April 30, 2008

The Common Element In California

The Record Searchlight reports from California. “The severity of the housing downturn hit home Tuesday with the release of North Valley Bancorp’s first-quarter earnings. The Redding bank’s nonperforming loans went from $459,000 in the first quarter a year ago to $25.7 million in 2008. The bank reported $1.6 million in nonperforming loans on Dec. 31. The dramatic spike is centered in four real estate projects, including three in Shasta County, with loans totaling a little over $24 million.”

“The two largest loans are residential development projects of $9.5 million in Placer County and $6.75 million in Shasta County.”

“‘We are seeing subdivisions or developers that are experiencing either a slowdown in sales … or price declines that are such that banks can no longer cover in terms of collateral,’ North Valley Bancorp CEO Mike Cushman said.”

“In Shasta County, the number of homes lost to foreclosure in the first quarter went from 65 in 2007 to 150 this year, according to the Shasta County Recorder’s Office.”

“Cushman, who’s been a banker for more than 30 years, said the current housing downturn is the worst he’s experienced. ‘We actually feel pretty lucky. Most of our markets are still performing pretty well. … It’s the Sacramento area where we are experiencing the greatest reduction in values,’ Cushman said.”

“The spike in North Valley’s nonperforming loans are not a result of subprime lending. ‘There were not any community banks in our area involved in any type of subprime lending,’ Cushman said.”

The Daily Bulletin. “Blaming the national real-estate market’s blowout, a local housing-land developer has gone bankrupt and left more than $5.1million of unpaid loans in the lap of its largest creditor, Rancho Cucamonga-based PFF Bancorp Inc.”

“There are other loans, but Ontario-based Empire Land LLC left PFF’s Pomona First Federal Bank & Trust holding the bag on the unpaid loans. Other big-name creditors listed include homebuilder D.R. Horton and banking giant Wachovia.”

“The bank loaned millions of dollars during the housing boom to local real-estate developers who got stung by the subprime mortgage meltdown.”

“Like several other home developers and builders, Empire Land’s revenue dropped when new-home sales began falling in the past year or so. At the same time, thousands of home foreclosures started hitting the market, forcing prices even lower and persuading would-be buyers to lay low.”

“The company owned or had interests in 11,800 properties across 14 California land projects as of March 31, according to court documents. Its sister company, Aviat Homes L.P., owned 330 residential properties - some unfinished - in California, with projects in Hesperia, Moreno Valley and Brentwood.”

From Reuters. “LandSource Communities Development LLC, a large California land and development company, is expected to file for bankruptcy protection in the next two to three weeks, a Standard & Poor’s publication reported on Tuesday, attributing the information to unnamed lenders.”

“S&P…reported that the company’s cash had declined to about $25 million from about $115 million in early February. An article on the Web site, citing unnamed sources, said a bankruptcy filing would help preserve cash and start a process to sell assets.”

“LandSource had received an official notice of default on a $1 billion loan after it failed to meet certain terms of its lenders, the Wall Street Journal reported last week. LandSource’s primary investment is The Newhall Land and Farming Company, which owns 15,000 acres of land north of Los Angeles.”

The Recordnet. “Foreclosure activity in the Stockton metropolitan area continued as the busiest of any in the nation during the first three months of this year, according to RealtyTrac. A total of 7,560 foreclosure filings, default notices, auction sale notices and bank repossessions, were filed countywide in the first quarter, RealtyTrac reported. That was almost a threefold jump year to year.”

“Six of the top 10 foreclosure hot spots in the nation were in California.”

“The actual numbers of repossessions also are soaring, DataQuick said. The firm said the number of homes repossessed during the first quarter in San Joaquin County nearly topped 2,500, more than a fivefold increase from 440 a year ago. That compares with almost 4,000 homes repossessed countywide all of last year.”

“Pending sales countywide nearly hit the 1,200 mark last month, compared with about 800 homes being foreclosed on per month countywide, at the first-quarter foreclosure rate. That’s a higher sales rate than at any time during the previous boom years of 2000 to 2005.”

“Jerry Abbott, president of Coldwell Banker Grupe, Stockton, said most of the sales are foreclosure homes.”

The Press Enterprise. “Owners of foreclosed homes in Temecula would have to register with the city and hire someone to oversee their properties under an ordinance expected to come before the Temecula City Council. As of Tuesday, there were nearly 1,000 bank-owned properties in the Temecula ZIP codes, according to Realtytrac.”

“March foreclosures in the 92591 ZIP code, which covers Temecula, are up 117 percent from March 2007, said RealtyTrac spokesman Daren Blomquist. Another 817 were in the foreclosure process.”

“Garnett, board president of the Redhawk homeowners association, argued that the city should drain abandoned pools and bill the lenders, whom he considers to be part of the problem. ‘These are not nice people,’ he said.”

The North County Times. “The ‘witching hour’ for foreclosures, as described by City Councilwoman Maryann Edwards, is the period from when buyers abandon the home they can’t afford to when the lender repossesses the house, a process that often takes months.”

“It is a state of ownership limbo that has cursed numerous neighborhoods in Temecula as it turns green lawns brown and clear pools into cauldrons of algae and goop. City officials envision creating a registry to track empty homes and to find the lenders who are responsible for the properties after the buyer walks away.”

“Many property managers want to see pools on abandoned properties drained. ‘As for the concern that pools may crack if we drain them, I don’t even care,’ said Harry Garnett, president of the Redhawk Homeowners Association.”

“Garnett said that, of the approximately 3,000 homes in the association, roughly 50 are abandoned.”

“‘I think this ordinance is a great idea, but we should have been talking about it three or four months ago,’ he said. ‘We didn’t think it would get this bad, and now we don’t think we’ve seen the bottom of this. It’s only going to get worse.’”

“Debra Thomas, president of the Meadowview Home Owners Association said, because of fewer assessments being paid, many associations have less money coming in for community improvements. She said it is evident that the number of foreclosures is increasing among the 900 homes in Meadowview, and ‘it’s getting worse.’”

“San Diego home prices were pummeled again in February, returning the county’s price decline to a record clip after the price freefall slowed in January. The decline in prices from the same month a year earlier hit 19.2 percent, the largest locally during this housing recession and the biggest drop since the Standard & Poor’s Case-Shiller Home Price Index started calculating home prices in 1987.”

“And when compared with January, the year-over-year gap widened by its largest margin yet, indicating that the fall in prices might be accelerating.”

“How long prices will decline for is impossible to predict, most analysts agree. And the role of easy money in the form of no-down-payment, no-verified-income loans makes this housing recession impossible to forecast, said James Hamilton, an economics professor with UC San Diego.”

“‘It’s a more extreme boom up and it’s a more extreme down,’ he said. ‘So as far as where prices are headed and when they’ll stabilize, I don’t think you can tell because I really feel we’re in uncharted territory.’”

“Kelly Cunningham, an economist with the San Diego Institute for Policy Research, said the monthly decline of 3 percent will not continue for long.”

“‘I hope not. Gosh, that’s well over 30 percent decline if it continue on for a year. I don’t think that’s going to happen,’ said Cunningham. ‘But of course I’ve been saying the worst is here for a while now and then it gets worse.’”

The Union Tribune. “Las Vegas, Miami, Phoenix, Los Angeles and San Diego, five areas that saw home prices rocket ahead in the housing boom, are now leading the retreat backward.”

“The S&P/Case-Shiller index is based on homes sold in December, January and February as compared with previous sales of the same properties. The results are translated into index values with 100 for all areas as of January 2000. Percentages then are derived from changes month by month and year over year.”

“San Diego County’s February index value was 190.34, down from 197.45 in January and 235.54 in February 2007. The all-time peak was 250.34, set in November 2005, meaning that prices soared 2½ times their level in January 2000 before falling back 25.1 percent.”

“Of the 20 areas tracked, Los Angeles, Miami and Washington, D.C., still posted index values above 200.”

“James Hamilton, an economist at the University of California San Diego, said the downward trend is likely to continue because of the ‘overhang’ of unsold homes, numbering about 19,000 in the county – several times the typical listings count at the peak of the boom in 2003-05.”

“‘It’s not a shock that we’re seeing this decline now, and I think we’ll see some further declines yet to come,’ Hamilton said. ‘That overhang of unsold homes is still there.’”

“In explaining the San Diego area’s high ranking among declining markets, Hamilton said, ‘The common element there is those were the communities that had the biggest run-up.’”

The Modesto Bee. “Dennis Swann of Swann’s Automotive Repair in Modesto said he’s seeing more people forgo repairs for things they see as unnecessary, such as air conditioning. Dennis Slewoo of USA Auto Service, also in Modesto, said he’s had to schedule more repairs in stages, rather than doing them all at once.”

“Both men see the same standard: Consumers, stung by high gas prices and a downbeat economy, are clamping down on their automotive expenses.”

“‘Buying a vehicle because it looks good is less and less of a reason,’ said said Chuck Parker, publisher of Automotive Digest. ‘People are looking for utility, for cars to last. People are fighting to keep their kids in school and pay their mortgage.’”

“Slewoo said a customer brought his car in for a brake inspection Tuesday. Slewoo found the brakes were nearly metal on metal and needed immediate replacement.”

“‘He asked me if we could push it back two or three weeks,’ Slewoo said. ‘With his income, he said, he has to save his money. Two or three years ago, this conversation wouldn’t happen.’”

The Salinas Californian. “The first-ever completely affordable housing project in Monterey County will instead be priced at market rates, following a decision Tuesday by the Monterey County Supervisors.”

“At the request of the developer, Woodman Development, supervisors voted unanimously to remove all affordability restrictions on 123 single-family homes in the Commons at Rogge Road, north of Salinas. The project was first approved in 2006.”

“The company has claimed falling home prices have made it impossible to sell the homes at pre-set affordable rates, which are now more expensive than market-rate homes.”

“‘I don’t think there’s an advantage to those homes sitting vacant,’ said Supervisor Dave Potter.”

“The vote means Monterey-based Woodman Development can sell the once price-restricted homes at any price they choose, and buyers won’t have to meet income requirements. The homes must be owner-occupied.”

“Additionally, the homes’ resale prices will no longer be restricted to keep them affordable - a stipulation that also kept people from buying. Woodman will also have to pay the county more than $150,000 in fees it had avoided by building affordable homes.”

“Woodman’s original agreement with the county required it to provide homes for moderate and ‘workforce’ buyers, households of up to four people with incomes ranging from $76,080 to $114,000, with a maximum price of a home set at $480,000.”

“William Silva, Woodman’s chief financial officer, told supervisors the changes are necessary because qualified buyers have been opting to purchase cheaper market rate homes with no deed restrictions.”

“‘It has left us in a predicament,’ Silva said.”

It Is What Markets Do

Some housing bubble news from Wall Street and Washington. Realty Check, “I went up to Capitol Hill this morning because about 1,200 members of the National Association of Home Builders are taking their annual day of action up here. It couldn’t be more timely, as several bills are working their way through Congress to help builders and borrowers alike and to right the housing market.”

“I have to say I was a little curious as to how the builders would be received, given their bold move in February, when the association cut off all PAC money to Congressional members.”

“On the hill this morning, I asked NAHB Chairman and CEO Jerry Howard if he felt at all strange coming back up here to ask for help, after his association had made such a brash move. ‘The bottom line is–our members have felt that over the course of the last 4 or 5 years – Congress had totally ignored the housing industry …finally our guys said ‘enough is enough’ - they’re not doing anything for housing–why should we play the game if they’re not going to be playing the game,’ Howard said, pretty brashly himself.”

“And without my prompting: ‘We think we have access just by virtue of the fact that we are 15 percent of the GDP–we think that gives us access. This was our way of saying ‘we need more than access, we need action across a whole range of issues.’”

“What about the quid pro quo, I asked? ‘There is no quid pro quo,’ he argues. ‘There is the housing industry and there are a multitude of actions Congress can take to show their interest in the housing sector–they hadn’t done anything.’”

The Denver Post. “Protesters in pink pig suits hammed it up Tuesday morning outside the headquarters of MDC Holdings to oppose tax breaks for homebuilders. About 20 protesters demonstrated against the inclusion of tax relief for the industry within the Foreclosure Prevention Act, legislation initially intended to help struggling home owners.”

“The protesters also have targeted Toll Brothers, Lennar, KB Home and other large builders and plan a protest in Washington, D.C., as the House takes up the legislation, said Jacob Hay, a spokesman for the Laborers’ International Union of North America, which organized the action.”

“‘They are being greedy,’ Hay said. ‘They helped cause the mortgage crisis, and now they are going to Congress asking for a bailout.’”

“Reckless lending and building practices contributed to a housing bust that has cost the nation more than 350,000 construction jobs since 2007 and put 3 million homeowners at risk of foreclosure, Hay said.”

“HomeAmerican Mortgage, MDC’s lending arm, boosted the number of subprime loans it originated from 746 in 2005 to 2,233 in 2006, a 199 percent jump. During the same period, prime loans increased only 3.6 percent to 9,809.”

The Tampa Tribune. “Three new reports paint a gloomy picture of the Tampa Bay area’s housing market and signal more pain may be on the way for home sellers. Prices are down, sales are down and foreclosures are up.”

“‘If sellers remain stubborn on price, it will delay the recovery in home sales,’ said Chris Lafakis, an economist who covers Florida for Moody’s Economy.com.”

“Meanwhile, another report shows homeowners continue to have trouble paying their mortgages in Florida, where foreclosure filings nearly tripled compared with 2007, according to RealtyTrac.”

“Tampa Bay builders started construction on 1,277 single-family starts during the first quarter of 2008, down 43 percent from 2,240 homes during the same quarter last year. Single-family inventory, which comprises units under construction, finished vacant units and model homes, totaled 6,556 units at the end of the first quarter of 2008.”

“Even though the reports look gloomy, Lafakis said the bad news is needed. ‘It’s bad,’ he said. ‘But we just need to take our medicine and start recovering.’”

The BBC News. “House prices in the UK have recorded their first annual fall for 12 years, according to the Nationwide. Nationwide said the price falls reflected a weakening market which had been hit by ‘poor affordability and tighter financial market conditions.’”

“David Blanchflower, a member of the Bank’s Monetary Policy Committee which sets interest rates, said in a speech on Tuesday that house prices could fall by 30% over the next few years if interest rates were not cut.”

“He added: ‘I am not suggesting that such a drop will necessarily occur, but it may. Cutting interest rates now may help to prevent such a dramatic fall.’”

“But the fall in prices, down 1.8% over three months compared with the previous quarter, will be welcomed by some new buyers who have seen prices rocket up by 45% in the past five years.”

“‘Prices have been rising consistently in the last four of five years, so a bit of a fall is due. It is what markets do,’ said Peter Rollings, managing director of Marsh and Parsons Estate Agents.”

The Daily Mail. “A three million pound housing estate has been fenced off after all 20 properties failed to sell in two years. The three and four bedroom houses were on the market priced between £119,950 and £137,5000 but all are still empty.”

“And instead of being full of families, a six-foot barbed wire fence has been erected around the estate following attacks by vandals.”

“Natalie Hudson, 25, who lives nearby said: ‘They should knock them all down. All the kids smash the windows, and it’s been like that for about two years. They are an eyesore now, and just like shoe boxes. They stopped even putting glass back in the windows.’”

The Guardian. “Inside Track, the company that spearheaded the buy-to-let investment boom, is to go into administration. The demise of the firm, which once promised to show customers ‘how you could give up work and be a property millionaire instead,’ comes as buy-to-let mortgages dry up amid tumbling values for British new-build flats, Spanish apartments and Florida homes.”

“Inside Track blames the credit crunch for its collapse as banks tighten up on buy-to-let lending, effectively ending 100% loans. Profits for the group three years ago were as high as £12m, but internal management accounts for the nine months to January 31 this year show income of just £239,000, with a £97,000 loss in January alone.”

“Inside Track Seminars was set up in 2002. It specialised in holding ‘free workshops’ …lasting about two hours, these painted a world where anyone could become a ‘property millionaire.’ But it was a model that depended on a rising housing market.”

“Founder Jim Moore, who spoke at the early seminars before moving to Spain, told prospective investors they could ’start from scratch, live on easy street instead of struggling for a living.’

The Calgary Herald. “Alberta led the country with the biggest drop in resale housing activity in the first quarter of this year. The Canadian Real Estate Association says MLS sales in the province were down 30.5 per cent compared with the first quarter of 2007, new listings increased by 36.2 per cent.”

“As for sales, the data show it was the third consecutive quarterly decline since activity peaked in the second quarter last year. CREA president Cal Lindberg said it’s important to remember 2007 was a record year for MLS sales in Canada.”

“Marc Pinsonneault, senior economist with National Bank of Canada, said: ‘The upshot is that the seller’s market that had prevailed until the first half of 2007 has since clearly turned into a buyer’s market.’”

“‘Resale housing activity is trending lower in the four most active provinces,’ said CREA chief economist Gregory Klump. ‘Housing markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue as rising mortgage carrying costs and property taxes erode affordability.’”

From CBC.com. “Calgary’s rental vacancy rate has climbed to almost four per cent, in part due to the slow sales of both new and converted condos, says a group that represents landlords.”

“Almost 40 per cent of new condominium units built last year, as well as condo conversions that did not sell, are now being rented out, said Gerry Baxter, executive director of the Calgary Apartment Association.”

“‘The market is really restabilized and you know, right now it’s like a balanced market,’ said Baxter.”

The LA Times. “As foreclosures surge, lenders might be forced to acknowledge that far more of the mortgages they sold to investors were never written properly in the first place. That’s one analyst’s conclusion from the latest earnings disaster at Countrywide Financial Corp., the nation’s biggest mortgage lender.”

“One item that caught the eye of Keefe, Bruyette & Woods Inc. analyst Frederick Cannon was a $456-million provision to buy back flawed loans from the pools of home loans that backed mortgage-based securities.”

“Most of the sub-prime and other higher-risk loans that helped stoke the housing boom were put in those pools. As of March 31, the company had set aside $1 billion to buy back such botched loans, up from $430 million a year earlier.”

“At the peak of the housing boom, the company was lending $30 billion to $50 billion a month in new mortgages — many of them, like those throughout the industry, based on misstated earnings of borrowers.”

“‘So when they set aside $1 billion that’s a day’s worth of funding,’ said Robert Simpson, CEO of Investors Mortgage Asset Recovery Co. ‘I’m not sure that addresses what the real problem may be.’”

The Columbus Dispatch. “The cold wind blowing off Lake Erie was nothing compared to the frosty reception awaiting National City Corp. directors at the troubled bank’s annual shareholders meeting yesterday.”

“The bank, facing millions in losses from high-risk mortgages, accepted a $7 billion bailout last week led by New York firm Corsair Capital. The group will buy new National City stock for $5, further depressing share prices that have declined 80 percent since July. In the past four months, the stock’s dividend has dropped from 41 cents to a penny.”

“‘This is not the way you are supposed to run a bank,’ shareholder Howard A. Kline, 75, said after the meeting. Kline said he’s lost thousands of dollars on his National City stock. ‘It’s probably not going to be in my lifetime that the stock gets back to where it was,’ he said.”

“Kline said when he was younger, getting a home loan from National City was difficult. But in the past 10 years, management lowered lending standards to issue more high-risk, high-fee loans to people with poor credit.”

“Tom Gray of Concord, Ohio, blamed the bank’s move into subprime lending on former CEO David A. Daberko, who retired last year. He gave credit to Peter Raskind, who was named CEO in July and chairman in December, for facing the hostile crowd.”

“‘I think the music has stopped, and he’s standing there with no chair,’ said Gray, a 67-year-old former employee of the company.”

“One shareholder, speaking remotely from an auditorium separate from Raskind, scolded board members for failing to oversee Daberko, Raskind and other top officers.”

“‘This is a 163-year-old company and in three short years it was practically destroyed,’ said the shareholder, who didn’t give his name. ‘Managers didn’t have the foggiest idea what they were doing and the board stood by. Current top management is not going to get any smarter. Care to comment?’ he said to loud applause.”

The New York Times. “In early February, Congress gave beleaguered mortgage borrowers a rare cause for celebration. As part of the economic stimulus package, it passed rules intended to make it easier and less expensive for people to take out hefty loans in the nation’s costliest housing markets.”

“Instead, the effort to make it easier to get jumbo mortgages — loans over $417,000 — has yielded frustration and disillusionment.”

“Since the rules took effect April 1, many prospective borrowers and their mortgage brokers say the new loans are either not available or the rates are far higher than they expected. Relief, they say, has been replaced by grief.”

“The program ‘is so much of a failure that it’s really unbelievable,’ said Daniel M. Shlufman, president of the FCMC Mortgage Corporation. Mr. Shlufman likened Congress’s effort to ‘coming up with a vaccine to a terrible disease, and then not giving it to people, or making it too expensive.’”

“‘It’s a complete joke,’ said Jose Lemus, president of a mortgage brokerage firm in Santa Ana, Calif. He said a buyer in Southern California looking to borrow $417,000 would pay an interest rate of 5.75 percent, while someone borrowing slightly more for a conforming jumbo loan would pay an interest rate of 6.99 percent.”

“For a jumbo loan that is not conforming, the rate could be as low as 7.35 percent for someone with excellent credit, Mr. Lemus said, but the rate for someone with average credit could be as high as 9 percent. ‘It’s getting harder by the day,’ Mr. Lemus said.”

“An influential trade group of the nation’s largest financial institutions, the Securities Industry and Financial Markets Association, recently made a key decision that some critics say has kept those rates from dropping. The association decided that loans above $417,000 — even those jumbo loans now considered by law as conforming — would not be eligible to participate in the ‘to be announced’ market.”

“Sean Davy, a managing director at the trade association, said that lumping the new loans in with the smaller conforming ones could have created enough uncertainty and instability to drive up rates on the conventional loans.”

“Some prospective borrowers, like Nathan Menaged, 29, are skeptical that things will change. Mr. Menaged, a marketing consultant, owes about $574,000 on his Brooklyn home. He makes monthly payments of $4,000.”

“‘I thought I had some good possibilities for getting into something more comfortable,’ Mr. Menaged said of the new rules, which he has been tracking with great hope since January. But the interest rates on them remain prohibitively high. If rates had fallen as he expected, he hoped to lower his monthly payments by $1,000 — money he wanted to pay for his daughter’s tuition.”

“‘It’s frustrating and it could become desperate if I don’t find an alternative in the near future,’ he said.”

It Is Irrelevant What They Paid Or What They Owe

The Union Leader reports from New Hampshire. “As the number of foreclosures in New Hampshire continues to climb, housing advocates are seeing a disturbing trend: The mortgage crisis is spreading to prime borrowers. Just more than 6 percent of mortgages in New Hampshire are delinquent, according to the latest survey by the Mortgage Bankers Association. For the first time since 1992, that’s comparable to the national rate. There were more than 18,000 mortgage loans in New Hampshire with payments past due as of the fourth quarter of last year. Of those, 10,710 were prime loans, 6,390 subprime loans.”

“Robert Tourigny, executive director of NeighborWorks Greater Manchester, said his agency has seen an ‘alarming’ increase in calls from homeowners seeking help not because of adjustable-rate loans, but because loss of income is making it difficult to keep up with their payments.”

“‘Those, I think, are what’s really troubling, because that’s a sign of the tough economy,’ Tourigny said. ‘If you don’t have the ability to pay, it doesn’t matter what your interest rate is.’”

The Beverly Citizen from Massachusetts. “When the real estate market changes, so do real estate agents. That’s the logic with a recent course from the Massachusetts Association of Realtors designed to help Realtors with foreclosure sales, short sales and selling properties at auction or those banks own.”

“Marilyn Jarvis is president of the North Shore Association of Realtors and she took the course. As a real estate agent for the past 25 years, ‘I’ve worked through changing markets in the past,’ Jarvis said.”

“Many situations she has dealt with in the past year have ‘positively been more stressful’ than sales in 2003 and 2004, for example, when the market was supercharged.”

“‘Many times they realize the interest-rate adjustment is coming and realize between the mortgage and taxes they can’t afford it,’ she said.’

“Increasingly, sellers are realizing they need to price their home based on the current market, something that was a little tougher when the market first began to soften. ‘People are starting to realize it is irrelevant what they paid for the property or what they owe,’ she said.”

The Enterprise from Massachusetts. “Thomas Fitzgerald is happy with the new home he bought two years ago, but not about the vacant houses that surround it. ‘My neighborhood is going to hell,’ said Fitzgerald, who lives in the city’s north section.”

“Recently, an elderly neighbor around the corner was shot and wounded. ‘A week after the shooting, police took homeless people out of the house on the corner,’ Fitzgerald said. ‘Then, across the street, I saw kids kicking the door in and down the hill. Kids broke in and took all the plumbing out.’”

“All three houses were vacant amid the surge of foreclosures in the city. City officials estimate there are 700 vacant houses in Brockton, with some 400 of them left empty by foreclosures.”

“The vacant houses lurk throughout the city. They include single- and multi-family dwellings. ‘It’s everywhere, there’s no neighborhood that hasn’t experienced them,’ said Carol DeLorey, a non-voting member of the Brockton Housing Partnership, a coalition of 13 local lending institutions established to address the foreclosure crisis. ‘It’s progressively getting worse,’ DeLorey said.”

“The abandoned structures, often owned by out-of-city lenders, often attract vagrants, vandals and thieves. ‘Scavengers are having a blast,’ said Fire Chief Kenneth Galligan.”

From WBUR.com in Massachusetts. “The latest home sales numbers show that the Massachusetts housing market is still declining. The state has lost 3,000 construction jobs over the past year. And many of those who still have work are getting less of it. WBUR’s Business and Technology Reporter Curt Nickisch rides along with one asphalt and concrete contractor who’s hitting the pavement…to find more jobs.”

“Adrian Morgado is wearing a T-shirt that says Morgado Construction, the name of the small concrete and asphalt paving company he runs in New Bedford. He bought this truck four years ago when business was as blazing as its red paint job.”

“ADRIAN MORGADO: ‘It was amazing, there was all these condominiums being built. Non-stop. Every day, paving. Every morning, I knew my schedule.’”

“Dawn to dusk. Money was good. Morgado hired a crew ten strong, and there was more than enough work for them close to home. Today it’s different. Now Morgado’s heavy work boot rides the gas pedal, rumbling his truck down a Cape Cod highway on $4-a-gallon diesel. He has to drive much further now just to give estimates for paving jobs.”

The Telegram in Massachusetts. “Worcester County saw a 34 percent drop in sales for March, from 530 in March 2007 to 350 last month, the data shows. Condominium sales in Worcester County were down 40 percent in March from the year before, and down 37 percent for the quarter, the Warren Group data shows.”

“The state data marks the second-steepest price drop since The Warren Group began recording prices in 1987, according to CEO Timothy M. Warren Jr.”

“‘The Bay State’s housing market is looking a lot like it did at the end of 1990, when December prices fell 11 percent compared to the same month the year before,’ Mr. Warren said in a statement. ‘That was the low point of the ’90s housing crisis. Afterward, prices began to fall by smaller percentages and by 1993, they were level.’”

“‘But that downturn was fueled by the banking failures in the 1980s, while this one has more to do with the staggering number of foreclosures facing Massachusetts homeowners,’ he said.”

The Boston Herald from Massachusetts. “‘The market is in decline - and it’s accelerating downward,’ said Warren of the Warren Group, which yesterday reported that median house-sale prices dropped to $304,000 in March. That’s down 10.6 percent from March 2007, trailing only an 11 percent drop between December 1989 and December 1990 as the worst 12-month pullback on record.”

“Massachusetts Association of Realtors President Susan Renfrew said she can’t predict when real estate will bottom out. ‘I think we’re still working through a market correction,’ Renfrew said.”

“But Warren, who previously predicted housing would hit bottom some time this year, now expects the tough times to continue into 2009. ‘We may see things improve a year from now, but I don’t really think things are going to turn around this year,’ he said.”

The Boston Globe. “Home sellers in Massachusetts are slashing prices at double-digit rates to close deals, but there is no evidence the lower prices will end a housing slump now entering its third year.”

“Some of Boston’s more popular suburbs had dramatic price drops for single-family homes in the first quarter of 2008 - prices were down 19 percent in Acton, 23 percent in Westford, and 31 percent in Sudbury - compared with the same three-month period last year.”

“‘It’s a self-reinforcing cycle where prices drop and people stay out of the market because prices drop, and that makes prices drop even more,’ said Patrick Newport, an economist for a Waltham economic consulting firm. ‘There’s potential for prices to drop even more than they did in the 1990s.’”

“That housing slump lasted 3 1/2 years and, by the end, prices had fallen 10.2 percent from the market’s previous top.”

“Real estate agents said the only way sellers in many communities can attract buyers is by cutting their listing prices. But the sharp drop in the number of sales indicates these price cuts have been either too small, or too few, to close many deals.”

“‘The offers don’t come together. A buyer and seller might stale mate over $10,000 or $15,000, and you go back to square one. We’re seeing a lot of that,’ said Michael Clancy, an agent in Weymouth.”

“Condo developers are increasingly turning to auctions to unload units, both in Boston and the suburbs. Next month, 25 units at the upscale Concord Commons development will be auctioned, while the owners of the Residences at Peabody Crossing will auction 18 condos.”

“The Peabody project’s developer, Town & Country Homes of New England Inc., set minimum prices for various units in the $200,000 range. Some of the units that already sold at Peabody Crossing went for more than twice that, said Sue Hawkes, CEO of Velocity Marketing, which is handling the auction.”

“The developer ‘was hoping there’d be a good spring market like everybody else and realism set in,’ Hawkes said. The company was ‘more comfortable moving on and selling the property he has before there is further potential erosion’ in prices, she said.”

“Thomas Skahen’s firm recently dropped the prices sharply for 36 condos in Holden. ‘We’re still not getting any activity,’ he said.”

From Bloomberg. “Home prices in the Hamptons, where rich and famous New Yorkers spend summers by the sea, fell in the first quarter as Wall Street job cuts and an economic slowdown took a toll on buyers.”

“The median price declined 7.1 percent to $882,500 and the number of sales dipped 29 percent from the last three months of 2007, according to a survey by appraisal firm Miller Samuel Inc.”

“‘If you don’t price it properly you’re going to sit,’ said Prudential Douglas Elliman CEO Dottie Herman, who owns a second home in Southampton. ‘Price matters in this market. You’re dealing with more inventory so there are more choices for buyers. Sometimes people will look at houses and if it’s not priced right it will help sell someone else’s who is.’”

“The availability of mortgage financing drove down sales in the Hamptons, said Judi Desiderio, CEO of Town & Country Real Estate in East Hampton, New York.”

“‘Every market in the country is affected by that,’ Desiderio said. ‘Unless you have sterling credit and can put one- third down and own everything else you have and can prove it, they’re going to give you a hard time.’”

The Pocono Record from Pennsylvania. “New housing permits are on a steep downward slide in Monroe County, and may have yet to hit bottom. ‘I would certainly think we would be lower than last year, possibly by more than 50 percent. The downward trend was pretty clear,’ said John Woodling, director of the Monroe County Planning Commission.”

“Peter G. Gallagher, Pocono Builders Association president, cautioned against year-to-year comparisons. ‘It’s hard to compare to the last few years. We had banner years,’ he said.”

“Gallagher noted that the nation’s attention on the sagging home market has changed the way consumers approach the buying process. ‘We have seen somewhat of a shift in our business and of those I talk to in the association. People are looking for concessions — like free items. However, we all know that nothing is free,’ he said.”

“Jim Mathiesen, general manager of Target Homes in East Stroudsburg, said his company is finding new ways to compete in what he describes as a slower market.”

“‘We continue to sell homes, but not at the same rate as in 2005 and 2006. And the market is not as strong as it was last year,’ he said. ‘Builders have to work harder and offer more value for the customer to get them interested in the purchase. For example, we are offering free granite kitchen counter upgrades and to help with closing costs.’”

“But still, there’s optimism in the market. According to Gallagher, ‘It’s a great time to buy. Mortgage rates are down, property prices are down, and if they wait to long, they may end up buying when it’s going back up.’”

The Wall Street Journal. “As the growth in subprime mortgage delinquencies appears to be slowing, lenders are seeing a rapid rise in defaults on a type of mortgage that gives consumers with good credit several different monthly-payment options.”

“These mortgages, which are sometimes known as ‘pick-a-pay’ or payment-option mortgages but are generically called option adjustable-rate mortgages, are turning out, in some cases, to be even more caustic than subprime loans, in part because the loan balance and the monthly payments on some loans is growing even as home prices are falling.”

“On Tuesday, Countrywide Financial Corp. said that 9.4% of the option ARMs in its bank portfolio were at least 90 days past due, up from 5.7% at the end of December and 1% a year earlier. Countrywide also reported that it had charged off $125 million of these loans in the first quarter, compared with $35 million a quarter earlier.”

“Some borrowers say they weren’t suited for these loans or that the terms were poorly disclosed. Edward Marini, a 63-year-old disabled Vietnam veteran, took out a $280,000 option ARM from Countrywide Financial when he refinanced the mortgage on his 2,000-square-foot home in Little Egg Harbor, N.J., in 2005, pulling out cash to pay off some debts.”

“‘The way I understood it was that I would have a really low payment for five years,’ says Mr. Marini.”

“Mr. Marini recently received a note from Countrywide that his payment, now about $1,300 a month, would jump to about $3,800 next year, well above his $3,250 a month in disability payments. Mr. Marini, who owes more than his home is worth, says he was turned down by Countrywide for a refinance and, more recently, for a loan modification.”

“‘I didn’t think they would even pull this kind of stuff on someone who is on a fixed income,’ he says.”

Bits Bucket And Craigslist Finds For April 30, 2008

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

April 29, 2008

The Boom Has Turned Into A Bust For Many

The San Francisco Chronicle reports from California. “Like a brick cast from the top of the Transamerica Pyramid, national and local home prices are rapidly accelerating on their way down. The average cost of a Bay Area home dropped 17.2 percent year-over-year in February, compared to 13.2 percent in January and 10.8 in December, according to the Standard & Poor’s/Case-Shiller report released Tuesday.”

The LA Times. “Los Angeles and Orange County home prices were down 19.4% in February from a year ago, among the sharpest drops in the nation, according to an index released today.”

“The Case-Shiller index compares the latest sales of detached houses to previous sales, and accounts for factors such as remodeling that might affect a house’s sale price over time. It excludes foreclosures.”

The Voice of San Diego. “In another month of record price declines, San Diego County home prices dropped 19.2 percent year-over-year and 24 percent from the November 2005 peak, according to the Standard & Poor’s/Case-Shiller home price index for February 2008.”

“The index tracks prices on the same homes over the years. It doesn’t measure condos or new homes. Broken into three tiers by price, the lowest tier continued to fare the worst but was followed by growing losses in the middle and high tiers, in tier breakpoints as of February 2008.”

“Lowest tier: (priced under $405,028) Prices were down 27.5 percent from Feb. 2007, down 31.6 percent from peak of June 2006. Middle tier: (priced between $405,028 and $609,200) Prices dropped 20.4 percent year-over-year and 26.1 percent from the Nov. 2005 peak.”

“High tier: (priced higher than $609,200) Prices were down 12.5 percent compared to a year earlier and 17 percent from the June 2006 peak. (Last month, this tier saw a 10 percent year-over-year and 15 percent from-peak drop, which were the larger drops yet at that time.)”

“Also this morning, RealtyTrac reported foreclosure filings for the three-month period ending at the beginning of April. San Diego County quarter one filings numbered 15,315. That marked a 48 percent increase from the previous quarter, fourth quarter 2007, and a 252 percent increase from the same quarter last year.”

“The total was more than eight times as large as the total filings recorded in the same quarter two years ago.”

The Daily Bulletin. “The San Bernardino-Riverside area ranked No. 2 nationwide in the first quarter of this year in foreclosure filings, according to RealtyTrac. Banks repossessed almost 10,000 homes in the region from January to March, while default notices clocked in at almost 23,600.”

“And buyers put money down on more than 3,700 foreclosures.”

“Real-estate expert Michael Carney isn’t surprised. ‘As more prices fall, there are more homes with no equity,’ said the director of Real Estate Research Council at Cal Poly Pomona. ‘If you have no equity in your property, and prices are falling, you have no incentive but to walk away.’”

From KSBY 6. “Half of homes up for sale in North Santa Barbara County are former foreclosures, according to the local Association of Realtors. DataQuick says it is a record quarter for default notices. In San Luis Obispo County, default notices compared to last year are up 112 percent. In Santa Barbara, it is up 141 percent.”

“According to Martha Beckman, President of the Association of Realtors, the average price of a North Santa Barbara County home is $375,000 to $400,000 dollars. Compare that to the price of $425,000 last year.”

“This because of the sheer number of homes - many foreclosure re-sales up for grabs. While prices may plummet a bit more, she suggests buying sooner rather than later.”

“‘Right now, we are close to the bottom if we’re not at the bottom, and you don’t know you’re at the bottom until it starts to come up again,’ Beckman said.”

The Tribune. “Sales of all homes in San Luis Obispo County plunged in March to less than half of what they were a year before, the latest mark of the real estate market downturn…according to DataQuick. The drop creates the county’s lowest March sales in 18 years, said spokesman Andrew LePage.”

“However, it is not the county’s lowest month for home sales historically, LePage added. That occurred this year when 178 homes were sold in January. Last month’s downward tumble comes at a time that traditionally marks the kickoff to the home-buying season.”

“‘Banks have really tightened up and are not offering what they offered a year ago,’ said said Kirk Lesh, real estate economist with the UCSB Economic Forecast Project. ‘Nowadays, you have to put 20 percent down to get a house, and not too many people have that sitting in their banks.’”

“Last month, the biggest decline was in sales of new homes, which plunged 68.3 percent year over year. The median price of a new home dropped to $439,500 in March, a 17.1 percent dip from $530,000 in March 2007.”

“For existing single-family homes, the median dropped to $480,000—10.5 percent lower than $536,500 a year ago.”

“Consumers who were once able to stretch their budget on tight incomes and low credit scores can’t now, said Steve Harding, Rabobank regional president in Arroyo Grande.”

“As well, loans that didn’t require strict research on personal income no longer exist because of today’s stringent verifications, he added. ‘There used to be ways to work around poor credit scores,’ Harding said. ‘But now, bad credit is totally out of fashion. It’s just not going to happen.’”

The Mercury News. “Bidding wars have remained common in high-priced places like Cupertino and Los Altos, where stellar school districts are the big draw. But with more than 900 houses for sale in Santa Clara County for $450,000 or less, many home buyers assumed that market was soft and are shocked to find themselves outbid on foreclosed, bank-owned properties in this price ran”

“Banks eager to unload their REO inventory - which forms a large chunk of the cheapest houses for sale in the county - have been lowering the listing prices. It’s become common to find bank-owned houses in South San Jose priced at roughly $400,000 that last sold in 2005 or 2006 for $600,000 or more, for example.”

“One San Jose resident, a mobile-home owner who has been looking for a house since February with a budget of up to $550,000, bid unsuccessfully on several short sales and half a dozen REOs before getting a bank-owned Evergreen house for $540,000 that was listed at $529,900. The buyer, who did not want to be identified, said he’s investing despite fears that valley home values may continue to fall.”

“‘I have a feeling it’s still risky to buy a house at this moment, but I want my kids to go to a good school, so I’ll take a chance,’ he said. ‘I might stay there for 10 years. I look for the long term, not the short term.’”

“Some agents who specialize in REOs said about half the buyers now scouring the market for deals on bank-owned properties are people who want to live in the homes, while the other half are seeking investment property to rent out.”

“But even at today’s REO prices, some investors are waiting to buy because they can’t get enough monthly rental income to cover their mortgage and expenses.”

“True, agent Peter Carey said, but the ones buying now are ‘gambling on better times’ in the future, he said, hoping to buy property in the $400,000s that will eventually gain value.”

The Modesto Bee. “Even during the boom years, when the housing industry was roaring and employment was growing, Northern San Joaquin Valley incomes were falling further behind the rest of California.”"Just-released statistics from the state Franchise Tax Board show that Stanislaus, Merced and San Joaquin county incomes didn’t keep pace from 1999 through 2006. Incomes in the three counties lagged about 25 percent behind the state as a whole.”

“That’s surprising considering that the valley’s economy appeared to soar during those years. But high-paying jobs apparently didn’t follow.”

“‘Bay Area folks who made the mad rush here for housing actually hurt the local job market,’ said Edward Hernandez, a human resources and business management professor at California State University, Stanislaus.”

“Hernandez said many of those newcomers quickly realized they couldn’t stand the daily commute back to the Bay Area, so they switched to lower- paying valley jobs.”

“‘Out of desperation they’d take any job they could just to get in. They really messed up our job market,’ said Hernandez, noting that starting salaries declined at some valley businesses because so many qualified workers were competing for openings.”

“The income statistics demonstrate that creating more jobs doesn’t necessarily generate wealth, said Carol Whiteside, president emeritus of the Great Valley Center. She said many of the valley’s new jobs were low-paying, entry-level or service positions, rather than a healthy mix of jobs from diverse employment sectors.”

“‘We always assume people in the Bay Area are top wage earners, but it was the Bay Area workers making lower salaries who were the ones moving here and making the those long commutes,’ Whiteside said.”

“The region’s economy started declining in late 2006 when the housing market turned. Stanislaus’ unemployment rate spiked to 11.3 percent in March, home foreclosures are at record levels and bankruptcies have risen dramatically.”

“‘The income (statistics) are going to look a lot worse the next time they release them,’ Hernandez predicted. ‘The boom has turned into a bust for many.’”

The Boom Was An Aberration

Some housing bubble news from Wall Street and Washington. MarketWatch, “The decline in U.S. home prices quickened in February, with prices down a record 12.7% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s. In February, prices were down 2.6% compared with January for 20 key cities, with prices in the smaller 10-city index off 2.8%. That’s the fastest monthly price decline in the history of the index. The pace of decline has accelerated for nine consecutive months.”

The Associated Press. “‘There is no sign of a bottom in the numbers,’ David Blitzer, chairman of the index committee at S&P, noting that all 20 metro areas have declined for six straight months.”

“Half of the cities saw home values plunge by double digits led by Las Vegas at 22.8 percent and Miami at 21.7 percent. Those two areas experienced the sharpest appreciation in 2004 and 2005 with annual increases above 50 percent and 30 percent.”

“Countrywide Financial Corp., the nation’s largest mortgage lender and servicer, said Tuesday it lost $893 million during the first quarter due to a sharp increase in its provision to gird against unpaid home mortgage loans. The latest results marked the third consecutive quarterly loss for Countrywide.”

“The company was forced to set aside $1.5 billion to cover loan losses. Charge-offs, or loans written off as not being repaid, totaled $606 million during the quarter. The lender raised its reserve for credit losses to $3.4 billion by the close of the quarter.”

“The mortgage lender recorded an impairment charge of $347 million during the quarter related to securities backed by home equity lines of credit. Countrywide also took a loss of $394 million as it transferred loans to a held-for-investment portfolio. Revenue plunged 72 percent to $679 million from $2.4 billion in the year-ago quarter.”

From CNN Money. “In a sign of just how bad things have gotten, the already harrowing delinquency numbers in Countrywide’s subprime portfolio moved higher to 35.88% from 33.64% in the previous quarter. Even the company’s conventional loan portfolio showed deterioration, as delinquencies jumped to 6.48%.”

From Bloomberg. “GMAC LLC, the auto and home lender that General Motors Corp. sold to a private equity group, said in a statement that the latest results included a loss of $859 million at its Residential Capital LLC mortgage unit. ResCap recorded a $910 million loss a year earlier.”

Deutsche Bank AG, Germany’s biggest bank, reported its first quarterly loss in five years after writing down the value of loans for leveraged buyouts and asset- backed securities by 2.7 billion euros ($4.2 billion).”

“The company wrote down the value of leveraged loans and loan commitments by 1.8 billion euros and of securities backed by residential and commercial mortgages by 885 million euros in the first quarter.”

“Meritage Homes Corp., a U.S. builder that sells most of its homes in Texas, Arizona and California, reported a first-quarter loss as the housing slump forced the company to write down property values.”

“The net loss amounted to $45.3 million. Revenue from home sales fell 35 percent, to $371.7 million, and the company recorded $60 million in pretax expenses to write down property and the value of joint ventures. Meritage said its average selling price fell 13 percent, to about $280,000, in the quarter from a year earlier.”

“Empire Land has filed for bankruptcy protection, joining at least a dozen home builders that sought protection from creditors in the last 10 months as home sales and prices slumped.”

“‘A severe tightening or loss of financing for the entitling and development of land, and the resulting pressures that were placed on the debtors’ cash flows,’ helped prompt the bankruptcy filing, Chief Financial Officer Neil Miller said in a statement filed Friday with the U.S. Bankruptcy Court in Riverside.”

“The closely held company listed assets and debt of $100 million to $500 million in its filing. Empire Land and its affiliates build so-called master-planned communities, large-scale projects that include commercial buildings and schools, in California and Arizona.”

The Charlotte Observer. “D.R. Horton will finish construction on its current inventory, a fraction of the homes, over the next six months to a year, Crosland spokesman Bill Norton said. ‘Basically, it’s a national company that’s under pressure out of its Texas headquarters to renegotiate contract terms,’ he said of the builder.”

“Hannah Swetland, who moved into the neighborhood in October, said she noticed almost immediately that something wasn’t right. A few homes went up quickly, but then construction stopped, she said.”

“‘We bought before any builders were thinking about the economy,’ Swetland said.”

“Now, she’s worried about ‘our property values, but also just that the community was left like this,’ she said.”

The Rocky Mountain News. “Men dressed as pigs frolicked outside the annual meeting of Richmond American Homes in Denver this morning, drawing attention to the role they say corporate home builders played in creating the mortgage and foreclosure crises.”

“The six costumed pigs were supplied by the Laborers International Union of North America, which hasn’t had much luck unionizing house construction workers, but represent a lot of workers who work on commercial buildings.”

“The ‘Pigs at the Trough’ campaign hopscotches across the country, attending annual meetings of corporate home builders, and on Wednesday will be back in Washington, D.C., as Congress debates the Foreclosure Prevention Act, union spokesman Jacob Hay said.”

“Hay said corporate builders overbuilt homes, then to get rid of the excess inventory pushed subprime loans through their mortgage subsidiaries.”

“The consensus by local and federal officials is that home builders did play an important part in the foreclosure profit by offering loans at, say, 4 percent, that would change in a few years to 7 percent — a rate that many of the buyers couldn’t afford.”

“Richmond American Homes is a part of MDC Holdings, founded in 1972 by Larry Mizel. Despite a loss of more than $400 million last year, MDC awarded Mizel and President David Mandarich bonuses of $2 million.”

“The worst housing slump in 70 years erased 67 percent from the market value of homebuilders in the Standard & Poor’s 500 Index, turning the companies into small-cap stocks.”

“‘They went through the laundry and got shrunk,’ said Stephen Lieber, who oversees $11 billion. ‘It’s gone beyond an inoperable business situation and turned into an economic crisis.’”

“Centex reached a market value of $10 billion in July 2005 when new home sales peaked at an annual rate of 1.39 million units. The Dallas-based company has since lost 74 percent of its market capitalization.”

“‘The boom was an aberration,’ said Jonathan Vyorst, a New York-based money manager at Paradigm Capital Management Inc., which oversees about $2 billion. ‘The homebuilders have a long way to go and the value of land on their balance sheets has to be reduced dramatically.’”

From USA Today. “What needs to happen to stimulate the housing market? Dean Baker: ‘Prices have to fall. We had a bubble that got prices hugely out of whack with the fundamentals. We need a real price decline of between 30% and 40% from the 2006 peaks.’”

“Lawrence Yun, Chief economist, National Association of Realtors: ‘Overshooting downward can lead to unnecessary loss in economic activity. Prices do need to come down in some markets. But a measurable overshooting downward introduces a host of new problems, including additional pressure on foreclosures. We need to genuinely think of bringing legitimate buyers back into the market.’”

“Does the national median home price need to fall a lot more before the housing market can get moving again? Yun: ‘Prices need to adjust as the market dictates. Another 10% fall in some markets could occur. However, I doubt prices will or need to fall in the vast middle America. Indianapolis, Dallas, Kansas City, Omaha are, if anything, underpriced markets.’”

“What if you can’t pay your mortgage, yet can’t sell your home for enough to pay off your mortgage? Should you mail in your keys and walk away? Baker: ‘People should consider the risk to their credit rating vs. how much they can save. In some cases, walking away might be a perfectly rational choice.’”

From Reuters. “Home foreclosure filings jumped 23 percent in the first quarter from the prior quarter, and more than doubled from a year earlier, as more overextended borrowers failed to make timely payments, real estate data firm RealtyTrac said on Tuesday.”

“Foreclosure filings were far-reaching, rising on an annual basis in 46 states and in 90 of the 100 largest metropolitan areas, to a total of 649,917 properties.”

“Nevada, California, Arizona and Florida had the highest foreclosure rates among states during the quarter. Georgia, Michigan, Ohio, Massachusetts and Connecticut were the other states with the top 10 foreclosure filings.”

“The share of vacant U.S. homes grew to a record high in the first quarter, the government reported on Monday. The percentage of owner-occupied homes sitting empty rose to 2.9 percent, the third straight monthly rise, for a total of 18.6 million vacancies, U.S. Census Bureau data showed.”

“With prices seen falling further at a time when there is an overabundant supply, some government mortgage relief programs may not preclude foreclosures from mounting.”

From Realty Check. “When you break down the sub-categories, you find that the number of bank-owned properties is rising faster than ever before. ‘Typically you’ll see about 20 percent of the foreclosure filings being bank-owned,’ RealtyTrac’s Rick Sharga told me in an interview this morning.”

“‘We’re getting to a point now where it’s well over 1/3 and aiming at 40 percent, so that just suggests that a lot of these homes can’t even be sold to investors at auctions – because there’s just no equity in the properties,’ he said.”

“Sharga estimates that by the end of this year there will be over a million bank-owned homes in the market. There are about four million properties listed on the Multiple Listing Service. The National Association of Realtors noted last week that in a casual survey they found 18 percent of the homes currently on the MLS are foreclosed homes.”

“It’s interesting to me that given all the programs supposedly helping folks in default and all the banks claiming that they are doing refi’s or ‘work-outs’ or whatever, a growing number of homes are still going back to the bank.”

“Congress, the Bush administration and regulators have urged lenders to renegotiate terms for borrowers so they can stay in their homes, easing the glut of empty houses. Such efforts may mask the slump’s extent by delaying foreclosures, RealtyTrac CEO James Saccacio said in the statement.”

“‘This country needs a cleansing,’ said billionaire real estate investor Sam Zell. ‘We need to clean out all those people who never should have bought in the first place, and not give them sympathy.’”

“Government attempts to slow the flood of defaults ‘could be simply deferring another flood of foreclosures,’ Saccacio said in the statement. ‘That could extend the length of time it takes the market to recover from this downward cycle.’”

“The subprime borrowing spree featured lax lending standards that allowed people to buy homes with little or no down payment, and many of those borrowers today have no incentive to pay off mortgages that are worth more than the homes they bought, Zell said.”

“‘That whole process has to be liquidated,’ Zell said.”

The Kansas City Star. “The news that caught my attention comes from recently released transcripts of the 2002 meetings of the Federal Open Market Committee. It makes monetary policy for the United States.”

“The transcripts, released after a five-year delay that reflects an irksome lack of transparency at the Fed, shed new light on its role in fueling a housing bubble that has since popped — putting us in our current economic predicament.”

“One theme in the newly released transcripts is how Tom Hoenig, president of the Federal Reserve Bank of Kansas City, expressed concern as early as March 2002 about how incredibly low short-term interest rates — then 1.75 percent, and on the way to 1 percent — might be ’setting up conditions that I think will give rise to future imbalances.’”

“In May, Hoenig again warned about ‘risks of … some financial excess.’ In June, he called the low-interest-rate regime ‘extremely accommodative. And I think we need to take a longer-term view of this.’”

“The transcripts also reveal how captivated the then Fed chairman, Alan Greenspan, was with how the housing boom was leading the economy out of the 2001 recession.”

“‘Despite the weakness in the economy, homebuilding has been remarkably well maintained,’ Greenspan said in June. ‘We are getting fairly dramatic increases in a lot of areas in the market value of homes and hence in total housing equity, from which there has been a consistent degree of extractions’ in the form of refinancings and home equity loans.”

“‘Unless we get a significant decline in home prices, and that’s a very questionable prospect at this stage, it’s hard to imagine that there will not be very considerable ongoing support for consumption expenditures coming out of the housing equity markets,’ Greenspan said.”

“In August, Greenspan acknowledged concerns about a ‘housing value bubble’ but questioned ‘whether that’s a valid notion.’”

The Words ‘Price Reduction’ Are Almost Standard In Florida

The Herald Tribune reports from Florida. “John Rankin remembers the day the owner at 2214 Sonoma Drive skipped town. ‘He packed up his truck one day, and drove away,’ said Rankin, president of the Mission Estates homeowners association in Venice. ‘Then he just never came back.’ That was nearly a year ago. As weeks and then months went by, the property fell into disrepair.”

“After press time last week, nearly a year after the property was first abandoned, the foreclosure case finally went to court. While Rankin said he is hopeful the association will receive its back assessments, there is no guarantee these days that that will happen.”

“‘If you get enough of these vacant units, those monies from assessments aren’t coming in, and what do you do when you get a shortfall?’ said Community Association Leadership Lobby director David Muller. ‘You still have to pay the management and the maintenance crews.’”

“According to the CALL survey, of those Southwest Florida associations that did take steps to make up for the revenue being lost, many did engage in legal action to force a mortgage lender to pay (40 percent). But just as popular was increasing the monthly maintenance fees for all other residents (32 percent), and increasing special assessment fees for everyone (38 percent).”

“In other words, it seems the likely scenario for most residents is that their own fees will be raised to make up for the delinquency of others who have gone into foreclosure. Muller said those extra fees can wind up creating a cascading effect.”

“‘Especially the folks there on a fixed income, they might not be able to make ends meet,’ he said. ‘Those folks who are already struggling to make their payments now face increases, and they might not make it and wind up in foreclosure themselves. And so it snowballs from there.’”

National Public Radio. “On a recent Saturday morning, real estate agent Marc Joseph and his staff drove about a dozen people through the streets of Cape Coral. For three hours, they visited nearly a dozen bank-owned properties, many of which had been marked down more than 50 percent.”

“A four-bedroom, three-bathroom house with an in-ground pool that last sold for $741,500 in March 2006; it’s on the market now for $369,900. A three-bedroom ranch house on a freshwater canal selling for $143,500, having been sold just 17 months ago for $316,800.”

“Fishkind and Associates estimates that Lee County has a three- to five-year inventory of unsold homes. As a result, homes can now be bought for well under the replacement cost, Joseph says. ‘There is a lot of inventory on the market, and there’s a lot more coming,’ Joseph says.”

“When condominiums went on the market at the gleaming new development of Cape Harbour in Cape Coral, Fla., a few years ago, so many people wanted to buy that the owners had to sell them by lottery. The fact that the towers hadn’t been built yet was viewed as a minor concern.”

“By the time the tower was finished, the real estate boom had ended, and today many of those same condos are unsold or in foreclosure, says real estate agent and resident Robin Speronis.”

“As prices have fallen back to earth, owners have increasingly found themselves owing more than their properties are worth, and are walking away from them, helping to create a backlog of more than 19,000 unsold homes — about six times as many as two years ago.”

“Marcus Netto has to work two jobs to pay the mortgage, maintenance and taxes on the two Fort Myers properties he owns; he also has a time-share in Orlando. But he has to dip into savings to cover his expenses.”

“‘I got almost $4,000 every month (in costs),’ says Netto. ‘That’s a lot of money for me. I don’t make that.’”

The Miami Herald. “Harriet and Paul Fass, both 65 and hoping to soon retire, aren’t rich. Even so, the Wilton Manors couple cobbled together $100,000 to invest in the financing of a private housing development in Florida City, in the midst of the region’s real estate boom.”

“Now the Fasses, and some four dozen other investors, are facing the prospect of losing hundreds of thousands of dollars. Some families’ entire life savings could be wiped out. The investors had bought into a lie.”

“A Florida City public official had guaranteed, in writing, to bail out the project if it stumbled. ‘It sounded safer than the stock market,’ Harriet Fass said of the real estate deal.”

From CBS 4.com. “Forbes Magazine has come out with a list of the top ten worst-selling housing markets in the U.S. And it’s probably no surprise to you that Miami tops the list. Housing prices are coming down fast.”

“The words ‘price reduction’ are almost standard with any sign in a yard today, making it nearly impossible to judge what is a good deal, especially when you see how much prices are dropping. At the peak of our market in 2004 home values rose on average $1,000 a week. So far this year we’re in a nosedive, prices dropping $1250 a week.”

“‘It went so fast and, so crazily, that I think it has to,’ said Hazel Goldman. ‘You know anything that goes up has to come down.’”

“Goldman, a realtor, blames credit for the steady drop in price. Banks now demand 20 to 30 percent down. ‘Unfortunately as much as the young people can afford the payments, which is a struggle, but more and more people can, it’s hard for them to come up with the down payment,’ Goldman.”

“Blythe Mandelbaum couldn’t pass up a sweet deal: $150,000 off the 2007 price tag. ‘We got a lot for our money. We’re in the right school district. I’m very happy. I know prices are still coming down but I don’t know if I would have been as lucky.’”

“And while some jumping in, most are staying out, and in a sense making money, $1250 a week.”

From TC Palm. “James Perham had called his rented Peninsula Lane house home for eight months when a bank representative showed up on his doorstep two weeks ago and told him he was trespassing.”

“Perham didn’t know the man he was paying had allowed the house to go into foreclosure in April 2007 — before getting a renter. Perham’s landlord didn’t own the house. The bank did.”

“‘I have a feeling that it’s going to start happening quite a bit there because of the current state of the market,’ said Brad Hunter, director of Metrostudy. ‘A lot of people bought homes at the peak and can’t afford their mortgage payments now. … They’re getting in over their heads, and they’re not communicating to their renters what the true situation is.’”

“In St. Lucie County, 549 homes entered some stage of foreclosure last month, up from 370 in March 2007, according to RealtyTrac. Martin County had 160 homes entering a stage of foreclosure last month compared with only 38 in March 2007, while Indian River County had 153 homes entering foreclosure last month, up from 58 a year earlier.”

“Anyone looking to lease or buy should hire an attorney or contact a legal aide before signing papers or handing over any security money or rent, said Billy Moss, a commercial real estate agent in Vero Beach.”

“‘Leases are a very delicate situation,’ Moss said. ‘I would never sign a lease unless an attorney was involved.’”

“When his landlord wanted only cash, Perham thought it was a little odd. But when the neighbors had good things to say about him, Perham decided the man was OK and handed over his $3,100 deposit. ‘It was a nice house, the guy lived across (from) the canal,’ Perham said. ‘I didn’t question anything.’” “And then, more than $12,000 in rent later, came the bank officer.”

“Perham found another private home to rent — this time in Port St. Lucie — and will move in May 1. His rent has been cut in half. ‘But believe me, I went through the court system and checked everything, checked to make sure everything’s been paid,’ Perham said. ‘I’m going to do it from now on.’”

The Orlando Sentinel. “Mired in confusion over mortgage and title situations, some homeowners are taking drastic steps to simplify their lives — including walking away from their homes.”

“As housing values fall and credit woes rise, more Central Florida consumers are turning to a process that lenders, credit counselors and foreclosure experts advise against. But even they understand why it can be appealing to homeowners.”

“‘If you’re in good standing, you might as well talk to the wall,’ said Orlando attorney Rick Franzblau, who handles foreclosure cases. ‘Until you stop paying, they won’t even talk to you.’”

“Elizabeth Levensohn walked away from her Mount Dora home about six months ago and says it was the best thing she has ever done. She bought the house for just more than $100,000 a little more than two years ago.”

“‘It was the only house I could afford,’ Levensohn said.”

“At the time, it seemed like a good decision. She thought she’d be able to pay the mortgage on her salary as a school director at an Orlando church. Commuting wasn’t that expensive. The cottage was less than 700 square feet, just enough room for Levensohn and her daughter.”

“Within a year, she knew it was the biggest mistake of her life. When she and Isabella were down to eating ramen and beans and rice, she knew something had to give.”

“She decided to walk away from the house and let it go into foreclosure. Now she rents an apartment and lives a car-free — and, she said, relatively stress-free — life in Orlando.”

Bits Bucket And Craigslist Finds For April 29, 2008

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

April 28, 2008

Something Is Going To Have To Give In California

The Desert Sun reports from California. “There could be one silver lining to the Coachella Valley’s transitional home real estate market: though some prices have fallen, property taxes in some cases may do so, as well. Riverside County Assessor Larry Ward’s office receives 100 to 150 inquiries a day from people interested in re-evaluating home values. Last year, the assessor’s office reduced about 10,000 property values across Riverside County.”

“The average reduction has been about $40,000 a home, Ward said. ‘We made a number of reductions last year and we’ll be making substantially more this year,’ he said.”

“Ward said another 235,000 homes in the county sold after Jan. 1, 2004, are going to be reassessed this year. What he’s noticed so far, is that the average sale price is down to under $300,000 - what it was about mid-2004.”

“‘We are actively reviewing property across the county,’ he said.”

“That could help Indio resident Lena Eylicio, who paid $497,000 for her Sonora Wells home in 2006. Comparable homes now sell for $270,000 to $300,000. It frustrates her knowing her new neighbors likely are paying much less in annual property taxes.”

“‘It’s scary to look at a $9,000 bill,’ she said. ‘If they’re going to be paying less, why shouldn’t we be paying less?’”

The Santa Cruz Sentinel. “Through sheer determination, Metro bus driver Eduardo Montesiro managed to avoid being one of the 250-plus homeowners who lost their homes in Santa Cruz County during the sweeping foreclosure crisis that struck last year.”

“But as he straddles two mortgages in Watsonville — trying to keep his income in line with rising payments while still helping his wife provide for their two children — he acknowledged, ‘By the end of the year, something is going to have to give.’”

“Throughout California, the nationwide mortgage crisis hit Latino families especially hard due to language barriers, unfamiliarity with the mortgage process, unforeseeable income changes and subprime lenders who didn’t verify income.”

“Being a Latina, Maria Enomoto, a Consumer Credit Counseling Services counselor who led the Spanish-speaking workshop, said she understands that in Latino culture, ‘It means a lot to own our own home. If you have your own property, you are successful.’”

“But some families she has worked with, from office professionals to fieldworkers, report spending nearly all of their income paying a mortgage, then buying groceries, gas and other everyday living expenses on credit cards. She said that formula is not sustainable, because debt far exceeds the ability to repay.”

“Of the families who have bought houses they couldn’t afford in recent years, most ‘probably never knew what kind of loan they were getting,’ Enomoto said.”

“Karl Skow of Hollister, who is president of the Greater Monterey Bay Chapter of the California Association of Mortgage Brokers, said homebuyers from all economic and cultural backgrounds have to also take responsibility for their missteps and be realistic about their income.”

“‘I think everyone was feeling like they were living the American dream,’ he said, adding that many homeowners who actually understood loan terms thought they could refinance or sell within the first couple years to avoid skyrocketing payments.”

“‘I don’t think there is anyone who is without fault,’ he said.”

“Montesiro’s story is a perfect example of what Skow is talking about. Montesiro said he understood his adjustable-rate mortgage would increase, but thought he could leverage the rising value of the smaller home he bought in 2000, which he is now renting out, to pay for the larger one he bought in 2005 to accommodate his family. But he didn’t count on the tanking housing market.”

“After spending most of last year worrying about how to crawl out from under the mounting payments, he said he made a vow this year to find a more manageable approach. He said he left Saturday’s workshop with a plan in mind, which may involve selling the big house and moving back into the smaller place until he can catch up.”

“‘I’ve learned tremendously,’ he said.”

The Tribune. “Mike Melvin remembers the thrill of moving into his Atascadero home. Three years ago, he and his then-girlfriend had fallen in love with the cozy three-bedroom and its wood-burning stove and weatherbeaten white picket fence.”

“‘It was our first home purchase,’ said Melvin, who bought the house with no money down on an interest-only, fixed-rate mortgage that switched to a variable rate two months ago. ‘It’s like my life suddenly had meaning. It wasn’t the answer to all of my dreams, but it was a step in the right direction.’”

“Today, Melvin is behind on his loan payments and on the brink of losing the house. He said he’s contacted his lender for help, but so far the efforts have not been fruitful.”

“‘They’ve sent me a notice in the mail saying they’ve started the foreclosure process,’ he said.”

“The sting is still being felt by homeowners from Paso Robles to Nipomo. Overall, foreclosure activity is up 20 percent in the county from March 2007, according to RealtyTrac.”

“There were 490 notices of default sent to homeowners from March 2007 to March 2008, RealtyTrac figures show. A total of 329 real estate owned properties — in which the lender takes ownership of the property — was recorded during that time period. Foreclosure activity is greatest in the North County—Paso Robles and Atascadero.”

“Kirk Lesh, real estate economist with the UCSB Economic Forecast Project, also believes that several factors contributed to the increase in foreclosure activity. Some people, he said, had taken the creative financing options, hoping to refinance later on, while others bought homes as investments with the goal of soon selling them for a profit. Some were given loans without any down payments or income verification.”

“‘I think the interest rates got so low that it just created some greed in the market,’ he said. ‘The zero-money-down loan was a good example of the lowering of loan standards.’”

“Three years ago, Kim Missamore bought a three-bedroom, two-bath home on an acre in Shandon for her children with an interest-only loan. When her adult children moved out and stopped helping pay the mortgage, Missamore said she was left with the payments, which are $1,400 a month.”

“Even with a renter in the Shandon home, Missamore said it’s difficult to keep up with the interest payments. So, she’s living with her daughter in Atascadero and paying what she can to avoid going into foreclosure and damaging her credit.”

“‘I’d love to sell it, but I’m stuck,’ she said. ‘It’s scary. If I don’t get a loan modification, I may have to let it go.’”

“Melvin was paying about $1,600 a month at 6.25 percent, but then his mortgage reset, and now the payments are $2,200 with an interest rate of 7.25 percent.”

“‘I was completely naïve,’ Melvin said. ‘Everyone was telling me that in three years, when the equity in the house increased, I could refinance and get a better loan. That’s where I am now, but the market crashed and the value of the house went down.’”

“Melvin said he’s tried to work with his lender for the past six months. ‘All I can do is hope that the mortgage company comes around,’ he said. ‘I’ve sacrificed a lot in three years to hang on to it.’”

“Even so, Melvin said he’s not sour on home ownership. ‘I don’t think we can make too much of it,’ he said. ‘It’s a critical part of our life to take responsibility for something.’”

“With the economy’s growth slowed and oil above $100 a barrel, auto dealers in San Luis Obispo County are finding that selling cars is more difficult than it has been in years.”

“‘It is gas prices and the housing crunch,’ said John Cole, an owner of San Luis Obispo’s Cole Chrysler Dodge and Cole Mazda. ‘When (the value of) your house goes down, people don’t have the equity, and they don’t want to spend money. Those two things have really started to have an effect.’”

The Press Democrat. “The steaks at Cattlemens are a little smaller. The pizzas at Mary’s Pizza Shack are a little pricier. The pastas at Flavor have less cheese and more vegetables. And the busboys at Checkers also wash windows.”

“Soaring food prices and a slumping economy are gobbling up Sonoma County restaurants’ profits, forcing them to find creative ways to cut costs and draw in diners. ‘In the 12 years I’ve been here, I’ve never seen anything like it,’ said Katherine Castillo, owner of Checkers Bistro & Wine Bar in downtown Santa Rosa.”

“She’s far from the only one feeling the pinch. From fancy white tablecloth joints in Healdsburg to family-friendly pizza parlors, restaurants across Wine Country are feeling pummeled like pieces of veal.”

“‘If people can’t afford their house payments, they’re obviously going to go out to restaurants less,’ said John Frenzel, director of marketing for Cattlemens, the Santa Rosa-based chain of nine steakhouses.”

“Not only is the number of diners down, but when people do treat themselves to a night out, they’re spending less. They’re ordering less-expensive entrees, drinking less alcohol and skipping dessert. ‘We have noticed over the last year more people going from higher priced items to lower priced items,’ Frenzel said.”

“Castillo’s cut back on fresh flowers. She’s stopped using a window-washing service, asking the busboys to do it instead. ‘They’ve got nothing but time,’ she says.”

The Pasadena Star News. “At the peak of the housing boom, home builders had no trouble getting customers to line up and buy their new homes. Demand was high, home values were rapidly rising and many lenders were offering loans to virtually anyone who could fog a mirror. But those days are gone.”

“Home prices and sales have plummeted and financial institutions have tightened their lending standards, edging many prospective buyers out of the market. As a result, many builders are offering incentives to bring buyers in. MBK Homes is no exception.”

“‘It’s a different market we’re in today,’ said Julie Tlilayatzi, MBK’s director of marketing. ‘It’s a buyer’s market. But we’re not cutting the quality of the homes.’”

“Standard Pacific Homes in Irvine offers a ‘Spotlight Allowance’ of $80,000 on selected luxury homes in Walnut…provided that the home closes escrow within 30 days. The money can be used for a rate buydown, closing costs, homeowner dues or property taxes, or to customize final touches of the home.”

“Los Angeles-based KB Home also has two programs that are advantageous for buyers, although company spokesman Keith Jajko hesitates to call them incentives.”

“KB’s price protection feature allows buyers to purchase a new home with the assurance that if the base price of their home at the time of closing is less than the original purchase price, KB Home will honor the lower price.”

“If the base price increases, buyers will still pay the original price.”

“Jajko acknowledged that the housing market has changed dramatically. ‘We’re seeing more of a market where people are actually out to buy a home,’ he said. ‘During the height of the market there were a lot of investment flippers. But a lot of that has gone away. Now we’re seeing families that really want to buy a home … and that’s refreshing.’”

The Record Searchlight. “It’s been nearly a year since an east Redding home was auctioned off for $375,000, then taken back by the seller after the deal was voided, the result of a legal dispute. Now the nearly 3,000-square-foot home with a pool on Vermeer Place is on the brink of being lost to foreclosure.”

“A notice was posted last week for a May 13 public sale, at which time the three-bedroom, three-bath home will be auctioned off on the Shasta County Courthouse steps. Balance due on the note is $333,373.”

“The home was built in 2003 on a lot that sold for $75,000. At one time, owner Don Shearing asked $719,000 for the house. But that was September 2005 — the housing balloon had not popped.”

“So with much fanfare, Shearing and Pacific Auction Exchange, a Redding franchise that he owns, hosted a June 15 auction — it wasn’t a foreclosure sale — that saw Ken and Jason Jones nab the home for $375,000.”

“But Shearing hired a lawyer and ultimately took the house back about a month later after both sides came to an agreement. Shearing immediately listed the house again for $590,000.”

“The home languished until it was taken off the market April 11. The list price had been dropped to $559,000. For the record, Jason Jones doesn’t think he will make a bid next month.”

Too Many Houses And Not Enough Buyers

Some housing bubble news from Washington and the empty houses across the US. Bloomberg, “A record 18.6 million U.S. homes stood empty in the first quarter as lenders took possession of a growing number of properties in foreclosure. The figure is 5.7 percent higher than a year ago, when 17.6 million properties were vacant, the U.S. Census Bureau said in a report today. The vacancy rate, the share of homes empty and for sale, rose to 2.9 percent, the highest in a series that goes back to 1956.”

“About 2.3 million empty homes were for sale, compared with 2.2 million a year earlier, the report said. In addition to homes for sale, the report counted 4.1 million vacant homes that are for rent and 4.7 million that are seasonal.”

“Most foreclosures are contained in the report’s ‘other’ category, which includes homes tied up in legal proceedings as well as homes that are empty because the owner is renovating and living somewhere else, according to the Census Web site. There were 7.5 million such homes that were vacant, up from 7.3 million a year earlier, the report said.”

The Associated Press. “The national vacancy rate, including new and existing homes, has been steadily rising since mid-2005. ‘The inventory problem has not gotten any better,’ said economist Patrick Newport. Although glut-fighting home builders have reined in construction, ‘they still will have to cut back more.’”

From MarketWatch. “Families are no more likely to own their home now than they were in 2002, even with the big effort to push families with poor credit into homeownership through subprime mortgages. The percentage of homes occupied by owners ticked up to 67.9% from 67.7%, after peaking at 69.2% in 2004.”

“‘Given tight lending standards and foreclosures, we expect the homeownership rate will continue to edge lower,’ wrote Michele Meyer, an economist for Lehman Bros.’”

“The vacancy rate rose to…about 1 million more than was typical before the housing bubble burst. Analysts say the housing market won’t recover until the glut of vacant homes on the market can be worked down.”

“‘There is clearly still substantial excess housing supply that will take time to work off,’ wrote economists for Goldman Sachs. ‘We think it unlikely that prices begin to stabilize until vacancy rates start declining.’”

The St Petersburg Times from Florida. “Five hundred people turned out for the (condominium) groundbreaking in 2005, complete with spotlights, valets and a sand sculpture of the towers-to-be. All 257 units in these two 29-story towers were snatched up in 13 days, before ground was even broken.”

“But alas, this is Florida, where another boom has busted. Two-thirds of the buyers have backed out. Deals have been shredded, lawsuits filed. The developer sought bankruptcy protection after the fallout.”

“That left Johnny Foens, who kept his promise and moved into the middle of a city of 318,000 in a county of 1.1-million, in a region of 2.7-million, and found himself living in a tower nearly alone.”

“‘We’d really like to meet some couples,’ says Johnny’s girlfriend, Amanda, ‘but there’s nobody here to meet.’”

The Star Tribune from Minnesota. “The three dozen residents of the Sexton are scattered widely among the mostly vacant 123 units in the downtown Minneapolis condominium building.”

“In some cases, unit sales at the Sexton mirror the boom and bust of the condo market. One unit sold in August 2006 for $620,000 with no down payment, according to property records. It went into foreclosure nine months later and most recently was listed for sale at $109,900.”

“Its reputation as a troubled project is widely known, said Tom Melchior, a multifamily analyst. ‘[The Sexton] doesn’t come up in conversations very often, but when it does, the comment usually is something like ‘That place is really a mess,’ Melchior said.”

The News & Observer from North Carolina. “The Triangle’s traditionally robust spring home selling season began with a whimper. One problem is a rising inventory of speculative homes, those built without a buyer lined up.”

“Although overall sales are down, builders keep adding to the market glut by churning out higher-priced homes. There were 4,753 spec homes on the market in March. That’s up nearly 12 percent from a year earlier.”

“Average spec home prices were $608,822 in Orange, $434,810 in Wake, $289,091 in Durham and $249,213 in Johnston. ‘A whole lot of builders were committed to build on lots and built homes even though they had to know the market was adjusting,’ said Ross Rhudy, general manager of Ammons Pittman GMAC Real Estate. ‘A lot are gambling their house will be the one to sell.’”

The Denver Post from Colorado. “Birds fly, fish swim, and even during sharp downturns in housing, builders keep building. The result: a glut of homes on the market, an urgency for homebuilders to get the homes sold, and deals for buyers.”

“DR Horton’s Raspberry Hill community in Weld County stands alone on a prairie, just east of Interstate 25. A few dozen homes have been built and sold there, and 200 more are planned in a second-phase build-out. Sales brochures at the site advertise ‘rock bottom pricing’ of $249,900 to $299,900.”

“The ‘Wilson’ model home, with 3,114 square feet and four bedrooms, previously was $402,714, according to the builder. It is now listed at $299,000.”

“Price declines are a signal to stop thinking of homes strictly as investments, said broker Jennifer Gore. ‘Someone asked me when we would know the market had truly improved. I said, ‘When you no longer see incentives offered in advertising in the paper.’”

The Northwest Herald from Illinois. “Once part of the housing boom, McHenry County is feeling the effects of the national housing bust. The county saw a ‘very large decrease’ in the number of home sales in the last quarter of 2007, according to County Assessor Donna Mayberry.”

“‘We have a lot of supply right now,’ said Jim Haisler of the McHenry County Association of Realtors, ‘and we don’t have the demand.’”

“When Neumann Homes declared bankruptcy in October, large projects were left unfinished – or not even touched – in Wonder Lake, Lakemoor and Gilberts. ‘Nothing lasts forever. The boom was not going to last forever,’ Mayberry said.”

The Detroit News from Michigan. “Metro Detroit’s dismal residential housing market — gridlocked and stagnant amid a global mortgage loan crisis, consumer sentiment at a 26-year low and a glut of unsold and foreclosed homes — has cast a pall over local builders who only a few years ago were enjoying boom times.”

“Now, half-built subdivisions dot the region, construction workers are fleeing south and companies from family-owned shops to global firms like Pulte Homes Inc. are bracing for what could be their worst year yet.”

“Said Centex spokesman Eric Bruner: ‘We are in the middle of the worst housing market in modern history.’”

“In 2007, a paltry 5,556 permits to build new homes were filed in the nine counties that make up southeastern Michigan, according to Clawson-based Housing Consultants Inc. That was nearly half the number of permits filed in 2006 and 20,994 less than in 2004, the best year this decade.”

“Stalled subdivisions abound, a boon for companies such as Pinnacle Homes of Farmington Hills, which step in to buy unfinished subdivisions from banks and attempt to build homes for much less than just a few years ago.”

“‘I knew the market well enough to know that this was an overall downturn and one that was going to be around for a while,’ said Pinnacle executive, Howard Fingeroot, standing amid the empty lots of Kirkway Estates in Lyon Township. ‘The only way to compete with the foreclosures was to get closer to their prices.’”

“In a venture with AmTrust Bank of Cleveland, Pinnacle will build 85 houses in the 100-lot development. The homes will be from 2,800 to 3,400 square feet and will list for around $330,000, Fingeroot said.”

“The 15 homes already standing, he added, sold for more than $450,000 each just a few years ago. ‘There are still plenty of people who want to buy, and now is the time,’ Fingeroot said.”

From KFOX Las Cruces in New Mexico. “With several unsold homes on the market, builders are paying the price. ‘I think they’re going to slow down and let everything catch up. Builders aren’t building as much so it will all catch up and be fine,’ said Sean Vick, builder with From the Ground Up Design.”

“He hopes to move his homes off the market quicker. ‘It’s tough we have three houses on the ground right now for sale,’ said Vick.’

“But there’s a ray of hope. The Las Cruces Home Builders Association’s spring showcase of homes debuted this weekend inviting potential buyers.”

“‘We come from California so it’s a very different kind of real estate market. The prices here you can buy three homes for what you have to pay for one out there,’ said Dorothy Overhiser a new Las Cruces resident.”

“The Overhisers said that their four-bedroom, four-bathroom California condo, overlooking the ocean, was on the market for more than six months, but selling looks more promising in Las Cruces.”

“‘I think the market is bottoming out. This market right here wasn’t really strong to begin with. It just had good steady growth that when it backed off it didn’t back off too far,’ said Charles Overhiser.”

“Builders said they welcome anything that can help the market turn. ‘It’s an opportunity to stimulate the economy. Somebody can get bargain prices on real nice homes,’ said Michael Clifford with Team Builders.”

The New Jersey Herald. “Home foreclosures are soaring in Sussex County and throughout New Jersey, according to sobering 10-year figures provided by the state Office of Banking and Insurance.”

“Foreclosures filings in Sussex County rose by 44 percent from 2006 to 2007, and increased by 46 percent statewide. Total filings had hovered around the upper 400s and mid-500s from 1997 to 2005, before vaulting to 620 in 2006 and 892 in 2008.”

“Home prices are down about 25 percent from their the market peak in about June 2005, according to Bob Brandon of Weichert Realtors in Landing.”

“He chalks it up to a plague of overbuilding and a lack of arms-length transactions, sales in which people are ready and willing to use the home. ‘Houses never leave the market,’ he said. ‘There are too many houses and not enough buyers.’”

“Also, he said, some appraisers skewed their work to the whim of the banks and provided appraisals ‘that are way out of whack.’”

“More than ever, Sussex County residents in need of work are reeling from the specter of a foreclosure on their home, said Bill Weightman, director of the state’s job center in Franklin. ‘I’ve had men and women cry in here. This is the American Dream going south, and I don’t think it’s coming back,’ he said.”

“Several years ago, ‘Michelle’ and her mother had a successful business and acres of property in Sparta, a township known for its affluence and quality of life. But it all spiraled downward last May, when Michelle was let go. The lay-off was sudden, she said.”

“Now Michelle and her mother, who asked that their real names and other specifics of their lives not be printed, are struggling to pay their $5,500-a-month mortgage payments, not to mention buy food or the gas or bus fare needed to get to job interviews.”

“‘Nobody wants to lose their home,’ she said. ‘It’s not a beautiful mansion, but this is my mom’s hard work for many years. We don’t want to end up on the street, getting that call, ‘By the way, you can start packing.’”

“People heading toward a legal battle for their home can opt for a pre-foreclosure sale to recoup some money instead of nothing. Brandon, who has been in the real estate business for 40 years, advises them to talk to a broker, get the right price on their house and get rid of it.”

“Ben Bensley, of Andover Township, said he attends the sheriff’s sales to gauge the market, but he’s not about to bid. ‘If the price is here and the market value is here,’ said Bensley, moving his hand from high to low, ‘then why buy it? I’d say 95 percent (of the properties), if not more, go back to the bank.’”

“Mike Callanan, of East Amwell, represents numerous banks’ interests as a part-time job in Sussex and the surrounding counties. He, too, acknowledged, ‘There are no bargains.’”

Waiting For A Better Value

The Boston Globe reports from Massachusetts. “Prices for Massachusetts single-family homes plunged nearly 11 percent last month, the biggest slide since the depths of the real estate downturn in the early 1990s. ‘The Bay State’s housing market is looking a lot like it did at the end of 1990,’ said Timothy Warren Jr., CEO of the Warren Group.”

“A separate report on the local housing market was also issued today by the Massachusetts Association of Realtors. The reports showed mostly similar trends. The March median selling price of a detached single family home in Massachusetts was $315,000, a drop of 8.4 percent from March 2007, the association said.”

“‘Foreclosures are still running rampant and causing a glut of homes to hit the market,’ Warren said. The last time house prices fell this much in Massachusetts was an 11 percent slide in December 1990, he said.”

The Republican from Massachusetts. “There were two cars parked in front of 144-146 Prospect St. Friday morning; one of those cars sported a bright red banner that said ‘AUCTION.’”

“About 90 seconds after the auction began without even the clap of a falling gavel…there was a single bidder at the sale. The mortgage holder, LaSalle Bank NA, purchased the three-family home for $101,250. ‘They need to protect their interest,’ said Ronald J. Marcella, an auctioneer from Dalton who represented LaSalle at the sale.”

“Nearly 3,000 Massachusetts homeowners had their property foreclosed in the first quarter of 2008, according to a recent study.”

“‘The number of people losing their homes to foreclosures shows no sign of abating,” said Timothy Warren Jr. ‘The last time more than 1,000 foreclosure deeds were filed during one month was in August 2007 when 1,018 were filed.’”

“‘We hope that represented something of a peak, but March’s numbers have shown us that Massachusetts’ foreclosure problems continue to worsen. With steady increases in petitions, I don’t see this problem going away any time soon,’ he said.”

“Mary R. Pennicooke, of Springfield, said she got a foreclosure letter from her lender in February. Pennicooke said she bought a house in Springfield two years ago with $18,000 down. Since then, she’s lost her job and the payments on her adjustable-rate mortgage have gone from $1,200 a month to $1,600. ‘I wasn’t earning $1,600 a month,’ she said.”

From Enterprise News in Massachusetts. “As foreclosures statewide hit a new peak in March, the city has partnered with the state and area lenders to provide discounted services to buyers of bank-owned property. The home-buying initiative, Buy Brockton, launched this week is the first of its kind in Massachusetts.”

“It allows borrowers to buy homes in the city that are bank-owned, in foreclosure or being sold in a short sale without the customary 5 percent down payment.”

“‘The local housing market has been devastated by the foreclosure crisis affecting our nation,’ Mayor James E. Harrington said in a press release.”

“The number of foreclosure deeds filed in Massachusetts rose to a new peak in March when 1,167 foreclosures were recorded, according to The Warren Group. The figure — a 140 percent increase from March 2007 — represents the highest number of foreclosures recorded in the state since the firm began tracking foreclosure deeds in 2005.”

The Boston Herald from Massachusetts. “With a growing number of Massachusetts homes falling into foreclosure, real estate agents say more and more ex-owners and tenants are vandalizing properties on their way out the door.”

“Jack O’Leary has seen foreclosed homes where ex-owners put paint on the carpets, anti-bank graffiti on the walls or took everything but the kitchen sink - then stole that, too. ‘I’ve gone into houses where the light fixtures are gone, the toilets are gone, the kitchen is gone. And when I say ‘gone,’ we’re talking stripped down to the bare walls,’ said O’Leary, a Brockton real estate agent who specializes in foreclosed homes.”

“Broker John Agostinelli just put a Watertown condo on the market where someone removed all doors, kitchen cabinets, appliances, gas fireplaces - even the light switches. ‘This property has the most damage we have seen of approximately 30 properties we’re (currently) listing,’ said Agostinelli, who’s selling the place ‘as is,’ knocking down the price some $90,000.”

“O’Leary has reduced an Easton split-level ranch’s cost by about $200,000 because someone ripped out appliances, sinks, toilets and more. ‘You drive up and say, ‘Wow, what a nice house!’ the broker said. ‘Then you look inside and say: ‘My God, what happened here?’ Short of taking the shell of the house, everything is gone.’”

“Agents say that while they can’t condone vandalism or theft, they sometimes understand the frustration - or desperation - that leads to such acts. ‘Some of these homeowners were victimized (by scam mortgages) and have legitimate gripes,’ O’Leary said.”

“But the agent also recalls one case where a foreclosure ‘victim’ had two new SUVs, a 25-foot boat and a 45-foot motor home parked in the driveway.”

“‘That’s not victimization,’ O’Leary said. ‘That’s setting your priorities wrong.’”

The Indypendent from New York. “There was a time when Simeon Ferguson grew tomatoes and callaloo leaves in the garden behind his three-story brownstone in Crown Heights, Brooklyn, the home he has owned since 1975.”

“But his remaining years of rest and relaxation are facing a major obstacle — his home is at risk of foreclosure. In early 2006, Michael Bocelli, a mortgage broker with the Long Island-based Global Financial Inc., sold Ferguson a new $450,000 option adjustable rate mortgage that was fairly guaranteed to put his house in foreclosure, according to Ferguson’s attorney.”

“Mr. Ferguson, a retiree on a fixed income, had no attorney or family members present during the closing, but was apparently quite happy with the deal. He later told his daughter Karlene that he had negotiated a new, more affordable fixed-rate mortgage. In fact the monthly payment of $1,480 on even the ‘teaser’ rate was greater than his entire monthly income of $1,100.”

“On top of his $6,675 broker’s fee, Bocelli was paid an additional $14,420 by IndyMac, the California-based bank that gave Ferguson the loan. This fee was contingent on signing Ferguson up to a ‘No Income No Asset Loan,’ which carries a higher interest rate, according to documents.”

“In its own paperwork, IndyMac explicitly instructs the broker that, ‘The file must not contain any documents that reference income or assets.’ In fact, Ferguson has only a few sources of easily documented income — social security and a pension.”

“Depending on when you speak with Ferguson though, he may or may not remember the details. That’s because he has dementia, a condition he was diagnosed with in 2005.”

“By the fall of 2007, one in four homeowners with subprime mortgages in the historically black neighborhoods of Crown Heights and Bedford-Stuyvesant were in foreclosure, according to the Federal Reserve Bank of New York.”

“At age 93, Artee McKoy of Jamaica, Queens, a homeowner for almost 50 of those years, he is still confused about how somebody could take his home out from under him without his knowledge or consent and saddle it with a new $315,000 mortgage from Fremont Investment & Loan, until recently one of the country’s biggest subprime lenders.”

“McKoy is also confused why the three-bedroom duplex is currently in foreclosure. Like Simeon Ferguson, he suffers from dementia, a symptom of Alzheimer’s disease, which he was diagnosed with in 2005.”

“‘It’s a huge warning sign when a 93-year-old man with no attorney present can take out a $300,000 mortgage,’ says Professor Ann Goldweber, director of the Elder Law Clinic.”

“‘Some of the new products that were created in the last few years had a lot of moving parts,’ says Evan Wagner of IndyMac. ‘For people who got these loans that weren’t really intended for them, it’s kind of like taking a medication that isn’t intended for what it’s meant to do, and sometimes there are bad side effects.’”

The Poughkeepsie Journal from New York. “It is a scene that is played out often these days in the lobby of the Dutchess County Courthouse in Poughkeepsie. In a corner that has become known as the ‘foreclosure alcove,’ someone’s home is being auctioned off.”

“On a recent morning, a Pleasant Valley home that belonged to Vernon R. Tatem was sold at auction. A handful of people showed up; no sign of Tatem. Bids began around $130,000, but the lender insisted on at least $169,590. The winning bid, from some local investors, was $1 more than that.”

“According to county records, the property was assessed in July 2006 at $310,400.”

“‘It’s unfortunate, really,’ said Sandra Nesheiwat, one of those investors. ‘The problem now is prices of houses have gone down and the mortgages are well above what the houses are worth.’”

“Foreclosures jumped in 2006, ran high in 2007 and, so far, right into 2008. Bankruptcies, some aimed at staving off foreclosures, rose 41.4 percent in 2007 over 2006 in the region served by the Poughkeepsie Bankruptcy Court.”

“In Dutchess, 3,569 subprime loans were made in 2006. Of them, 740 were late 30 days or more on payments and 276 in foreclosure. In Ulster, 302 were late, according to the report. Many of them are also adjustable-rate mortgages. Of those 2006 subprime loans whose rates will adjust by October 2009, likely with higher payments, 759 of them are in Dutchess and 267 are in Ulster.”

“Brad Kendall, Dutchess County clerk, said his office’s records of default notices, or lis pendens filings, has shot up. ‘If you’re looking at the number of the lis pendens over the years, it gives you a sense of how much trouble is out there. It’s about doubled over the last few years,’ Kendall said. Filings in 2007 hit 1,184.”

“‘It’s going to continue upward. The real estate values in the Hudson Valley had been increasing … which had allowed people to refinance their homes to pay off their credit card debts. That cycle has come to an end,’ said Thomas Genova, a bankruptcy attorney in Wappinger.”

“The ‘refi’ move no longer works when equity, or the homeowner’s share of a mortgaged home, is gone. Tapped by refinancing or home equity loans, what equity may be left disappears when the property value declines, Genova said.

“Another option is to walk away and give up the home. ‘The biggest change in this practice over the last six months is people coming in and saying, ‘I can’t afford to keep this house anymore,’ Genova said.”

“‘It’s turned 180 degrees from, ‘How do I keep this house?’ to ‘How long do I have to stay in this house before I have to leave?’ Genova said.”

The Journal News from New York. “For the past two years, the residential real estate market in the Lower Hudson Valley has resembled a stalemated chess game, in which buyers on one side and sellers on the other have refused to make a move.”

“Those in the market to buy are waiting for prices to drop to a level that represents better value.”

“Sellers, on the other hand, not keen on seeing some of the vast equity they’ve accrued in recent years suddenly slip away, are holding firm on prices. They include homeowners such as Soneka Samakai, the owner of a contemporary three-bedroom Colonial in Garnerville.”

“Samakai is selling her 2,200-square-foot, two-story home because she recently married and will soon move south with her husband. Though Samakai understands the market has slowed considerably throughout the Lower Hudson Valley, she was reluctant to ask less than the $500,000 that the home first listed at, but has since lowered the price by $15,000, to $485,000.”

“Equally vexing to Samakai is why buyers don’t instantly fall in love with the home, which features several updates, much as she did when she purchased it in 1999. ‘I just don’t understand it,’ she said.”

“Until homeowners and homebuyers can reach some accord, lower sales numbers are likely to continue. During the first three months of the year, sales dropped by about a third in Westchester and Rockland counties and nearly 10 percent in Putnam.”

“Meanwhile, prices held firm, with median prices for single-family homes in Westchester dropping by just 2 percent. In Putnam, the number is down 3.4 percent, while Rockland saw a drop of 5.2 percent.”

“‘One way of expressing what we have for this market is, neither party is motivated,’ said Greg Rand, managing partner at Prudential Rand Realty, which has 20 offices in the Hudson Valley. ‘A 2 percent decline in median sale price (in Westchester) is disappointing to me,’ he said. ‘I want to see a 5 or 6 percent decline.’”

“In Peekskill, Gary Henderson and Divette Jones face a short sale on their small North James Street home, which they bought in 1986.”

“The three-bedroom, one-bath home was valued at about $300,000 at the height of the market in 2004, Henderson said. Needing to pay back taxes, the couple at that time sought to refinance their fixed-rate mortgage with Countrywide Financial.”

“The adjustable-rate mortgage that Countrywide gave Henderson and Jones came with a promise that they could refinance within a year and convert the loan to a fixed rate, Henderson said. But before the year was out, Henderson and Jones saw their mortgage payment rise from $1,600 a month to about $3,500 a month, he said.”

“That’s more than they can afford, said Henderson, who earns about $31,000 a year. Between his paycheck and Jones’ disability payments, the couple bring in about $3,000 a month.”

“The couple, who have two children living at home, have turned to a real estate firm that works with distressed homeowners, which has listed the home for $245,000.”

Bits Bucket And Craigslist Finds For April 28, 2008

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