

“‘We were seeing a lot of people coming up from the metro areas, and they were willing to drive another 40 minutes,’ Thompson said. ‘They came primarily because the cost of housing was so cheap here, and of course the cost of gas wasn’t so high here either at that time. People used to say the mountain was the barrier between us and the metro area, well, all of a sudden that mountain seemed to get flat for a while there.’”

“And while Matthew Mullenax, geographic information systems coordinator at the Berkeley County Planning Commission, said they’ve had a ‘tremendous boom,’ there’s still been a slight slowdown.”

“‘You’ll see a 100-acre subdivision that has only one or two houses built, and all the infrastructure is there — roads, sewer and water, things like that,’ he said. ‘They’re just laying there and waiting for somebody to come by and build a lot or order a house.’”

The New York Times from Maryland. “The foreclosure crisis has been hard on counselors, and some veterans are burning out, said Lisa R. Evans, deputy director of St. Ambrose Housing Aid Center Inc., Baltimore’s oldest nonprofit housing group.”

“‘Volume has doubled or tripled,’ she said. ‘Families in the past were losing their homes because they lost a job or had a medical expense. You could fix that with a couple thousand dollars. But now we have families coming in where the loan is two times the value of the property, and there was never any income, and there’s just nothing you can do for that person. One counselor said, ‘I’m exhausted.’ And the phone keeps ringing.”

“In private, Roy Miller, a nonprofit housing counselor, talks forcefully about the predatory loans he has seen in this neighborhood. But to the class, he took a different tack.”

“‘When people say it’s the banks, or it’s the lenders, or it’s the real estate agents — it’s not their fault. You’re the one who said, ‘I want it,’ he said.’”

The Morning Call from Pennsylvania. “The number of homes sold at sheriff’s sales in Northampton County more than doubled to 99 properties during the first three months of the year, according to the county’s sheriff department, which handles the sales.” “In Lehigh County, 94 homes sold at sheriff’s sale in January, February and March, nearly double the number in 2007.”

“What’s notable about the current mortgage lending crisis is that people of various income levels are entering the foreclosure process. Jack Gross in Bethlehem, who sells foreclosed properties for many banks, said he is handling more homes priced at $200,000 or more than at any other time in the past 15 years.”

“‘Years gone past, the bulk of our inventory was concentrated in center city Allentown, the south side of Bethlehem and downtown Easton,’ Gross said. ‘And that is the not the case anymore. We are more in the suburbs.’”

“‘The person who bought a house with as they say ‘no skin in the game,’ now they owe $250,000 on a house that’s worth no more than $180,000,’ said Bethlehem economist Kamran Afshar.”

“He added, ‘With someone in the neighborhood in foreclosure, it will affect everyone.’”

“Afshar said residents who don’t plan to sell their homes soon will probably not see a big impact. In the short-term, however, he said ‘If there are two houses that are foreclosed, prices of all houses in the neighborhood drop at that moment.’”

“Not long ago, alarmed planners in the Lehigh Valley scurried to figure out how to stop developers from chewing up more than 4 square miles of open space each year. It turns out all they really needed was a good old housing slump.”

“The number of building permits issued in 2007 dropped 45 percent over just two years earlier, while land approved for development decreased by more than 800 acres, or 1.3 square miles, in the same period, according to a Lehigh Valley Planning Commission report to be released today.”

“Bethlehem Township farmer-turned-developer Mark Wagner said he believes some local developers who were riding the housing wave only two years ago won’t make it out of this drought. ‘Guys who built on speculation are in trouble,’ Wagner said. ‘I know guys sitting on 30 or 40 homes they can’t sell. It’s tough to carry that kind of inventory and ride though a drought this long.’”

“Wagner said his own near-death business experience during the last drought prepared him for this one. Like many, he rode a development boom in the late 1980s and began building homes on speculation.”

“But when the so-called ‘New Jersey invasion’ market went sour in 1990, he was stuck with rows of homes he couldn’t sell. The three-year lull nearly ended his burgeoning development career.”

“While 17,348 homes were listed for sale last year in the Valley, only 7,231 sold, according to the Lehigh Valley Association of Realtors.”

The Daily Local from Pennsylvania. “‘Existing home sales are down in the Philadelphia area; we’re in the midst of a significant decline that began in the fall,’ according to Steve Storti, Prudential Fox & Roach senior marketing VP. ‘We’re in the midst of a demand slowdown at the end of a wild ride for home sales.’”

“Broker Bob Hallowell made the point that the local housing market isn’t nearly as bad as in other parts of the country. However, he added, ‘That’s not to say we aren’t down — because we are. Everyone uses 2004, 2005 and 2006 as benchmarks, when during these three years more existing homes sold across the country than at any other time in U.S. history.’”

“Hallowell, whose office sold 80 to 90 houses a month prior to the halcyon days of 2004-2006, sold 120 to 140 a month during those three years. He declined to predict how many units his office is selling per month right now, preferring instead to say, ‘We’re seeing and sensing caution. You just can’t go through the three boom years we had without a correction.’”

“Associate broker Marie Griesser said that in the first three months of 2008, she and her colleagues are seeing lots of people moving up and down in their housing choices. ‘Last year, everyone who bought did so because they had to,’ she said.”

“Said local agent Dyan Nelson Blass, ‘Realistic sellers are the ones selling their homes. Whether you’re in a $300,000 home or one valued at $1 million, you’ll sell your home if you price it right to start with.’”

“Most of the homes that Blass sells today are for 90 percent or more of the asking price.”

“For some, however, there is a silver lining. Keller-Williams’ Blass, for one, is breathing a sigh of relief. ‘It’s not the crazy market we saw three years ago and and I’m glad. I’m no longer going nuts.’”

The Philadelphia Inquirer. “Lily Khalif of Philadelphia is a long-term investor, and she continued to pick up Center City properties during the boom. ‘Prices never went up so much to deter us,’ she said.”

“This is, however, a much better time for long-term investors. ‘I wish we had access to more capital to buy, especially for new construction,’ Khalif said. ‘Builders never have been as willing to negotiate price as they are now.’”

“Alex and Beth Cerrato of Haddonfield waited five years for prices in Ocean City to drop before buying a condo last fall. They found a property that was selling $125,000 below what others were going for in the neighborhood. And by negotiating directly with the seller, they were able to get a house already listed at a bargain $475,000 for $400,000.”

“‘A real estate agent had complained that it was a little smaller than the others, but it’s five houses from the beach, and the owner was a contractor who filled it with top-of-the-line everything, including furniture,’ he said.”

“In turn, the seller, who owned the house outright, put the money down on a house on the beach listed for $1.2 million. ‘I think he got it for $1 million,’ Cerrato said.”

“‘In Ocean City, where there is a lot of unsold inventory, there are plenty of bargains, with prices maybe 20 to 30 percent lower,’ said Jerome DiPentino, owner of Premier Properties in Longport.”

“Second-home sales nationally took a big hit last year as speculators disappeared from the market in the face of tightening credit, the National Association of Realtors reported yesterday.”

“Vacation-home sales dropped 30.6 percent in 2007, to 740,000 from a record 1.07 million in 2006, while sales of investment properties fell 18.1 percent, to 1.35 million last year from 1.65 million in 2006.”

“Investors ‘are being wrung out of the market,’ said Mark Zandi, chief economist of Moody’s in West Chester.”

“‘The housing market has gone from boom to bust as the investor frenzy has flamed out,’ he said. ‘Both flippers and long-term investors have fled the market. The long-term investors will eventually come back, but the flippers won’t be back in our lifetime.’”

The Citizens Voice from Pennsylvania. “More than two dozen people will board a bus Sunday in Clarks Summit to stroll through foreclosed houses. The two-hour-plus tour will stop at six vacant houses that banks reclaimed through foreclosures.”

“At least 26 people will tour homes priced between $55,000 and $127,500 and ranging from fixer-uppers to ready-to-occupy. ‘These are people looking for homes to live in or investment properties,’ said Davis, who will host the tour with co-worker Sara Levy. ‘Once they see what’s out there, they are going to want to invest in something.’”

“The tour represents housing and investment opportunities, not commercial capitalization on the misfortunes of people who lost their homes, Farrell said. ‘These are properties the banks want to unload,’ he said. ‘They are lost already. They are gone.’”

“Classic Properties will host another tour April 27 and Farrell expects buyer interest to expand substantially by then. ‘We’re anticipating a 20 percent increase in foreclosed listings by that time,’ said broker/owner Steve Farrell. ‘We’re going to have to get a bigger bus.’”

Bits Bucket And Craigslist Finds For March 29, 2008

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