April 1, 2008

It’s A Market-Driven Issue In California

The San Francisco Chronicle reports from California. “The coordinators of Sunday’s auction of 41 units at the new Eight Orchids condominium midrise in Oakland billed the event as a means of finding the actual market value for such homes. Among the dozen transactions recorded by The Chronicle, sales prices ranged between 25.3 and 34 percent off the original asking price.”

“‘The market has definitely humbled us,’ said Stuart Gruendl, CEO of project developer BayRock Residential of Oakland. ‘But at the same time, our heads are above water and the property is succeeding.’”

“BayRock has been taking reservations for Eight Orchids, a 157-unit complex at Seventh Street and Broadway on the edge of Chinatown, since February 2007. As of early last month, it had sold 20 units - fewer than two per month.”

“One of the early single-bedroom condos sold for $316,000, up from a starting bid of $245,000 but well below the original $435,888 asking price. The auction for a three-bedroom, three-bathroom town home started at $475,000, stalled around $528,000 and then quickly ran up to $534,000.”

“That was nearly 34 percent off the list price of $805,888. Nevertheless, a member of the bidding family, when asked how he felt, replied: ‘I’m kind of nauseous.’”

“On the other hand, one winning woman walked out of the auction room crying tears of obvious joy, with her family members smiling and offering congratulatory hugs. ‘Nobody offered me a consoling hug,’ Gruendl later joked.”

“All 41 of the homes put up for auction received bids above the minimum. Ken Stevens, CEO of the West Coast division of Accelerated Marketing, said the auction would be used to establish the price for remaining homes at Eight Orchids.”

“More difficult to evaluate is what the auction will mean for the broader Oakland or East Bay market, experts say. P’All those auctions will end up in some appraiser’s book,’ said Christopher Thornberg, an economist with Beacon Economics of Los Angeles.”

“‘That kind of discount could be attributed to their location, as much as to the overall market and credit situation,’ said Patrick Duffy, principal with MetroIntelligence Real Estate Advisors in Los Angeles.”

“The particular challenge for Oakland developers is that several large condo developments have opened or begun selling the past year. These builders are selling only a few units per month on average, according to San Francisco research firm Mark Co.”

“The Eight Orchids discounts could be unwanted news for those who have bought downtown Oakland condos during the past few months - especially if they settled on a unit in the Chinatown building itself. Gruendl acknowledged there is a gap between what early buyers paid and the amounts agreed to at the auction.”

“‘But not enough that existing homeowners should lose sleep,’ he said.”

The Press Democrat. “Lenders increasingly are unloading foreclosed homes as supplies continue to mount in Sonoma County — good news for buyers and bad news for homeowners trying to sell.”

“One in four homes sold in Sonoma County in February were foreclosed upon in the past 14 months. Every week in February, buyers purchased 16 houses or condos that had recently been in foreclosure, according to DataQuick.”

“Two days was all Richard and Liz Fedrick needed to find a newer house in Cloverdale they liked and could afford, something they didn’t think possible after leaving Sonoma County four years ago in search of cheaper housing in Southern California’s high desert.”

“Last month, the couple, with their toddler, moved into the three-bedroom home they bought for $295,000 after the lender cut the list price 18 percent.”

“‘We were expecting to have to settle for something older, something small. But there were tons of choices,’ Richard Fedrick said. ‘It’s a great market.’”

“Still, the rest of the housing sector has a way to go before hitting bottom, agents said.”

“‘In order for a market to level out, you have to get through the bank-owned homes. There’s going to be more and more inventory this year and next year,’ said Rendino, an agent in Rohnert Park.”

“Every week in Sonoma County, lenders seize almost 50 homes and condos from borrowers who have stopped paying their mortgages, according to the county recorder’s office.”

The Charlotte Observer. “Starting today, Wachovia Corp. has stopped making so-called Pick-A-Payment mortgage loans in 17 California counties that have been hard hit by falling home prices and rising foreclosures, according to a memo obtained by the Observer.”"In these counties, the Charlotte bank is no longer originating mortgages that it keeps in its own portfolio, a class of loans that includes the Pick-A-Payment product, bank spokesman Don Vecchiarello confirmed. The bank continues to make mortgages that it can sell off to investors, he said.”

“‘It’s a market-driven issue,’ Vecchiarello said. ‘It’s not a product-driven issue.’”

“The 17 counties are in regions known as the ‘Central Valley’ and the ‘Inland Empire,’ areas the bank has identified in earnings conference calls as particular trouble spots. The territory stretches from San Diego in the southern part of the state to Sacramento in the northern part of the state.”

“Wachovia acquired the product when it bought California-based Golden West Financial Corp. in 2006 to expand on the West Coast and in the mortgage business.”

“Investors have worried about the $24 billion deal because Wachovia bought Golden West at the peak of the housing boom. About 60 percent of the bank’s Pick-A-Payment portfolio is in California.”

From FOX 6 San Diego. “When Eddie Zepeda’s mortgage payments went up, he went through the roof. ‘I was desperate,’ explains Zepeda.”

“He had to decide whether to pay his skyrocketing mortgage, or to take care of his family. Even working two jobs, Zepeda says there wasn’t enough money for both. Zepeda says the money problems started to take its toll on his family.”

“‘I was getting divorced at a certain point cause the stress was just too big,’ he says. Zepeda says he tried everything. He set up meetings with five different lenders.”

“‘Two brokers and three banks and they all told me to ride it out, that there was nothing I could do at this point,’ Zepeda explains.”

“Zepeda says he didn’t have much of a choice so he decided to stop paying his mortgage and simply walk away from his home.”

The Daily Bulletin. “If neighborhood streets could talk, El Rancho Verde’s roads would tell the story of change. Nonetheless, the same huge front yards, towering palms trees and ivy-laden landscape flourish on this stretch of county land located adjacent to Rialto’s borderline.”

“Things have changed for the worse, some residents say, but others say the best is yet to come.”

“John Brown moved here because the houses were cheap. That was in 2000. He paid $140,000 for his five-bedroom, three-bathroom home. ‘I have three kids and didn’t want to bring them up in the L.A. area,’ Brown said.”

“He’s optimistic about a proposed housing development by Lytle Development in the neighborhood’s northeast end that hasn’t materialized because of the busted housing market.”

“‘I’d like to see it happen,’ Brown said. ‘We’d like to see our property values go up.’”

The Modesto Bee. “Assessed home values — and property taxes — will be lowered this year on about 38,000 houses and condos, 4,000 mobile homes and 1,000 multifamily housing units in Stanislaus County.”

“County Assessor Doug Harms said that’s because property values have dropped dramatically in the past two years. He said some homes are worth less than half of what buyers paid for them during the 2005-06 housing boom.”

“The biggest drop will be for 2,500- to 3,500-square-foot Patterson homes purchased during December 2005, which Harms calculated are worth about 52 percent less than their original prices.”

“To break it down, homes purchased from October 2005 to July 2006 will see the biggest declines, which will average 40 percent to 44 percent countywide. The lowered assessments will reduce property tax collections.”

“‘It’s in the billions,’ Harms said of the loss. Last month he had estimated that property tax revenues would fall $1.4 billion, but now he estimates the loss will be significantly larger.”

“Five vacant Modesto homes that police say are havens for illegal camping, drug use and dangerous fires are set to come under the wrecking ball tomorrow. Police say officers and city building inspectors have since October worked with owners of the homes.”

“The owners agreed to allow city workers to demolish the buildings Wednesday morning, according to a Modesto Police Department press release.”

“‘There are a number of these properties throughout the city that we are monitoring,’ said city Building Inspector Bert Lippert in a press release. ‘If a property is being used as a haven for drug use or is becoming a safety hazard for the surrounding neighborhood, then we begin looking to the property owners to take reasonable steps to clean it up. If that doesn’t happen, then we have to look at other means to protect our community. And demolishing the dwellings is something that is very effective.’”




There’s No Need To Rush

Some housing bubble news from Wall Street and Washington. “Comstock Homebuilding Companies, Inc. announced that in connection with their unqualified opinion regarding the Company’s 2007 audit, the Company’s independent registered public accounting firm, PricewaterhouseCoopers, indicated their belief that declining market conditions and the significant amount of the Company’s debt which matures in 2008 creates substantial doubt that the Company would continue operating as a going concern.”

“Comstock builds and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use urban communities and active adult communities. The company currently markets its products under the Comstock Homes brand in the Washington, DC; Raleigh, North Carolina; and Atlanta, Georgia metropolitan areas.”

The Associated Press. “Centex Homes, a unit of homebuilder Centex Corp. sold 27 properties to a joint venture for about $161 million as it looks to minimize its land supply. The book value of the properties sold was approximately $528 million.”

From MarketWatch. “The agreement encompasses a group of 27 projects and about 8,500 residential lots in 11 states, with most of the properties located in California and Nevada.”

From Realty Check. “The book value, according to Centex, was $528 million at the time of sale, but analysts say that was already after significant writedowns. They say the land was worth $900 million originally.”

“Pali Research analyst Stephen East notes, ‘Given the well-known weakness in the markets, we are surprised that CTX had not been more realistic in its mark down of land in its impairment process the prior quarter. Did they really think three months ago this land was worth more than 3X what it was sold for?’”

“Construction spending fell again in February as home building tumbled for a record 24th straight month…the Commerce Department reported Tuesday. Residential activity has fallen every month since March 2006, a record period of declines.”

“Analysts believe that housing will keep falling until a record glut of unsold homes is reduced. That effort is being hindered by the fact that mortgage defaults have soared to record levels, reflecting the abuses that occurred in lending activity at the height of the housing boom.”

From The Age. “Switzerland’s biggest bank UBS unveiled massive new writedowns Tuesday and turned to its shareholders to prop up its capital base, as it became the bank worst-hit by the US subprime mortgage crisis.”

“The latest writedown — 19 billion US dollars (12 billion euros) — was the biggest single subprime hit so far worldwide and came on top of 18.4 billion US dollars the bank had written down in 2007.”

“Overal writedowns at UBS, now totalling 37.4 billion US dollars, are far greater than those of American banks Citigroup (21.1 billion US dollars in 2007) and Merrill Lynch, which has booked 19.4 billion US dollars in writedowns.”

“Deutsche Bank AG, Germany’s largest bank, said Tuesday that it expects first-quarter write-downs of $4 billion due to market conditions triggered by the U.S. subprime collapse.”

“‘Conditions have become significantly more challenging during the last few weeks,’ the bank said.”

From Reuters. “U.S. issuance of asset-backed securities tumbled 83 percent in this year’s first quarter as investors fled the risky subprime mortgage segment that fueled a global credit crisis in 2007.”

“ABS issuance slumped to $54.7 billion in this year’s first quarter compared with the $323.3 billion sold in the year-ago quarter, Thomson Financial said.”

“‘It’s hard to issue new securities when the buyers are effectively on strike. Why should you buy a new issue when everything in the secondary market is on sale, much of it at distressed prices too?’ said one portfolio manager.”

“‘I don’t see anything in the residential space in the next six months,’ said one investor. ‘Most of the home loans that are being made are agency-backed.’ ‘None of the loans being made have come from non-agency land,’ said one bond investor.”

“Issuance fell 30 percent to $863.6 billion last year from $1.25 trillion in 2006. The overall decline was led by a 61.9 percent drop in home equity ABS..also known as residential subprime mortgages.”

The Wall Street Journal. “As the falling real-estate and stock markets erode their savings, many aging Americans are delaying retirement, electing labor over leisure in uncertain times. With their homes worth less, fewer people feel confident enough to retire, even if they plan to continue living in them.”

“The giant gray wave is still an inevitability. But it has run into a breakwall. Investment advisers and retirement planners at more than a dozen firms say they are seeing large numbers of older workers put off retirement as the housing and stock-market troubles have deepened.”

“A three-decade veteran at IBM, Dick Boice had planned to sell his house, pack up and move to Arizona with his wife, Lauren, to take early retirement. But two months after the January date he set to exit the work world, Mr. Boice, who is 59 years old, is still on the job. He figures he’ll stay put for another couple of years.”

“The Boices had counted on proceeds from the house sale to boost their retirement income. After a year on the market, the roomy colonial in Blue Springs, Mo., didn’t move, forcing the couple to cut the asking price by $40,000 to around $250,000.”

“The house remains unsold. Meanwhile, Mr. Boice has watched the value of his 401(k) and individual retirement accounts fall by roughly 20% so far this year.”

“‘Everything is just heading south,’ says Mr. Boice. ‘You can’t hardly make any kinds of plans because you don’t know what you can count on.’”

The Boston Globe. “Note to young renters: It’s a very good time to start thinking about buying your first house. Sure, the housing market is in the dumper, and houses are still expensive - up almost a third from their prices at the start of the decade, with some markets considerably higher than that.”

“Right now, the housing glut means sellers are motivated and prices are falling. There’s no need to rush, suggests Walt Molony of the National Association of Realtors. Nobody, not even the usually optimistic agents’ group, is predicting increasing prices.”

The Whittlesea Leader from Australia. “Banks are repossessing Whittlesea homes at a rate of one every four days as families struggle to pay their mortgages, Supreme Court records show. Welfare workers say growing numbers of families with mortgages are crying for help.”

“North East Housing Service manager Cheryle Avent said the situation was likely to worsen unless there was drastic government action, with many Whittlesea residents ‘mortgaged to the hilt.’”

“Steve Chesterton, of Chesterton & Co Real Estate, said first-home buyers had ‘missed the boat’ and some were postponing having children because of high prices. ‘I feel painfully sorry for the first home buyer it would be extremely difficult with a young family.’”

The News Limited. “Australians should resign themselves to the fact that housing will never be affordable, a housing report from the Reserve Bank says. The report said ‘it is no doubt the case that housing will never be as ‘affordable’ as we might like, and the cost of housing has been the subject of concern for at least several decades.’”

“The increase in housing prices had been ‘a mixed blessing’ for Australians, the RBA said. ‘At one level, rising housing prices have made many people feel wealthier and have contributed to higher levels of consumer spending than might otherwise have occurred. But they have also resulted in concerns about housing affordability.’”

“The RBA said governments had an important role to play in making housing more affordable. ‘In particular, policy initiatives to address any structural factors that encourage excessive demand for housing … will reduce ‘average’ house prices over future cycles and could provide enduring affordability benefits to both home buyers and renters.’”

“‘It is now widely accepted that policies that simply give people more money to spend on housing are likely to be capitalised into higher housing prices.’”

The Leader Post from Canada. “The Saskatchewan Housing Corporation has programs in place, like the Home First home ownership program, which makes it easier for families with low to moderate incomes to buy homes.”

“The Home First program includes forgivable loans of up to $20,000 and deferred payments on low-interest mortgages of up to $30,000.”

“A new housing development in Regina is opening the door to home ownership for some families. The city has committed to providing five-year tax exemptions to families moving into Maple Leaf Estates ‘For our family, it’s an opportunity we probably wouldn’t have had (otherwise),’ said Connie Grasdal, who recently moved into her new home.”

“According to Grasdal, having the chance to build equity in her own home is a welcome change from her days of renting. ‘Especially in today’s market,’ she observed. ‘That’s another reason it would have been impossible for us to find a decent place.’”

“Grasdal, who braved the morning chill to attend Monday’s opening ceremony, explained why she brought her daughters to the event, which fell on a school day. ‘(We’re here) to show how grateful we are for the project,’ she said.”

“While Saskatchewan is in the middle of a booming housing market, there are signs of a slowdown elsewhere in the country. In Alberta, which until recently had been home to the country’s hottest housing market, house prices have been falling recently in some places.”

“But don’t expect the American experience to be repeated anywhere in Canada, according to economist Derek Holt. Holt said there are significant differences in the housing markets of the two countries and he doesn’t think there’s a Canadian housing bubble that’s about to burst.”

“‘Frankly, (American) mortgage brokers just got sloppy,’ he said, referring to practices like ‘ninja loans,’ where financing was made available to people with no income, no job and no assets. ‘I don’t think you had that kind of dynamic in (Canada),’ Holt added.”

“Further, Holt doesn’t think houses in Saskatchewan are overvalued, given that virtually all sectors of the provincial economy are firing on all cylinders. ‘(They’re providing) good, firm support to the housing market,’ he said.”

“Richard Corriveau of Canada Mortgage and Housing Corporation, said Saskatchewan will ‘absolutely’ experience a slow-down in the housing market at some point in the future, like that which is happening in Alberta now. He said both provinces recently experienced price increases of about 50 per cent over two-year periods, which are not sustainable over long periods of time.”

“‘But we’re still forecasting a solid 8.2-per-cent gain (in 2009),’ he said.”

“Corriveau also believes that Saskatchewan’s higher house prices simply reflect the strength of the province’s economy, which greatly reduces the risk of a housing-market collapse.”

“‘Saskatchewan is certainly enjoying its time in the sun and for very good reason,’ he said. ‘It’s long overdue, in my opinion.’”

The Dallas Morning News. “Analysts with the Federal Reserve Bank of Dallas are keeping a wary eye on local housing. ‘We have seen some slight edging down – some downward pressure – on prices,’ said D’Ann Petersen, a business economist with the Dallas Fed. ‘But it’s nothing like we have seen on the national level or especially compared to places like Florida, California and Nevada.’”

“The number of North Texas houses winding up in foreclosure – more than 19,000 in 2007 – is troubling, she said. ‘Foreclosures for me are the wild card,’ Ms. Petersen said. ‘So far, it hasn’t had a large impact on our inventories or home values. And we are in the top three for job gains.’”

“The homebuilding industry is returning to older standards. ‘In Dallas-Fort Worth, every year we have produced more houses than we sold, and we have done that for five or six years,’ said Bruno Pasquinelli of Portrait Homes.”

“‘We have got to get rid of all these extra communities and get our pricing power back in this market,’ he said. ‘There is just too much of everything.’”

“‘Sellers are much more realistic,’ said Virginia Cook, founder of a Dallas real estate sales firm. ‘They do listen to our opinions of home value now more than they did before. People, if they can’t make money on their house, feel like they are cheated in some way.’”

From KHOU.com. “On a street named Celia in East Houston sits what years ago must of have been a cozy little house with a piano that now is way off tune and a big backyard that’s now a jungle.”

“Usually, when you find a house that’s in this bad of shape, it’s been abandoned. But this horrible house does indeed have an owner and that owner has a name: Sam, Uncle Sam. According to county property records, the owner is the RTC: the Resolution Trust Corporation.”

“The RTC was setup by the federal government in the late 1980s after the economy tanked and thousands of homes in Houston were lost to foreclosure. ‘It wasn’t just homes,’ Harris County Appraisal District spokesman Jim Robinson said. ‘We had major commercial property, vacant land, shopping centers … [owned] by the federal government. They generally sold them off.’”

“But why would the federal government be so irresponsible? 11 News spoke to an official with the FDIC, which took over the RTC. He checked their records and said the government sold the house 13 years ago. But the records are so old, he said they don’t know who bought it.”

“The official said it’s likely the home was bundled with other low-value properties and auctioned off to what the official called bottom-feeders: investors who bought up properties dirt cheap.”

“If the properties turned out to be bad investments, the investors would never bother to have the land titles put in their names, they’d simply abandon the homes. They’d washed their hands of them, and so had the federal government.”

“If a house ever became a problem, the problem wasn’t the investors’ or the federal government’s. In this case, it became the problem of everyone on Celia Drive.”

“Jorge Hurtado lives across the street. He has to look at it every day and, ‘worry about it because it’s dangerous for everybody,’ he said.”




Too Many Dogs And Not Enough Bones

The Sun Herald reports from Florida. “Tern Bay Golf & Country Club Resort, the first phase of a 1,789-acre, 1,810-home development, is now owned by the landscaper. And Scott Hawkins will sell it to you, to anyone, for the $300,000 he’s owed on the stalled project. One caveat: ‘You can’t build a house, can’t get a permit, can’t do anything until this thing is settled,’ he said. ‘There are a lot of people who are owed a lot more money than I am. I was just the one who got the ball rolling.’”

“Its 18-hole golf course is closed and only 14 homes were built before the project simply stopped last summer. Tern Bay LLC signed Lennar Corp. as its sole builder. Lot sales were coordinated by Priority Developers Inc. In August, Lennar dropped out.”

“‘Lennar’s deal allowed them to abandon the project and forfeit their $10 million deposit,’ said Ross McIntosh, a Naples land broker. ‘So Lennar went home,’ he continued, ‘leaving Priority holding a $100 million bag, which it didn’t remotely have the means to sustain.’”

“Sarasota developer Pat Neal said whoever steps in will seek a renegotiable bargain. The project ‘is actively for sale and will be sold 30 to 40 cents to the dollar,’ he said. ‘It will come back with another developer as a new project’ no sooner than 2013.”

“Until then, Griffith Construction Inc. President Bill Griffith said, ‘I feel sorry for the one person living there.’”

The Herald Tribune from Florida. “Last month, Palmetto developer and home builder David P. Lewis defaulted on four loans from Naples-based Orion Bank totaling $12.5 million. Three of the loans were taken out by Lewis’ company, Manatee Moccasin Wallow Inc., to finance a 40-acre development in Palmetto that Lewis bought for $3.4 million during the real estate boom and where he planned to build 96 single-family homes.”

“The fourth loan, for $4.8 million, was secured by Lewis’ Palmetto Estates, a 56-acre housing development in Palmetto.”

“Like so many other builders and developers, Lewis suffered from declining sales in the post-boom environment. He sold 57 homes in 2005, 35 homes in 2006 and 26 in 2007. So far in 2008, he has only sold three, court records show.”

“Early last year, Lewis attempted to sell off his 96-unit Manatee Moccasin Wallow development as well as a 284-unit town house project he had planned near U.S. 301 and Interstate 75 for $9.9 million, but he was unsuccessful.”

“Sarasota artist Erez Back has defaulted on five loans totaling $3.1 million since November 2006. Three of the loans, totaling $1.36 million, are payable to the Bank of New York. The other two, totaling $1.74 million, are owed to US Bank.”

“Back bought a house in Sarasota for $175,000 in June 2002. He then bought four more properties during the boom for $3.1 million. Back could not be reached for comment.”

“Drive down any Sarasota street these days, and it seems the path is dotted with for-sale signs. Those homes on the market just may have a new owner: the bank.”

“‘Our sellers of tomorrow are the banks,’ said Kathy Marlowe, of Keller Williams Realty, who estimated the majority of her sales in the coming year could be bank-owned property.”

“Marlowe and four other partners have formed a new real estate team dedicated to foreclosures. The newly minted ‘Florida Foreclosure Team’ will be starting guided tours that highlight area properties that banks are hoping to jettison.”

“‘The homes in foreclosure are really all over the board,’ said Marci Walker of Blue Skye Lending, including everything from million-dollar waterfront condos to modest properties.”

The Bradenton Herald from Florida. “While the tour is a good way to raise awareness, Mike Rahn, mortgage lender at CNL Bank. said many of those looking to buy short sale or foreclosure properties aren’t being realistic. Some offers the banks receive are so low that they are not even taking them despite the state of the market and not wanting to be property owners.”

“‘I don’t think there’s any magic bullet, I think it’s just going to have to run its course,’ Rahn said. ‘I think we’re going to be in ‘09 before we see a real recovery.’”

“According to Manatee County Clerk of Circuit Court records, there were 427 foreclosures in March, more than any single month in 2007 and so far in 2008. Experts believe that things may get worse before they get better.”

“‘There’s still an awful lot of adjustable mortgages out there and we’re told that more will be resetting this year,’ said Carol Ciarniello, executive director of the Center for Financial Independence.”

“Ciarniello has seen a decrease in the number of people turning to the organization for help to save their homes. She’s unsure if the change is because there are more investors in trouble or if people are just too scared or embarrassed to reach out for help.”

The Palm Beach Post from Florida. “With a growing number of homeowners having trouble keeping up with their mortgage payments, the city on Monday announced a $1 million program to try to forestall foreclosures.”

“For some qualified homeowners, the city will offer up to $10,000 in emergency assistance to pay arrearages. Nearly 2,000 homes in the city are in ‘pre-foreclosure,’ city officials said”.

The Sun Sentinel from Florida. “In February, more than 1,700 Palm Beach County homeowners were at least 90 days late on their mortgage payments and were in danger of losing their homes to lenders, according to Realestat.com. That’s more than double the number of people facing Foreclosure in the same month last year.”

“Broward County had more than 2,200 homeowners in danger of Foreclosure in February, also more than double the number a year ago.”

“The United Way of Palm Beach County and other agencies sponsored a one-day seminar in February in Boynton Beach designed to help homeowners facing Foreclosure. The keynote speaker was HUD Secretary Alphonso Jackson, who announced his resignation Monday.”

“‘The housing crisis has been a powerful, staggering shock to our economy,’ Jackson told the crowd of more than 400. ‘Millions of homeowners have felt it. … The ripple effect touches financial institutions and governments everywhere.’”

“It’s a clear morning on Fort Lauderdale Beach ‘It’s the perfect storm,’ Eric Kozlowski said.”

“Inside Primanti Brothers Pizzeria, Kozlowski, who’s cooking at the grill, wasn’t talking about the weather. Rather, the perfect combination of factors that have small businesses on the beach reeling: the collapse of the South Florida housing market, the dramatic downturn in the national economy, the transition of Fort Lauderdale beach property from middle-class family-friendly to high-end resorts.”

“In the past, beach businesses would hope to capitalize on Spring Break to catch up. But this year, they haven’t even had much of that. ‘A few years ago, they started a campaign with a motto: Fort Lauderdale — positively posh,’ Kozlowski said. ‘Well, you can shoot a cannon ball down that beach and not hit a positively posh person.’”

“‘I won’t mention names, but I’ve been open here 38 years and have ties to a lot of the saloons and restaurants in town, and I don’t know anyone who’s doing better than breaking even,’ said Tim Schiavone, owner of another nearby beach icon, The Parrot.”

“‘I don’t know what’s going to turn it around,’ Schiavone said. ‘It seems the middle class in America is being squeezed out. And that’s my market. When your gasoline bill is up $100 a week, and electric is 40 percent higher and your condo is new on the tax rolls and insurance is higher, you’re not likely to go out to dinner.’”

“He paused for the right words. ‘Too many dogs and not enough bones.’”

The Augusta Chronicle from Georgia. “Growth in Columbia County, the fastest-growing section of the Augusta metro area, is finally starting to slow.”

“‘Columbia County is definitely holding up better than the average, but we have felt it,’ said Jim Courson, the owner of Jim Courson Realty in Martinez. ‘There’s no question about that. Any Realtor who tells you differently is lying.’”

“For those who can qualify for a mortgage, Columbia County is a buyer’s market. There are more than 1,400 homes for sale in the county, according to the Realtors association.”

“Faced with paying long-term interest on unsold new homes, many builders are discounting home prices in an effort to sell them quickly. ‘A lot of them now don’t want the cheese,’ said Johnny Hensley, a VP for ReMax of Augusta. ‘They just want to get out of the trap.’”

The Post & Courier from South Carolina. “The somber statistics measuring the housing market in Charleston just keep coming like a steady stream of termites squirming out of woodwork. Charleston-area home sales in the first two months of the year plummeted 28.5 percent from the same period of 2007.”

“And the number of properties for sale has stretched to a whopping 10,850 listings.”

“After two years of such dismal indicators, the foundation of the area real estate business is full of holes. Some say the whole works are close to collapsing. Others say it already has.”

“Jaime Banda watched his lenders ratchet up a loan agreement last year when he was trying to buy a house and his credit score faltered. Banda’s expected payment went from $1,426 a month to over $2,000.”

“Banda got a better deal when he improved his credit and eventually moved into a 1,600-square-foot house between Moncks Corner and Goose Creek in December. The property was flanked by homes for sale. Since he plunked down $175,000 for his property, prices on the neighboring homes have been cut from $259,900 to $229,000, and from $219,000 to $194,000.”

“‘I’m not going anywhere, but it makes me nervous if I had to sell,’ Banda said.”

“Dan Ravenel said the current slump is just part of a cycle, the type of free-market adjustment that he has seen a number of times in his 31 years of selling homes.”

“‘It concerns me for my clients, because I see a lot of them frustrated … but I’ve been there before and I think old folks like me weather these storms very well,’ he said. ‘We didn’t spend all our money last Christmas.’”

“Slumping sales and the subsequent media reports haven’t helped, he acknowledged, but he noted that the industry is slipping from a lofty perch — the huge appreciations of 2004 and 2005.”

“‘I would love to think that press was wholly to blame for this, but it’s not that easy,’ Ravenel said. ‘It will take a while to recover. People are skittish. Nobody wants to be foolish.’”

The News & Observer from North Carolina. “Sales of the Triangle’s existing homes fell for the eighth consecutive month in February. Existing home sales declined 16 percent from a year ago in Wake, Durham, Orange and Johnston counties to a total of 1,590, according to the Triangle MLS.”

“Job growth and a market unscathed by speculator-driven purchases had kept the Triangle housing market relatively strong during the national housing slowdown. But slowing job growth, record foreclosures, which added hundreds of additional homes into the market, and tighter lending restrictions have cooled the local market from its 2006 record.”

“Wes Minton, an owner of the York Simpson Underwood residential brokerage in Raleigh, said brokers and sellers were spoiled by record sales years from 2003 through 2006.”

“‘It was good so long, it can’t be that good all the time in any business,’ Minton said.”

“‘Sellers saw such big numbers in sales prices for so long everybody thinks their house will bring top dollar,’ said Minton, whose sales are down about 10 percent from last year. ‘But in the market now, things aren’t bringing top dollar. There are plenty of houses selling, but sellers aren’t getting as much as they hoped.’”

“Pending sales — an indication of future closings — were down 23 percent from a year earlier. The number of homes on the market with price drops was 69 percent higher than in 2007. Expired listings are up 189 percent, and withdrawn listings are up 29 percent, said TMLS real estate analyst Stacey P. Anfindsen.”

“Linda Craft of Raleigh, who sells about 350 homes annually, said she has increased advertising and now hires home stagers for all listings. But another key to higher sales is advising sellers not to expect prices from a bygone market.”

“‘Six months ago, agents would ask another 6 to 10 percent, and in a down market that formula doesn’t work,’ Craft said. ‘Now we’re putting [prices] where the market really is.’”

“‘You’ve got a real housing slowdown on your hands,’ said Moody’s Economy.com economist Michael Helmar. ‘It still isn’t as bad as the rest of the world, but that doesn’t mean you are not having some struggles. It just means the rest of the world is worse.’”




Bits Bucket And Craigslist Finds For April 1, 2008

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