The Housing Bubble

The San Francisco Chronicle reports from California. “The developer of the recently opened Eight Orchids condominium mid-rise in Oakland hopes to auction off nearly a third of the units, with some starting bids $300,000 below prior asking prices, as builders struggle to unload new properties in the current housing climate. ‘It tells you it’s a very weak market and the normal selling process is not going well,’ said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley.”

“A complicating factor in Oakland is the number of large condo developments near downtown that have opened or begun selling the past year. Oakland condo developers are only selling a few units per month on average, said Alan Mark, president of the Mark Co.”

“In January, median resale condo prices in Alameda County stood at $360,000, down 19 percent from a year earlier, according to DataQuick. Sales fell 47 percent. The firm doesn’t track new condo sales specifically.”

“The heavily discounted starting bids and auction process itself should reassure people they’re paying the fair market value, said Stuart Gruendl, CEO of BayRock. ‘I have a big pool of buyers, they’re more than tire kickers and now, I’m going to create an event to create some urgency,’ Gruendl said.”

“He added that he isn’t ‘desperate’ to sell or under pressure from his lenders but acknowledged that the market is challenging.”

“The minimum bid for one-bedrooms is $245,000, down from as high as $520,888; two-bedrooms will start at $325,000, down from as high as $630,888; and three-bedrooms will begin at $475,000, discounted from as much as $805,888.”

“There is no ’secret reserve,’ meaning any unit that receives at least the minimum offer will go to the bidder.”

The LA Times. “As the housing slump worsened last fall, Don Dale struggled to find buyers for the $900,000 houses he was selling for Shea Homes in the hills of Aliso Viejo. Then in January, Shea slashed prices to about $750,000. Dale sold nine in one day.”

“‘If there is value, there are buyers,’ Dale said.”

“Stuck with excess inventory, builders throughout California are beginning to offer steep discounts on new homes, sometimes at a loss. Centex Corp. is touting the ‘greatest prices in years’ in its ads. In San Bernardino County, builder Van Daele Homes is advertising 35% discounts.”

“‘Builders don’t have the luxury of waiting another year for the market to turn — they need the cash flow now,’ said Patrick S. Duffy, principal of a consultant to home builders. ‘It’s better for them to take 90 cents on the dollar today than to risk no cash flow at all because they’re not selling any houses.’”

“Carlos Vega spent an afternoon last week driving to sales offices for newly built subdivisions in the hills of Rancho Cucamonga, where five builders have projects. Vega said he had made several offers but hadn’t yet committed to anything because the rival builders keep topping one another’s deals.”

“One builder, he said, offered to sell him a model home, complete with landscaping and designer furnishings, at a price Vega estimated was about 20% below what the property would have fetched a few months ago.”

“‘They’re throwing me offers left and right,’ said Vega.”

“In Victorville, new houses built by KB Home are selling for about 33% less than they did two years ago because of the combination of price cuts and size reductions, CEO Jeffrey Mezger said at a conference last week.”

“In the Riverside County suburb of Lake Elsinore last week, a saleswoman at one housing development that had cut prices recalled getting a visit from a field representative from a rival firm that had kept prices level.”

“The saleswoman, who declined to give her name because she was not authorized to speak for the company, said her counterpart asked for a price list. The reason: The rival hoped to persuade her corporate headquarters to make similar trims.”

“If there is any grumbling about price cuts, it’s from people selling their own homes. In Lake Elsinore, for instance, more than 100 resale homes are listed in the $300,000-to-$400,000 range. For that price, buyers can get a brand-new model that has been freshly discounted.”

“Jack Lloyd has been trying to sell his Palmdale house for nearly a year. He’s cut the asking price several times, and he’s now seeking $285,000 — down from the original $425,000.”

“But Lloyd isn’t hopeful, noting that new houses in nearby developments are $240,000. ‘Who’s going to buy mine?’ he asked. ‘Sure, you have to put in carpet, put in the lawn in those, but is that going to cost you 40 grand? I don’t think so.’”

“‘Many of the home sellers are having trouble facing the facts,’ said Lancaster real estate agent James Baker. ‘The best prices are not on the privately owned houses, they’re from the builders and the banks.’”

The Contra Costa Times. “Ruby Aldana-Bonite said she believes the new agreement by Fannie Mae and Freddie Mac to only buy mortgages with independent appraisals could help ‘keep everybody’s noses clean.’”

“‘A lot of times, orders would be dangled in front of you, ‘If you come in at this value, we have more work for you,’ she said. ‘It’s not right.’”

“Aldana-Bonite, of Benicia-based Aldana-Bonite Appraisals, said that although she favored the new rule, there would be few changes for independent real estate appraisers.”

“‘Banks have already gotten rid of in-house appraisers now and are now using a third party,’ she said. ‘And that’s good if they’re not getting that pressure from the loan officer and you’re not pressured or leaned toward a certain value.’”

“Rob Denton, owner of Denton Valuation in Walnut Creek, said that ‘appraisal shopping,’ or when mortgage brokers and loan agents called multiple appraisers to find one who agreed to their price, was common in the housing boom.”

“‘The feds are suggesting that when you are prompted by a broker to reach a certain value, those people should be reported,’ he said. ‘But there doesn’t seem to be any clearinghouse for doing that. … We’re not going to accept work under those premises, but there are no avenues for corrections.’”

The Press Enterprise. “In a move to help people buy homes and refinance out of unaffordable mortgages, the Federal Housing Administration today will raise the limits for one year on FHA-insured mortgages.”

“Housing and mortgage experts said that while the new availability of FHA mortgages will not cure the housing crisis, it is a step in the right direction. It will not, however, help a homeowners who owe more than their houses are worth.”

“John Marcell, a California Association of Mortgage Brokers official who lobbied to have the FHA ceiling raised, said the Inland median price reflects an effort to minimize the impact of a burst of distress home sales by homeowners unable to afford their mortgages and by lenders. These sellers have been willing to accept ‘fire sale’ prices, he said.”

“Will Herring, government affairs chairman for the Inland Empire chapter of California Association of Mortgage Brokers, cautioned that the new ceiling will not help the many families who owe more money on their house than it is worth and will not be able to refinance with FHA, Fannie Mae or Freddie Mac.”

“‘Everyone who wants to refinance cannot refinance because they are upside down,’ he said.”

“‘Every little bit helps, but it is not going to clear up the issues overhanging the housing and mortgage markets,’ said Greg McBride, senior financial analyst at Bankrate.com.”

“McBride said one obstacle is that houses are still too expensive for many first-time buyers. And refinancing is not an option for people who don’t earn enough to stay in their homes, he said, adding, ‘… The only way they can afford the payments is if you made the payments for them.’”

The Voice of San Diego. “Karen Turk was laid off from her job at an escrow company in July. And before her second pink slip came in October from the escrow company she moved to. And before December, when she was laid off again from a third escrow company.”

“Turk’s not alone. A 20-year veteran of the escrow business, she guesses 98 percent of the people she’s worked with have been laid off and thrust into a burgeoning pool of job-seekers. Every month, San Diego loses more high-paying jobs, especially those tied to real estate.”

“‘I can count the ones who are left on one hand,’ Turk said of her friends in the real estate industry. ‘This is all they’ve ever done. You’re thinking, ‘What do I do now? How do I recreate myself?’”

“‘Some of the people who are losing their jobs, they might be segueing into those other jobs,’ said Gary Moss, labor market information specialist for the San Diego Workforce Partnership. ‘But as a viable option, with a comparable salary, it’ll be a stretch for most people.’”

“Thousands of out-of-work San Diegans need help now. Middle-aged, single-career workers like Turk need considerable training to even think about making the kind of money they were making before. She said managers like her were making between $70,000 and $100,000.”

“‘I’ve already resigned myself that if I make half of the $75,000 I’ll be happy,’ she said. ‘For someone in your 50s, in your early 50s, it’s readjusting your entire lifestyle.’”

“Turk is learning computer skills and hopes to begin night classes to become a medical assistant. Even the way she knows how to look for jobs — the newspaper — has changed since the last time she went job-hunting, decades ago, she said.”

“‘If they’re not buying homes, people still get sick, they get colds and chicken pox,’ she said. ‘I wonder, will I go back in the housing market again? I don’t want to do this again.’”

“Alan Gin, economist at the University of San Diego, said he’s ratcheting down his optimism from earlier months, but still holds the region won’t experience a technical recession with negative job growth.”

“With local universities churning out thousands of degreed professionals every year, Gin theorized some San Diegans have taken a job with less pay to live here. It’s like Tony Gwynn sticking with the Padres, he said.”

“‘It’s the San Diego discount,’ he said. ‘In a pure sense, as an economist, you think, ‘Well, if it’s making people happy then it’s OK.’ But you have this problem where people might be happy, but they’d be happier if they were paid better.’”

Some housing bubble news from Wall Street and Washington. Associated Press, “Industry data released Thursday show January pending U.S. home sales remained at the second-lowest reading on record. The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes held at 85.9, the same reading as December and just short of a revised record low of 85.8 in August. The reading was 19.6 percent below year-ago levels.”

“An index reading of 100 is equal to the average level of sales activity in 2001, when the index started. Lawrence Yun, the trade group’s chief economist, said in a statement that the reading is a sign the housing market is stabilizing.”

“‘Our members are telling us there’s been a pickup in shopping activity.’ Yun said. ‘Our hope is that the increased traffic of buyers looking at homes will translate soon into more contract offers.’”

“Home foreclosures soared to an all-time high in the final quarter of last year. The Mortgage Bankers Association, in a quarterly snapshot of the mortgage market released Thursday, said the proportion of all mortgages nationwide that fell into foreclosure shot up to a record high of 0.83 percent in the October-to-December quarter.”

“That surpassed the previous high of 0.78 percent set in the prior quarter. ‘Clearly it’s the worst it’s been,’ chief association economist Doug Duncan said in an interview with The Associated Press.”

“The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 5.29 percent in the fourth quarter. That was up from 4.72 percent in the prior quarter, which had marked the previous high.”

“Late payments skyrocketed to a record high of 20.02 percent in the fourth quarter, up from 18.81 percent — the previous high — in the third quarter.”

“‘Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state,’ Duncan said. ‘We expect some increases in the next couple of quarters.’”

From Reuters. “Wall Street and policy-makers have worried that foreclosures will grow when many subprime loans face a built-in interest rate reset in coming months. But Duncan, blamed the current spree of failing loans on poor credit quality of the borrower rather than a rate spike.”

“‘The current delinquencies are due to credit quality rather than resets,’ he said.”

From Bloomberg. “U.S. mortgage foreclosures rose to an all-time high at the end of 2007 as borrowers with adjustable-rate loans walked away from properties before their payments increased, the Mortgage Bankers Association said today.”

“Late payments rose to a 23-year high, the organization said in a report today.”

“‘We’re seeing people give up even before they get to the reset because they couldn’t afford the home in the first place,’ said Jay Brinkmann, VP of research and economics for the trade group.”

“‘It comes down to an overstretching of buyers to get into homes they couldn’t afford and an overextending of credit by lenders who were more willing to take risk,’ Brinkmann said.”

“About 40 percent of all foreclosures are homeowners with prime or subprime loans who couldn’t make their payments before the reset, Brinkmann estimated in an interview. Another 23 percent are borrowers who received some form of loan modification, typically a freezing or a reduction of their rate, and then default, he said.”

“The share of late payments for adjustable prime loans was 5.51 percent, from 3.39 percent a year earlier, and the foreclosure inventory rose to 2.59 percent, almost tripling from a year earlier.”

“Carlyle Group’s publicly traded mortgage bond fund failed to pay margin calls, prompting creditors to seek immediate repayment, as the burning subprime mortgage market scorches investors in even the highest-rated debt.”

“The fund used loans to buy about $22 billion of AAA rated mortgage debt issued by Fannie Mae and Freddie Mac. Carlyle said last month its agency mortgage securities ‘have the implied guarantee of the U.S. government and are expected to pay at par at maturity.’”

“The U.S. Treasury denied speculation today that the government will guarantee mortgage- backed bonds issued by Freddie Mac and Fannie Mae.”

“Carlyle’s counterparties are Wall Street firms, which use repurchase agreements to lend money and require securities be put up as collateral. As the perceived credit worthiness of asset- backed bonds declined, the amount of money that can be borrowed using them as collateral fell.”

“‘Market conditions are the worst anyone in this industry can remember,’ said Alain Grisay, CEO of London-based F&C Asset Management Plc, on a conference call. ‘I don’t think anyone has a recollection of a total disappearance in liquidity. I just cannot remember a time when for six months there are billion of dollars worth of assets out there for which there is just no market.’”

“Thornburg Mortgage Inc., the New Mexico provider of ‘jumbo’ home mortgages, lost more than half its value in New York trading after receiving a default notice from its own bankers.”

“The company may need more than $300 million to meet the margin calls and restore capital, analyst Jason Arnold said in a March 4 research note. ‘Bankruptcy is now a more likely outcome,’ Arnold said today. ‘We would expect little to no value to remain for shareholders.’”

“Merrill Lynch & Co on Wednesday said it will eliminate 650 jobs as it stops making subprime mortgages through its First Franklin Financial Corp unit.”

“Merrill bought First Franklin and much of its loan portfolio from Cleveland-based National City Corp for $1.3 billion in December 2006.”

“Taylor Wimpey Plc, Britain’s biggest homebuilder, said annual profit dropped as property markets cooled in the U.K., U.S. and Spain. Earnings in North America dropped more than 80 percent and Spain lost 70 percent as operating profit margins collapsed and sales plunged.”

“CEO Peter Redfern said markets will be ‘more difficult’ this year. ‘Conditions in the U.K. are more subdued than they have been for some years,’ Redfern said.”

“The company booked 283.4 million pounds in writedowns after reviewing its North American operations and land values, with the bulk being in Florida and California, Redfern said. He wouldn’t rule out further writedowns.”

“‘The outlook for the U.S. remains pretty uncertain. We’re certainly not expecting significant improvements during 2008,’ the CEO said.”

The Wall Street Journal. “In the latest sign of how the credit crunch is hurting even borrowers with good credit, some home-equity lenders are starting to slam the door on homeowners who want to refinance their primary mortgages.”

“Approvals from home-equity lenders used to be routine, particularly if the borrower wasn’t increasing the size of the mortgage as part of the transaction. But that’s no longer always the case — even in places where the housing market hasn’t been hit by huge price declines.”

“‘For borrowers trying to improve their situation, this is a nightmare,’ says Richard Redmond, a mortgage broker in Larkspur, Calif. That’s because getting a new home-equity loan to replace the old one in order to get a refinancing approved ‘may be impossible,’ he says.”

“Dale Betterton Betterton bought a home in Boulder, Colo., this past summer with 5% down. When interest rates dropped last month, he decided to refinance. But National City, which holds his home-equity loan, declined to approve the deal.”

“Mr. Betterton had ’superb’ credit and the new mortgage would cut his mortgage rate by more than a percentage point, making him a better credit risk, says his mortgage banker, Lou Barnes.”

“‘My understanding was it was pretty straightforward to refinance when rates go down, and there wouldn’t be any strange obstacles,’ says Mr. Betterton, who is now considering paying off his second mortgage so he can refinance.”

“David Erickson, a mortgage broker in Lynnwood, Wash., says he’s had two refinancings declined by National City that ‘would easily have gotten approval six months ago.’ In the past, he says, home-equity lenders were eager to keep the loan on their books. Now, he says, ‘they’d sure love to get paid off and get 100 cents on the dollar.’”

“A recovery in global credit markets will depend on stabilization in U.S. home prices and a massive reduction in housing inventory, former Federal Reserve Chairman Alan Greenspan told Deutsche Bank AG clients on Wednesday.”

“Greenspan, the U.S. Fed chairman from 1987 until 2006, also blamed the credit crisis on a ‘general underpricing of risk’ and a ‘breakdown’ of how assets are valued after the U.S. housing bubble burst.”

“‘The sooner we can get home prices in the United States stabilized, the sooner we will resolve all questions,’ Greenspan said, according to two sources who were on a conference call with the former central bank chief.”

“The inventory of homes for sale rose 5.5 percent to 4.19 million units at the end of January, roughly a 10 months’ supply at the current sales pace. U.S. home prices also dropped in the fourth quarter, the first consecutive two quarters of decline since 1982, according to Freddie Mac.”

“‘The level of housing has got to fall,’ Greenspan said, according to one source on the call. ‘If it doesn’t fall further we are going to be involved with a continual backing up of inventory pressing on prices.’”

“Most of the recent housing-related initiatives have focused on keeping people in their homes. But lawmakers would actually help the housing market stabilize more quickly if they took action to dislodge those borrowers who don’t have the desire and financial ability to stay.”

“This cycle will be difficult to break. But as we saw in California in 1996, buyers will flock to the market once a bottom is reached.”

“Many of these types of borrowers made little or no down payment, and due to falling house prices are now ‘underwater’ on their mortgage. Some overstated their income or net assets and cannot afford their mortgage payments. Others can afford their mortgage payments but have decided to stop making them because they have no equity in the home.”

“Although this recommendation might not be politically correct, lawmakers should make changes that would hasten — rather than extend — foreclosures for that segment of borrowers.”

“The recent housing bubble and mortgage problems weren’t created overnight, and it will take several years to deal with the aftermath. We are well on our way toward establishing an environment that will facilitate the market recovery.”

“Lawmakers should not overreact with radical changes that could cause more harm than good. Rather, they should tweak existing laws and allow market forces to work.”

The Tampa Tribune reports from Florida. “Hundreds of peculiar home sales and foreclosures clustered in low-income neighborhoods in south St. Petersburg have attracted the attention of the Florida Department of Law Enforcement. The deals involved unusual mortgages uncovered last summer in a Tampa Tribune investigative report. The sales are tied to a real estate investment program run by a local businessman. Several buyers complained to police that they bought the properties at inflated values.”

“Buyers said they looked past unusually structured settlement documents that allowed third parties to collect thousands at their closings in order to make money in Florida’s real estate boom.”

“Some said they signed stacks of mortgage documents in parking lots and restaurants, such as Dunkin Donuts. Some of the buyers said their documents were blank when they signed.”

“Jay Pasqualichio said he now thinks he paid too much for his 12 properties. Since the real estate market has tanked, he also owes much more on the homes than their current value.”

“‘I’m not trying to put all the blame on other people,’ Pasqualichio said. ‘I know I signed the documents. But I hope people who see these ads and hear these types of pitches, will really do their homework. … I now see I was clueless.’”

“A handful of buyers interviewed for July’s story said at the time they were reasonably happy with their investments, but that has changed. Three of those buyers are now in foreclosure on a combined 18 properties.”

“One of the buyers, Marisol Napoleon, said renovations did not meet her expectations, and one of her houses ended up ‘falling apart.’ She couldn’t keep the homes rented, she said, because they needed more improvements than she could afford to complete. She said she now thinks she paid too much for the properties.”

The St Petersburg Times. “One in 20 homes in the Tampa Bay area is vacant, ranking the region second-worst in the nation. Orlando, with a 7.4 percent vacancy rate, trumped the bay area as the worst market for vacant homes among the 75 biggest metro areas in the United States.”

“The recent U.S. Census Bureau report was disheartening to St. Petersburg Realtor James Tuten, but not shocking. Whether it’s his four investment homes sitting empty for lack of buyers or customers who were forced out of houses by unaffordable mortgages, Tuten has seen ample evidence of the ranking.”

“‘You’ve had all those boom developments over the years. Now you’ve got all this housing and there’s nobody to take it,’ he said.”

“The foreclosure epidemic is only partly reflected in the vacancy survey. That’s because many homes in default remain occupied until the bank repossesses them. And for the government to count a home as vacant, it has to be for sale.”

The Naples News. “Lee County had the most foreclosures in its history last month. In February 2,461 foreclosures were filed, up from 2,297 in January.”

“‘It’s the highest it’s ever been,’ said Charlie Green, Lee County Clerk of Courts. ‘The bottom line is, the court system is slammed.’”

“‘They were burned,’ said Keith Gensor, a mortgage broker with Florida Sunshine Mortgage, of the sub-prime lenders. ‘They were burned big time. Now, it’s almost nearly impossible to get a sub-prime loan. If you have bad credit, good luck to you. I don’t think it’s going to come back any time soon.’”

“Those who make their payments on time and increase their credit-worthiness may want to look to the future. ‘The flip side of the coin, they’re going to be golden,’ he said. ‘When it turns around in the next few months or next few years, they’re going to be the cream of the crop.’”

“The flood of foreclosed — or even short-sale — homes on the market affects everyone’s market value by lowering it. ‘On the micro-level, it hurts. It absolutely hurts,’ Gensor said. ‘I have approximately 10 houses on my street sitting here (empty).’”

The Miami Herald. “From atop any gleaming, half-sold condo project, South Florida’s housing market looks bleak. Viewed from abroad, it looks brighter. International shoppers from Europe and Latin America to Canada and South Africa are again scoping out bargains, agents say.”

“Some are looking for a vacation home; others see an investment opportunity.”

“‘All of them are looking for bargains,’ says Michael Schnabel, a Miami-based Realtor…who has seen low-ball offers of 65 percent to 70 percent of list prices. ‘They’re all aware of what’s going on: a lot of construction, a lot of supply.’”

“Despite the foreigners’ strong appetite for a place in the sun, Realtors see many hurdles to closing deals.”

“Sophie Mavroleon, a Realtor in Bal Harbour, markets $500,000 to $1.5 million properties to Europeans, especially the French. She says she has watched many potential sales evaporate over taxes and maintenance, which have spiraled upward because of insurance costs.”

“‘Foreign buyers will buy beautiful views on the ocean; it’s an easy sale — until people realize how much taxes and maintenance costs are,’ Mavroleon says.”

“Though foreigners are more likely than Americans to pay cash for U.S. homes, an estimated 69 percent rely on mortgages, the NAR says. Banks ‘are making it more complicated and more difficult for foreign nationals to obtain loans,’ says Tony Acquaviva (who) owns U.S. Mortgage of Florida in Boca Raton.”

“‘Banks are saying they’re not sure what values are anymore, and instead of a loan-to-value of 80 percent, they’ll do maybe 60 percent or 65 percent,’ says says Philip Spiegelman, a principal in International Sales Group. ‘Offshore buyers felt 20 percent upfront should be sufficient, and now this is causing a whole new level of difficulty.’”

The Broward Palm Beach News. “Jack McCabe, one of the first real estate pros to predict a catastrophic ending to South Florida’s housing boom, is now working full-time advising hedge funds and other vulture outfits that await some bottom-feeding deals.”

“McCabe says he’s seen only two such deals so far, both involving townhouses on the west coast of Florida. Given that, he doesn’t believe we’re halfway down the dangerous slope yet.”

“He told a group of Fort Lauderdale real estate agents last week that, contrary to what they may be hearing, 2008 will be much worse than last year, the year of ‘the great meltdown.’”

“McCabe backs his prediction with numbers that are almost impossible to refute. Like 38,582 and 1,063.”

“Those are the number of homes that were for sale in Broward County in December versus how many were actually sold (the figures in Miami-Dade are even worse, while those in Palm Beach are slightly better but still dire). The massive inventory, more than three years’ worth, is only growing, according to recently released government statistics.”

“‘The year 2008 is going to be the worst,’ McCabe says. ‘People’s credit cards are maxed, and they aren’t buying anything. People have stopped spending money. They don’t have houses to use as piggy banks. The piggy bank is closed.’”

“If you really want to gauge the South Florida real estate industry, just talk to a real estate agent. ‘It’s not a good time,’ says Kimberly Spitnale, who specializes in beachfront properties. ‘Nothing’s selling. There’s not a lot of buyers out there right now. The most inquiries come from Canada and people overseas.’”

“Ah, foreign buyers — another sign of how bad things are.”

“‘There’s not going to be any turn in this market in the immediate future,’ says Marvin Kessler, an agent in Coral Springs. ‘There are too many foreclosures each and every day and not enough buyers.’”

From TC Palm. “Thomasville Furniture of Jensen Beach is the latest casualty of the Treasure Coast’s slumping housing market.”

“Kathy Devereux, VP of marketing, said ‘challenges’ in home sales impacted furniture sales at the store and the company has shuttered the upscale furniture retailer’s only Treasure Coast location.”

“This isn’t the first major furniture retailer that has departed from the Treasure Coast. Palm Beach County-based Skeffington’s Furniture closed its Stuart location. In April, Modernage Furniture mailed letters to households along the Treasure Coast stating that, after 67 years, the Stuart and Vero Beach locations were closing.”

“The Springmaid-Wamsutta store at The Outlets at Vero Beach also shut its doors last month.”

“Brad Hunter, director of Metrostudy’s South Florida division, which follows housing trends on the Treasure Coast and in South Florida, called the trend alarming.”

“‘The bad part of this is that it puts people out of work, which further depresses the market,’ Hunter said. ‘In a way, it’s a vicious cycle. When people lose jobs, that lessens the number of people that can afford homes, which further reduces home prices, which then reduces the demand for furniture and other retail services.’”

“The civil division of the St. Lucie County Circuit Court is adding a night shift to handle a huge backlog of home foreclosure filings.”

“Starting Monday, from four to six clerks from various divisions of the circuit court will work from 6 to 9 p.m. Monday through Thursday to file new cases, said Clerk of Courts Edwin M. Fry Jr.”

“‘The case load has become just horrendous,’ Fry said, ‘and we’re trying to find a solution. Going back to 2005, we typically would have 40 to 45 foreclosures filed in a month. This January, we had 715 foreclosure cases filed. It’s just killing us.’”

“Fry said he doesn’t know how long the night shift will last. ‘The number of foreclosures doesn’t look like it’s going to slow down this year,’ he said, ’so we might be doing this for a long time.’”

“It’s assumed that housing construction is in a slump, but that’s not the case for Holiday Homes. The builder has projects in St. Lucie and Indian River counties, and sees this time as a good opportunity. Genelle Cooper, VP of operations in Florida, talked about the company’s plans and market conditions.”

“Q. Why is Holiday putting up homes at a time when many builders have stopped projects and others have gone bankrupt? A…We’ve been able to work with our trade partners, and lower our home prices. Land prices have come, dropped down drastically. As a matter of fact, we are taking advantage of subdivision opportunities every day.’”

“‘We are able to negotiate the contract terms and the flexibility of those terms, especially when it comes down to the lot takedowns. The interest rates are down. We’re trying to take advantage of all of those options, and provide the customer with a good value home, and for the lowest possible price.’”

“Q. How much have prices come down? A. ‘In Port St. Lucie, we have a home that’s 1,200 square feet that’s starting at $104,990. That’s the base price of that home. It does not include the land. That home, similarly two years ago, was much higher.’”

“Q. As a percentage, was it at least 20 percent higher? A. ‘Even more than that. It was probably, that same home, maybe in the $150,000s.’”

“Q. That’s a huge change. As to the land, it looks as if those prices have come down from 40 percent to 60 percent. A. ‘Yes. We were purchasing lots in Port St. Lucie from $70,000 to $80,000 each, and now we’re able to purchase them for $20,000.’”

“Q. Along with land prices, have material costs dropped?”

“A. ‘Labor costs, material costs, everything has dropped. We’ve been able to partner with our suppliers and subcontractors, and bring the cost of building our homes down. A lot of these subcontractors have worked with us for a long time, so we’re trying to keep it going for a lot of people. We pass those savings to the consumer.’”

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