The Housing Bubble

KMPH reports from California. “An inventory closeout auction in Chowchilla, Sunday afternoon, placed high-end homes in the reach of buyers in need of a break. In a time when home sales are low and foreclosure rates high, Michael and Hermosa Dopheide landed their 4-bedroom home. It was previously priced at $319,000 but they bought it for a flat $200,000. ‘We’re both teachers and we don’t really have a lot of cash, so we have to be really very discriminate in the way we use it,’ said Hermosa.”

“Michael says he’s confident he and his wife have made a smart investment. ‘The price is right and I think it’s an up-and-coming market so I’m taking a little risk but I think it’s a good one for our future,’ said Michael.”

The Fresno Bee. “Instead of the familiar auctions for foreclosed properties in the central San Joaquin Valley, this one featured new houses with varying degrees of amenities — such as lakefront views and a golf course.”

“A 4,002-square-foot home with four bedrooms, 31/2 bathrooms and an option for a separate guest house was priced at $470,000 — instead of the original $734,000. On the other end, a 1,436-square-foot home with three bedrooms and two bathrooms was listed at $160,000 instead of $304,000.”

“These were the actual minimum prices, which meant a home would sell as long as there was one bid. This practice differs from some auctions of foreclosed homes. By the end of the event, 22 of the 31 homes up for auction had owners.”

“Some homes sold for their minimum prices, such as a 2,350-square-foot house with three bedrooms and two-and-a-half bathrooms in The Cascades. Lisa Magee jumped up and down, squealing, after her father-in-law bought the home for $320,000. (Its original price was $484,000.)”

“‘Oh, I’m shaking,’ she said afterward.”

“Sales of homes in the two developments were robust for about 11/2 year until they slowed down a year ago. ‘We lowered the prices so far to make it attractive,’ said Marty Clouser, senior VP of the company behind Sunday’s auction.. ‘Let the buyers decide their discount.’”

“Chowchilla almond farmer Noreen Fry was hoping for one of the lakefront homes with its own boat dock, but after one of her friends started bidding on it, she said she stepped aside.”

“And some of the houses didn’t sell, including the $470,000 home that was originally $734,000.”

The Recordnet. “The housing boom made construction one of San Joaquin County’s fastest-growing industries from 2002 to 2005, according to a 2006 California Employment Development Department report.”

“It’s a different story now. The residential building halt and mounting foreclosure crisis, the latter of which has displaced many San Joaquin County families, also have left a shortage of work for Marselo Martin and other laborers who once built and landscaped those homes.”

“Now homeless, he does side jobs - anything to send money to his family. ‘Today I work. Tomorrow I might not,’ said Martin.”

“The surge in day laborers soliciting at Stockton’s Gateway Plaza concerns property owners. As many as 100 men wait for work every day in front of the plaza’s Unocal 76 gas station, as police intermittently survey the area for loitering.”

“Increased competition among workers is also a problem for the laborers. For every employer that pulls up, five to 10 men rush to the vehicle, but only a few are chosen. By the end of the day, most are left behind.”

“Martin spends many nights sleeping under the downtown freeways when there’s no room in local shelters. ‘Right now, there’s no work here. It’s almost as bad as Mexico,’ he said.”

The Santa Cruz Sentinel. “A near record number of homeowners likely won’t pay property taxes by the April 10 deadline, another sign of just how tight things have become.”

“‘If you’re starting to have some debt problems and you don’t know if you’re going to make it, the first thing you do is stop paying the property taxes,’ said loan broker Jim Chubb in Soquel.”

“About 4.5 percent of property owners countywide, nearly one in 20, are expected to be in this situation come Thursday, the due date for the final installment of the 2007 property tax bill…according to projections by the county’s Assessor-Controller Office.”

“The projected rate of delinquency is up from 2.3 percent four years ago and is the highest since at least the mid-’90s, said Assessor-Controller Mary Jo Walker. ‘We have to be robust enough to withstand the shortage [of delinquent property taxes] for a couple years,’ Walker said. ‘We prefer this not to happen.’”

“Already, the county’s property tax roster, which normally accounts for more than 10 percent of total revenues, is showing stunted growth due to the slumping real estate market. Hundreds of homes have been reassessed at lower values, meaning less property tax coming in on those properties, a trend that’s expected to continue in the coming year.”

“The highest rates of tax delinquency are expected in Watsonville, where 10 percent are projected to miss the Thursday deadline, and the San Lorenzo Valley, where 7 percent are expected to be late.”

“County Tax Collector Fred Keeley says the high numbers are no surprise given the current housing crunch and the struggle for credit, a crisis evident in the rate of foreclosures.”

“This year, at least 130 county homes have been foreclosed — compared to 29 at this time in 2007.”

The Daily Press. “Foreclosed homes are becoming a breeding ground for criminals, according to Karen Hunt of the San Bernardino County Sheriff’s Department, Victorville station. The entire Victor Valley is plagued by this problem, not just Victorville.”

“‘Anytime you have property with nobody around, there’s a potential for vandalism,’ Hunt said. ‘Sometimes, even if neighbors notice strange people, they just assume they must be the new owners.’”

“Another area of real estate affected can be new homes being built, Hunt said. ‘We encourage builders to have security on site,’ she said.”

“The San Bernardino County Board of Supervisors is expected to direct the Sheriff’s Department to come back with a report on May 14, said David Zook, spokesman for San Bernardino County 1st District Supervisor Brad Mitzelfelt.”

“‘The primary intent of the item is the public safety aspect, which is to ensure we’re doing all we can to prevent criminal activities in vacant homes,’ Zook said. ‘The other key aspect of that is metal theft, because we know how prevalent metal theft is in our county.’”

“‘They go in and get the stoves and get whatever they can get,’ said Jack Fales of Ambassador Realty. ‘We see it a lot.’”

The Press Enterprise. “Marla Berry is one of 305 teachers who received preliminary layoff notices from the Rialto Unified School District. She is one of 14,000 teachers statewide who have been notified that they might not have jobs next school year.”

“Karl Stuck, president of the Lake Elsinore Teacher’s Association, said 32 teachers with temporary contracts have been notified that those contracts may not be renewed.”

“‘Quite a few people have no clue how they’re going to make their mortgage payments after June 30,’ he said. ‘The housing crisis is causing the budget crisis and the budget crisis is causing districts to lay people off, which further exacerbates the housing crisis. It’s a self-feeding cycle.’”

“Jacob Milchman, a fifth-grade teacher at Record Elementary School, and his wife, Amy, a fifth-grade teacher at San Jacinto Elementary, were two of 50 teachers in the San Jacinto Unified School District to be notified that they could be losing their jobs through budget cuts.”

“In November, the Milchmans bought a three-bedroom home in Winchester. They need both of their salaries to make the payments. Compounding their worries, they are expecting their first child on June 2.”

“Willard Hughes, a teacher at San Gorgonio High School in San Bernardino, said he has been through layoffs in other jobs. But that was before he was 29 years old, married and the father of four, he said.”

“‘It’s more nerve-wracking now,’ he said.”

“The California native, a first-year teacher with the San Bernardino City Unified School District, moved back from Montana to take a job in the Cadet Corps program. He still has his Montana license plates and continues to pay the $125 a month rent on a three-bedroom apartment the family lived in there.”

“He planned to buy the Redlands home he is renting but learned in January that his contract would likely not be renewed next year.”

The Daily Pilot. “Someone in the real estate community wants to help Melissa Barnes sell a home, and it’s not a friend, a family member or even a colleague. In fact, it’s a competitor.”

“Barnes, a Realtor in Newport Beach, recently got a boost from Surterre Properties, another Newport Beach firm. A month ago, Surterre began sending out an e-mail list of Best Buys — homes that are a bargain due to their price, location or other factors — and one of Barnes’ properties in Newport Heights got picked for the latest mailing.”

“‘What I think it shows is that agents are grouping together, no matter what company they belong to, in order to facilitate sales,’ Barnes said. ‘That’s what we all need.’”

“‘The media per se likes to sell newspapers, and they like to dwell on the negative rather than the positive,’ said Realtor Spyro Kemble, who conceived the project. ‘Across the U.S., we have a subprime mortgage mess, but you don’t have that as much in the Newport Beach area.’”

“One of the firm’s goals, agent Michelle Brown said, is to encourage people to look for deals now rather than wait for home prices to plummet further.”

“‘Everyone’s waiting for that perfect day, but the problem with that is, you never know when the glass is empty,’ she said.”

The Pasadena Star News. “According to the staff at the family-owned West Covina Pawn, every day has been exceptionally busy since the economy started to tank. A constant stream of customers crowded the store last week, hoping to get cash for their valuables, including jewelry and antique gold coins. Most said they needed the money to pay bills.”

“‘The out-flowing money on loans has been exceptional,’ said Clint Toth, owner of Arts Jewelry and Loan in Whittier. ‘(We’ve seen) a lot of real estate agents, a lot of middle-class people.’”

“Pawnshop owners said they often see the effects of a distressed economy before anyone else. When people reach the end of their ropes, they start taking out loans against their personal possessions or just selling it outright.”

“Pawnshop owners like Monrovia Mayor Rob Hammond are noticing the return of a regular harbinger of bad economic times - more white-collar workers in their stores.”

“‘We’ve been seeing more white-collar workers in the past six months,’ Hammond said. ‘There are two major reasons I’m hearing right now - one is the high cost of gas … and we’re hearing from more and more people that their hours were cut or their jobs were eliminated.’”

“Pawnshops are always busy, Hammond added, but lately, they’re even busier.”

“Selling belongings or taking out loans using them as collateral is an indicator of crises happening in households, said Julie Albright, marriage and family therapist and sociology lecturer at USC.”

“‘It’s like a pressure cooker where the screws just keep tightening down and tightening down,’ she said.”

“Todd Robinson of Crown City Loan and Jewelry in Old Town Pasadena said he sees the middle class struggling first-hand. He said he’s getting at least a dozen brand-new customers a day.”

“‘They’re definitely coming from a different walk of life’ than his regulars, he said. ‘Poor people are still poor, but it’s the middle-class people that are just hanging on. They’re really starting to feel it.’”

“Experts said the economic downturn became notable toward the middle of last year with the sub-prime mortgage crisis, and other factors like manufacturing plant closures.”

“‘It’s a very complicated and scary situation, but I think we will be recovering by the end of the year,’ said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. ‘But I think it will be a little slower than anybody would like.’”

“Kyser said the sub-prime crisis has trickled down, impacting a broad range of people, including workers in the retail, auto, construction, mortgage and housing industries. One of the most alarming trends, he added, is the erosion of the middle class.”

“‘It’s very definitely a two-tier economy,’ Kyser said. ‘We’re losing our middle class and nobody knows what to do to save or stabilize it.’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “A $7,000 income tax credit to anyone who buys a foreclosed property, further undercutting your asking price, (is) part of a deal that includes $29 billion in tax cuts through 2010 that are intended to give the battered housing market a boost. U.S. Senate leaders agreed to it on April 2. More than $25 billion would be handed out to homebuilders over a three-year period in the form of rebates of income taxes paid during the height of the housing boom.”

“‘These tax provisions will keep property values up, keep folks in their homes, and keep businesses afloat, and those are all keys to handling the housing crisis,’ Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said in a statement.”

“No, they’re not keys to handling the housing crisis. At best, they would be a waste of taxpayer money. At worst, they might delay some of the adjustments that have to occur before the housing market can stabilize.”

“The $7,000 credit, which would be paid over two years, is as likely to depress values as to prop them up.”

“The problem for homebuilders is that during the boom they geared up to construct more than 2 million new housing units a year. That included stockpiling land, increasing their workforces and constructing many houses on speculation.”

“Today, only about half that many homes are being built and sales have plunged. If anything, allowing losses to be carried back an extra two years could work to slow down the needed industry shakeout.”

“As a Finance Committee statement said on April 2, ‘Homebuilders and other housing sector businesses particularly need cash to prevent layoffs, to avoid selling land and houses at distressed prices, and simply to shore up their lagging bottom lines.’”

“Avoiding the sale of land and the inventory of unsold new homes is exactly the wrong thing to encourage. Reducing the overhang of new homes is the real key to establishing a bottom for the industry.”

The Wall Street Journal. “Do the political math. The Mortgage Bankers Association tracks 46 million mortgage borrowers, and 42 million are paying on time. More than 20 million households own their homes outright and, having worked for years to pay for them, probably don’t want to pay for someone else’s. Neither do 35 million renters who didn’t take a flyer on nicer digs.”

“The Senate Banking Committee, chaired by Connecticut Democrat Christopher Dodd, held the first of what are sure to be many hearings last week on the government’s role in connection with the near-collapse and ultimate acquisition of Bear Stearns Cos. by JPMorgan Chase & Co.”

“Isn’t there an inherent conflict of interest? Congress has oversight responsibility for financial regulatory agencies. At the same time, the members represent business constituencies dedicated to opposing rules and regulations that get in the way of their profits.”

“As for Dodd, he’s no piker when it comes to raking it in from the financial industry. Finance, insurance and real estate companies chipped in $13 million in campaign contributions since 1989, according to the Center for Responsive Politics.”

“As a group, members of the Banking Committee received a total of $29.3 billion in the 2003-2008 election cycle from those industries and related political action committees.”

“Among the ideas floated by Treasury Secretary Hank Paulson last week in his blueprint for regulatory reform was for the Fed to become a kind of uber-cop.”

“But if Fed policy makers can’t identify an asset bubble until after it has burst (by their own account), how can they anticipate the next threat to the financial system?”

From Reuters. “Former Federal Reserve Chairman Alan Greenspan has defended himself from charges that easy U.S. monetary policy created the current credit crisis by inflating a housing bubble, and instead blamed professional investors.”

“‘The U.S. bubble was close to median world experience and the evidence that monetary policy added to the bubble is statistically very fragile,’ Greenspan wrote.”

“‘The core of the subprime problem lies with the misjudgments of the investment community,’ he wrote. Subprime-mortgage securitisation exploded because it appeared misspriced and there were few delinquencies and defaults, ‘creating the illusion of great profit opportunities.’”

“Lenders were then pressed by securitisers for mortgage paper ‘with little concern about its quality.’”

“Greenspan also said he doubts tightening of regulation would have solved the problem. ‘The problem is not the lack of regulation but unrealistic expectations about what regulators are able to prevent,’ he wrote.”

The Dallas Morning News. “Credit score experts have bragged about the way the all-important three-digit number is able to predict a consumer’s likelihood of repaying a loan. But did they fail to screen subprime mortgage applicants properly?”

“‘The FICO score is based on their existing credit accounts,’ said Craig Watts, Fair Isaac spokesman. ‘That’s where the lenders went astray. They thought the FICO score could anticipate additional risk that an exotic mortgage was going to bring to an individual’s credit risk. That’s not what the FICO scores do.’”

“Lenders were using the credit scores ‘as a way of pricing the risk, but they really weren’t an indicator of how well those loans were going to perform,’ Mr. Fishbein said.”

“Dallas mortgage banker Craig Jarrell believes in the FICO scores. ‘I don’t think they failed at all,’ said Mr. Jarrell. ‘They [subprime borrowers] had bad credit, and they got a loan anyway.’”

“The lenders who made those loans ignored the fact that the borrowers with poor credit shouldn’t get a home loan. Blame that mindset on the fact that the lenders could just pass the risk to investors who were eager to snap up high-yielding securities backed by subprime loans.”

The New York Times. “Almost all mortgage applicants had to sign a document allowing lenders to verify their incomes with the Internal Revenue Service. This includes the so-called stated income mortgages, affectionately known as ‘liar loans.’”

“So while borrowers may have misrepresented their incomes…lenders had the tools to identify these fibs before making the loans. All they had to do was ask the I.R.S. Instead, lenders appear to be complicit in the rampant fibbery.”

“Mike Summers, VP for sales and marketing at Veri-tax Inc., in Tustin, Calif., knows plenty about this. His company handles the filing of these verification forms with the I.R.S. on behalf of lenders and loan originators. He began selling the service to lenders in 1999 and said he was surprised at the reaction he received — like that of a skunk at a garden party.”

“‘In 2001, I was going around the subprime world trying to get them to sign up,’ Mr. Summers recalled. ‘Ameriquest, and others I don’t want to name, just didn’t want to know because it would kill the deals. The attitude was don’t ask, don’t tell.’”

“Can investors stuck with losses on these loans sue to recover their investments based on this due-diligence failure? ‘Investors hoping to put back the loans for deficient underwriting under reps and warranties would end up going back to the originators,’ said Josh Rosner, an authority on mortgage-backed securities. ‘Given that many of these lenders are out of business, ultimately this could come back to the bank or investment bank.’”

“‘The general view is this should not be talked about out loud,’ Mr. Rosner added.”

“Wall Street will certainly battle forcefully against such lawsuits, if investors bring them. But its role as one of the great enablers in this mortgage debacle is something that even Wall Street can’t deny.”

The Orange County Register. “A small group of former mortgage workers were huddled around a table last month, talking about the dire condition of the industry that had employed them.”

“‘I always assumed that the industry would be there,’ said Dave Kleiman, 48, who started at age 18 in what is now called subprime lending and most recently was a senior manager at Saxon Mortgage in Foothill Ranch, which shut down in February. ‘There’s nothing left to rebuild now.’”

“Jon Daurio is a former Ameriquest executive who founded subprime lender Encore Credit Corp., which was bought in 2006 by Bear Stearns Cos. He’s doubtful the local subprime industry will ever be what it was before last year’s crash.”

“‘It’s not coming back, and if it comes back, it’s not going to be the same way, and it’s definitely not going to be on the profit structures that we had,’ he said.”

“What fueled the recent boom for subprime lenders was securitization. Wall Street firms bought mortgage loans from lenders, packaged them into securities, and sold them to investors. It was a great business for a while. In 2004 and 2005, with home prices nationally rising at an annual rate of around 15 percent, subprime borrowers largely stayed current on their mortgages.”

“That led to riskier subprime lending, more securitization, more profits for lenders and investors.”

“‘It was all based on the idea that house prices couldn’t go down,’ said Dana Johnson, chief economist for Comerica Bank. ‘And of course, they did, and it was that that set in motion all of the defaults. You had people who had no skin in the game.’”

“The question for the mortgage industry, then, is will securitization come back? Or, barring that, will investors at least resume buying mortgages to hold?”

“‘I don’t see Wall Street coming back anytime soon in terms of the risk appetite for underwriting subprime mortgages to the extent that we did,’ said Ricardo Chance, a managing director with KPMG Corporate Finance LLC in Costa Mesa who previously worked for investment firms.”

“For many investors, the condo hotel may go down as the Pets.com of the real-estate bubble. Many buyers purchased the hotel rooms from developers hoping to get paid every time the room was rented.”

“But condo hotels, which account for as much as 10% of all hotel rooms under construction and a much greater percentage in resort markets such as Orlando, Fla., and Las Vegas, are coming back to haunt many of the people who bought the units, the developers that constructed the buildings, and the operators hired to run the hotels.”

“Some projects also are being brought to the attention of regulators by investors.”

“‘It’s been a very bad investment,’ said Moji Adekunbi, who bought a $550,000 condo-hotel unit in the Signature at the MGM Grand in 2005 in Las Vegas, where one of every four hotel rooms being developed is a condo-hotel unit.”

“Mr. Adekunbi counted on the cash flow from renting out his unit more than covering his $3,000-a-month mortgage payment, leaving him with a tidy profit.”

“He said the developer’s sales staff led him to believe that the hotel would have 94% occupancy and $350-a-night rates, Turns out, he said he is netting only between $400 and $1,800 a month before his mortgage payment.”

“‘I am in so much debt. I don’t know how long I can sustain this,’ Mr. Adekunbi said. Making matters worse, many markets for these rooms are weak, meaning owners might lose much of their investment if they sell.”

“During the real-estate boom, many Americans scrambled to buy anything they could — office condos, warehouse condos and high-rise residential condos, which are crowding the skyline of cities such as Miami.”

“Developers loved condo hotels. ‘It minimized the upfront risk to the developer, and shifted it to the individual unit owners,’ said Mark Lunt, a lodging analyst at Ernst & Young. Many developers said they insisted that buyers regard condo hotels as vacation homes that they would use rather than income-producing investments.”

“In Florida, a group of buyers is suing WCI Communities Inc., claiming the developer sold them condo hotels in the waterfront Resort at Singer Island as unregistered securities. The buyers said they bought the units as investments, not primarily for their own use.”

“A few buyers are talking to the SEC, alleging possible securities fraud, according to their attorneys. One issue could be whether developers sold these units as investments, which should have been registered with the SEC or other regulators.”

“Many developers were careful not to market condo hotels as investments, but ‘many others find it difficult to restrain themselves from creating expectation of investment returns and cash flow,’ said Rob Webb, a senior hospitality partner in (a) Cleveland law firm. ‘All you have to do is find the developer’s newspaper ads, and it could be a devastating blow.’”

“Michael Trombley, a retired major-league pitcher who lives in Fort Myers, Fla., is one of several investors who have filed lawsuits alleging securities laws were violated in the sale of units in the Clearwater Cay Club in Clearwater, Fla.”

“‘They were always trying to preach to people that the market is hot. This is a no-brainer. You’d better get in quick,’ said Mr. Trombley.”

“In 2005, Mr. Trombley, along with five friends and family members, bought five units in the development for a total of about $2.2 million, according to his attorney, taking out loans to finance the entire purchase price.”

“Mr. Trombley estimates the four units he holds are worth at best 40% of the original purchase price, he said. Carrying costs, meanwhile, are running about $14,000 a month.”

The Sun Sentinel reports from Florida. “Many were left out of the market during the housing boom of 2000 to 2005 because homes were too expensive. But now, even with sellers desperate and prices plummeting across South Florida, first-time buyers still can’t realize the American Dream with property taxes remaining too big a burden and lenders tightening credit standards. Having moved six times in seven years, renter Stacy Bailen of Palm Beach Gardens would like to buy a little starter house and start building equity.”

“But the 31-year-old administrative assistant worries about obtaining a mortgage and the still-hefty home ownership costs, particularly property taxes. In the end, Bailen decided to postpone buying.”

“‘When I hear that I should look to buy something, I say, ‘With what?’ she said.”

“Real estate agent Douglas Rill said he has a three-bedroom listing in West Palm Beach that was just reduced to $149,900 from $179,000. It does need work, but the house has a new roof and would be ideal for a first-time buyer, he said.”

“‘I don’t have a lot of action on it,’ Rill said. ‘I thought people would be breaking the door down.’”

The News Press. “In 2005, two Naples companies joined forces to purchase four lots in Lehigh Acres, and built houses on them. But by late 2006, when the homes hit the market, the housing bubble had burst, leaving W.M. Development and Wilson & Wilson General Contractors searching for buyers.”

“‘It’s a little gut-wrenching,’ said Wilson & Wilson VP Greg Soriano. ‘You spend all that money on that property and pretty much have to wait it out.’” “The partners’ plight is not an uncommon one in the section of southwest Lehigh designated by the U.S. Census Bureau as tract 403.04.”

“Porter Davis is the listing agent for a four-bedroom, two-bathroom home on Lowry Avenue, built in 1972, that has a short-sale asking price of $145,900. He said the home was purchased for $96,900 in 2002 and refinanced for $217,500 in 2005, and was assessed at $192,870, last October.”

The Tampa Tribune. “At Lago del Rey, the grass is green and columns of water spout from the lion-headed fountain just outside the gates. But something’s missing from the 39-lot subdivision on Hale Road - residents. Save for a single house under construction, Lago del Rey is empty.”

“With Pasco County’s housing market in a shambles, residential developers have hunkered down to await the economic turnaround they hope is coming soon. In the meantime, dozens of projects scattered all across the county - from small ones like Lago del Rey to giants like Wiregrass Ranch - are largely idle.”

“‘It’s as bad as I’ve seen it,’ said Clearwater lawyer Joel Tew. ‘It’s really frightening.’”

“Wiregrass Ranch still has more than 12,000 residential units approved for the future. Had things gone as planned at Lago del Rey, the community would be filled with family-friendly houses by now.”

“Lago del Rey developer John Nugent Jr. of Hudson, and business partner Gary Blackwell of New Port Richey broke ground on Lago del Rey in 2005 just as the housing market was reaching its peak. Interest in the community was strong at the time, Nugent said. ‘Given the market we were in, it should have sold out in about 12 months,’ Nugent said.”

“Three years on, the developers have sold about a fifth of the lots in Lago del Rey, county property records show. ‘We’ve had quite a few cancellations - people who couldn’t go through with it,’ Nugent said.”

My Fox Tampa Bay. “The call of the auctioneer filled the air at the Tampa Convention Center on Saturday. About 150 homes went up for auction on Saturday, but over an eight day period, another 1,000 homes in Florida will go; and all of them are foreclosures.”

“For some, the bidding started as low as $1,000. Others, like a condo on Harbour Island, went for a little more. Bids on that one in particular started at $139,900—about a quarter of its original price.”

“Like many others, Goddy Daudu wasn’t burned in the real estate crash. Saturday was his first auction, and he came to play. ‘I’m here to buy as many as I can buy,’ Daudu said.”

“And that he did. Daudu saved more than 50 percent on an East Tampa home, paying $63,000 for it. Then, he hunted for more.”

“Don Melitich had his eye on a few homes in the Bay Area. Specifically, he wanted something under six figures with about 1,000 square feet. Don spotted one in Holiday, but it went to another bidder. For him, though, it’s all about cost.”

“‘There are others,’ said Metlitch. ‘There are plenty.’”

The St Petersburg Times. “It’s a no-brainer among property owners confronting the relatively bleak home sales and prices in places like St. Pete Beach and Clearwater.”

“Now the National Association of Realtors has confirmed what everyone knew in their gut. In a recently published survey, the association said sales of vacation homes have declined at triple the rate of first-home sales.”

“Florida’s complex property tax rules that punish second homes and out-of-state buyers aren’t helping things, Realtors say. Add the cost of coastal hurricane insurance, mix in market turmoil from the higher-than-normal foreclosures, and you’ve created a lot of hesitant buyers.”

“‘They think they’ll pick it up at rock bottom prices,’ said Martha Thorn, a top Clearwater Realtor. ‘These people can afford to wait.’”

“The sales slowdown is palpable at upscale Clearwater condo buildings popular with vacation home buyers. Think Mandalay Beach Club, Belle Harbor or Sandpearl Resort.”

“Even if the developer did well initially selling the condos, the resale rate has been sluggish. The biggest problem: homeowners sticking to high asking prices the market no longer supports.”

The Herald Tribune. “Orion Bank grew and prospered as one of Florida’s most aggressive real estate lenders during the boom, so it comes as little surprise that the Naples-based financial institution is suffering from the bust.”

“Orion reported $91.7 million in non-current loans in its December quarterly report, a 4,267 percent increase from the $2.1 million in problem loans it reported during the same quarter a year earlier.”

“Orion, however, did not increase its loan loss reserves by a similar amount. In September, Orion’s reserves of $12.77 million exceeded its $11.4 million in problem loans. But just three months later, its $12.39 million in reserves represented only 13.5 percent of its $91.68 million in problem loans.”

“One explanation for the discrepancy, analysts say, is that Orion did not want to report a serious drop in profits by setting aside more money to service loan problems. ‘Banks often like to have minimal reserves to show profits,’ said Ken Thomas, a Miami-based economist who specializes in analyzing financial institutions, adding that bank regulators need to sign off on that strategy.”

“‘Loan loss reserves are meant for rainy days,’ he said. ‘And excuse me, it’s raining now. When you have a bank with that much of an increase in non-current loans without a commensurate increase in loan-loss provisions, that raises questions.’”

“Court records show that Orion has started 51 foreclosure lawsuits against borrowers since the beginning of August in seven Florida counties. Only four of those foreclosures were filed in Collier County, which analysts say is not surprising given that the bank is based there.”

“‘When you leave a territory where you have operated for years and go into unfamiliar territory with unfamiliar borrowers, your risk increases,’ said Benjamin Bishop, chairman of a Jacksonville-based investment bank that specializes in advising banks and financial institutions.”

“Thomas echoed that sentiment: ‘Out-of-town lenders are usually the last to know what is going on.’”

“Real estate is not selling the way it did just two years ago, but that does not mean there are not people making money off the bursting of the housing bubble. Sign companies that cater to Realtors and their customers’ swollen inventories of houses, condominiums and businesses are having a field day as orders skyrocket.”

“‘We are off the chart. My inventory is totally shot,’ said Pat Neligan of Sign Service Co. in Sarasota. ‘I’m doing more in a week than I used to do in a month.’”

“The Sarasota Association of Realtors sells those little ‘pool,’ ‘price reduced’ or ’sale pending’ signs that sit on top of the larger for-sale signs, as well as those that stick into the ground and direct buyers to an open house.”

“Kathy Roberts, the association’s executive director, said the organization buys the signs in bulk. Roberts said sales of the so-called ‘rider’ signs increased almost 95 percent in 2006 compared with 2005.”

“The for-sale sign phenomenon is not limited to Sarasota, Manatee and Charlotte counties. Bob Stephens owns Bargain Sign Inc. in Clearwater, and he said for-sale, for-lease and foreclosure sign orders have risen 30 percent.”

“‘We’ve done quite a few in the last year and a half in for-sale signs,’ he said. ‘The for-sale or for-lease market is great.’”

“There is one type of real estate-associated sign that has fallen off, he said: Those ‘We Buy Your House In Any Condition’ signs.”

“‘We probably had six or seven out of those guys who would come in and buy 1,000 of those signs and they’ve just disappeared,’ Stephens said. ‘They all used to drive Hummers and now they are working at Wal-Mart.’”

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