The Housing Bubble

The Rocky Mountain News reports from Colorado. “The slump in the new-home sales market in the Denver area continues. Experts predict that new-home sales will drop another 10 percent this year, on top of a 31 percent drop in 2007. And with fewer consumers taking out loans because of stricter underwriting standards, lack of confidence in the economy and no sense of urgency, hard times are at hand for formerly highly compensated mortgage brokers.”

“‘It is tough,’ said Jeff Willis of Berkeley Homes. ‘Everyone is scaling down as close to the bone as you can get.’”

“Mark Levine, director of Real Estate and Construction Management at the Burns School of Real Estate at the University of Denver, said he wouldn’t argue with people who expect another 5 percent to 10 percent drop in home sales next year. ‘Builders have to ask themselves, why are they building homes if no one is buying?,’ he said.”

CBS 4 Denver in Colorado. “Eight percent of active listings in the Denver metro area are in foreclosure. Now there is a new and unique way to find foreclosed homes.”

“Dana Dziagwa with WR Starkey Mortgage organized a bus tour, taking potential buyers through foreclosed properties. ‘Homes are in a neighborhood, so it affects the neighborhood; it affects the people around the homes,’ Dziagwa said. ‘So we think it’s important to obviously sell them and make it good for everybody.’”

The Grand Junction Free Press from Colorado. “Sherri and Ronald DeRose bought a turn-of-the-century English Tudor home along a stretch of North Seventh Street, known among historians as the Goodwin House, more than six years ago. ‘I have lived (in Grand Junction) since I was 6,’ said Sherri DeRose. ‘I had my eye on this house since as long as I could remember. The day the (for sale) sign went into the lawn I wanted to see the house — I said, ‘I have to live here.’”

“Taking no chances she then contacted her real estate agent and made an offer the following day on the home, which measures 6,244 square feet.”

“But the home has become too large for the couple who want to ‘downsize’ and sell the residence. That could take some time, local real estate experts say, in that the home has been listed at $617,000.”

“And given that there are about twice has many homes for sale in the Grand Junction area this year when compared to the same period a year ago, there are a whole range of choices (price and size) for would-be buyers.”

“As of mid-April, there were roughly 1,620 residential properties for sale in the Grand Junction market, according to data compiled by Mark Abbott of Colorado Properties. He said that was up from about 1,376 at the beginning of the year, and about double from a year ago.”

“‘That tells me that a lot of people are trying to sell their homes,’ said Abbott on the run-up in houses for sale in the market in the last year.”

“And the ‘higher up you go in price — the longer it takes to sell,’ said Ron Sechrist, the listing agent for the Seventh Street home. Both brokers said the Grand Junction market, which was long able to shrug off the effects a weak national economy had had on other housing markets throughout the country, has also started to feel the impact.”

“‘Part of it is that people who want to move here can’t sell their homes in other parts of the country,’ Abbott said. ‘(Another) part of is property values here are not inexpensive … and when people come here and they look at what $200,000 will buy them here as opposed to back east and down south they say: ‘We do not want to do that.’”

“Given that backdrop the local homes that seem to being sold the fastest are those that are ‘clean with good curb appeal,’ Abbott said. ‘If they’ve got scuff marks or are beaten up — it’s not going to sell (quickly) … there is a lot to choose from and buyer’s can afford to be picky.’”

The Review Journal from Nevada. “The $200,000 home, once on the verge of extinction in Las Vegas, is making a strong comeback and some new homes are starting at $150,000, a local housing analyst said Thursday.”

“The number of homes for sale for less than $200,000 represented 8.3 percent of available listings in the first quarter, up from 4.9 percent in 2007 and 3.4 percent in 2006, said Larry Murphy, president of SalesTraq.”

“KB Home is advertising new homes from $149,900, or about $100 a square foot, in the master-planned Providence community.”

“‘I would not have believed this two years ago, but folks, that is the market today,’ Murphy said at his Crystal Ball seminar. ‘We’ve come full cycle. We’re back to 2004 prices.’”

“Home builders overbuilt in Las Vegas for about three years, bringing nearly 40,000 new homes to the market in 2005 when the city’s population growth of 75,000 required only 25,000 homes, Murphy calculated.”

“‘Why did we build more homes than we needed? Because a lot of people bought homes they didn’t need … investors,’ he said. ‘So in 2007, 2008 and 2009 we’re going to build fewer homes than we need.’”

“Consultant Steve Bottfeld of Market Solutions admitted he was wrong last year when he predicted that Las Vegas home prices would not drop. However, he remains bullish on the market and said the median price for new homes, including high-rise condos, will be up 8 percent to 10 percent in 2008.”

“‘We’re not on the bottom, but we’re nearly on the bottom,’ he said. Home sales in March increased from February, but they’re still far below year-ago levels.”

“Las Vegas has its problems, but so does the rest of the nation, said Jim Letchinger, president of JDL Development. The Chicago-based developer is building the 113-unit Mercer midrise condos on west Tropicana Avenue.”

“‘It’s not just Las Vegas, though it may seem like it,’ Letchinger said at Crystal Ball. ‘Vegas is suffering from a temporary — and I stress, temporary — correction.’”

“He said most of the failed condominium projects in Las Vegas were ‘fundamentally flawed,’ a bad product in a poor location.”

“The real estate ‘gold rush’ is clearly over, but the market will move on and eventually become stronger and better, Letchinger said. ‘I guarantee you every home you buy is going to be worth more down the road. I can’t say when — three years, six years — but in the history of the world, land prices go up, construction costs go up,’ he said.”

The Reno Gazette Journal from Nevada. “Numbers remain mixed overall according to the latest housing sales report from the Center for Regional Studies at the University of Nevada, Reno.”

“‘The most obvious showing is the pronounced increase in new condo sales in the first quarter of this year compared to last year,’ said Brian Kaiser, a housing and real estate analyst with the Center for Regional Studies.”

“‘New and existing single-family home sales still haven’t bottomed out, but the declines over the past few months are not as steep as they were in 2007. This could be evidence that the market is nearing the point where it will have enough traction to start digging back out of this hole that we’re in,’ he said.”

“New and existing home sales were down 61.9 percent, with 598 units sold in the first quarter of 2008 compared to 1,570 units in the first quarter of 2007. The median sales price for new and existing homes dropped 11.1 percent to $300,000 in the first quarter of 2008 compared to $337,305 for the same period last year.”

“Homes priced higher than $200,000 likely will require buyers to sell an existing home in order to be able afford the purchase, said Ken Wiseman, broker-owner of Reno Rancho Realty. But since many homeowners are upside down on their loans, selling their current home isn’t a viable option, he said.”

“Inventories also should see an uptick in the spring, which is the traditional season for sellers to place their homes in the market. For the average homeowner, selling a home remains a challenge because they have to compete with heavily discounted real estate-owned properties still in the market, Wiseman said.”

“‘The real test is what happens in April, May and June with seasonal spring home sales,’ Wiseman said. ‘That’s when we’ll see the true health of the housing market.’”

The Deseret News from Utah. “Sales of single-family homes and condominiums in Salt Lake County declined 42.21 percent in the first quarter of 2008, compared with the same period last year. A report released Wednesday by the Salt Lake Board of Realtors also showed that condominium sales fell just over 30 percent, compared with the first quarter last year.”

“Among the areas where median selling prices fell were some of the neighborhoods along the Wasatch Front where demand previously had been strong, including ZIP code 84105 just north of Sugar House in Salt Lake City, 84092 and 84093 in Sandy, 84010 in Bountiful and 84054 in North Salt Lake. Those areas saw price declines ranging from 7 percent to 11 percent.”

“The declines represent a distinct difference in the market, according to veteran Realtor David Seiler. ‘It isn’t a bad market, it’s a changing market,’ he said. ‘We’re having to adjust our reality again because the last two years haven’t been real. They’ve been fueled by investors and easy money.’”

“Greg Adkins is one of many sellers feeling the bite of the current housing crunch. Since late last summer, the custom homebuilder has been trying to sell an upscale house he built in Riverton.”

“‘We built the house in speculation that someone would come by and buy it,’ he said. The home is currently on the market for $749,000, he said. ‘Originally, I tried to sell it for $799,000 and then we dropped it to $749,000,’ Adkins said. ‘But we haven’t had any activity on it whatsoever.’”

“Adkins said the glut of homes built by speculators is also a contributing factor, ‘and now it’s hurting everybody,’ he said.”

“Adkins said he’s concerned about the lack of interest he has had in his property and the strain it is putting on his financial situation. ‘It is a big concern, because I don’t know how long I can keep making the payments,’ he said. ‘I would say another two or three months before it becomes critical.’”

“Across the Wasatch Front, home sales have continued to fall. Summit County condo sales fell a whopping 61.54 percent in first quarter 2008 from last year’s first quarter, with the median sales price dropping just over 38 percent.”

“Similar trends were seen in Utah and Tooele counties. Sales of single-family homes in Utah County declined 41.69 percent, and in Tooele County, sales dropped 45.45 percent.”

“Housing slumps hurt almost everybody. Saratoga Springs projects a $1 million shortfall in revenue for this fiscal year because of the slowdown in homebuilding.”

“Ken Leetham, Saratoga Springs city manager, said the city noticed it might have problems with the budget and slowed spending. ‘We’ve curtailed our spending and we’ve put off several projects that were scheduled to be built,’ he said.”

“They halted road projects and put a hiring freeze on open city positions, but haven’t yet had to cut any staff positions, he said. The city is still issuing building permits, but those permits have slowed, Leetham said.”

“‘We’re at about a third of the level that we were in 2006, which was our highest growth year,’ he said. ‘It’s not that people aren’t buying and selling homes, (it’s that) there’s a lot of homes on the market.’”

The Sun News reports from South Carolina. “Grand Strand real estate sales continued seeing some of the steepest decreases in the state in March, according to an S.C. Association of Realtors report. All areas of the state saw declines compared with March 2007. On the Grand Strand, there was a 33.3 percent drop in sales. The only areas with bigger decreases were the Southern Midlands, with a 44.07 percent drop, and the Charleston area, with a 33.86 percent drop.”

“The declines are large here because short-term investors have shied away from real estate after getting burned when the market turned in 2006, said Coastal Carolinas Association of Realtors market analyst Tom Maeser.”

“‘Most investors these days are buying with long-term projections as opposed to short term,’ said Chris Price, broker in Myrtle Beach. ‘The flippers are out of the market.’”

“Price decreases on the Grand Strand were tame compared with the roughly 20 percent fall in the Hilton Head Island area and the 19 percent drop in Cherokee County.”

“‘Sellers are being more realistic in their pricing, Maeser said. ‘Prices are finally adjusting in the marketplace. They’re coming down.’”

“‘The big thing is we’re not seeing a lot of new home projects come out of the ground because there’s not a big demand, and they overbuilt,’ Maeser said.”

The State in South Carolina. “Home sales continued to weaken in the first quarter of the year in the Columbia area, dropping 11.5 percent compared to the same period last year, according to the S.C. Association of Realtors.”

“The drop comes on top of the first year-over-year decrease in home sales last year since 2000 in the Columbia area.”

“The real estate industry now is paying for some mortgage lenders’ loose standards in 2004, 2005 and 2006, said Ron Roe, CEO of Russell & Jeffcoat Realtors. ‘People that normally would have to save up money didn’t have to, so they were able to buy homes,’ Roe said. ‘We were actually borrowing buyers from the future.’”

“Statewide, home sales suffered, dropping 21.48 percent for the first quarter of 2008. Orangeburg, Calhoun and Bamberg counties fared worst, with a 44 percent drop.”

The Blackshear Times from Georgia. “While much of the nation’s housing markets are reeling from the economic downturn, Pierce County finds itself in a bit of a slowdown, too - but not due to a lack of people wanting to buy here.”

“Poor conditions elsewhere can squelch a home sale here. ‘About one-third of (agreements) are contingent on the buyer selling their home, and when those don’t sell, those contracts are lost,’ notes broker Carolyn Akins.”

“Developer Sonny Bowen and his wife are the proprietors of a retirement community under construction in Blackshear. Only a model home currently stands on the property, which Bowen began developing prior to the nation’s housing problem. He’s had one commitment - and would have many more if homeowners could pack up and leave on a whim.”

“‘If you count the people who’ve told me if they could sell their home, they would move, I’d have about 20 homes under construction,’  Bowen says.”

“Akins says there is a mix of new residents moving here from neighboring counties and those escaping tough housing markets in more populated areas. One state in particular hit hard by the housing crash, Florida, has already had its share of transplants seek life at a slower pace in South Georgia.”

“‘We still continue to benefit from people departing from Florida, where some have been forced out of the market,’ says associate broker Alta Bruce.”

“Although homes are still selling, it’s a slower process, realtors say. Potential buyers are being more patient - and a little picky - about what they choose with more homes available to browse. ‘People who are selling have to be aware it’s a different market and buyers may be asking for more concessions,’  Bruce says.”

The Star Banner from Florida. “Marion County sheriff’s deputies have arrested an 82-year-old man and charged him with threatening a process server with a gun when he received a foreclosure notice.”

“Robert McGuinness, of Black Diamond Process Service, told a sheriff’s deputy that he went to serve court papers on Frank W. Conard. McGuinness said Conard…pointed a handgun at him and said ‘You have two seconds to get off my property or you will go to the hospital.’”

“His boss, Ron Ragle, said said his employees have been threatened with knives and people have released dogs on them, but they never had someone pull a gun on them. ‘Foreclosures are going through the roof,’ Ragle said.”

“Ragle said they served 40 to 50 papers a month two years ago. Now, he said they serve more than 300 a month.”

The Tampa Tribune from Florida. “A new report on real estate prices shows Tampa’s decline was the steepest among Florida cities tracked during the quarter and was more than 15 percent over the past year.”

“The city has good company. Fort Lauderdale and Orlando, the two other Florida cities tracked, had slightly sharper yearlong price declines.”

“Much of the bad news is because of foreclosures and delinquencies, particularly with subprime loans, said Bob Visini, VP of LoanPerformance, which tracked the data. In the Tampa Bay metro area, 17 percent of existing loans are subprime loans, which have higher interest rates and are typically given to borrowers with credit problems, Visini said.”

“In January, 26.29 percent of those loans were at least 60 days late, compared with 9.34 percent at the same time last year, he said.”

“Meanwhile, conventional loans are in trouble, too. As of January, 2.88 percent of those loans were more than 60 days late. That’s more than double since January 2007 when 1.03 percent were delinquent for more than two months.”

“‘That may not sound like a lot, but it’s bad,’ Visini said.”

The Herald Tribune from Florida. “Price was the driving factor in the boosted sales in the Charlotte County-North Port market, where 268 homes changed hands in March, compared with 237 in the year-ago period, the Florida Association of Realtors reported.”

“The median sales price was $152,200 last month in the market, the lowest since February 2004’s $147,100.”

“‘Realtors are being a little more aggressive with their clients to stop chasing the curve,’ said Missy Becker, a Realtor for 23 years. ‘That’s what’s been clogging up the market.’”

“Like its southern neighbor, the Sarasota-Bradenton market hit a median sales price that had not been seen since early 2004. Its $239,300 median was the lowest price since $235,700 in April 2004.”

“There were 19 condominium sales for the first three months of this year, compared with 16 during the same period last year, The average price per square foot is still falling. It was $331 this year, compared with $414 last year, said John Van Zandt, an agent on Anna Maria Island.”

“Going forward, he predicts an increase in the number of sales but that values will remain low. ‘Sellers are having to make significant concessions to get buyers to sign,’ Van Zandt said. ‘We just have so much inventory, and buyers are cherry pickers. In fact, they are sometimes referred to as scavengers, hyenas and bottom feeders.’”

The Sun Sentinel from Florida. “That median price of an existing Broward County home last month was $311,400, down 16 percent from $372,400 in March 2007, the Florida Association of Realtors said.”

“Meanwhile, condominium prices continue to plummet in Broward. The median price of an existing condo last month was $137,000, a 30 percent drop from $195,500 a year ago.”

“‘With people who are reasonable, their places will sell,’ said Patti Seward, an agent in Broward and Palm Beach counties.”

“Seward’s client, Allison Perrine Cabaniss, recently paid $730,000 for a four-bedroom house in Boca Raton that she says easily would have fetched more than $1 million during the housing boom of 2000 to 2005. She turned around and knocked $109,000 off the price of her two-bedroom penthouse Boca condo, and it sold last month for $550,000.”

The Miami Herald from Florida. “The architects of a $37 million mortgage fraud scheme involving luxury condos on South Beach will be spending the next several years in jail for their crimes, a federal judge decided Thursday.”

“U.S. District Judge Jose E. Martinez sentenced former mortgage broker Richard Crowder II to 9 years imprisonment. Crowder, who owned America’s Best Mortgage Services, in Coconut Creek, was accused of luring buyers in a fraudulent no-money-down financing scheme to purchase 17 condos in Continuum on South Beach and at the Point of Aventura.”

“His accomplices, former title attorney Gary Mills, who owned Deerfield Beach-based Four Star Title, and former Wachovia loan officer, Karen Lynn Sullivan were sentenced to 46 months and 50 months, respectively. The defendants are scheduled to appear again in court on May 29 for a hearing to determine the restitution they must pay to the victims.”

“Mortgage fraud flourished during South Florida’s real estate boom, law enforcement officials have said, as rapidly rising property values and a frothy sales climate made it easy to mask crimes.”

“The slowdown has revealed the extent of the problem because criminals no longer can sell. The state ranks first in the nation in reports from lenders of suspected fraud, according to the Mortgage Asset Research Institute.”

The Voice of America. “As home prices soared in recent years, many in the Miami area used cheap so-called sub-prime mortgages to buy investment properties they could rent out to generate additional income. But when the housing bubble burst, many were left with mortgages with ballooning interest rates and properties with plunging values.”

“In Miami, the excitement of investing in real estate faded quickly for Sonya, who did not give her last name, because she is embarrassed by her financial troubles.”

“The Jamaican immigrant says she invested $40,000 in two homes in West Palm Beach when the real estate market was expanding. The properties were supposed to help pay for her upcoming retirement. But she ran into problems when the units failed to attract renters or buyers as the market turned sour.”

“After taking a $25,000 loan against her own home to make mortgage payments on the investment properties, she was still unable to prevent the bank from foreclosing on them.”

“‘Now I am facing foreclosure on the house I am living in,’ she said. ‘So on top of taking those two [rental properties], I am trying to see how I can keep the house that is over my head for over 14 years.’”

“The non-profit Neighborhood Housing Services helps delinquent borrowers navigate complex legal and financial procedures to avoid foreclosure. The group’s Jacquie Madera says many large banks are willing to negotiate with borrowers to help them stay in their homes, but she says some smaller banks are slower to respond.”

“‘Instead of doing a loan modification and giving the client a fixed-rate mortgage, they put them on a repayment plan,’ she explained. ‘That repayment plan is only for three months, and then what happens again? They are back in the same situation.’”

“Laborer Fernando Montenegro says he has little hope of saving his home and the house he bought for his daughter. The Nicaraguan immigrant says he had to stop making payments on the properties six months ago, because his wife and his daughter lost their jobs and his own income dropped.”

“He says has talked with the bank, but not to request an easier payment plan. Montenegro says he asked the bank to repossess the houses, because he does not believe his family can overcome its financial troubles.”

“Investor Julian Dominguez has been tracking foreclosures at the courthouse for more than 20 years, and says he has seen it all before. Dominguez says he sympathizes with homeowners facing foreclosure, but says many will land on their feet.”

“‘The news [media] goes to [report] ‘oh, they are losing their home.’ They are losing the property.’ When they go from that to a rental, they still have a home,’ he noted. ‘They are not on the street.’”

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