The Housing Bubble

It’s Friday desk clearing time for this blogger. “The latest trend in a South Florida housing downturn limping into its third year? Traveling tours of foreclosed homes. On Thursday, a zebra-striped Hummer limousine rolled to a stop in front of a vacant, two-story yellow house on a corner lot in Tequesta, the northernmost city in Palm Beach County.”

“Having finished sipping Mimosas, 11 people stepped out of the 30-foot vehicle and followed three real estate agents inside, opening cupboards, admiring the Mexican tile and wondering how much of a discount they could expect off the $290,000 list price. Then it was back in the limo and on to the next property.”

“Retirees Marie Mindala and Carl Coghlan are planning to marry soon and used the tour as a chance to scout for properties. One in Palm Beach Gardens was listed for $499,900 after selling two years ago for $930,000.”

“‘Somebody paid $900,000 for this house? They were crazy,’ Mindala said. ‘That’s what the market was at the time,’ Coghlan countered.”

“According to a survey by the Mortgage Bankers Association, 2.36 percent of homes with mortgages in Maine are in the foreclosure process, which is the most since the association began keeping records in 1979.”

“The Legal Counsel to the Maine Association of Realtors, Linda Gifford, said many local banks are considering short sales where they accept less than what is owed to them with the reason being that many houses are no longer worth what is owed on them.”

“‘Everybody thought the values would keep rising,’ Gifford said. ‘They didn’t.’”

“In Charlotte and across the country, foreclosures are increasingly afflicting exclusive communities and high-end homeowners. It points to a trend experts say often goes unrecognized — and could get worse.”

“‘We hear all about certain neighborhoods, and justifiably so,” said Conrad Miller, a real estate agent who lives in Providence Pointe. ‘It rears its ugly head in a little different fashion (in the high end). People overbought. Just because you qualify for a $400,000 house, you shouldn’t buy a $400,000 house.’”

“The number of properties for sale in Charleston has built up to nearly 11,000, according to the Charleston Trident Association of Realtors. Home foreclosures in the Charleston area rose dramatically during the first three months of this year. Now that the housing boom has reversed and prices have stopped climbing, some homeowners have found that they now owe more money than their home is worth.”

“‘People have put themselves in a position where they bought houses they couldn’t afford,’ said Frank Hefner, an economics professor at the College of Charleston. ‘If you’ve taken a variable-rate loan, you are speculating. ‘If you do a 30-year fixed (loan), you’re no longer speculating, but you might not be able to afford the house.’”

“The Charlottesville region’s real-estate market may have slowed to a tortoise’s pace, but that’s actually a good thing — at least for first-time homebuyers.”

“‘First-time homebuyers are the engine that makes the real-estate industry and the new construction industry work,’ said Ray Caddell, a real-estate agent who is in his 25th year of working with first-time buyers. ‘We call it the domino. The whole chain has to work or nothing works.’”

“Charlottesville-area homes are a good long-term investment, Caddell said, but not for house flippers who are looking for a quick payday. ‘We have to get back to understanding that the single best reason to buy a house is to put a roof over your family’s head,’ he said. ‘It’s not like buying pork bellies.’”

“Overland Park and Olathe lead Johnson County in foreclosures as of April 1. ‘In Olathe I get (a foreclosed house) every week,’ said Realtor Ellen Brewood. ‘It’s probably the type of housing there. Olathe was very hot a few years ago and everybody was moving there … it’s still a good location but it grew so fast and so many properties were available. It became easier for people to get in.’”

“When Carol Wolowic was looking for a home in Rockford last summer, it was a seller’s market. She was outbid on three houses before finally buying a house on the city’s northwest side for slightly less than $120,000.”

“Last summer, buying that house took real motivation. She spent several Sundays scouring neighborhoods and visiting open houses, going through an estimated 50 houses before putting in her unsuccessful offers and then finding her current home.”

“‘Most of my friends are in Chicago, and they are still renting,’ said the 26-year-old Wolowic. ‘I encourage anyone who asks to go out and buy. It makes so much more sense than renting forever.’”

“Up until about July last year, the local housing market was continuing a six-year run when it was perhaps the strongest sellers’ market in local history. In the second half of 2007, the market did a 180-degree turn. Now, the housing market may be the strongest buyers’ market in the last 10 years.”

“The story of this property’s foreclosure offers a compelling glimpse into the economic chain reactions that began months or even years ago and result in property losses that are rippling throughout the region, the state and the country.”

“Joan, a Fort Collins landlord who asked that her full name not be used, and her husband bought the house three years ago for between $140,000-$150,000 as a rental investment. At the time, Joan’s husband owned his own masonry and bricklaying business. Money was good, business credit was easy to come by and the deal seemed like a wise investment for the future.”

“‘We got one of those no-money-down, interest-only deals,’ she said. ‘It made a lot of sense at the time. We didn’t realize it wasn’t going to cash flow.’”

“Joan said she ‘doesn’t feel too good’ about the house being sold, particularly when she reads the newspapers and hears politicians blaming people like her for getting in over their heads. The loan industry should bear its portion of the responsibility for the rise in foreclosures, she said.”

“‘The people presenting these loans, they’re supposed to be the professionals,’ she said. ‘There isn’t a person in Fort Collins who didn’t get a postcard in the mail every week telling them to refinance, or ‘now’s the time to buy.’ They’re the experts in the field telling you you can afford this.’”

“According to data from the state’s division of housing, Adams County boasted the highest number of foreclosures in Colorado in 2007. To Kathi Williams, housing director for the state’s division of local affairs, these counties’ high figures stemmed directly from a spike in home construction, unreliable lending and low equity.”

“Williams cited commonalities in the foreclosure cycles she’d witnessed, she also pointed out that the current housing crisis is unique in that it has more to do with an oversupply of housing stock and a reliance on unreliable loans.”

“Any long-term solution, she said, would not involve quick-fix legislation or large-scale debt forgiveness. Williams warned that such a simplistic approach could hurt private investors in lending companies, and only shift the burden to another group.”

“‘Today we have a lot of loans in which people overstated their income and understated their expenses,’ Williams said. ‘When you’ve got a market in which you’ve got someone overextended into a house with no equity … They will not be able to sustain them long-term. We’ve got a patient that’s bleeding to death and we need to figure out what is the most effective triage.’”

“House prices in Britain, at six times average earnings, are too high. That’s it. We all know that, we’ve known it for years. Property prices are nonsensical, exorbitant, unaffordable, immorally inflated by investors and a shortage of available land space to build new homes, exploited by a greedy City.”

“All those buying a property have known this for the past five years at least, and it has then become in their interest to hope that the boom continues.”

“To that extent, property owners have been complicit in the financial recklessness of the past few years: easy credit built on pyramid selling. Buying houses has been a gamble, a cross-your-fingers-and- hope-for-the-best, those-mortgages- are-pretty-generous bet that many of us have indulged in.”

“Nothing could be more immoral, then, in the current climate, than using government efforts and taxpayers’ money to encourage first-time buyers to enter the housing market in order to stabilise the dodgy situation that banks and incautious borrowers have got themselves into.”

“They are trying to tempt the banks into continuing to offer cheap mortgage deals on properties that are simply not worth the astonishingly high amounts they have been flogged at in recent years. And trying to encourage you to sign up for them.”

“Why would anyone with the interests of a first-time buyer at heart encourage him, or anybody else for that matter, to purchase at the top end of the market, with a long-overdue correction imminent? They will tumble into negative equity before they’ve finished clearing up the Valpolicella stains from the housewarming party.”

“It isn’t as if, to most of the rest of us, a fall in house prices is such a big deal anyway. To most of us, for whom a house is a home, not part of an investment portfolio, tumbling values make sense. To most of us, the loss of 4,000 estate agents isn’t much to worry about. Nor is the loss of tens of thousands of City boys.”

“To most of us, the housing bubble has been an alarming, nonsensical boom. For most of us, a sharp correction will come as a blessed relief. House prices might make some sort of sense again; investors from the City and overseas will leave us alone and stop buying up the places we need to live in.”

“A decent house in the country might become affordable once more for a local person, not just for someone from far away, paying cash.”

The Marin Independent Journal reports from California. “The median price of a single-family home last month was $862,500, down from $965,000 a year earlier, and just 110 single-family homes were sold - about half as many as the 218 sold in March 2007, DataQuick reported. Sales totals ‘were easily the slowest March in Marin,’ said John Karevoll, a DataQuick analyst, who noted the research firm’s records date back to 1988.”

“‘This is a pitifully low sales count is more of an illustration of what is not going on, rather than what is going on,’ Karevoll said, noting March figures were a record low for the Bay Area as well.”

“‘Sellers are still trying to overprice their homes and nobody is falling for it any more,’ said real estate agent Celine von May.”

“The county’s inventory of 1,401 homes for sale is up from the 1,087 properties on the market at this time last year, said Levi Swift, president of the Marin Association of Realtors.”

“Buyers remain hesitant, Swift said. ‘They want to make sure they’re not catching a falling knife.’”

“The 213 properties in default in March is up 14 percent from February and 167 percent from a year ago, according to ForeclosureRadar.”

Bay Area Newsgroup. “Economist Christopher Thornberg said that prices falling across the coastal Bay Area is the last part of the housing bubble bursting. Unfortunately, that area has been most resistant to the idea that their values may drop.”

“‘It’s not only Marin and San Mateo counties having this illusion that it won’t happen to them, it’s also Newport Beach,’ Thornberg said.”

“Instead, Thornberg said that the first signs of the housing bubble started in inland areas and are slowly moving outwards to the Pacific. ‘You can’t have plummeting prices in San Joaquin and East Contra Costa counties that don’t affect Western Contra Costa and Alameda counties,’ he said. ‘And you can’t have plummeting prices in Alameda and Contra Costa counties that don’t affect San Mateo and Marin.’”

“Foreclosures have become a larger part of the market in the Bay Area, making up 76.2 percent of home sales in San Joaquin County, 49.7 percent in Solano, 26.1 percent in Alameda and 12.3 percent in San Mateo.”

“Kari Clouse, a certified mortgage planning specialist in Benicia, said that although government-sponsored loans now exist, their terms aren’t very attractive. Still, without 10 percent down, most potential buyers won’t be able to afford a home.”

“‘Right now you need more money down and we live in a state where people don’t save,’ Clouse said.”

“‘People don’t have the money to get these jumbo loans,’ she said. ‘Who has 10 to 20 percent down on a $500,000 to $700,000 house?’”

From ABC 7 News. “The Bay Area was suppose to get some relief when Congress redefined conforming loans in high cost regions. Experts say lending polices are simply unpredictable.”

“Doug Jones has been in the mortgage business for 40 years. ‘I’ve seen higher interest rates but I’ve never seen such instability and where even the banks don’t know what they’re going to do tomorrow,’ said Jones.’Today, I can start down a road with a customer and that loan may not be there next week.’”

“‘We certainly thought if it was at the conforming rate, you could get a six percent loan for what was considered a jumbo loan in the past that we thought it would help stimulate the housing market and that hasn’t happened yet,’ said Cathy Warshawsky from Bay Area Loan.”

“In Rachel Zamora’s case the lender required a second appraisal on her refinance application. It came in $150,000 dollars less then the first appraisal.”

“‘That means we can’t do all the things we planned to do. It’s just a shock to find out your home isn’t worth what it used to be and it dropped so much,’ said refinance applicant Rachel Zamora.”

The San Francisco Chronicle. “The more foreclosures that sold in a county, the faster its prices plummeted. For instance, 44.7 percent of the March sales in Contra Costa County were foreclosures and the median price there fell by about a third to $409,000 from $614,500 a year ago, according to DataQuick.”

“Richard Lee, a Realtor in Dublin, told the story of one listing that exemplifies how home values are spiraling down. On Aug. 15, he placed a San Leandro two-bedroom, one-bathroom home on the market. Initially he listed it at $499,950, which he said was exactly in line with what comparable homes in the neighborhood had sold for in midsummer. But the house did not draw any offers.”

“As the weeks and months have gone by, he has continued to drop the price. The home received some offers around $300,000 but because it was a short sale, the bank had the final say and it did not accept those offers. As of Tuesday, the price was down to $229,950, more than a 50 percent reduction.”

“Mona Koussa, a Realtor in San Ramon, agreed that foreclosure sales hurt values. ‘It’s tremendous downward pressure’ on price, she said.”

“‘It’s very frustrating if a seller is trying to do a regular sale that’s not in this subprime mess to have to compete with a property that did get caught in the subprime mess (and foreclosed upon). I tell folks (in high-foreclosure areas), if you don’t have to sell, take it off the market, rent it out and wait a couple of years until the market swings back up again,’ Koussa said.”

The Mercury News. “The Silicon Valley housing market got walloped in March, as median prices fell sharply and sales hit record lows for the month.”

“Despite high hopes for change, rates for large loans have remained stubbornly high, thwarting some sales. Still, at least buyers now know what to expect of loan rates, said Lisa Blaylock, a Coldwell Banker agent in San Jose.”

“‘Two months ago, we were still in limbo with what was going to happen with lending,’ she said. ‘Now, we’re not waiting for something to happen.’”

“Marc McIsaac put his nicely remodeled, four-bedroom South San Jose home on the market for $726,000 in February using Web sites. He since has dropped the price by $20,000. He said most of the potential buyers who have contacted him are looking for fire-sale deals for investment purposes.”

“‘The first question out of their mouth is: ‘Is this a bank-owned or short sale?’ he said. ‘You know they’re not necessarily interested in buying your house as a family or whatever.’”

“He and his wife don’t really need to move, he said, though they had been hoping to. ‘We might pull it off and wait awhile,’ he said.”

The Sacramento Bee. “Here’s one thing you can take from the latest housing statistics: The $250,000 house is where it’s at. In fact, you can easily buy for less. Almost half the new and existing homes that closed escrow during March in Sacramento County sold for $247,000 or less, according to DataQuick.”

“That’s the lowest median sales price in Sacramento County since May 2003. Yuba County saw median sales prices fall below $200,000 for the first time since January 2004. The Sacramento Association of Realtors also reported that homes priced under $180,000 accounted for 23.3 percent of March sales in Sacramento County and West Sacramento.”

“These numbers confirm the obvious: After more than 15,000 foreclosures since January of last year in the capital region, bank repossessions have become the house of choice for investors and first-time buyers.”

“Bank-owned homes now account for more than half of real estate sales in El Dorado, Placer, Sacramento and Yolo counties, said Mike Lyon, head of Sacramento-based Lyon Real Estate.”

“DataQuick reported Thursday that 2,522 buyers closed escrow during March in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That was up from 2,162 closings during February, but it wasn’t the usual spring leap.”

“DataQuick analyst Andrew LePage said that like most of California, the Sacramento market saw ‘about half the increase we usually do between February and March. You’re supposed to burst out of the winter doldrums, not merely accelerate,’ he said.”

“John and Toni Daniels of Sacramento are among those who scored a foreclosure deal. ‘Ours is a Countrywide repo,’ said John Daniels, now in escrow for a house in Elk Grove priced below $250,000.”

“Their 1,935-square-foot purchase with a three-car garage, pool and spa was once priced at almost $400,000, said Daniels.”

The Desert Sun. “More than 1,200 Coachella Valley properties were in some stage of foreclosure in March, according to RealtyTrac. That’s more than double the 532 desert homes that were in foreclosure a year ago. And it’s a 28 percent jump from February’s figures.”

“Mike Capizzi…the sales and marketing director of the Pacific Auction Exchange in Indian Wells said about 85 percent of the franchise’s business now involves foreclosures.”

“Capizzi said he expects to see even more auctions in coming months as summer nears, when Coachella Valley home sales are historically slow. ‘It seems every house we show or sell is somehow bank-related,’ Capizzi said.”

The Daily Pilot. “Throughout the region, many Realtors and lenders said they had seen a leap in customers as housing costs fell and buyers who had been priced out of the market were finally able to close.”

“The numbers for March, though, show another bleak month for the home industry in Southern California.”

“The research firm DataQuick, which has compiled home statistics since 1988, declared Tuesday that Southland home sales were slower last month than in any March in the last two decades.” ‘The number of homes sold dropped 41.4% across the region and 46.9% in Orange County from the same month a year ago.”

“Newport-Mesa, for the most part, was no exception. In four of the eight ZIP codes in Newport Beach and Costa Mesa, sales fell even more steeply from a year ago than the Orange County average.”

“‘You’ve got everyone that’s reading the news and everyone’s freaked out,’ said Steve Jones, a Westside developer who has tried for months to sell the last two condominiums in his 1.7 Ocean complex. ‘What I keep telling people is that this is when you can get a deal. This is when people are willing to negotiate.’”

The North County Times. “Home builders requested the fewest number of permits on record during the first quarter of the year. The number of permits fell to 926 units in the first quarter, down 63.6 percent from the same period last year, according to a report by the Construction Industry Research Board.”

“It was the lowest first quarter number since the board started recording data in 1988, before the county’s last housing recession in the early 1990s. March’s figures were by far the worst this year, with builders requesting permits for just 193 units, an 83.7 percent drop-off from a year ago.”

“Permits are generally considered a forward-looking assessment of the housing market because it takes builders up to a year or two to finish construction after first requesting the permit.”

“During the previous housing recession in the early ’90s, home sales began to recover about one year after building permits hit a low point. Prices, however, did not recover for four years.”

“As inventory has flooded the market, builders have pulled back because new homes are more expensive and they are struggling to compete with deeply discounted foreclosures, analysts said.”

“Though a low in permits preceded by four years the turnaround of San Diego County’s previous housing recession, some analysts said this recession, which began with falling prices in November 2005, will be shorter because prices and sales have declined at much sharper rates.”

“Other analysts and economists disagree, saying the market still has two or three more years of decline before recovery.”

“Including March home sales, monthly sales for San Diego County have been lower than the year before for the last 45 months, according to DataQuick.”

The Bakersfield Californian. “The turmoil in the real estate industry has claimed another casualty, this time engulfing a high-profile Bakersfield home loan officer. Robert Russo, who advertised as ‘Bakersfield’s Refi Guy,’ filed for Chapter 13 personal bankruptcy on March 26.”

“‘I cornered myself in that market of refi and it’s gone,’ Russo, said.”

“Russo’s bankruptcy attorney, Phillip Gillet, said he consults with financially strapped mortgage brokers, real estate agents and those who work in construction on an almost daily basis.”

“Many of those in the mortgage industry, where commissions are typically lower than those earned by real estate agents, are struggling with the diminished volume of loans, said Brian Dawson, president of a Bakersfield residential mortgage company.”

“‘The market turned off, and the business turned off so fast, and it just caught people,’ Dawson said.”

“Russo’s employer, Home Savings Mortgage, filed for bankruptcy last year, leaving him with a heap of unpaid advertising bills — an expense he once shared with the company. ‘They left me hanging,’ Russo said.”

The Fresno Bee. “The downturn in the economy has put a wrinkle in the cosmetic surgery industry. Plastic surgeons say they’ve noticed fewer people opting for face-lifts and other elective procedures in recent months as more Americans struggle to pay mortgages and dole out more money for fuel and food.”

“‘People don’t have as much money. They don’t have the disposable income,’ said Dr. Campbell Waldrop, a Fresno surgeon who specializes in eyelid and cosmetic surgery.”

“Dr. Thomas Mitts, who practices in Fresno and Visalia, said he used to have customers booked two and three months in advance. Now, it’s weeks.”

“Even in Beverly Hills, where plastic surgery is rampant, surgeons feel the pinch. Dr. John A. Grossman, a plastic surgeon for 30 years in Beverly Hills, said this is the first time he’s noticed ‘a buckling down.’ He said he’s gone from being booked six months in advance to three months.”

“Michael McGuire, a Los Angeles surgeon, said cosmetic surgery is locally driven and that patients living in areas struggling with high housing costs, foreclosures and high unemployment are not likely to shell out money on luxury items.”

“McGuire said it’s difficult to tell how long the slump will last. But he said no matter what, there will always be a market for plastic surgery.”

“‘We all love beauty,’ he said. ‘It does make the world a better place.’”

The Rocky Mountain News reports from Colorado. “The 2007 Parade of Homes, which featured five display homes in the $2 million range in Southshore near Aurora Reservoir, illustrates the plight of the struggling, upper-end market in the suburbs. More than six months after the end of the parade on Labor Day, none of the five homes has sold. One is in foreclosure. Another is expected to end up there after its builder dissolved his construction company.”

“On April 7, Remarc Homes put its 7,200-square-foot home called Celebrations into foreclosure, according to public records. ‘I’m not sure I want to be advertising to the public right now’ that the home is in the initial stages of foreclosure, said Debbie Cramer, an owner of Remarc.”

“The home, which features a ‘woman’s getaway space - a place for solitude, renaissance and peace,’ according to advertisement literature, is on the market for $1.825 million. ‘I think the land was a little overpriced,’ Cramer said. ‘We all had appraisals that said it could support homes of over $2 million.’”

“Wayde Jester, consulting director for Metrostudy, said the problem ‘may be one of simple supply and demand. There’s been a lot of building out there. If someone wants to invest $2 million in a home, it might not be southeast Aurora for most people.’”

“‘Sometimes builders’ egos get caught up in the parade home, and they get carried away,’ he said.”

“Byron Koste, director of the CU Real Estate Center, agreed. ‘Quite often in a parade, a builder wants to make a statement, and they’re inclined to overbuild for that specific neighborhood. If home prices keep going up, that’s usually not too bad. But when prices are moving in the other direction, the difference is magnified.’”

“‘Unfortunately, in difficult times like these, people can’t afford excesses,’ Koste added. ‘And some of these homes might be what you would consider to be excessive.’”

From Real Vail in Colorado. “The Vail Board of Realtors characterizes 2008 as being off to a ‘leisurely start.’”

“Other observers say Eagle County’s formerly white-hot real estate market has been deteriorating for nearly a year now – and that seemingly bubble-proof mountain home sales are finally feeling the impact of the national housing-market downturn.”

“The numbers don’t lie. January saw the number of transactions dip to 104 in Eagle County, home to Vail and Beaver Creek ski areas. This is the lowest January figure in 12 years. February improved slightly to 131 transactions, but that’s still the lowest number of deals since 115 in February of 2003.”

“In Pitkin County, home to Aspen, sales volume has been off considerably more than Eagle County to start 2008. January sales totaled $127,200,000, off nearly 50 percent from the $253,209,000 sold in January 2007. February sales totaled $131,485,000, compared to $192,612,000 in February 2007, a decrease of nearly 32 percent.”

“‘Everybody was really optimistic coming up on the end of ‘07, thinking maybe we were going to sneak through and not have the impacts here,’ said real estate broker and former Vail mayor Rob Ford. ‘Now here we are and everyone’s saying, ‘Oops, maybe we are going to be affected,’ but no one seems to know how deep it’s going to go.’”

From ABC 15 News in Arizona. “Despite recent news that home sales increased in the month of February, experts say it is not an excellent indicator of what’s to come.”

“‘The question is, ‘What is normal,’ Jay Butler, the director of Realty Studies at Arizona State University, told ABC 15. ‘A normal resale market for a year would be about 70,000 transactions. We’re probably not looking at that this year. Maybe some glimmers of recovery this year. Maybe 2009 we’ll approach it. Maybe 2010.’”

“Jamie and David Standage say they’re trying to patient when it comes to selling their Tempe home. They’ve had their remodeled house on the market for eight months, but no one has made an offer.”

“‘I don’t know whether people think now is not the time to buy, or what it is,’ said David Standage.”

“‘We just keep hearing that it’s not getting any better and that it’s not going to get better,’ said Jamie Standage.”

“The couple recently reduced their home price by $30,000 in hopes someone will take a second look at their house and make an offer. ‘We’ve done quite a bit of work on this, and I just feel like when the right person walks through here, they’re going to say, ‘Okay, that’s the house I want,’ David Standage said.”

The Arizona Republic. “Residents in an upscale neighborhood in Gilbert finally saw a clean-up earlier this week that they’ve been waiting for since October. Weeds at a vacant house in The Grove in the Millett Ranch subdivision had become an eyesore, resident Joanna Turpin said.”

“‘Nobody in the area has a house for sale,’ Turpin said, ‘but we were just embarrassed to have people over. Even the guy who cleans up our yard asked what was going on in the house across the street.’”

“‘Got Weeds?’ is a question often asked of Johnson Ranch residents after their homeowners association began its neighborhood maintenance program last year. Some associations are setting aside money to help maintain the yards of houses facing foreclosures, said Cynthia Dunham, executive director of The Leadership Centre.”

“‘We’re just beginning to see the ramifications of this,’ Dunham said. She said she expects Gilbert’s outlying areas with newer developments to be hit the hardest with foreclosures because those often contain investor properties. Dunham said more associations also are seeing their residents fall behind on assessments because of financial hardship.”

“‘With the market as bad enough as it is, you want to have the allusion that you have a nice neighborhood,’ Turpin said, who added people she’s talked to throughout the Valley say their neighborhoods have foreclosed properties that aren’t being maintained.”

“‘What kind of recourse do we have as neighbors?’ she asked. ‘Should it be up to us to clean it up? That doesn’t seem like it should be the case.’”

“Though Canadians account for only small part of the Valley’s total housing market, their interest is growing. Through mid-March of this year, 381 buyers from Canada invested in metro Phoenix homes.”

“Canadian investor Trevor Matheson has taken an interest in metro Phoenix’s real-estate market. So much so that he plans to buy six homes in the area over the next year.”

“‘There are definitely deals to be found in Phoenix,’ said Matheson, who plans to hold onto the properties for at least three to five years.”

“Matheson purchased his first Valley home in January…a house in north Phoenix’s Kierland area that sold for $785,000 in 2006. The owners were facing foreclosure, and Matheson got it through a short sale for $470,000.”

“Matheson is looking to sell six homes in Edmonton, Alberta, to buy homes here.”

The Review Journal from Nevada. “Most foreclosed homes in the Las Vegas Valley are concentrated in newer subdivisions and have average home ages of less than 10 years, a local housing market analyst shows.”

“The average age of homes in the top 10 foreclosure ZIP codes in Clark County ranged from 4.5 years in 89148 (537 foreclosures) to 25.1 years in 89108 (395 foreclosures). The median was eight years.”

“‘I think that was where the amateur investors and flippers were going because they could get a loan there,’ SalesTraq President Larry Murphy said. ‘I can get a new home and it’s easier to get a loan. Don’t get me wrong. It happened in older areas too, but people flocked to sales offices in 2004 and 2005, they got their houses delivered in 2006 and in 2007 they basically gave it back to the bank.’”

“The rise in ‘mortgage walkers’ is a new phenomenon for Las Vegas, Realtor Steve Hawks of ReMax Platinum said.”

“Home prices have dropped to 2004 levels, so most homeowners who bought into communities built after 2005 are going to owe more than their house is worth, he said. ‘When they try to sell for whatever reason, they either have to do a short sale or get foreclosed on. In addition, many investors purchased in these new areas and now are so upside-down they don’t see the break-even point,’ Hawks said.”

“‘Meanwhile, they’re paying on a loan that’s probably going to adjust, or even if it’s fixed, they can’t get the rent to cover the mortgage when their new neighbor just purchased the same house for $220,000 when they paid over $420,000. The person who bought for $220,000 can rent it out for far less, obviously, and the snowball continues,’ he said.”

“Home ownership in Las Vegas has become more affordable under current market conditions, with the median resale price dropping 19 percent from a year ago to $235,000. But they’re being denied that opportunity, said Cory Frey, senior loan officer for Southern Fidelity Mortgage, because they can no longer use so-called stated income loans, or loans based on income other than reported wages.”

“Before Assembly Bill 440 was enacted last year, Nevada law required lenders to ensure that borrowers could repay their loans before issuing a mortgage.”

“The bill amended the law to make it unfair for a lender to ‘knowingly or intentionally make a home loan, other than a reverse mortgage, to a borrower including, without limitation, a low-document home loan, no-document home loan or stated-document home loan, without determining, using any commercially reasonable means or mechanism, that the borrower has the ability to repay the home loan.’”

“Bankers look at loans in foreclosure and see that a majority of them are either stated income or adjustable rate, said Ed Jamison, chairman of Community Bank of Nevada. It’s an unfortunate dilemma because people got money they probably shouldn’t have, but the product was available, he said.”

“‘It’s always been a nod and a wink with certain segments of our economy on what they make,’ Jamison said. ‘Candidly, that segment has dried up because of the risk factor. Bankers are pretty dumb, but when you get hit in the head several times, you say, ‘OK, that’s not a good product.’”

“Luxury high-rise condo resales increased to 29 units in the first quarter from 24 in fourth quarter 2007, Las Vegas-based Restrepo Consulting Group reported. The number is up from 27 in the same quarter a year ago.”

“There were 523 high-rise condo listings as of March 31 at a median price of $749,900, or $482 a square foot. Three major projects were completed during the quarter. The $250 million, 40-story Allure tower on Sahara Avenue brought 428 high-rise luxury condos onto the market.”

“The high-rise condo market continues to show signs of weakness, Restrepo Consulting project director Elena Shampaner said. ‘This comes as no surprise considering the current housing recession, as well as the national credit crunch,’ Shampaner said.”

“The $420 million, 49-story Palms Place on Flamingo Road added 599 condo-hotel units; and the $1 billion, 64-story Trump Tower on the Strip added 1,282 condo-hotel units.”

“For the condo-hotel segment, 11 units were sold at a median price of $395,000.”

“No mid-rise luxury condos were resold during the quarter, Restrepo Consulting reported. The firm showed 132 mid-rise listings at a median price of $636,950.”

In Business Las Vegas from Nevada. “It is the classic tale of boom and bust in Las Vegas. Investors of apartment buildings saw an opportunity and went on a buying spree to obtain complexes, upgrade the units and sell them as condo conversions at a hefty profit.”

“The market took off with nearly 8,000 units closing in 2005 when investors were in a frenzy, according to Home Builders Research. By 2007, the number of closings dropped to 1,612, and the condo conversion market today has virtually ground to a halt.”

“Many major investors see what has happened to those who bought complexes to convert into condos, only to see them sell one-third or half of the units and rent out the rest as apartments, said Gary Cuff, senior director of multifamily investments with Cushman Wakefield Commerce CRG in Las Vegas.”

“‘The ones that can are hanging on, and the ones that can’t are going to be swallowed up by the sharks who will come in and buy these properties for deep discounts and hold them, rent them as apartments until such time they can take them to market,’ he said.”

“With the decline in home prices, first-time buyers would rather spend $150,000 for a small home in a good neighborhood with a back yard than the same prices for a converted apartment, Las Vegas housing analyst Steve Bottfeld said.”

“The median price of condo conversions in 2007 was $180,000. That’s down from $197,140 in 2006 when the market slowed.”

“‘The one thing you have to do to have success in condo conversions today is not sell them to investors,’ said Bottfeld. ‘Because as soon as there is a perception that you are buying into an apartment, you have lost the entire panache. The whole idea behind conversions is the first-time home buyer.’”

“‘The greed meter got going for a lot of people, and they thought they would get in on it,’ Cuff said. ‘Some did well, but those who got in late were left holding the proverbial bag when the market slowed down.’”

The Nevada Appeal. “Developers fought to get one of the city’s largest subdivisions approved more than two years ago, but not one room at the Shulz Ranch has been built. Work on the 521-home development in South Carson City might not start any time soon either.”

“Shulz Ranch Developers, managed by Lennar Communities in Reno, defaulted on a $26 million loan on the property last month.”

“Work on subdivisions being developed by other companies has also been slow. More than half of the nearly 2,000 vacant home lots were approved by the city after the start of 2006. Home sales in the city last year were half of what they were in 2002, and the average home sale price rose more than $100,000 in that time.”

“The market, however, is getting better this year, at least for the 1,075-home Silver Oak subdivision, said Mark Turner, a sales agent for the developer. Prices for the homes have dropped about a third, he said, but the worst time for business was in the last two years. The company has about 475 lots left to sell.”

“The number of building permits for homes in the city dropped by more than half from 2006 to 2007. A slow down in home construction should not be a surprise with the country’s building and credit problems, though, said Bambi Spahr, director of the Reno-based Builders Association of Northern Nevada.”

“‘They’re not building ‘A Field of Dreams,’ she said.”

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