The Housing Bubble

The North County Times reports from California. “Residents in a neighborhood on the southeast border of the city said last week a financial agreement between a wireless company and several homeowners could drive down area property values. Not only will an ‘unsightly’ cell phone tower depress home values, but the Hillegeists devalued property values for the entire neighborhood when they sold their home for more than 20 percent less than what area homes were selling for at the time, said June Rady, a Park Hill Lane resident.”

“Paisley Hillegeist said she and her husband dropped the selling price of the property from $515,000 to $380,000 only because they couldn’t find a buyer after Cricket’s plans for the cell phone tower plan ran into a snag. Paisley Hillegeist said…she and her husband were just in a hurry to get out from under the mortgage.”

“‘There’s nothing underhanded going on here,’ she said.”

The Ventura County Star. “Oxnard is ground zero for foreclosures in Ventura County. About one-third of the 1,500 foreclosures last year were in Oxnard. The pace has quickened this year, with about 1,000 Oxnard homeowners in default on loans and about 432 in foreclosure since Jan. 1.”

“Even with the proposed laws and local codes, it will be a challenge to keep pace with the growing number of foreclosures in the city. Christina Galindo, an Oxnard Code Compliance officer, already has a caseload of more than 100 homes.”

“‘I can honestly say we’re staying on top of it,’ she said. ‘The banks and Realtors have been cooperative, but (the Realtors) are saying they’re overwhelmed.’”

The Bakersfield Californian. “Tim Fryer is stuck with $7,000 worth of useless letters for the entryway of a tract gone bust. The Bakersfield signmaker is among many local companies scorched by the bankruptcy of Sacramento developer Dunmore Homes Inc.”

“‘I paid out of pocket,’ said Fryer, owner of Victory Signs, about two cast-metal sets of logos, vowels and consonants spelling ‘Diamond Ridge’ that now gather dust in his shop attic.”

“The 319-home subdivision in southwest Bakersfield won’t go forward under the Dunmore name. The homebuilder’s assets are currently being liquidated in a federal district court in Sacramento.”

“From the outside, it looks like any other subdivision sprouted during the recent boom. A block wall rings the perimeter. Signs advertise homes from 1,457 to 3,596 square feet. Flags boasting the Dunmore name whip overhead on white poles.”

“A closer look shows telltale signs of the bust that’s broadsided buyers and builders alike. The wall? Chunks along McCutchen are knocked down, bricks laying in dirt next to open trenches tangled with wiring. The flags? Tattered. Roads with gem-based names — Aquamarine, Moonstone, Sapphire — carve through the tract but remain unpaved.”

“And it won’t be the last developer bankruptcy to touch Kern. ‘I think we’re going to see a lot more of these,’ said T. Scott Belden…one of several lawyers working on the Aleco case., as developers who bought land during the boom struggle. ‘They can only hold on for so long.’”

The Mercury News. “Here’s the latest fallout from the ever-widening housing crisis: The West Nile virus could be breeding in neglected swimming pools of foreclosed homes.”

“A survey plane will fly at an altitude of 5,000 feet over parts of San Jose, Campbell, Cupertino, Gilroy, Los Gatos, Morgan Hill, Monte Sereno and Saratoga.”

“‘It’s an unfortunate predicament that people are in,’ said Tim Mulligan, manager of Santa Clara County’s Vector Control District. ‘One of the first things to go bye-bye for a resident in foreclosure is pool maintenance. It’s a drain on their resources.’”

“Homeowners who fail to address a public health nuisance by not maintaining their pools could be fined $1,000 a day.”

From ABC 7 News. “With home prices dropping all over the Bay Area, how do you get gun-shy potential buyers back into the housing market? One homebuilder’s idea is to guarantee that you won’t lose any money if your home’s value drops after the purchase.”

“Lynne Herendeen is not only getting her dream home in Livermore, she’s also getting a promise: if she and her husband decide to sell in the next two years and the developer is selling similar homes in the neighborhood at a lower price - he’ll refund them the difference in cash.”

“If the deal had been in place two years ago, the developer would have lost in this gamble. When Herendeen first started looking at these homes two years ago, they were priced in the $600,000 range, now they’ve dropped into the $400,000 range. The deal is also good while they’re in escrow. If the developer drops his prices again, he has promised to make up the difference.”

“‘It’s a fabulous deal because of how bad the economy is now. We’re not going to close for six months so there’s a good chance that prices may drop by then,’ said Herendeen.”

“The president of Signature Properties says the company has never made an offer like this in its 25 year history. But he also says the company has never seen a market quite like this.”

“‘There are a lot of people that would like to buy something, but no one wants to make a ‘bad decision,’ and so we thought let’s put together a program that combats that fear,’ said Michael Ghielmetti, President, Signature Properties.”

“UC Berkeley Business School Professor Tom Davidoff of the Haas Real Estate Group predicts that we haven’t hit the bottom yet. ‘There’s no way prices fall 30-40 percent around Stockton and don’t fall at all in San Francisco, that just can’t happen,’ said Davidoff.”

Women’s Wear Daily. “The Golden State has lost its economic luster. California, the biggest U.S. market and a bellwether for the nation, is being especially hard hit by the implosion in housing, soaring gasoline and food prices, job cuts and tight credit.”

“Retail sales are down, some stores are scaling back expansion and vendors said customers are late with payments. Even a linchpin $3 billion downtown Los Angeles mixed-use development is being delayed because of financing difficulties.”

“The number of homes going into default in the state doubled in the first quarter, and the 6.2 percent unemployment rate in March was the third highest in the U.S. ‘We’re working hard for every dollar we get in the store today,’ said John Martens, general manager of Neiman Marcus’ Beverly Hills store. ‘It’s not business as usual; times have changed. It’s a very challenging time for us and for most retailers.’”

“‘Credit cards are getting declined like crazy,’ said Michelle Kim, president of a Los Angeles-based company that produces (a) young contemporary label. ‘We’re scared of producing 100 percent of the orders because they’ll cancel before shipment.’”

“Valerie Mamone, owner of Blush Boutique in Sacramento, Calif., which sells designer ready-to-wear, said sales are off about 20 percent compared with a year ago. ‘Our top-end customers are not buying as much because they are probably trying to budget their luxuries,’ Mamone said. ‘Before, that didn’t come into play.’”

“Los Angeles County led the state with 20,339 defaults in the first quarter, a 130 percent jump from last year. In the 12 months ended in February, the Case-Shiller home price index, which measures the value of single-family homes and was released last week, found that in 20 cities, home values decreased 12.7 percent. The declines in Los Angeles, 19.4 percent; San Diego, 19.2 percent, and San Francisco, 17.2 percent, ranked among the largest.”

“‘It’s definitely getting ugly out there,’ said David Solomon, president of NAI ReStore, referring to the vacancy rates. ‘Though there are national differences. California is not getting spared. California is probably among some of the worst, in particular areas of the state like the Inland Empire.’”

“When might the state begin to rebound? Traditionally, California has been slow to pull out of recessions because the source of success — such as the dot-com growth of the Nineties — is the factor that implodes. This time, it is the housing market.”

“‘California disproportionately enjoyed [in the Nineties] from high tech and recently from the construction and mortgage industry and is disproportionately hit harder because of that,’ said Chapman University’s Adibi. ‘Unfortunately, it is going to take us longer to come out of it because of that heavy dependency.’”

The Fresno Bee. “The sagging economy and the housing market collapse are taking down more than just overleveraged homeowners. Businesses in the Fresno area are calling it quits and filing for bankruptcy in escalating numbers.”

“Many bankruptcies are tied to the once high-flying housing market whose bottom fell out last year, leaving subcontractors, real estate agents and mortgage brokers scrambling for financial help. Others, including specialty retailers, suffered from soft sales.”

“With revenue lagging, many troubled business owners turned to their credit cards to keep them afloat, digging themselves deeper into debt and ultimately into bankruptcy, experts said.”

“One of those casualties was the Little Dreamers store that opened two years ago in the trendy Villaggio shopping center in north Fresno. Co-owner Sandy Tacchino said the store was doing well, selling its high-end baby clothing and furniture to customers who appreciated the boutique’s attention to quality and unique items such as an $1,800 dresser/changing table.”

“The store’s sales began to slide last June. To offset the loss, Tacchino cut back on inventory and reduced her employees’ hours. But the cost-cutting wasn’t enough, and Little Dreamers filed for Chapter 7 bankruptcy in January.”

“Tacchino said she is relieved to be out from under the financial burden. And she said she has learned there is life after bankruptcy. ‘I know that some people feel ashamed about having to do something like this,’ she said. ‘But I knew that I could not change the circumstances that we were in.’”

“Attorney Hilton Ryder said several of his clients waited too long before filing, eliminating any possibility of saving their businesses.”

“‘They come to me DOA,’ Ryder said. ‘They’ve tried everything they could possibly do to hang on, but the situation never got any better. When they hit my office, they have $30,000, $50,000 and $100,000 on their credit cards.’”

The Sacramento Bee. “California is facing a cash crisis this summer. A lack of cash reserves this year combined with lagging revenues has led officials to predict that the state will run out of cash as early as August, giving lawmakers a smaller-than-expected window to strike a budget deal.”

“California’s credit rating is already among the lowest of state governments.”

“Without a budget in place, the state would have to borrow money from banks at higher interest rates than those they can secure with internal borrowing. Such a move also could negatively affect the state’s credit rating, making future borrowing even more expensive.”

“‘In essence, it’s taking a subprime loan for the state, and it comes with greater costs,’ said state Controller John Chiang.”

“Even as housing prices doubled and the construction industry flourished, most Sacramento County residents saw their incomes effectively drop during the housing boom, according to new state tax figures.”

“Adjusting for inflation, the median income of Sacramento County families who filed joint tax returns fell about 1 percent from 2002 to 2006, according to California Franchise Tax Board figures released this week.”

“‘It’s crazy, man,’ said Anthony Richardson, a Sacramento resident who saw his tiny moving and hauling business suffer during the boom as new, big players crowded him out. ‘I used to go around making money. I was the only one who was doing it.’”

“Several economists said the apparent good times created by the boom masked problems in local sectors not related to housing. And many local residents were fooled into feeling flush by the abundant cash coming in from home equity loans – the same, nonrecurring funds that would later turn into high-interest debt.”

“‘The economic growth year to year was strong but not stellar,’ said Suzanne O’Keefe, an economist at California State University, Sacramento. For part of this period, especially 2003 and 2004, she said, state government was doing poorly because of the deficit.”

“Meanwhile, some of the big, local high-tech companies were downsizing, including Hewlett-Packard in South Placer and Intel in Folsom. ‘We were losing some of our higher-paying jobs,’ O’Keefe said. ‘Much of the job growth was in lower-paying jobs’ like service and retail.”

“The real estate boom may not have helped the Valley as much as other areas because ‘25 percent of the homes were being sold to speculators and non-resident owners. They weren’t reporting income in the region,’ said Carol Whiteside, president emeritus of a Modesto think tank.”

“The Valley also struggled to create jobs quickly enough to keep up with the population boom, Whiteside said. And the quality of the jobs being created wasn’t high end, for the most part.”

“Officials at the Franchise Tax Board cautioned that their income figures show adjusted gross income after exemptions, some of which are related to selling homes. Single filers, for example, get to exclude the first $250,000 in capital gains from a home sale; joint filers get to exclude the first $500,000.”

“But several economists said those real estate gains don’t really matter anyway because, in most cases, people plowed their big gains into another, bigger house. And for those who didn’t sell but borrowed against their ever-increasing equity to buy other things, such gains don’t represent steady income. People may have felt wealthier, but their incomes weren’t really rising.”

“During 2006, the last year of the boom, Sacramento households refinanced at a rate about twice the national average.”

“‘You might be feeling richer and you might be consuming more, but that isn’t taxable income, that isn’t earnings,’ said Deborah Reed, economist at the Public Policy Institute of California. ‘Unfortunately for some people, it wasn’t real in the sense that it’s not there now.’”

“Richardson, the local hauler, never made a huge amount of money to begin with, recalling wistfully that before the boom he earned $300 a day. Since the boom ended, he said, things have gotten worse. Much of the competition that smothered him during the boom is still around fighting for ever-dwindling business.”

“‘Ain’t nobody buying homes,’ Richardson said. ‘That’s a setback, too.’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “D.R. Horton Inc. reported a record loss as the deepening housing slump forced it to write down $834.1 million of land and inventory. The fiscal second-quarter net loss at the largest U.S. homebuilder was $1.31 billion, almost seven times higher than analysts’ estimates. Revenue plunged 38 percent to $1.62 billion.”

“‘Clearly in this past quarter we met the market and it was not a very pretty meeting and prices did decline in the quarter as we reported,’ said D.R. Horton CEO Donald Tomnitz. The company is ‘most concerned about the level of foreclosures entering the market and I think to the extent that those are significantly greater than what they are currently, then that’s going to negatively impact our pricing moving forward.’”

“The backlog, or homes under contract and not yet sold, fell 47 percent to 8,947. The value of the backlog plunged 57 percent to $2.1 billion at the end of March. The average selling price for a completed home sale in the quarter fell 8 percent to $237,800 in the quarter, Tomnitz said on the call. For homes ordered, the average price fell 15 percent to $220,800, Tomnitz said.”

From MarketWatch. “D.R. Horton’s net sales orders fell to 7,528 homes from 9,983 homes a year ago. The cancellation rate, measured by cancelled sales orders divided by gross sales orders, was 33% in the fiscal second quarter. It owns or controls 181,000 lots, or a 5.2-year supply.”

The Associated Press. “St. Joe Co., a Florida real estate developer, said Tuesday total residential sales plunged to $17.6 million from $37 million a year earlier. Rural land sales leaped to $91.1 million from $46.7 million in the first quarter of 2007.”

“‘With the U.S. and Florida economies battling rising home foreclosures, a tightening of credit and a significant inventory of unsold homes, predicting when residential real estate markets will return to health remains difficult,’ said CEO Peter S. Rummell.”

“‘Consumer confidence is declining and many consumers seem to be deferring residential real estate purchases until there is more economic clarity,’ said Rummell.”

“Bovis Homes Group Plc, the U.K.’s most profitable homebuilder, said first-half profit will be ’significantly’ lower than forecast after a 30 percent drop in orders.”

“Reservations since March 10 fell to 1,382 from 1,979 a year earlier, the Longfield, England-based company said today. Demand for private homes plunged 70 percent and prices may be cut in some markets, CEO Malcolm Harris said in an interview.”

“Bovis’ properties range from a one-bedroom apartment in Cambridgeshire, selling for 204,950 pounds, to a five-bedroom detached home in Reading, priced at almost half a million pounds. The company has reduced selling prices by 10 percent in Cardiff Bay, Wales, because of an oversupply of apartments, Harris said.”

“‘The last eight weeks have been particularly difficult,’ the CEO said. ‘The availability and pricing of mortgages is creating an enormous problem. First-time buyers are virtually priced out of the market. We’ve had people who have come along and reserved on a mortgage offer and then gone back to the lender and found that withdrawn.’”

The BBC News. “About 150 estate agents’ branches are now closing every week in the UK, according to research. The number of properties changing hands has fallen sharply in the past 12 months. And Bank of England figures show that the number of new mortgages approved in March was the lowest since records began in 1999.”

“‘There is money out there,’ said Jeremy Leaf, from the Royal Institute of Chartered Surveyors. ‘But even more creditworthy borrowers are being told that they need a more hefty deposit or they wont be able to get the mortgage they want.’”

The New Zealand Herald. “The Auckland property market has virtually ground to a halt and prices are falling, fresh figures from the city’s biggest real estate agency group suggest.”

“Barfoot & Thompson has reported sales fell to 453 in April, down 50 per cent from April a year ago and down 28 per cent from 632 sales in March. The number of new listings in the month was almost quadruple the number of houses that actually sold in April.”

“The average sale price reported by the firm in April fell to NZ$520,380 and is now down 7 per cent from its peak of NZ$559,903 in December last year. The number of houses listed as available for sale rose to 7,843 at the end of April from 7,379 at the end of March and was 76 per cent higher than a year ago.”

The Northern Life from Canada. “This city’s housing market remains hot. New Sudbury house price gains (for a typical 1,130 square foot bungalow) from last year to the present, lead the province, according to Century 21.”

“That bungalow on a 60 by 132 foot lot, with three bedrooms and two baths, sold for $175,000 in 2007 but has climbed to $237,000 in 2008 – an increase of 35 per cent. Remarkably, in second place, was Val Caron.”

“Rick Lymer, Ontario regional economist with the federal government, does not think the good times are a bubble. ‘Certainly not for housing when you look at the low interest rates. It is a good time to buy a house. I see no sign of this housing surge slowing down,’ he said.”

“For years few houses were being built, and now there is not enough supply in place to meet the increase in demand, he said.”

The Star from Canada. “The spring rebound anticipated by realtors in the Toronto area market hasn’t happened – at least not yet. Existing-home sales in April were down by 7 per cent from the record highs of last year, with 8,762 homes sold, according to the Toronto Real Estate Board.”

“This is the fourth-consecutive month of declining home sales. April was considered a bellwether since it was the first month of good weather after one of the coldest and snowiest winters in recent years. Most analysts had expected pent- up demand to emerge in the spring market as potential homebuyers were hampered by slush and snow in the first quarter of the year.”

“Inventory, in the form of new listings, was also up significantly in April. It advanced by 18 per cent to 18,691 as sellers hoped the better weather would bring buyers out. ‘With affordability the lowest in 17 years, the housing market should continue to cool, despite recent declines in mortgage rates,’ said Sal Guatieri, senior economist at BMO Nesbitt Burns.”

The Edmonton Journal from Canada. “If you were selling a ‘typical’ home this time last year, chances are it lasted 22 days on the market before someone bought it. You got $413,488 for it. That was then. This is now.”

“Selling a typical home these days? Chances are you’ll wait, and wait, for 52 days before selling. And the payoff? About $28,000 less for your single-family detached house than if you’d sold it last year — an average of $386,033, according to monthly figures for April released Monday by the Realtors Association of Edmonton.”

“Condos, duplexes and rowhouses also dipped in average price, and thickets of ‘For Sale’ signs seemingly stand outside every multi-family development.”

“Richard Goatcher, Edmonton senior market analyst for Canada Mortgage and Housing Corporation: ‘As we went into 2006, we went into sort of an overheating, accelerating market because demand outstripped supply, so for most of 2006 and four months of 2007 we had record-level price increases and a lot of speculative activity and high levels of new construction.’”

“There are 10,606 residential properties currently on MLS, up 12 per cent from last month. Why so many? Pat Adams, a condominium builder and president of the local branch of the Canadian Home Builders’ Association: ‘In 2005, if you could put up a house you could sell it.’”

“‘What happened to us in the industry is that it started taking longer to build and it cost more to build. Now, we’ve got an affordability problem and you’ve got an oversupply problem because one of the answers to a rapid increase in costs is to build as fast as you can. That means you’re going to end up with unsold houses if the market turns, and that’s what happened,’ he said.”

“Should I buy now or wait? Marc Perras, president of the Realtors Association of Edmonton.: ‘I think it’s a great time to buy now.’”

“Should I sell now or hold? Perras: ‘It’s tough to answer carte blanche. I’ve been telling people if you’re testing the market, you may want to wait for a different year to do that in.’”

“Fannie Mae, the largest U.S. mortgage- finance company, reported a wider loss than analysts estimated. Fannie Mae needs new capital to weather credit and derivative losses that rose fivefold to $8.9 billion.”

“Fannie Mae, under new standards, listed $56.1 billion in so- called Level 3 assets, a category which indicates the holdings are so illiquid that they can only be priced using the firm’s own valuation models. This is the first quarter Fannie Mae has been required to disclose such assets.”

“A key House lawmaker on Monday complained that the mortgage industry has done little over the past month to make higher-value loans available in costly housing markets after Congress took steps to try to infuse more cash into the so-called jumbo market.”

“‘I am disappointed,’ Rep. Barney Frank said in response to an audience question after a speech to a Mortgage Bankers Association convention. ‘We fought very hard to raise the loan limits for Fannie and Freddie, and there have been a lot of problems in implementation.’”

“Jay Brinkman, chief economist for the Mortgage Bankers Association, said Wall Street investors have been cautious to invest in jumbo mortgages under the new higher cap until the market determines how to properly price such securities and assess their risks.”

“‘You don’t want to guess on the low side,’ Brinkman said. ‘If you make a mistake in this environment … you can take a serious price hit.’”

From Money Magazine. “Can a couple coats of paint, some spackle and $15 billion keep foreclosed homes from bringing down the home market? A housing-rescue bill moving through Congress would allocate $7.5 billion in grants and $7.5 billion in zero-interest loans to states to buy foreclosed homes, rehab them, and resell them.”

“In 2002, the city of Baltimore started to buy abandoned properties in an effort dubbed ‘Project 5,000′ for the number of homes it wanted to purchase. Now, the city owns more than 10,000 vacant properties but hasn’t found an efficient way to unload them.”

“Relative to the foreclosure crisis, $15 billion is a drop in the bucket. According to foreclosure tracker RealtyTrac, about 650,000 foreclosure filings on properties were submitted in the first quarter. If the $15 billion were used just to buy homes with an average price of $100,000, states could purchase 150,000 homes.”

“Some worry that cities would be getting in over their heads. ‘I don’t buy that it’s going to work,’ said Vincent Valvo, group publisher of The Warren Group. ‘If cities were good at buying, selling, and developing things, we wouldn’t need private developers.’”

“Countrywide Financial Corp. has suspended the home equity credit lines of almost all its Las Vegas customers. Since January, Countrywide, Bank of America Corp., Washington Mutual Inc. and IndyMac Bancorp Inc. have frozen about 600,000 equity credit lines nationwide, said Michael Kratzer, president of a Bankrate Inc.-owned Web site that’s fielding consumer complaints.”

“Homeowners’ pain is acute in Las Vegas, where property values soared 50 percent or more during 2004 and 2005 and since have plummeted. The Las Vegas housing-market crash represents a turnaround since 2003, when the local economy and real estate were booming.”

“‘If you had anything on the ball, you could make it happen in Vegas,’ said real estate agent Donna Marie Gold, who built a $4.5 million fortune buying and selling properties over six years.”

“After failing to complete a single sale last year, Gold said she fell $22,000 short each month on payments needed to maintain 14 properties. Now two to four months behind on some mortgage payments, she’s lost access to a $250,000 Wells Fargo & Co. equity credit line.”

“‘The whole thing was upside down in a New York minute,’ Gold said. ‘There needs to be some forgiveness in this climate with regards to credit and rebuilding one’s credit.’”

“John Simon, borrowed $35,000 on low-interest credit cards in 2007 to pay down his $63,000 credit line and save on the 11.75 percent interest he says Countrywide charged. He expected to be able to access the credit line later. When Countrywide froze the line, he wasn’t able to get money needed to pay his bills.”

“‘They took away the last amount of cash I had to make all the payments on my father’s retirement home,’ Simon said. ‘From a business standpoint, this was the stupidest thing I ever did. But it was so easy.’”

From Newsweek. “Whenever a boom goes bust, there’s always a round of finger pointing and blame assigning. And at least a few observers include an industry economist in this lineup: David Lereah, the former chief forecaster for the National Association of Realtors, whose irrational exuberance for real estate has led to some measure of ridicule.”

“It’s been more than a year since Lereah left NAR, so I called this week to check in. His answer: not yet. ‘We’re not at the bottom,’ he says. ‘[People] want it to be near the bottom, but we’re not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There’s still supply out there in abundance … This thing is going to get worse before it gets better.’”

The Herald Tribune reports from Florida. “Martin Caparros was late to the party with his Vintage Grand condominium conversion project, but his sales team still managed to sell 238 units for a total of $43.4 million from January 2006 to October 2007. It turns out, however, that part of the Miami Lakes developer’s success can be attributed to market-distorting rebates and enticing mortgages that his sales team offered to buyers as incentives in late 2006 and early 2007.”

“The rebates, which ran as high as $35,000, distorted the market, analysts and appraisers say, because sales prices were recorded at $235,000 and banks lent money against that value, while buyers were only paying $200,000 to $215,000 for their units.”

“‘When a bank forecloses after one of these deals, it is instantly upside down on its loan,’ said Dennis Black, a Port Charlotte appraisal instructor. ‘Its customer owes more than the property is worth.’”

“That was certainly the case with nine loans secured by Tampa real estate investor Michael Chadwick. In late February and early March 2007, Chadwick’s Sarasota real estate agent, Pat Brester, bought nine Vintage Grand units and immediately resold them to Chadwick at much higher prices, enabling the Tampa investor to get loans that exceeded original purchase prices by nearly $90,000.”

“Chadwick’s Sarasota real estate agent, Pat Brester, bought the nine units for $1.91 million from Feb. 26 to March 13 last year and sold them to Chadwick for $2.22 million on the same days they were purchased.”

“Chadwick then got two loans from SunTrust and seven loans from Fifth Third Bank, totalling just under $2 million, or nearly $90,000 more than Brester originally paid for the properties.”

“Together with the rebates offered by Vintage Grand, Chadwick was able to walk away from the closing table with about $360,000 — money Chadwick said he used to make interest payments on his loans.”

“‘I could not have carried the properties otherwise,’ he said.”

“When the money was gone, Chadwick filed for bankruptcy protection, listing $3.04 million in debts and $2.095 million in assets.”

“His nine Vintage Grand units were valued at…an average of $139,000 per unit — a far cry from the $246,400 Chadwick said paid for the units, and the $221,755 per unit he received in loans. ‘All in all, it was just a bad real estate decision,’ Chadwick said. ‘I didn’t know how bad the market was going to get.’”

“Julie Bartlett, a California real estate investor…helped Vintage Grand with its marketing efforts. Bartlett thought the deal was so good that she convinced her father to buy a unit. But she is now regretting that decision.”

“‘The units are worth $100,000 today and we’re buried in interest payments and condo fees,’ said Bartlett, who took over nearly $2,000 in monthly payments from her father a year after he bought his unit. ‘We’re getting to the point where we either have to find a short sale or give the unit back to the bank.’”

The News Press. “Welcome to ‘the courthouse steps,’ a corner of the second floor of the Lee County Courthouse where the county clerk’s office holds auctions every weekday in cases where a judge has ordered that a piece of property be sold to satisfy an unpaid debt. It’s a busy place, and on the brink of getting a lot busier.”

“Judges in March ordered 521 properties sold - more than 19 times as many as the 27 from March 2006. Lee Clerk of the Court Charlie Green said he’s about to step up the auctions, which disposed of more than 70 properties one day last month. ‘We’ll have days in the future when we’ll have two sales,’ Green said.”

“What’s frightening is that a huge backlog of foreclosure cases is building up and needs to be dealt with: almost 16,000 were still pending at the end of March, he said.”

“Back in the heady days of the real estate boom that ended in late 2005, there were buyers aplenty at the auction, said David Hall, president of First Community Bank of Southwest Florida. ‘They were buying into a buying frenzy,’ he said.”

“But now there’s a glut of homes on the market, Hall said. ‘There’s just so much property out there.’”

“Thomas Bruzzesi, who has been a real estate investor since 1989…once watched an inexperienced bidder triumphantly pick up a house for $12,000 and later realize to his chagrin that there was also a $168,000 mortgage on it — the bidder’s money was down the drain.”

“Ed Bonkowski, a Fort Myers-based real estate broker, did a lot of business in foreclosed properties in the early ’90s in the last major downturn but said he hasn’t lately because good deals are ‘few and far between.’”

“He expects that will change eventually, as foreclosure sales accelerate and bank-owned homes pile up. ‘Our decision to buy’s going to be when the banks are ready to bulk sale a bunch of them, then it’d make some sense,’ Bonkowski said.”

“But prices will have to drop steeply for that to happen, he said. ‘At 15 cents on the dollar, all those properties will be gobbled up, investors will come out of the woodwork and buy them and everybody will go back to work,’ Bonkowski said.”

The Republican Eagle. “In these harsh times, when a builder goes broke, the financial hardships, much like the would-be homes, have only begun.”

“Vincent Santanelli was delighted when his elderly father-in-law told him he planned to purchase a home at Cascades at Groveland, a Florida retirement community west of Orlando.”

“Still under construction, the property was a short distance from Santanelli’s own Groveland home and was reasonably priced – a rare find in central Florida’s tight housing market. Best of all, Santanelli says he felt at the time, the home was a product of Levitt and Sons, a Ft. Lauderdale-headquartered building giant with a solid reputation for high quality and service.”

“With some financial help from Santanelli, the father-in-law placed a $20,000 deposit on the home and put the Cozumel duplex he lived in on the market. He quickly received a couple of offers and was about to sell when, in November, the retired senior and his family learned that Levitt and Sons had filed for bankruptcy.”

“‘We’re still waiting to find out if Bank of America is going to take over the development so we can get the deposit back. My father can’t sell the Cozumel home, and now that the value of it has dropped because of the market, he’s looking at a bigger mortgage than he’d anticipated. He has no idea where to turn next,’ says Santanelli.”

“Santanelli and his family aren’t alone in their predicament. When Levitt and Sons filed for Chapter 11 bankruptcy protection Nov. 9 after defaulting on $181.5 million in debt, hundreds of customers who had shelled out unsecured deposits were suddenly cast in financial limbo.”

“Debt-holders like Santanelli’s father-in-law have to get in line with everyone else — homebuyers, contractors, everyone — to who the bankrupt company owes money. To get a sense of just how long that line is in Levitt’s case, more than 650 liens were filed against the company in St. Johns County, Fla., alone within days of the bankruptcy.”

“‘We understand that many of our customers have experienced financial and other distress as a result of our bankruptcy and the catastrophic and unprecedented downturn in the residential real estate sector in Florida and beyond. We have endeavored to be as sensitive as we could possibly be to our customers, and we will continue to do so,’ (stated) Levitt lead bankruptcy attorney Paul Singerman.”

“That the company has tried to be sensitive to its customers’ plight is a statement Levitt homeowner Dan Wenk strongly disagrees. Toxic mold and water damage in his Clermont home near Groveland…he claims made his home unlivable and that Levitt has refused to address. Wenk says his battle took on new urgency in August 2006 when he was diagnosed with leukemia.”

“‘I’m not blaming Levitt for my illness, but I’m saying, ‘Hey, I can’t live in the home you sold me, and you haven’t done anything to fix the situation,’ says Wenk, adding that he and his family had to rent another home in which to live.”

“‘I hired an attorney, and when we finally sued Levitt, it was about the same time that I noticed…they were reorganizing their stock. Levitt requested an extension for responding to the points we raised in the suit, then they asked for more time. Then, I found out they had filed bankruptcy,’ he said.”

“Wenk says that the cost of his now-stalled lawsuit, medical expenses and the burden of maintaining a second home pushed him over the financial edge. ‘Because of this, I’m having file for bankruptcy now, and my mortgage company had to foreclose on the Levitt house.’”

The Tampa Tribune. “Karen Mateson recently approached the Career Central vehicle parked at Pasco-Hernando Community College with cautious curiosity. She glanced through the back door of the mobile job center and, a few minutes later, was looking for jobs in the medical field with the help of Dave Hamilton, the mobile unit’s driver and operator.”

“Mateson, an artist at heart, is enrolled at PHCC’s Dade City campus working toward a degree in radiology. She’d like to teach art, but will settle for a job doing sonograms. ‘It’s not my passion,’ Mateson said, somewhat sheepishly, of the medical field.”

“Hamilton helps dozens of people like Mateson every week as he pilots Career Central’s mobile unit around the remote corners of Pasco and Hernando counties. ‘It’s not about finding a career right now,’ Hamilton said. ‘It’s about finding a job.’”

“The bursting housing bubble cost Pasco more than 1,000 jobs between the summer of 2007 and the same period a year before. The decline put Pasco County firmly in the middle of Florida’s 22 largest counties, with half seeing smaller declines or job-market growth and the rest - most of them in the southwest corner of the state - sharper declines in their job markets.”

“Pasco, which ranked first in job growth among the nation’s 329 largest counties in early 2005, now ranks near the bottom.”

“The bulk of the job losses happened in the construction industry as builders dramatically curtailed projects in response to slumping demand. Many of those unemployed construction workers are finding Hamilton’s roaming job center. ‘Unfortunately, I don’t have construction jobs to pick from,’ he said.”

“During one of those visits to Land O’ Lakes that Russ Wilson stopped by the mobile job center looking for work. Wilson, 32, was a truck driver until the cost of fuel forced him to give that up. Now he lives with his wife and two children at his mother-in-law’s house just north of Land O’ Lakes High School. He works odd jobs and his wife cleans houses to make ends meet.”

“‘Nobody’s hiring,’ Wilson said. ‘I couldn’t even get a job as a dishwasher.’”

The Tallahassee Democrat. “The day the Legislature convened its 60-day, 2008 session in a flower-drenched Capitol, the average price of gasoline in Florida was $3.25. It shattered an all-time record, $3.62, on Friday, the last day of session.”

“For the 60 days in between, lawmakers steered the ship of state while spiking gas prices and paralyzed housing starts gripped the throat of a tourism and growth-based economy.”

“Republicans at the helm kept one eye on a fuel gauge that showed tax collections on fumes and another on the approaching storm of the November elections. The result was a $66.2-billion budget with more than $4 billion in spending cuts targeted largely at school children, the sick and the elderly. It was a year like no other.”

“‘It’s never been this bad,’ said Florida Education Association Attorney Ron Meyer, who has been lobbying in Tallahassee since the early 1970s. ‘Money is the root of all evil, but even when there’s no money, there’s still evil.’”

“The teachers’ union thinks Florida is so off course, it’s preparing a massive lawsuit. ‘I can’t imagine that such a small reduction, coming on the heels of eight years of historic funding increases, would ever lead anyone to contemplate such a thing,’ said House education committee chairman Joe Pickens.”

“Some 40,000 Floridians who rely on two Medicaid programs, Medically Needy and Medicaid Aged and Disabled, got a one-time reprieve when Republican leaders agreed to take $350 million from a state reserve fund.”

“But the same budget also includes language that sunsets the programs next year, meaning they will go away unless lawmakers act. And that decision may rest largely on the health of a nearly $1-trillion economy over which the Legislature has little control, some experts say.”

“‘Obviously, the state can’t turn the economy around, they don’t have the power to reduce interest rates or lower the cost of a barrel of oil,’ said Orlando economist Hank Fishkind. ‘But they can do little things. The Senate had a plan to speed up construction projects, but unfortunately, the House did not agree. I wouldn’t say Rome burned while they fiddled, I’d say Rome burned and all they managed to do was evacuate the barn.’”

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