The Housing Bubble

A report from the Oregonian. “Condo king Homer Williams gambled that Portland’s condo mania had reached such a fevered pitch that he could sell Pearl District luxury on a humdrum stretch of Southeast Portland. He and his partners launched a $40 million building, a sprawling, 123-condo complex, along eclectic Belmont Street in 2006. Their timing couldn’t have been worse. Since sales opened last year, 2121 Belmont had no sales, Williams said Tuesday.”

“To cope, Williams said, the complex will switch to apartments, the fourth such conversion of the slowdown. Williams acknowledges that the slowdown is real but says much of it is tied to psychology. ‘It’s between the ears,’ he said. ‘People are afraid right now.’”

“Portland has roughly 1,300 new and existing condos on the market in the 28 biggest downtown projects. Over the past five years, an average of 800 condos sold annually.”

“The next year could be bleak for developers with large, slow-selling condo buildings. In some ways, they have a self-fulfilling problem. Brokers steer buyers away from struggling buildings over worries that the developer may reduce prices or, worse, that the bank will take the building back.”

“‘I discriminate against unsold property,’ said John Cooper, a Portland real estate broker. ‘If I’m representing a buyer, I don’t want to put him in that situation. It was just the wrong time to come on the market.’”

“It’s not a given that developers will be fill their condo-turned-apartment buildings at the sky-high rents they want. But Williams predicts the renters they do get will someday turn into buyers. Rents are so high, it will make financial sense for them to buy, he said. But he acknowledges that buyers will stay renters until the economy and housing prices settle.”

“The trouble for developers stuck paying construction loans: No one has a clue when that will happen.”

The Bend Bulletin from Oregon. “The number of mortgages entering the early stages of foreclosure during the first three months of 2008 nearly tripled the number in the same period last year, according to the Deschutes County Clerk’s Office.”

“The likelihood is that we are catching up with the rest of the nation,’ said Bob Mullins, a volunteer for Bend-based Consumer Credit Counseling Service of Mid-Oregon. ‘Deschutes County has been lagging behind. It was only a matter of time before we started catching up. We’ve still got a ways to run because this started here later than in the worst parts of the country.’”

The Curry Pilot from Oregon. “The slump in the housing market that has cut home prices and sales across the country is being felt in Brookings. Shell Lent believes the local housing market is more affected by the national housing crisis than the numbers may indicate.”

“‘I had two houses for sale and sold one right away, but I had to drop the price from $449,000 to close to $300,000,’ he said. ‘It isn’t over, you haven’t seen anything yet.’”

“Lent currently has a house for sale that has dropped in price from $419,000 to $290,000.”

“During the last housing boom, from 1988-1992, the Curry County area had 110 real estate agents and 300 listings. By 1999, there were 55 agents and 850 listings. By the spring of 2006, the number of listings had dropped to 320 with 120 agents.”

“During the past year, the real estate market has lost some agents and the number of listings has risen to 400 which, as J.B. White, president of the Curry County Board of Realtors said, essentially repeats the pattern of 1992-1999 slump.”

The Mail Tribune from Oregon. “Jackson County’s residential housing slump continued to reflect the national numbers during the first quarter of 2008.”

“Sales prices for the area’s existing single-family residences tumbled 9.6 percent to $235,000 during the first three months of the year. The March median sales price for existing single-family residences declined 12.9 percent to $235,000, from $270,000 a year earlier.”

“California’s residential real estate woes continues to ripple into the Southern Oregon market, said Doug Morse, an agent in Medford. ‘Forty-three percent of our buyers are from California and they’re not coming up because they haven’t been able to sell their houses.’”

“New construction also remained slow. Just 62 homes were sold countywide in the first quarter with the median price falling 17.1 percent to $269,450. The inventory of houses on the market as of April 1 dropped 7 percent to 2,171.”

“‘It points to the people that don’t need to sell aren’t putting their places on the market and the people with their houses on the market really need to sell,’ Morse said. ‘I think it helps a lot more right now because when there are so many homes on the market, the buyer thinks maybe they shouldn’t buy.’”

The Seattle PI from Washington. “Seattle single-family home prices in March sank 2.2 percent from the same time a year ago. The numbers reflect continued pickiness on the part of buyers, who are benefiting from an abundance of homes on the market and slower sales.”

“In Western Washington overall, the median price for a single-family home was $325,000, well below the year-ago price of $345,000. There still were far more homes on the market than a year ago. House and condo listings increased 61 percent from 2007 in Seattle, 64 percent in King County and 35 percent in Western Washington.”

“Pending sales of single-family homes and condominiums in Seattle and King County were down sharply, compared with last March, by 29 percent and 39 percent, respectively.”

“‘Our market is pretty strong,’ said Carolyn Matson, a real estate agent at an open house for a Green Lake bungalow last weekend. ‘I think it’s nice that buyers have some room to negotiate, especially given what the market has been like for them.’”

“Sellers should also realize it’s no longer enough to hang a sign and wait for multiple offers to pour in; some may need a six-month marketing plan that includes online tours and newspaper ads, she said.”

“Sharon Heustis, who rents a house in Ballard, said she hadn’t seriously considered buying a house in Seattle when prices were ‘insane,’ and she didn’t want a no-money-down loan or mortgages with balloon payments made out of lead.”

“But with prices calming and interest rates low, it might be feasible, she said. Still, she’s inclined to wait another year or so in hopes they drop further. ‘I think they should get better — Seattle, I think, has been overvalued for about three years,’ she said.”

“But Ashley and Brian Yarno, who have been looking for a fixer-upper around Green Lake for six months, think the window to buy might be smaller.”

“‘If we don’t buy within the next five months, we’re stupid,’ said Ashley Yarno, whose aunt is a real estate agent and advised the couple, in their mid-20s, that the time to act is now, before prices start climbing again.”

The Seattle Times from Washington. “If their plans pan out, John and Judith Mehrens soon will own a waterfront condominium in a brand-new Bremerton complex that’s currently advertising units starting at $109,000.”

“28 units in a project called The 400 will be auctioned off to the highest bidders April 20 in an eBay-like experience: unbelievably low starting prices followed by last-minute bidding frenzies if the goods strike the public’s fancy.”

“It’s shaping up as the Puget Sound area’s largest auction of brand-new, nonforeclosure housing and potentially the start of a trend.”

“‘If it looks like a person could buy one for a price somewhat below what they were being marketed for before the auction, we’d be interested in doing that,’ John Mehrens says. ‘But if it becomes a feeding frenzy, we’ll go have a cup of coffee.’”

“The building’s developer, Mark Goldberg, chairman of M.S. Cavoad Co. in Seattle, says his major goal is to get out from under his construction loan. Even before it was completed last July, The 400 was 70 percent presold at prices topping out at $919,000, or $531 a square foot.”

“Then Bremerton’s real-estate market followed the national trend and ground to a halt. Some presales fell apart.”

“Jacqui Curtiss, broker in Port Orchard, says she’s not surprised the remaining units are on the auction block. ‘In real estate, timing is everything, and the timing was bad,’ Curtiss says. ‘Builders and developers are struggling everywhere. And when you have a lot of units in one building, your exposure level is a lot higher.’”

“Recently it took several months to sell five units in The 400, an unacceptable pace, Goldberg says. ‘We’re not going to sit around for the next year selling one or two.’”

“Paul Thomas, a founding partner of Northwest Auctions in Seattle, has conducted a dozen auctions in the last year for homeowners. He foresees more builders going this route.”

“‘At least three-quarters of our residential auctions over the next year or two will be conducted for builders who are desperate to sell their properties before losing them to the bank,’ Thomas projects.”

The Vancouver Sun. from Canada. “Contractors in Metro Vancouver took out substantially fewer building permits in January and February this year than they did in 2007, Statistics Canada reported Monday.”

“Municipalities issued permits for $872.7 million worth of work over the first two months of the year — 19 per cent below the $1 billion worth of work approved in the same months of 2007.”

“In B.C., ‘[the] construction market has been overheated for several years, so a decline in building permits isn’t necessarily a bad thing,’ said Philip Hochstein, president of the Independent Contractors and Business Association of B.C.”

“The ‘hectic pace of the past few years’ has driven labour rates and materials up sharply, Hochstein added, so ‘a moderation in activity will bring back some certainty,’ to contractors and their clients.”

The Chilliwack Times from Canada. “Hot, hot, hot. That’s been the temperature of the local real estate market for the past few months, but a cooling may be upon us.”

“March home sales in the Chilliwack area were the lowest for that month in the last five years, according to Chilliwack and Area Real Estate Board (CADREB) numbers. But CADREB president Trude Kafka isn’t worried.”

“‘Home prices are largely a reflection of market conditions and supply and demand and because we typically don’t experience the artificially inflated prices that can occur in the larger metropolitan areas, the market adjustments here are usually not as severe,’ Kafka said in a press release.”

“There were 206 residential sales last month, compared to 294 for the same month in 2007.”

“This downturn is really just a ‘market correction,’ according to Kafka. ‘We are actually on our way back to a balanced market where prices more accurately reflect the current market conditions.’”

The Anchorage Daily News from Alaska. “The state-owned Alaska Housing Finance Corp., that finances many home purchases in Alaska, is about halfway through a big-ticket ad campaign this spring to try to sweep aside the ‘doom and gloom’ headlines in national media about falling home prices and rampant defaults.”

“‘The more (Alaska buyers) hear it, the more they assume the same thing is happening here,’ said Sherrie Simmonds, spokeswoman for the Alaska Housing Finance Corp.”

“Simmonds stars in the feel-good ads, which are running in prime time on TV networks and radio stations. In the ads, she points out that interest rates are low and Alaska home prices are stable, making it a great time to invest in a new home.”

“The ad campaign, called ‘Alaska’s Housing Market: Built to Last,’ is the first of its kind for the corporation, but it fits the corporation’s role, as a public entity, to ‘educate people’ on Alaska housing issues, Simmonds said.”

“Though the housing market looks stable, that’s not to say there are no legitimate concerns for Alaska homeowners. Energy and transportation costs have skyrocketed, said Dan Fauske, the corporation’s CEO, in a recent interview.”

“The reduction in home sales has also affected some builders, he said.”

“Addressing the recent slowdown in local home sales, Mark Korting of Re/Max Properties Inc. told an Anchorage Chamber of Commerce luncheon Monday that ‘there seems to be a lot of (buyers) out there … just waiting’ for prices to drop further.”

“In addition to ads, the corporation has been hosting a series of community meetings around the state to explain differences between Alaska’s housing market and locations in the Lower 48 where the housing market has crashed.”

The Homer News from Alaska. “Over the past few years, Homer’s growth has been cited as the main reason behind the town’s first stoplight. But if estimates from the Alaska Department of Labor and Workforce Development are accurate, the last big jump in Homer’s population came during annexation.”

“Since then, the city’s population has actually decreased by about 33 people. The department estimates that there were 5,502 people living within Homer city limits in 2007, down from 5,535 in 2002. The population record for the city came in 2003, when 5,877 people lived within the city limits.”

“According to Kenai Peninsula Borough statistics, the population of young families boroughwide decreased significantly from April 1, 2000, to July 1, 2006. The population of children ages 0 to 14 dropped a combined 12.6 percent. The population of adults ages 25-49 dropped 13.8 percent.”

“That decrease can be seen in dropping school enrollment projections and facilities running below capacity, and comes as no surprise to some, indluding Homer resident Dylan Weiser.”

“Weiser moved to Homer in 2000. He said he has seen more retirees move into town, while many younger people have left in that time. This increase in a retired population makes it tough for younger working families, Weiser said. The retirees drive up property values, while younger families are moving farther away from town to afford housing.”

“New home construction also has increased from 23 units in the Homer area in 2000 to 49 in 2006, and the value of this construction jumped from $2.6 million in 2000 to more than $10 million in 2006.”

“The assessed value of taxable real property grew 60 percent from 2000 to 2007. By comparison, the assessed value of taxable real property grew just 30 percent for the seven-year period from 1993 to 2000.”

“These increased prices of homes can be seen in the real estate market as well. There were 27 houses listed on the Alaska MLS Monday with an asking price above $400,000 in Homer.”

“From 2000 to 2005, the Homer area created 317 new jobs, a 14.8 percent increase, and average salaries increased from $27,665 to $32,655, an 18 percent increase, according to the borough.”

“The number of jobs actually decreased from 2003 to 2005 by 63 jobs. The jobs that are available in town are more minimum wage service jobs than professional, said Weiser.”

“‘When you get a good job in Homer, you keep it until you die, if you intend to stay,’ he said.”

Some housing bubble news from Wall Street and Washington. Associated Press, “An industry group said Tuesday that pending U.S. home sales fell in February to the lowest reading since the index began. The National Association of Realtors’ seasonally adjusted index of pending sales for existing homes fell to 84.6 from January’s upwardly revised reading of 86.2. The index stood at 107.6 in February 2007. A reading of 100 is equal to the average level of sales activity in 2001, when the index started.”

“The previous low was August’s reading of 85.8, recorded at the height of the credit crunch.”

“The PHSI in the Northeast remains 25.4 percent below a year ago. In the Midwest, the index is 17.4 percent lower than February 2007. The index in the South is 30.3 percent below a year ago. In the West, the index is 17.1 percent below February 2007.”

From Bloomberg. “Bank holding companies including Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. have the thinnest safety cushion against losses in seven years. The margin may erode further in coming weeks. Credit ratings on $704 billion of bonds have been cut this year following the collapse of the U.S. housing market.”

“As a group, regulated banks had a total risk-based capital ratio of 12.79 percent at the end of last year, according to data compiled by Bloomberg. The figure was the lowest since 2000, before the last U.S. recession. How much commercial banks have already cut back on lending will be known in mid-April when most report earnings.”

“‘All I know is the first-quarter reports are going to be pretty bad, and there’s a lot more to come,’ said L. William Seidman, who was chairman of the FDIC from 1985 to 1991. ‘Our experience was that if the economy got in trouble, it took at least a year for the banks to get into trouble.’”

“‘The important thing to remember about capital ratios is that they are minimums,’ said Ralph Sharpe, who was director of the Office of the Comptroller of the Currency’s enforcement and compliance division from 1984 to 1994. ‘In good times everybody looks good, but when the tide goes out, you see who is not wearing their bathing suit.’”

The Times Online. “House prices in Britain plunged last month by the worst figure since the financial crisis in the early 1990s.”

“Halifax, the country’s largest mortgage lender, revealed today that March prices dropped by 2.5 per cent, the biggest monthly fall for 15 years, beaten only by a 3 per cent fall in September 1992 when on ‘Black Wednesday’ John Major’s Government took sterling out of Exhange Rate Mechanism.”

“It appears to show that the rapid withdrawal of 100 per cent mortgage loans, with Abbey yesterday being the last lender to abandon such a loan, the demand for higher deposits and the raising of rates on mortgages has driven a sudden slowdown in the housing market.”

“The data from the Halifax follows the Nationwide reporting that house prices fell by 0.6 per cent month-on-month in March, a fifth successive decline. Latest figures from the Bank of England show that mortgage approvals edged down to 73,000 in February from 74,000 in January. This was the second lowest level since current records began in 1999.”

“Halifax’s chief economist Martin Ellis said: ‘Overall, we expect there to be a modest (low single digit) decline in UK house prices this year. Any declines, however, should be viewed in the context of the significant price rises over recent years.’”

“UK prices have increased by 171 per cent over the past ten years and by 51 per cent over the last five years. The average UK price has risen by £120,860 during the past decade from £70,696 to £191,556,’ he said.”

This is Money. “While some of Britain’s estimated 750,000 landlords are rich on equity built up in the past decade, others are recent investors who bought over-valued property, much of which - especially new-build flats in large, urban blocks - has proved difficult to let.”

“Rosemary Jane, like thousands of other educated, middle-class homeowners, believed property investment was the sensible way to supplement her pension and finance a comfortable retirement. But her foray into buy-to-let has left her staring into a financial abyss where everything she owns, including her home in Portsmouth, is in jeopardy.”

“And at 57, retirement is out of the question - probably for a long, long time.”

“Rosemary bought three properties in 2004 whose values were questionable at the time and which are now falling. She easily found loans, but the repayments depended on her achieving high rents - which never materialised.”

“Ideally, what Rosemary wants is for the property club that recommended the investments - to take the Manchester property off her hands and also release her from a pledge she made to buy another house in Florida, which has yet to be built.”

“When complete, the US property is likely to be worth less than the $240,000 (£125,000) she promised to pay in 2004. But this is a moot point as she will never find a lender to offer her a mortgage.”

“Rosemary says: ‘Nobody would give me a mortgage on the Florida property and it is unlikely I will ever be able to remortgage the Manchester flat away from Northern Rock either.’”

“David Sandeman (a) property research specialist , says the average flat built since 2005 is fetching about 26% less than its original price and more than 15% will not sell at all.”

“‘This is the tip of the iceberg,’ he says. ‘Everyone is just realising now what these properties are worth - and their values will be pushed down more. Investors are battling to refinance. They will go back to the brokers who found them mortgages in a flash three years ago - but there won’t be any mortgages there now.’”

The Observer. “Location, location, location, the mantra of Britain’s property owning classes, has turned into frustration, frustration, frustration.”

“Cheap and easy mortgage loans have for the past decade fuelled a housing boom that has turned Kirstie Allsopp and Phil Spencer into TV stars and spawned a host of glossy ‘property porn’ mags and supplements encouraging us to fantasise about grander, more expensive homes.”

“But the mortgage feast has turned into a famine because of an unwelcome American export: the credit crunch. ‘There is no doubt this is a very difficult situation,’ said one bank executive. ‘Some borrowers will really feel the pinch, and repossessions will rise, though they are low at the moment. We are already seeing house prices begin to fall across the country.’”

“In the space of just one day last week, more than 300 mortgage deals vanished from the market, according to Moneyfacts. Almost 3,000 were withdrawn in March, taking the number of products available to fewer than 5,000. To put that in perspective, the figure stood at more than 15,000 before the credit crunch began last summer.”

“Twenty-four-year-old Liam Tarry bought a house in Norwich 18 months ago but is now preparing for life as a tenant again because his mortgage has become unaffordable.”

“Tarry bought the house with a friend who took on most of the mortgage. But a few months ago the friend moved out, leaving Tarry facing a remortgage of more than three times the size of his existing repayments.”

“‘My plan was to profit from house prices, which I suppose was foolish,’ he says. ‘But, then again, I could not have predicted that house prices would fall and that lenders would stop lending.’”

“Akira Mori, Japan’s richest man, spent a record 231 billion yen ($2.3 billion) buying Tokyo’s Toranomon Pastoral Hotel last September. He now says it’s worth closer to 200 billion yen.”

“‘The boom we’ve enjoyed for the past few years is over,’ said the 71-year-old CEO of Mori Trust Co. ‘Investors were convinced that prices would keep rising, so in about six months, they’ll probably rush to get out regardless of price.’”

“Global real estate financing has evaporated as defaults by U.S. homeowners saddled banks and securities firms with $232 billion of losses and asset writedowns.”

“‘People who bought properties last year at a very high price, they’re in trouble,’ said Toshio Masui, president of Japan operations for (a) Los Angeles-based buyout firm. ‘Everybody was overpaying. People with a bunch of stuff in their portfolio are now running around trying to get refinancing, and they won’t get it.’”

“‘We should be prepared for another round of real estate deflation that may last for some time,’ said Akiyoshi Inoue, president of Tokyo-based Sanyu Appraisal Corp.”

“While total returns for real estate investments in Japan, including capital gains and rental income, have been positive since 2002…the housing market has been showing signs of strain. Condominium sales are set to fall for a third year in 2008.”

“Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, reduced property loans by 7.7 percent as of Sept. 30 from a year earlier. Regulators have sought to prevent a bubble like the one that burst in 1991, leading to 15 years of falling land values.”

“Japan’s previous property boom lasted 16 years, making Mori’s father Taikichiro Mori the world’s richest individual in 1991, according to Forbes. When Taikichiro Mori died in 1993, the family’s $15 billion fortune had been cut in half in just two years, Forbes reported.”

“‘Japanese investors suffered a severe shock when the last bubble burst, and because they lived through the crash, they’re bound to be cautious now,’ said Junko Miyakawa, a senior analyst at Tokyo-based Shinsei Securities Co.”

“Regulators at the Tokyo-based Financial Services Agency may have sought to curb lending to prevent a new bubble from forming, said Katsuya Takanashi, CEO of Secured Capital Japan Co., which manages about 550 billion yen of real estate assets.”

“‘The FSA doesn’t want to repeat the bad-loan problem that trapped Japan’s economy for such a long, long time,’ he said.”

From Conde Nast. “The former Fed chief is on the defensive and one of the biggest charges against him, WSJ’s Greg Ip tells us, ‘is his decision to slash interest rates to 1% in 2003 and wait to raise them until 2004, and then only slowly.’”

“Greenspan explains that policy makers were motivated by the specter of Japanese-style deflation which descended upon that country in the 1990’s after booms in its stock and real estate markets the previous decade.’”

“The irony of course is that in keeping interest rates low after the tech-stock boom of the late-90’s, Greenspan (implicitly or explicitly depending on who you want to listen to) encouraged both the consumer spending binge and the real estate bubble.”

“In hindsight, it appears that in trying to maneuver around an outcome similar to Japan’s ‘lost decade,’ Greenspan and his compatriots only succeeded in delaying it.”

From Reuters. “In an interview in Tuesday’s Wall Street Journal, Greenspan…has lashed out again at his critics, saying he was being blamed unfairly for the credit crisis and that he had no regrets about decisions he took while at the helm.”

“Greenspan said rock-bottom interest rates actually went against his ‘19th century’ aversion to easy money. ‘My inner soul didn’t feel comfortable,’ he is quoted as saying.”

“Critics say Greenspan, under whom U.S. rates went from 6.5 percent in late 2000 to 1 percent in mid-2003, eased policy too much and then took too long to tighten again. That, they say, spurred excessive mortgage borrowing and stoked the housing bubble that is now the root cause of the credit crisis.”

“But Greenspan said the Fed cut rates to spur growth and prevent deflation and, at that time, dissenting votes on the policy committee were from those who wanted rates even lower.”

“Analysts also blame Greenspan for failing to press for stricter rules for bank lending to consumers with weaker credit records, and for not anticipating the subprime mortgage meltdown.”

“In the interview, Greenspan admits he was wrong about the improbability of a housing bubble. But WSJ reporter Greg Ip says Greenspan does not share some foreign central bankers’ belief that their job is to defend against excessive asset-price inflation. No sensible policy, he maintains, could have prevented the housing bubble.”

“‘I am reasonably certain that I am right here,’ Greenspan is quoted as saying. If proved wrong, he says, ‘I will change. I do not have a vested interest in holding wrong ideas.’”

The Arizona Republic. “The recent rise in Phoenix’s housing prices means that in some cases the cost of owning a house grew too high compared with the cost of renting one, says a new report from the Center for Economic and Policy Research, in Washington, D.C.”

“The report says that when ownership costs exceed 50 percent, it indicates a bubble. Some ‘extraordinary’ gaps include New York City, where it costs 109 percent more to own a home than to rent; San Diego, 133 percent; San Francisco, 161 percent; and Los Angeles, 168 percent.”

The Boston Globe. “Owning a home in Boston is about 70 percent more expensive than renting an essentially identical home. Therefore the government should stop trying to keep owners in homes and instead let more people return to renting. Those families could spend the extra money on other needs…says a new study from the National Low Income Housing Coalition.”

“The study joins a growing chorus making the point that home ownership is a misnomer in many cases. Many ‘homeowners’ are people with little equity, no equity or even negative equity who are basically making monthly rental payments to a mortgage company.”

“The group argues there is little long-term benefit to ownership because prices in cities including Boston likely will continue to decline…And even if they could, they’d be better off paying half as much and investing the difference in stocks.”

From The Housing Bubble March, 14, 2005. “Think about this statement from Greenspan the next time he says there is no collapse looming. From the 1999 (FOMC) transcript, ‘Owners’ equivalent rent is going to start to accelerate unless I misread how asset prices interact with consumer prices. The reason is that the ratio of owners’ equivalent rent to the value of housing has been going down continuously, and the implicit rate of return that that is suggesting cannot credibly be expected to continue.’”

The Denver Post reports from Colorado. “Homebuilders spend countless hours dreaming up promotions. They offer deep discounts. They come up with giveaways. They take out radio, television, Internet and newspaper ads. They even hire people with iPods to stand along the side of the road, listening to tunes, dancing, waving and swinging these really stupid signs. Peter Kowalchuk, president of Qgenisys, said it’s a shame many homebuilders are resorting to markdowns.”

“‘If they’re going to offer me $30,000 now, they’re going to offer me $40,000 later,’ Kowalchuk said. ‘For those who bought a month before the markdown, automatically their home values are depreciated.’”

The Arizona Daily Star. “Loft-style condominiums have sprung up in city centers across the country over the last decade. Eventually, developers in Tucson thought, ‘Why not here?’ They launched projects promising hundreds of new loft-like dwellings in Tucson’s central core. But now, many remain vacant lots or gutted buildings.”

“A few worry that Tucsonans may not be as eager to shell out luxury prices for living Downtown as they originally had thought.”

“‘What can and will consumers pay for?’ wondered Steve Quinlan, chairman of Long Companies and an investor in two loft projects. ‘If this was in Los Angeles or some other markets, then the answer would be easier,’ he said. ‘Affordability is a problem here.’”

“The loft building boom got under way in Phoenix in 2003 and 2004, said Scott Merrill, a real estate agent specializing in the downtown Phoenix market. But in Tucson, lofts didn’t catch on until after the 2005 success of the Ice House Lofts.”

“That put the beginning of Tucson’s loft movement about at the peak of the market. Now that the market has slowed, demand for all types of housing, including Downtown-area lofts, has dropped, developers said.”

“‘I think that market is affected just like the rest of the real estate market,’ said Steve Fenton, developer of the rental and condo project Academy Lofts. Fenton said he had no trouble finding renters for the 25 apartment units in the project, but could only sell six of 11 condominiums.”

“Investors in one would-be loft project at 1047 N. Main Ave. are considering alternatives for the site because of the slowdown, said Jerry Yarborough, a real estate agent representing the New Jersey property owners.”

“‘It never really went anywhere,’ Yarborough said about the investors’ condo plans. ‘We kind of missed the market.’”

“Some buyers interested in living Downtown might not be willing to pay an added premium, said Ross McCallister, a developer who was interested in the property for Bourn Partners yet-to-be-started The Post, 56 E. Congress St.”

“‘You don’t have the whole package,’ McCallister said, referring to dining and entertainment options. ‘If you moved Downtown, what’s going on to keep you down there?’”

The Arizona Republic. “Homeowners associations strapped by unpaid assessments related to the foreclosure-ridden real-estate market are mustering volunteer work crews, cutting maintenance jobs and scrimping on landscaping to save money.”

“Phoenix, Chandler and Avondale are among Valley cities fielding calls for help from HOAs that previously turned only to their own boards of directors and management companies.”

“‘We are in new territory and need to find creative ways to work with everyone, whether that’s stepping in with volunteerism or offering some training,’ said Annie Alvarado, deputy director of Phoenix Neighborhood Services.”

“Like miniature governments that depend on revenue to finance upkeep of common areas, community pools and private roads, HOA boards have to cut expenses or raise fees when revenues fall.”

“‘Unfortunately, in associations as in other parts of society, those who are able to pay are supporting those who can’t,’ said Brian Lincks, spokesman for City Property Management Inc. and an officer in the Arizona Association of Community Managers.”

“His Phoenix-based company manages 260 HOAs in Maricopa County, encompassing about 80,000 homes. A few years ago, Lincks said, he usually carried 15 to 30 pending foreclosures on his books; today, there are about 1,800.”

“‘Everyone’s revenues are off because of our housing crisis, and it’s truly becoming a crisis,’ he said.”

The Review Journal from Nevada. “More than half of Las Vegas home sales in March were foreclosures or short sales, the president of Greater Las Vegas Association of Realtors said Monday. Sales are down 7.9 percent from the same month a year ago. Inventory of homes listed for sale is at 22,763, up 6.9 percent from March 2007.”

“Foreclosures and short sales, or homes sold for less than the mortgage owed, accounted for 773 sales in March, 52.3 percent of the total.”

“While home prices are still declining, down 20.3 percent from a year ago, association President Patty Kelley said she doesn’t expect them to go much lower because they’re now selling for less than what it would cost to build that same home today.”

“‘It’s starting to become a feeding frenzy,’ Kelley said. ‘The banks, the title and escrow companies are backed up. They laid off all their people and now they don’t have the staff to handle the volume. We could get foreclosures and short sales out of the inventory. We have buyers coming back, but the banks can’t act fast enough.’”

“Realtor Steve Hawks said he just received notice from the bank about a 2,480-square-foot home in Seven Hills going on the market for $334,000, compared with its 2002 sales price of $565,000.”

“Distressed property sales are among the greatest opportunities in Las Vegas right now, Jeremy Aguero of Applied Analysis said. ‘Sharks are swimming around the blood,’ he said at an economic forum last week.”

“The number of Clark County homes that entered preforeclosure status reached a record 6,152 in March, up 52 percent from February and more than double the 2,813 preforeclosures in the same month a year ago, Foreclosures.com reported.”

“The county has 15,937 preforeclosures through the first quarter of the year, or 3.11 percent of its 512,253 households. Nevada leads the nation with 2.42 percent of its households, or 18,087 homes, in preforeclosure through March, followed by Arizona (1.96 percent), Florida (1.87 percent) and California (1.05 percent).”

“Real estate-owned, or bank-owned, homes in the county also rose substantially in March to 1,937, up from 1,640 the previous month and 1,763 in January. The three-month total is three times more than a year ago.”

“Nicholas of CMPS Institute said the markets hit hardest by foreclosures are those with a high percentage of speculative investors who don’t necessarily have as much as incentive as a primary resident to keep the home.”

“‘It’s just an investment. They can just walk away from it,’ he said. ‘It’s going to have to play out in places like Vegas and Florida. You can’t bail out speculators. The problem is going to have to correct itself.’”

“Jeanette Young said she’s now faced with possible foreclosure on her home after losing her job at National Alliance Title, which closed in December. President Bush’s plan to give $600 tax rebates to help homeowners is a ‘joke,’ she said.”

“‘I don’t know anyone that has a mortgage that is $600, unless they’ve had the same loan for 10-plus years,’ she said. ‘Mine is $2,200 plus all the other bills associated with a home. I do not see any relief in sight for those of us who have lost our jobs, cannot find comparable income and now cannot make our house payments.’”

The Las Vegas Sun from Nevada. “It doesn’t take a Harvard MBA to figure out that, at a time of year when business conventioneers and tourists head to Vegas for near-perfect weather, the city’s economic engine isn’t firing on all eight cylinders. The proof: Rooms are going for $75 at Harrah’s, $69 at Bally’s and just $199 at Wynn Las Vegas and the Venetian.”

“Even one of the Strip’s most exclusive hotels, the Four Seasons, is offering a $50 credit on hotel services as well as rooms for less than $400 a night.”

“Then there’s the blitz of promotions, from two-for-one meal and show offers to free cocktails and concierge services. Even the just-opened Palazzo is offering a $20 food credit and a $25 gambling credit.”

“Las Vegas has been harder hit than other destinations by the combined effect of the subprime mortgage crisis, rising gas prices and the broader economic slowdown, said Ray Snisky, president of one of the nation’s largest operators of travel charters and packaged tours.”

“The company, which is stepping up special offers in vacations it packages for major airlines and big hotel companies such as MGM Mirage, has seen some Las Vegas rates drop by more than 20 percent from a year ago.”

“‘It’s been surprising to us because Las Vegas has always been considered recession-proof,’ Snisky said.”

“Gov. Jim Gibbons and state legislators cannot count on a quick recovery from the severe economic downturn that has left them scampering to find where to cut $898 million from Nevada’s two-year budget.”

“Economists and housing industry experts predict the state’s flat economy won’t turn around before the last half of 2009 and might not regain its usual robust growth for another three to five years. That means the state’s top elected officials not only face decisions this week on how to make dramatic cuts, they’re also likely to go into the legislative session next year with tax revenues no larger than today’s.”

“‘Our state is going to be in a world of hurt,’ said Assemblywoman Sheila Leslie, D-Reno. ‘That reality is starting to sink in at my level. It is frightening.’”

“The time when politicians could campaign for more full-day kindergarten classes and expansion of state services is over, said Eric Herzik, a political science professor at the University of Nevada, Reno.”

“‘It is not a rosy future,’ he said. ‘Remember, just six months ago people were saying Jim Gibbons was making things up when he started talking about budget cuts. Well, nobody is in denial anymore.’”

“Herzik said legislators are going to walk into the 2009 session with no ability to expand services unless they increase taxes at a time ‘when people in the state are hurting.’”

“‘This time it is affecting Nevadans,’ he said. ‘The housing slump, the foreclosures have hit Nevada worse than anywhere else. In the past, bad things happened to other people.’”

“‘I am not sure yet we have hit bottom,’ said Dennis Smith, president of Home Builders Research, about the slump in the housing market. ‘I do not see a return to the heyday (of 2004-06). Loans are harder to get. It will turn around. How long is it going to take? Maybe three years to five years.’”

“Herzik noted even cigarette and liquor sales are off during the current downturn. ‘What we need is for people to start gambling, drinking and smoking,’ said Herzik, not entirely in jest.”

The Las Vegas Business Press from Nevada. “Corus Bankshares, a Chicago-based lender responsible for $360 million in Las Vegas condominium-project loans last year, now faces high financial risk from the market’s dramatic downturn.”

“The firm has bet almost exclusively on luxury condominiums, with a $4.34 billion loan portfolio at the end of 2007. Corus’ fourth-quarter earnings were $1.9 million or 96 percent less than the previous year. As of Dec. 31, $286.6 million in condo loans were more than 90 days past due and had stopped accruing interest, representing a fourfold increase from the previous year.”

“‘Continued weakness in the housing and mortgage markets, combined with a general slowdown in the economy, has resulted in a significant decline in Corus’ 2007 earnings,’ Robert Glickman, the company’s CEO, said in a statement. ‘This is clearly the worst quarter we have seen in many, many years.’”

“‘The market remains in the midst of a rebalancing from an overheated demand profile to a skeptical consumer perception,’ said Brian Gordon, a principal with a Las Vegas-based financial consulting firm. ‘We believe end-users will ultimately dictate demand within the luxury condo sector and normalized conditions will prevail over the next several years.’”

The LA Times on Nevada. “They blow up aging casinos in this town. Now, some are wondering what to do about yesterday’s desert dream homes. Take the foreclosed million-dollar house realty agent Michael Antos recently showed. Please.”

“Antos pointed out that the house was showing its age. After all, it was built in 2000. In Vegas, that makes it as dated as a coin-operated slot machine. ‘Now you’ve gotta have at least 20 by 20 to sell something at this price,’ Antos explained.”

“About 1,000 houses are listed for sale in Las Vegas for $1 million or higher, more than 600 of them built since 2004. But unless they’ve been constructed in the last year or two, the properties are considered out-of-date, making them all that more difficult to sell, real estate agents say.”

“‘Once you get into the market over $2.5 million, a lot of people just prefer to build their own,’ said veteran Las Vegas real estate broker Michelle Sterling.”

“In 2000, 176 Las Vegas homes sold for more than $1 million, according to DataQuick. By 2006, that number multiplied nearly eightfold — to 1,385 before ebbing to 1,219 last year. Along with being out-of-date, developer Tom McCormick says, a lot of the mansions built hastily during the boom were poorly designed.”

“The housing slump has left Las Vegas strewn with empty houses, and at all price points. There are now more than 22,000 homes for sale here, 51% of them vacant, according to SalesTraq. That compares with perhaps 15% to 20% in Southern California, said John Burns, an Irvine real estate consultant.”

“William Derentz bought a 5,400-square-foot home in Las Vegas for $2 million in 2004. He never moved in, since he planned to resell it in a year or two at a hoped-for profit of $1 million. But after the home languished on the market, Derentz threw in the towel in February and relocated his family from Mission Viejo to the house.”

“He now hopes to sell it when the market recovers, even if that takes several years. Meanwhile, to make the property more competitive, he’s spending $200,000 to fix up the backyard of the house, outfitting it with a pool and ‘his-and-her’ cabanas.”

“‘It’s going to look like the Bellagio back there,’ Derentz said. ‘You’ve got to make it two cuts above.’”

The Reno Gazette Journal from Nevada. “For Brian Turley and other area repo men, business is booming. In the wake of the subprime mortgage debacle, more people are defaulting on car payments and repossession firms report their business has doubled or tripled in the past three years.”

“‘We’re doing more business than ever; it’s at least doubled,’ said Karen Regan, office manager for a Reno vehicle recovery firm. ‘About a year ago, before the foreclosure stories hit the news, we picked up a lot (of vehicles) in the Spanish Springs area. People were choosing between their homes or their cars.’”

“Two weeks ago, Justin Zane, co-owner of Zane Investigations of Reno, recovered two 2007 Corvettes, she said. Cars trundle into the firm’s yard every day: Chevy Tahoes and Silverados, Honda Elements, tricked-out pickups and brand new Toyotas. Motorcycles and all-terrain vehicles also are recovered.”

“‘That’s another choice, lose your toy or lose your car,’ said Kristen Ithurduro, Zane’s sister and partner. ‘But a lot of these folks, we get their motorcycle, and then three months later, we’re back for their car. It’s a vicious cycle.’”

“Local repossession firms said the subprime crisis is responsible for the upswing, but the usual causes of financial instability are still in play. Divorce, rising fuel prices, an inability to repair a car even when a consumer can make the payments and people buying more expensive vehicles than they can afford are at the root of many repossessions.”

“‘People make bad choices,’ Ithurduro said.”

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