April 11, 2008

The Great Experiment Is Over

It’s Friday desk clearing time for this blogger. “Sixteen houses and 273 lots ready for building, many of which are in Lapeer County, will be on the auction block April 19 in Rochester, as two southeast Michigan builders look to sell properties in a slow new housing market. Opening bids on the houses and condominiums is $60,000, well below listing prices that were as high as $2.5 million for a nearly 6,000-square-foot cedar log home in Northville.”

“Andrew’s River Estates resident Vern White says he bought a lot in the subdivision as an investment about four years ago and would love to see prices and demand rise. ‘I figured I’d make more,’ he said. ‘Now I won’t even get my money out of it.’”

“When Christine first purchased her three-unit house on University Place in 2004, she was thrilled at the prospect of finally owning her own home. She had a husband of 14 years, a comfortable commuter job in New York City and manageable mortgage payments for her new residence — $2,800 per month.”

“Now, Christine pays $5,109.26 every month for her house. Facing foreclosure, she has exhausted all her savings, is deep in debt and calls her mortgage company every day to try to negotiate a better payment plan.”

“‘It was a good mortgage,’ said Christine, who asked to have her surname withheld. ‘I remember wondering why it was so easy — they just looked at our last two years of taxes. That should have been a red flag.’”

“Realtors and their lenders have conflicting viewpoints when it comes to the real estate market in Denton. ‘This is more of a slowdown, not a crisis,’ said Stacy Curtis, president of Curtis Mortgage. ‘And it’s a slowdown from the record-setting pace of the last few years.’”

“Curtis, who joined others with his own upside-down mortgage on one his properties, said he would stick to his house and others should as well.”

“‘I purchased a investment property for $180,000 in June of 2005. Last summer, it appraised for $194,000; now it is at $175,000,’ he said. ‘I’m holding on, assuming by the end of this year or next, it will be back up.’”

“‘People who live in this area and want to own a home, need to stop listening to the national doom-and-gloom reports and get out and buy,’ Curtis said.”

“East Valley real estate agent Kathy Ciaccio has called Maricopa County about a number of pools, but sees the foreclosure epidemic becoming an epidemic of neglect. ‘Typically, I show six or eight houses to one client on a weekend,’ Ciaccio says. ‘Half of those houses have murky, green pools.’”

“In northeast Phoenix, Bill Hostert, couldn’t believe what he saw when he peered over his fence. ‘This pool was pretty sickening looking, I’ll tell you that,’ he said. Bill says the new, absentee owner from Canada had no idea what shape the pool was in.”

“Now he’s worried about the consequences. ‘The mosquitoes that are gonna be flying around here, the West Nile disease and all that’s flying around, I don’t need that.’ he said.”

“Construction of $1 million condominiums overlooking the Animas River is on hold pending an upturn in the economy. The tipping point came probably a month ago, Mynders Glover, a partner in the Animas Riverfront project, said Monday. He cited the stumbling economy and a weak real-estate market for delaying construction.”

“‘We’ve been following the news all along,’ Glover said. ‘There were different factors, and professionals were asking, ‘Are you really going to build this?’”

“In addition, sales haven’t been brisk at The Villas at La Campanella. According to La Plata County assessor records, three of 13 villas priced in the mid-$800,000s have sold. Two of the units were purchased by the developer’s husband and the husband’s company.”

“Chicago Spire, which will be the world’s tallest residential building when completed in 2012, has come to Malaysia to attract investors in the mega project. ‘We think property in Chicago has good value globally compared to other cities across the world,’ said Edward Lewis, director of global real estate service provider Savills. ‘The dynamism and strength of economy in Chicago makes this incredibly good value.’”

“According to Lewis, the credit crisis in the US subprime market has not affected Chicago’s top-end estate market which is more resilient due to limited supply. He said investors could capitalise on the upside potential of the US housing market which was now at a downturn.”

“Savills Rahim & Co’s executive chairman Datuk Abdul Rahim Rahman said there was further room for capital gains from investment in property with the expected strengthening of the US dollar in the coming years. According to Abdul Rahim, demand for prime properties anywhere in the world will continue to attract investors.”

“‘There are no signs of slowing down. There are not enough properties to sell,’ he said.”

“Countrywide CEO Angelo Mozilo…fought back against his board’s attempts to curtail his pay two years ago by hiring his own consultant…John England, paid for by Countrywide. Later, Mozilo writes to England about having to pay taxes when his wife travels with him on the corporate jet. ‘In order ‘to avoid extraordinary travel expenses,’ Mozilo complains that his wife ‘would have to travel commercial or not at all, which is not right nor wise.’”

“At last month’s hearing, Mozilo testified that he had ‘to pay an enormous amount, a substantial amount of money, to have her on the plane.’ But, ultimately, he conceded that he might have been making too much of a fuss. ‘In today’s world, I would never write that memo,’ he said.”

“The state budget is chronically in deficit, California’s schools rank near the bottom of the states in academic achievement, and a severe water supply crisis is looming, all issues that the state Legislature has managed to sidestep for years or even decades.”

“But lawmakers are Johnny-on-the-spot in responding to matters ripped from the headlines.”

“A political feeding frenzy has erupted over the housing industry meltdown, for example, with dozens of measures that purport to alleviate the pain of those whose subprime mortgages have been foreclosed, even though most of those mortgages should never have been issued in the first place.”

“Whether any of the proposed nostrums would ease the mortgage situation is almost beside the point. Lawmakers, especially those from regions with high foreclosure levels, are scrambling to demonstrate their compassion by throwing bills into the hopper, seeking media notice and political credit for doing something.”

“Legislating in ignorance about a situation that hasn’t yet played itself out would appear to be the height of folly. And history would indicate that hasty lawmaking almost certainly would have unanticipated and perhaps very negative consequences.”

“The Hope for Homeowners Act of 2008 is an ambitious effort to address the crisis created by the collapse of the housing bubble, and the epidemic of predatory subprime mortgages over the years 2003-2007.”

“I…argue the effort to stabilize prices in bubble-inflated areas is counter-productive. Insofar as it succeeds, it makes homeownership less affordable for young people and families moving into the area.”

“If the sale price-to-rent ratio is 20 to 1 (in many cities it is higher), then this house would rent for just 5 percent of the sale price. This means that owners would end up paying 77 percent more in housing costs than a family who rents a comparable unit.”

“In addition, since house prices will continue to decline in these areas as the bubble deflates, it is unlikely that many of these families will accumulate any equity by the time they sell their home. In fact, most of the homeowners in these areas are likely to end up underwater.”

“If prices did temporarily stabilize at bubble-inflated levels, it would only lead to more construction, which would then place further downward pressure on prices.”

“A government house-price stabilization program that tries to maintain artificially high prices would face all the same drawbacks as farm price support programs that target artificially high prices, except the housing market is far larger.”

“Furthermore, it is difficult to see why it would be desirable to sustain artificially high prices, even if it were possible. Sustaining bubble-inflated prices means that it will be much harder for young people and families moving into an area to afford to buy a home.”

“Tess Vigeland: When we talk about the psychology of home ownership, you really have to address this idea of the American dream and that a big part of that is owning a house. Should our notion of well-being be so tied to the idea of home ownership, because it certainly isn’t in other Western societies?”

“Chris Thornberg: Absolutely not. Again, so much of the rhetoric going on out there in the context of the current crisis seems to be wrapped around this idea that ‘My God, we have to keep people in their homes no matter what.’ Home ownership is not the be all and end all. Home ownership is not the Holy Grail. There are plenty of people in plenty of circumstances for whom living in an apartment is a very logical thing to do.”

“The great American experiment with homeownership for all and mortgages for everyone is over. Millions of homeowners will lose their houses. The government is scurrying to minimize the damage to the nation’s economy and banking system. Wall Street is picking shards out of its hide. Academics are straining to find the right historical analogy and tally the losses. And the press is looking for people to blame.”

“Making every American adult a homeowner was always imprudent and impractical; now that’s obvious. Some Americans don’t earn enough to pay for a mortgage and maintain a house; in recent years, mortgage brokers worried little about the first concern and never mentioned the second.”

“Homeownership can give Americans a stake in society and help build savings — but not if they don’t have any equity in their homes. Better to help them open savings or retirement accounts.”




The Value Of Housing Has Come Unhitched In California

The Sacramento Bee reports from California. “Across the colorful history of Sacramento, it’s likely that few people have received as much advance celebrity as Cathy Del Brocco for the simple act of selling their house and leaving town. And few took so long to leave. She listed her house in the Pocket for $335,000 and planned her move to a quieter place with a cheaper price tag. But there was just one problem with this grand plan: Del Brocco lived in Sacramento, and she couldn’t sell her house to save her life.”

“She put it on the market about 10 months ago and had to drop the price five times before it sold. Meanwhile, the price of a home she had seen in Holland, Mich., kept falling.”

“She declined to name what she finally got for her Sacramento house. But you can probably guess. Subtract 10 months from $335,000 in this market and you’ll be close. Here’s one hint: It was listed for $284,000 in February.”

“The good news for Del Brocco: The price was dropping at the house she eventually bought in Michigan. It sat 291 days on the market and was vacant.”

“‘It went down to $125,900,’ Del Brocco said. ‘I offered $100,000. They came back at $118,000. I came back at $114,000, and that’s what I got it for. It’s the cutest house.’”

The Sacramento Business Journal. “New-home prices fell for the eighth consecutive quarter to the lowest level since 2003. The Sacramento area’s median new-home price declined to $359,000 during the first quarter, a 7.5 percent drop compared to $388,000 in fourth-quarter 2007 — and $107,000 less than the peak two years ago.”

“Centex Homes was the top builder in the six-county area by a wide margin through the first two months of the year, according to Hanley Wood Market Intelligence. Division president Doug Pautsch attributed it to a variety of factors, including aggressive pricing, customer service and the location of its projects.”

“‘I don’t think there is a simple answer,’ he said. ‘There’s no silver bullet.’”

“Folsom-based Elliott Homes Inc. appears well-poised for the long haul after paying $10 million this week for 400 acres of GenCorp Inc.’s unused real estate off Highway 50 in Rancho Cordova.”

“That comes to $25,000 an acre, a lot less than the $100,000-an acre figures some builders were paying for land during the housing boom. At those land prices, a privately owned builder can compete all day long against big Wall Street builders that dominate this market.”

“Sacramento real estate agents have long maintained that more than 40 percent of homes for sale in Sacramento County and West Sacramento are vacant. This week, commercial broker Mary Collins said thieves hit the vacant house next to hers in Rio Linda. They arrived within a week of a for-sale sign saying the home was bank-owned.”

“‘They took the lighting, the copper and the air conditioner. It just takes 50 percent of your equity overnight,’ she said.”

“The first of several reports on first-quarter home sales is in, showing the number of new homes sold in the eight-county Sacramento region has fallen to the lowest level since possibly the early 1990s.”

“After a free-fall in sales and prices that has lasted nearly three years, any notion of mere stability will appeal to thousands of area homeowners who have seen their values fall. It also will appeal to sellers who have lost bargaining power in a market where buyers rule.”

“‘We’ve dropped the price twice, maybe three times,’ said George Vargas of Elk Grove this week. ‘We’ve had a few more people since our latest price drop, but it’s slowed down in the last month.’”

“DataQuick’s Andrew LePage said banks have sold only about 40 percent of the homes they foreclosed on in the region during the second half of 2007. The thousands more slated for sale will put a downward pressure on prices. ‘There are just a heck of a lot of foreclosures to burn off before the market can kick into gear in any big way,’ he said.”

The Monterey County Herald. “There are nearly 1,200 homeowners in Salinas on the brink of foreclosure, according to the State and Consumer Services Agency. Some of them were likely among the hundreds who sought help with their loans Thursday at a workshop at Sherwood Hall in Salinas.”

“‘Tell them exactly what your situation is,’ Supervisor Lou Calcagno told the distressed borrowers. ‘You got involved in a situation that wasn’t of your making. There’s only so much the government can do, but at least it can show you the way.’”

“The first step is to make the phone call, be ready to wait in line forever and be transferred from one customer service representative to another. ‘It’s the hardest call you’ll make, and near the end maybe it’s going to piss you off,’ Mary Harman, past president of the Orange County Chapter of the California Association of Mortgage Brokers told the group.”

“Maria Matamoros already tried to refinance her home loan, but because she’s the registered owner of her niece’s home, the retired 62-year-old did not qualify. Matamoros and her niece often ask their relatives for help with the payments for the $620,000 home they bought only 13 months ago — a home now valued at $400,000.”

“After hearing about the modification process, they want to see if they qualify. ‘I really can’t pay,’ Matamoros said.”

The Fresno Bee. “Speakers delivered a mixture of good and bad news at the Greater Fresno Area Chamber of Commerce annual economic reporting conference. The keynote speaker, Gary Schlossberg, senior economist at Wells Capital Management, said he thinks the country has entered a recession but doesn’t believe it will be particularly deep or long.”

“He called for more perspective on housing. Prices have fallen 15% to 20%, but that came after a run-up in values of up to 225% in some areas between 1998 and mid-2006.”

“Foreclosed properties comprise 15% of the inventory, or 1,100 houses; account for 38% of the homes in escrow; and have been 25% of all home sales in the Fresno and Clovis region over the last six months.”

“Paul Gibson, co-owner of Guarantee Real Estate and Home Loans, said low interest rates, new loan programs and Fresno’s relatively low housing prices provide a catalyst for renewed strength.”

“‘Is this a recession or a fearcession?’ he asked. ‘The subprime [mess] won’t submerge us. But if you watch too much 24/7 talking heads news, it will mess with your mind.’”

The Daily Breeze. “After several years of sharp spikes, Los Angeles County apartment dwellers will see only modest increases in their rent this year, thanks to the tepid housing market, a report predicts.”

“USC Lusk Center for Real Estate forecast director Delores Conway said the apartment sector should weather the housing slump and credit squeeze as long as Southern California doesn’t lose large numbers of jobs.”

“‘Renting remains attractive when mortgages are harder to obtain for high-priced homes,’ she said.”

“And renters will have more choices with many newly built apartments and some condominium projects that have reverted to rentals as well as foreclosed homes hitting the market.”

“‘The shadow market of houses and condos for rent will continue to grow as owners lease properties rather than sell at a reduced price,’ she said.”

“Jack Kyser, chief economist at the Los Angeles County Economic Development Department, said more apartments are coming on the market in downtown Los Angeles. While that will limit landlords’ ability to raise rent, it will not put them in dire financial straits.”

“‘I think people are just going to be looking more at renting rather than going out to buy,’ he said.”

From ABC News. “All around Beverly Hills, ultraluxury condo complexes are sprouting up in an outward show of confidence from investors who have seemingly ignored forecasts that the high-end property market will slow to a crawl.”

“‘The talk is of a United States on sale, but the truth is that it remains the best place to invest money longer term,’ economist Jack Keyser said.”

“The CPC group headed by Brits Nick and Christian Candy spent $500 million on a site the previous owner had purchased for $33.5 million just three years earlier. Their idea: build 252 condos and run away with a billion and change.”

“Not all experts agree that the high-end real estate market will be able to buck the trend of property value decline indefinitely.”

“‘Markets are segmented and the high end benefits from a more affluent buyer class, but it still can’t defy the laws of supply and demand,’ said economist Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. ‘This high-end market will see weaker demand and some slowing as a result — it just takes a little longer to hit.’”

“Cranes tower over the desirable parts of L.A. and the real estate market is primed for the sale of the 29-bedroom, 40-bath former home of William Randolph Hearst and actress Marion Davies, which is on the market in Beverly Hills for $165 million.”

“Look a little closer though and you’ll meet developers whose ebullience has dampened and you’ll find a $165 million mansion that has sat on the list for more than a year.”

From KGTV San Diego. “Earlier this decade, Chula Vista was one of the fastest-growing cities in the nation. Four years ago, almost 4,000 homes were built. However, this year, the city will be lucky to see 500, according to city officials.”

“‘For us, new homebuilding has come to a screeching halt,’ said Chula Vista City Manager David Garcia.”

“Now, instead of new homes, there are more foreclosure signs. Home prices are dropping, and for people who are still in the area, they are looking to pay less property tax.”

“‘They’re saying, ‘Hey, the house down the street sold for $100,000 less. My house is worth less, so I’m going to appeal my property values,’ said Garcia.”

The North County Times. “It took a jury less than two hours Thursday afternoon to unanimously clear a real estate agent accused of failing in his duties to a couple he helped buy a tony Carlsbad home.”

“Marty and Vernon Ummels say that the $1.2 million price tag for the upscale coastal Carlsbad home they bought in 2005 could not be justified, especially when other houses on the street were selling for much less, vital information the couple said they didn’t get until after the close of escrow.”

“But the jury found that Little had not breeched his responsibility to the couple as their agent, nor had he been negligent. ‘Mr. Little did what he was supposed to do,’ jury forewoman Wendi Brick said. ‘The bottom line is that you (as a buyer) are responsible when you sign a contract and purchase something.’”

The Union Tribune. “‘Of course, it’s devastating and shocking that the standard of care (provided by an agent) doesn’t seem to include having the agent tell you about houses that sold on your block for much less money,’ Marty Ummel said. ‘I believe it’s the agent’s responsibility to do his due diligence and inform his clients of any material fact that would impact their willingness to buy or not buy.”

“‘The jury spoke, but what they decided hurts the real estate industry. It says the Realtors don’t have to do their due diligence,’ Ummel said.”

The Voice of San Diego. “The case attracted national attention as it posed a hot question: What are the responsibilities of a real estate agent?”

“The real estate camp was concerned that if the plaintiffs won Thursday, it would catalyze and focus a growing urge around the country to find someone to blame — and to hold financially responsible — when houses aren’t worth as much as their buyers once paid.”

“At a time when housing market trouble has rocked the global economy, the individual roles of people involved in the basic housing transaction have come under fire. A soaring market this decade hid a multitude of mistakes, a plethora of cut corners and fudged appraisals, because buyers could sell for a profit, nearly no matter what.”

“But now that the value of housing has come unhitched from what once propelled it upward by double-digit percentages year after year, a spotlight has become trained on the topic of ethics in real estate.”

“Attorney David Bright said his client, Little, was being unfairly blamed for the Ummels’ house dropping in value. ‘I think Realtors are scapegoats for a declining market,’ Bright said after the verdict was reached Thursday afternoon. ‘There are always people out there who will blame someone for something that is beyond their control.’”

“But Marty Ummel…said the jury’s decision enables real estate agents to skimp on information they provide to their clients. ‘I think it sends a bad message to people about the real estate industry,’ she said. ‘Evidently there is not the relationship of trust that I would’ve expected.’”

“And Todd Lackner, a real estate appraiser not associated with the case, said the Ummels had ‘lost the battle but won the war’ when it came to raising questions and delivering a hit to the reputation of real estate agents.”

“‘I think it’s scaring Realtors more than anything else,’ he said. ‘[Little] won the court case, but there’s a lot of other Realtors out there that are very concerned. Not just in San Diego. It’s got to be nationwide.’”

“‘I think people are a little bit more skeptical, more concerned, and rightly so,’ he said. ‘If you don’t think this is the right value, don’t do it.’”




Buyers Haven’t Gone Away, They’re Just Waiting

The Patriot News reports from Pennsylvania. “The nationwide housing slowdown that took hold in 2007 might be showing up in the midstate. In the first quarter of 2008, the number of homes sold dropped 21.6 percent from the first quarter of 2007. It was the lowest first quarter for home sales since 2003. And for the first time since the national slowdown took hold last year, the average price of a midstate home sale has dropped.”

“In late 2006, Ryan Sweet, an associate economist with Moody’s Economy.com, predicted housing prices wouldn’t fall in the Harrisburg area. Since then, economic conditions across the nation have gotten worse than experts anticipated.”

“‘The Harrisburg housing market is in the midst of a correction. The labor market in Harrisburg is slowing, and job growth is on the verge of stalling,’ Sweet said. Those factors, coupled with tighter lending standards nationwide, mean ‘demand has fallen more than what we expected,’ he said. ‘You will see prices decline.’”

“‘Sellers were believing the market was the same as a year or two ago, and buyers were wondering why there was no change in price. Now, sellers are starting to recognize they’ve got to be more realistic in their price, and buyers aren’t going to be able to steal,’ said Frederick Briggs, an associate broker in Hampden Twp. ‘There has to be some negotiating process. We believe it’s coming very close to where the market value really is.’”

“Real estate agent Kathy Sumski said the key was the house’s good condition and its price compared with those of similar homes on the market. ‘You can’t have that fluff range we used to have. You have to price it on the money,’ Sumski said.”

The Baltimore Sun from Maryland. “March is usually the month when homebuyers get serious, when sales rocket out of the winter doldrums - but not this year.” “Home sales in the Baltimore area last month fell 34 percent from a year earlier, the seventh straight month of declines roughly in that range, Metropolitan Regional Information Systems reported yesterday. The average sales price slid almost 3 percent to about $297,700, or $8,900 less than a year ago.”

“A larger-than-usual jump in area sales from January to February had fanned hopes that the housing market was approaching a bottom. But that was dashed by the latest data: The 22 percent increase from February to March was the smallest for that period since Rockville-based MRIS began tracking local sales nine years ago.”

“‘Pretty bleak,’ said John McClain, a senior fellow at George Mason University. ‘A lot of people are still on the sidelines. … People think the economy’s in a recession, and it probably is.’”

The Daily News Record from Virginia. “Sales of new and existing homes dropped 22.2 percent in the first three months of 2008, according to the Harrisonburg-Rockingham Association of Realtors MLS.”

“Meanwhile, the median price of a home rose 9.2 percent to $202,000. For the local real estate market, it was the slowest first quarter since 2001, when Realtors closed deals on 186 homes at a median price of $124,800.”

“The remainder of 2008 will be ‘just OK,’ said Larry Martin, co-owner of Re/Max Performance Realty in Harrisonburg. Martin has been in the real estate business since 1981 and remembers two previous downturns in the market, 1981-82 and 1991-92. The current slump is longer and deeper than the previous two, he said.”

“‘I expect some recovery in 2009 and a strong recovery in 2010 and 2011,’ Martin said. ‘Our buyers haven’t gone away, they’re just waiting.’”

“Nearly half of all first quarter activity, sales of 91 homes, occurred in March, according to Scott Rogers, associate broker in Harrisonburg.”

“‘The flip side is that 183 people put their houses on the market in March,’ Rogers said. ‘So the net inventory also increased in that same time period.’”

“Nationally, the housing market is at a 10-year low, according to Lawrence Yun, chief economist of the National Association of Realtors. Home prices are higher than a decade ago, but people’s ability to afford a median priced home is about the same in 2008 as it was in 1998, Yun said.”

“‘The soft housing demand is psychological,’ he said. ‘It is a crisis of confidence.’”

“But prices are ‘out of whack’ with household income, said Chris Gingrich, professor of economics at Eastern Mennonite University. For at least a generation prior to 2000, the ratio of home prices to household income was about 2.8-to-1, Gingrich explained.”

“‘For 30 years, that ratio hardly moved at all,’ Gingrich said. ‘After 2001, the ratio skyrocketed to about 4-to-1.’”

“In 2005, the ratio of home prices to income in Harrisonburg and Rockingham County was 5.6-to-1. That’s based on a Census Bureau estimate of $31,100 median household income and median home price from the Realtors’ association of $173,035.”

“The market was overconfident five years ago, Gingrich said. ‘Housing prices have come unglued to income,’ Gingrich said. ‘And it’s not rocket science to determine how you pay your mortgage.’”

The Roanoke Times from Virginia. “Historic tax credits and the benefits of a city-created enterprise zone likely are drawing developers to this area that stretches down Salem and Campbell avenues to Fifth Street. Already several developers have landed rows of condominiums in structures up and down these streets.”

“At least three other projects are in the works, creating what the city’s economic development administrator, Brian Brown, said is a synergy of urban living in an underutilized district.”

“‘Condo developments tend to feed off one another,’ he said.”

“Genesis Mansions is creating Mansion Square Condominiums, with 30 condos at 501 Salem Ave. Each will have one to three bedrooms and measure 1,600 to 4,000 square feet.”

“There will be other amenities that are unique to Roanoke’s slew of downtown housing units, including an indoor pool and hot tub and a fitness center, said Ron Schenker, project manager. The condos will sell for more than $300,000 each, he said.”

“City real estate records show that Susanne Helbig, an owner of Genesis Mansions, purchased the property for $425,000 last year.”

“Condos aren’t the only ventures that are popping up as investment and revitalization efforts in this section of downtown. The YMCA is planning a 10,000-square-foot expansion to its Church Avenue facility.”

“And Integrated Imaging has a contract to purchase a structure at 419 Salem Ave. It wants to move its office there by December, said Chuck Hawthorne, a partner in the company.”

“The firm welcomes prospects for a revival in this district. ‘We feel like it’s a really good time to get into that area from an investment standpoint,’ Hawthorne said. ‘Hopefully, more restaurants will fill in there, once there’s actual residents.’”

“The YMCA also considers nearby downtown living projects as benefits to its business. ‘What downtown living does, it kind of brings a 24-hour vitality to an area,’ said Cal Johnson, executive director of the Roanoke Valley YMCA.”

“‘Because the YMCA’s open 16 hours a day, it’s great to be surrounded by people who are living downtown,’ he said.”

The Herald Leader from Kentucky. “If location, location, location are the first three rules of buying and selling real estate, then timing must be No. 4.”

“Hundreds of loft apartments and other condominiums are going on the market in downtown Lexington, just as the national real estate recession rolls over the Bluegrass.”

“For-sale signs are visible at Main & Rose Lofts, the largest of the downtown projects. They are in windows of apartments that have never been occupied. Some developers are offering incentives, like a free garage at Kimball House Square and low-cost loans at Artek Lofts, to sweeten deals and lure buyers.”

“Liens have been filed against three downtown projects — The 500’s on Main, Kimball House Square and NewPast on Main — which means developers and contractors are having disputes over money. Lenders have tightened requirements for loans for both developers and condo buyers following the national collapse of the subprime mortgage market and some major lenders.”

“‘Everybody is running scared,’ said Rob Parker, developer of The Mark Lofts at Woodland Park. He sold 10 of The Mark’s 36 units at one event in March 2007, but only eight in the year since then.”

“‘The market has definitely slowed down,’ agreed Kimball House developer Marc King, who has sold 17 of 39 condos.”

“‘The market is flooded with units right now,’ said Greg Buchanan, a Realtor who represents Kimball House Square. And another wave of condos could be on the way.”

“Meanwhile, mortgage companies are becoming more tight-fisted, less willing to loan money, said Buchanan. ‘People are not able to get certified for loans,’ he said, ‘because the credit market is a mess.’”

“Louisville developer Bill Weyland said lending agencies are demanding ‘a lot more proof’ from developers that they have a market for their units. ‘They want to know if the absorption rate is really going to be there,’ he said. ‘They are really concerned about making sure the developer knows who they are marketing to’ — and that means doing market surveys and getting hard numbers.”

“No one can escape, Parker said. ‘The economy is hurting everybody.’”

“‘Probably very few communities are not experiencing some sort of slowdown,’ said Phil Scherer, whose Commercial Kentucky Inc. is building the Fleur de Lis loft project in downtown Louisville. ‘What you have to understand is it may be a slowdown from record levels of activity, sales and appreciation’ between 2004 into 2007, he said.”

“Raphael Bostic, a real estate professor at the University of Southern California who is often quoted by the national media, said ‘the condo market has pretty much fallen on hard times across the board. They are weak on the West Coast … and eastern cities as well.’”

“Bostic said condos are ‘the most volatile’ of residential properties, because they are often purchased as investments and for recreational reasons. Particularly hard hit are the ‘flippers’ — investors who plan to resell quickly for a profit — and first-time home buyers who may be unnerved by price declines, Bostic added.”

“An estimated 30 percent of the units at Main & Rose Lofts were bought by investors to flip, said Bret Caller, one of the project’s developers. Those flippers might account for several of the 35 units at Main & Rose listed for sale…and the for-sale signs in the windows of some unoccupied units.”

“Asked about sales, Caller said, ‘We have sold 75 (of 96) units; they are out of our name.’ He said closings on several more units will occur in the next 30 to 60 days. He acknowledged that the for-sale signs in windows where big S’s were posted until recent weeks ‘doesn’t look good.’”

“Debbie and Tom Westerfield of Versailles bought a 1,500-square-foot unit at The 500’s as an investment before the building was completed. They paid $280,000 and spent an additional $35,000 to upgrade fixtures and other amenities.”

“The Westerfields think now is not the best time to sell, so they plan to use their condo for entertaining and then rent or sell it for the Alltech FEI World Equestrian Games in 2010.”

“Michael Canan bought a unit in July from a flipper at The 500’s on Main. ‘He (the flipper) had to close or it would go back to the developer, and I bought it from him,’ Canan said.”

“Asked if his unit is for sale, Canan said, ‘I’m in sales. Anything I’ve got is for sale.’”

The Tennessean. “The number of homes on the market in Middle Tennessee started the spring at record levels. The region’s housing inventory rose to 23,730 properties as of March 31, up 6 percent from the end of February and up 24 percent compared with a year ago, the Greater Nashville Association of Realtors said.”

“Driving inventory higher was a sharp drop in sales, which fell 29 percent in March compared with the same month a year ago. The 2,227 deals closed in March were the fewest for the month since 2000.”

“Few sellers have slashed their prices here, but those putting their homes on the market should not expect to make a large profit, agents said. ‘Prices are a little bit softer,’ said Karen Hoff, an agent in East Nashville. ‘Buyers get a little better price, and for sellers, it means they make a little bit less.’”

“The downturn has already taken a toll on builders. Two local firms have filed for bankruptcy, and others have sharply cut back on construction.”

“Only 1,051 building permits were taken out in January and February, according to MarketGraphics Research Group Inc. In 2007, 2,486 permits were taken out during the same two months.”

“‘We may see some downward price pressure in some spots, but I don’t expect to see any fire, house-burning bargains,’ said Bill Ford, an economist at Middle Tennessee State University and a former president of the Federal Reserve Bank in Atlanta.”

“‘It’s not like in other parts of the country that I travel to,’ Ford said.”




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Bits Bucket And Craigslist Finds For April 11, 2008

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