The Housing Bubble

The Uinta County Herald reports from Wyoming. “After 20 plus years of relatively little housing growth, it’s as if houses are sprouting up out of the reddish dirt around Evanston with the new grass this spring. There are many new developments currently under construction, and plenty of new homes already completed and on the market. Will there be enough growth to fill all of those houses?”

“Ben Bishop of Bishop Homes is a speculative builder. He noted that after the boom in Evanston in the late ‘70s and early ‘80s there were 20 years or so of no growth, because there was a lot of excess and it took time to absorb.”

“‘Housing markets tend to cycle from excess to normal affairs,’ he said.”

“There are several developers right now building houses in town, in similar positions to Bishop. ‘Homebuilders are like a herd, we see the same information,’ he said.”

“Some developers think that there may already be too many new homes, that supply may already be outgrowing demand. Others are very optimistic and have further building phases planned and already under construction.”

“Homebuilder Tony Perez talked to bankers, city engineers, and realtors, and said that they expressed confidence in the population growth and that homes would be needed. Perez joked that ‘everybody wants to be a builder now.’”

“The housing market is in fine shape here in Evanston, says Karen Field of Coldwell Banker. Field said employment opportunities make the difference here in contrast to the parts of the country hard hit.”

“‘Our market is good, and we don’t have an oversupply of houses,’ she said. ‘The economy is good in Wyoming. People have jobs. In the rest of the country there were loans that shouldn’t have been, and then people lost their jobs.’”

The Missoulian from Montana. “Longtime Stimson Lumber Co. employees Sue Tollefson and husband Greg Tollefson discuss the latest twist in the paperwork related to his layoff on Thursday afternoon. ‘It’s frustrating,’ says Greg. ‘You just work with it and try not to let it get to you.’”

“Weaknesses in the housing industry directly affected mills tied into construction, such as the stud mill in Bonner. Prices for lumber have dropped to about $239 per thousand board feet, roughly half of what lumber fetched in 2004 and 2005 when the housing market was robust.”

“‘Industrywide, demand fell off to such a degree that it brought prices down below historical lows and below profitability for many mills,’ said Shawn Church, an editor at Random Lengths Publications.”

“Production supervisor Richard Anthony has been at the Bonner plant for 38 years. ‘I don’t have a clue,’ Anthony said. ‘I don’t know what I’ll do.’”

The Oregonian. “As central Oregon’s long real estate gold rush gives way to a grim new era of falling prices and foreclosures, few companies have crashed to earth harder than Bend-based Desert Sun Development.”

“The upstart operation, led by its intense 29-year-old founder, Tyler Fitzsimons, is under siege from lenders, suppliers and contractors who say they’ve been stiffed for millions of dollars.”

“The unfolding saga reflects how the financial industry operated in central Oregon and elsewhere during the real estate boom. Banks lined up to back newly minted companies. They made huge loans to workers of limited means who couldn’t afford the payments.”

“At Desert Sun, five ex-employees told The Oregonian their incomes were inflated or their signatures forged on loan applications or other financing documents.”

“Now that some of those loans have defaulted, banks are going after some of the employees with foreclosure threats. But in many of the Desert Sun transactions, there is no house to repossess — only land worth a fraction of what is owed.”

“‘I owe $290,000 for a piece of land that is probably worth $70,000,’ said Casey Cross, a former Desert Sun electrician who owns an empty lot in Sisters. ‘I’m one of the lucky ones. It’s just me and my dog. There are good people with families just getting crushed.’”

“At its peak, Desert Sun employed more than 110 people. The company’s success enabled Fitzsimons to buy expensive toys, including a 2006 Ferrari 430 Spider, boasting a base ticket price in excess of $200,000.”

“Desert Sun had no retirement plan, but it did offer the employee homeownership program, which its Web site likened to a 401(k).”

“Fitzsimons said Desert Sun’s problems came about when the banks, rocked by the weakening economy, stopped lending. ‘There’s nothing malicious going on,’ he said. ‘Yes, we’re a victim of the market decline. But so is everybody else.’”

“Employees were ultimately responsible for repaying the loans, which generally ranged between $300,000 and $500,000. But the banks handed the money directly to Desert Sun and employees had little if any involvement in how it was spent.”

“Still, it sounded like a great idea to Krystal Chamberlin, an accounts receivable clerk at the company. Chamberlin worried that her limited income — the single mother earned about $27,000 a year — would disqualify her.”

“Chamberlin was delighted to hear in November 2006 that National City Mortgage had approved a $477,000 construction loan. She agreed to have her house built in the Roaring Springs subdivision of Sisters.”

“Chamberlin owes $284,000 on her property in Sisters, though not even the foundation is complete. On April 25, National City Mortgage notified Chamberlin that because of the lack of construction progress, it was declaring her loan in default. It asked for immediate payment of the $284.159.63 outstanding.”

“Cross borrowed $415,200 from Columbia River Bank for his house in Sisters. Cross has left central Oregon. But he worries that ruined credit could be only the start of his troubles resulting from the Desert Sun fiasco. ‘It’s the worst of the worst,’ Cross said.”

The Columbian from Washington. “So, what’s really going on in the Clark County housing market? The Columbian asked that question and others of 11 of the county’s top-producing Realtors in Vancouver.”

“If you could give three pieces of advice to a Clark County home seller, what would you say? Hali Hobson: ‘Price. Price. Price, and how it presents. It’s a kiss of death to overprice your home … and assessed values (from the Clark County Assessor) are two years behind the market.’”

“What about buyers? What are you telling them? Sharry McNeel: ‘I tell my buyers - and remind my sellers - that except for the years 2004 and 2005, when you bought a home, you’d have to be in it three or four years to break even or make any money. Sellers have forgotten that, and buyers have forgotten that, too, because they went through 2005 when you could buy a house for $300,000 and two months later sell it for $350,000. We’re back to the real world again.’”

“Would it be fair to say there’s a disconnect right now between Clark County buyers and sellers?”

“Don Humphrey: ‘Buyers are suddenly seeing prices so low that they don’t know when to pull the trigger because they don’t know if those prices are going to go even lower next week and next month…A couple of years ago, we were just taking orders. Now we really have to work the deal between that buyer who’s trying to find the very lowest mark he can get to and the seller who doesn’t want to give up any more than he has to.’”

“Terrie Cox: ‘A year and a half or two years ago, we couldn’t write up offers quick enough … and now it’s just flipped the other way. That was a no-brainer, because values can’t continue to keep going up that fast. I think we’re still going to have sales, but the market had to taper off.’”

“In an east Vancouver subdivision, one out of every nine houses has entered foreclosure since the start of the year. The Clark County foreclosure rate has been rapidly climbing since mid-2007. Across the county, 1,049 houses were in foreclosure through April, up fourfold from 2007.”

“Speculators own as many as one in five homes in some newer neighborhoods in the county, and now many are losing those properties.”

“Rising payments got the Murphys, Hazel Dell residents who say they did not understand the details of their adjustable rate mortgage, in trouble.”

“Their home’s value had climbed by more than $40,000 since they purchased it in 2003. They refinanced for $178,000 in 2005, borrowing from equity to pay off other bills. They struggled with the loan’s initial higher payments of $1,080 a month, about $100 more than they had been paying before the refi.”

“Then, on Jan. 1, the loan’s interest rate adjusted upward, bumping their monthly payment to more than $1,500. They couldn’t afford the payment, and they couldn’t come to an agreement with their lender. ‘They didn’t really want to work with us,’ said Mathew Murphy.”

“The bank foreclosed, and has given the couple until later this month to move out of the 1950s-style, three-bedroom ranch where they were raising their 2-year-old daughter, said Jennifer.”

“Many have also found that it is increasingly difficult to sell in Clark County. When Lamont Shaindlin’s commission-only sales income dropped last year, he could no longer afford his $1,600 monthly loan payments.”

“He tried to sell his Orchards-area house to avoid foreclosure, but said his lender, Washington Mutual, seemed indifferent to a short-sale offer of $195,000. Shaindlin owed about $199,000 on the loan.”

“‘The bank could have mitigated their own losses,’ he said.”

“Instead, unable to find a buyer willing to cover his debts, Shaindlin, his wife and two daughters had to vacate their Vancouver home of 11 years.”

“Last week, Lamont Shaindlin drove by the house his family lost. ‘It was still empty and the lawn was overgrown. We’ve found a place in the area, an apartment complex,’ Shaindlin said. ‘It’s not the move you want to make, going from owner to renter.’”

“A Columbian analysis of some of Clark County’s worst-hit neighborhoods found that many foreclosures are tied to real estate speculation and house flipping.”

“One Washougal house investor, who with her husband profited from several sales before the market cooled, was among dozens of investors in the Gables at Hiddenbrook Terrace, a 124-home subdivision in Vancouver. She and her husband bought a new house in that neighborhood for $299,690 in August 2005.”

“They also bought two homes in another new subdivision in Camas in 2006, one for $230,000 and another for $240,000. Now at least two of these investment properties are in the early stages of foreclosure, as is the Washougal house where she lives.”

“For several years, the speculator, who asked that her name be withheld to spare her from embarrassment, was able to purchase houses and sell them at a profit.”

“‘We were successful for a while, then the market got worse and it was hard to find a buyer,’ she said.”

“Of the subdivision’s 124 homes, at least 14 have entered the foreclosure process since late 2007. Another 19 are owned by people who don’t live in the neighborhood, a sign that these owners are likely investors.”

“Including those in foreclosure, 20 percent of these houses are not occupied by their owners and 25 percent have been sold at least once in the three years since they were built. Three property owners seem to have bought two houses each in the neighborhood.”

“‘In 2005 we had a situation that I would characterize as irrational exuberance,’ said Mike Lamb, associate broker in Vancouver.”

“Buyers thought the market would go up forever, and therefore borrowed deeply with the belief that they could sell if necessary, Lamb said. Meanwhile, people caught by high payments are abandoning their loans, Lamb said. ‘When you have no skin in the game, it’s easier to walk away.’”

“The Washougal speculator said she’s not sad about the prospect of losing three houses, including the 5,000-square-foot Columbia River-view home where she now lives. ‘It’s a nice house, but I can live anywhere.’”

Some housing bubble news from Wall Street and Washington. CNN Money, “Demand for new homes collapsed last year. Next up could be a similar drop in the rest of the construction market. Economists say a fall-off in nonresidential construction in the face of an economic slowdown shouldn’t be a surprise. ‘Developers are a little nervous about getting enough rent, getting enough tenants so they’re pulling back,’ said Jim Haughey, chief economist for Reed Construction Data.”

“Industry tracker McGraw-Hill Construction reported that nonresidential construction starts had remained strong through February, then plunged 23% in March, the most recent month for which a reading is available.”

“‘The degree of credit tightening going on there is very noticeable right now,’ said David Seiders, chief economist of the National Association of Home Builders. ‘It’s frozen up along with the private mortgage-backed security market.’”

“There has been an average of 32,000 job losses a month in the construction sector over the past 12 months. And a slowdown in commercial construction will lead to even more construction job losses.”

“‘The housing downturn is clearly not over, so this just seems like piling on at this point,’ said Seiders.”

From MarketWatch. “The hoped-for rebound in home sales failed to blossom this spring, with the housing market caught in a downward spiral as falling prices continue to sap consumer sentiment and keep would-be buyers on the sidelines.”

“The final nail in the coffin for the spring-selling period came this week after luxury-home builder Toll Brothers Inc. reported dismal sales figures for the quarter ended in April. The company’s CEO, Robert Toll, said traffic levels at its communities were ‘the worst that we have ever seen.’”

“Most buyers are canceling because ‘they go to their friends and neighbors and say, ‘We just bought a new home,’ and everybody says, ‘What, are you crazy? Prices are dropping,’ according to the chief executive.”

From Reuters. “Squatting is on the rise across the United States as foreclosures surge, eviction notices mount and homes go unsold for months, complicating the worst U.S. housing slump in a quarter century and forcing real-estate brokers to enlist the help of law enforcement and courts to sell empty houses.”

“In some regions, squatting is taking on new twists to include real-estate scams in which thieves ‘rent out’ abandoned homes they don’t own.”

“Others involve ‘professional squatters’ who move from one abandoned home to another posing as tenants who seek cash from banks as a condition to leave the premises — a process known by real-estate brokers as ‘cash for key.’”

“California real-estate broker Steve Smallson said he finds about three squatting cases a month, compared to none last year, in his region of Woodland Hills, a middle-class district of Los Angeles. That includes a case in April involving a foreclosed home worth $1 million where police were called after neighbors reported squatters filming pornography in the house.”

From Bloomberg. “Banks and securities firms, reeling from record losses resulting from the collapse of the mortgage securities market, are failing to acknowledge in their income statements at least $35 billion of additional writedowns included in their balance sheets, regulatory filings show.”

“The balance-sheet adjustments are in addition to $344 billion of writedowns and credit losses already reported on the income statements of more than 100 banks.”

“‘The smart people are the ones who’ve identified the problems, put them out there in full transparency, and addressed them by raising more capital,’ said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. ‘There is still billions of dollars of crap out there that hasn’t worked itself through the system.’”

The LA Times. “Nearly two years into a housing decline…many Americans hope the end is near. Most economists believe the worst is yet to come.”

“If the country is to avoid a full-scale recession, however, as some analysts are beginning to consider possible, the economy is apparently going to have to pull itself back from the brink without help from the housing industry. ‘The housing correction is still going to be with us this time next year,’ said Celia Chen, a housing economist at Moody’s Economy.com.”

“When it comes to housing, the optimists are those who see the near free fall in home prices as encouraging: It may at least shorten the economic agony. ‘Because the prices are going down so fast, we’ll be hitting the stabilization point sooner,’ said Lawrence Yun, chief economist at the National Assn. of Realtors.”

“Thomas Lawler, a housing economist, noted that in the last housing price correction, which occurred in the early 1990s, it wound up taking prices seven years to drop 20%. Compared with that protracted slump and recovery, he thinks the current free fall in home prices is a good thing.”

“‘Do you want a slow bleed?’ Lawler asked. ‘Wouldn’t it be nice to just get it over with? It might be that that’s what we’re seeing.’”

The St Petersburg Times. “If it was gloom you wanted, there were second and third helpings to be had last week when the National Association of Real Estate Editors met in Dallas. Speaker after speaker, expert after expert, predicted: Wait till next year, or longer. It ain’t over.”

“Charles McMillan, the new president-elect of the National Association of Realtors, acknowledged that there will be ‘few changes in the next few months,’ but predicted a 6 percent increase in existing-home sales next year, to 5.7-million homes.

“‘There’s no national market,’ McMillan said, although his 1.2-million-member association routinely reports national sales figures. ‘All real estate is local. It’s our job to restore confidence in the market.’”

“A questioner in the audience asked about an NAR promotional campaign that started a few years ago, just as the market was going into free fall - ‘There’s never been a better time to buy a home.’ If someone had taken that advice and bought a home, the questioner said, in some markets that house is worth less today. Why should people listen to NAR?’”

“McMillan dodged that bullet. ‘Realtors can’t guarantee a property will ever increase in value,’ he said, and started talking about mortgage fraud.”

The Arizona Republic. “Despite the housing slump, home sales at a north Mesa planned community were at full throttle Saturday. Buyers lined up by the dozens, eagerly awaiting the chance to buy a homesite in Mountain Bridge, a Blandford Homes development.”

“Buyers flew from Alaska, Canada and other states to nab a piece of desert property.”

“Sales kicked off at 9 a.m., when buyers had first pick of 100 lots and 19 models. Many had camped out since Monday, roughing it for a shot at scoring their dream home. ‘I flew in just for this,’ said Indiana native Lori Schneider, who slept in a Dodge Caliber Friday to earn her spot in line.”

“Buyers admitted to being drawn by the desert views and good values. Home prices are between $240,000 and $800,000.”

“‘I actually would have paid more for this location,’ said Bridget Stone, of Phoenix. ‘I think after today the pricing will go up.’”

The Montreal Gazette. “On paper, they have assets of more than $1 million. But Paul and Mary Staley (not their real names) aren’t feeling all that comfortable these days. They’ve painted themselves into a bit of a corner with two revenue properties, and are unsure how best to extricate themselves.”

“Mary acquired the triplexes in a now-trendy neighbourhood from a relative five years ago. They remortgaged them for $340,000 apiece and used the proceeds to pay off their large suburban home.”

“The Staleys’ problem is that the monthly cost of the mortgage and taxes on the two rental properties currently exceeds the rent by a fairly hefty sum. They collect $3,367 each month and owe $5,600 to the bank.”

“They’ve been dipping into their line of credit on their home for the shortfalls and renovations, and have pretty much maxed it out.”

“‘Because the tenants have lived in our buildings a long time, they’re paying rents far lower than what you could normally charge in that part of town. And we have a bad tenant who hasn’t paid in months. It’s very frustrating, working hard and sacrificing like we do to have someone live for free,’ said Paul.”

“The fact the properties generate less in revenue than they cost each month also suggests a lack of a coherent plan.”

“‘Is this supposed to be a good investment?’ investment adviser John Archer wondered. ‘The properties have to rise in value at least 5.35 per cent a year just for the loss to be offset. And this is before any major unexpected expenses. Why are they hanging on to these properties? For their children? If the properties don’t make economic sense now, will they necessarily make economic sense when they give them to their kids?’”

“Money is going to be tight for as long as they hold on to both revenue properties, even if they can increase rental revenue and minimize expenses, because a significant part of their monthly employment income is being funnelled into them, said accountant Nick Moraitis.”

“While they may come out significantly ahead selling in 10 years if housing prices continue to rise and they don’t add more debt, it won’t be an easy decade for them and may not be worth the hassle.”

“‘Their budget and lifestyle will be strained for the next several years to support the triplexes,’ Moraitis said. ‘I have a hard time seeing why they are keeping rental properties that they are losing money on every month. Just think of the stress-less life without debt, cash in the bank and additional income to spend.’”

The St Petersburg Times reports from Florida. “‘At first, as in all these gambling mania, everyone gained … A golden bait hung temptingly out before the people and, one after another, they rushed to the tulip marts, like flies around a honey pot.’ Charles Mackay, Memoirs of Extraordinary Popular Delusions and Madness of a Crowd (1843).”

“Doesn’t it seem familiar? It did to me last week, driving through Royal Highlands and thinking back to three years ago, to May 2005, when demand for real estate in the Tampa Bay area reached its peak.”

“Speculators were everywhere back then, of course, but nowhere in Hernando did their fever seem as much like a ‘popular delusion’ as in Royal Highlands, a 36-year-old subdivision that sprawls across northwest Hernando.”

“‘I always describe it as putting a ham bone in a pool of piranhas,’ said June Gulbrandsen, owner of Windward Realty near Royal Highlands.”

“Vacant parcels on the market for as little as $2,000 five years ago sold for 10 times that amount a year later. The following year, the average price for the 1,924 lots sold in Royal Highlands climbed to $38,386, according to the county Property Appraiser’s Office.”

“So who got stuck? The amateurs, especially those from out of state, who paid builders for houses that often depreciated more than $50,000 by the time they were completed, said Jeanne Gavish, a Land O’Lakes real estate broker.”

“‘Royal Highlands has loads and loads and loads of vacant houses,’ Gavish said. ‘It’s like a vacant-house graveyard.’”

“The speculation-driven market pushed up property taxes. It led to the current housing collapse in the county - where only 140 permits have been issued this year - that dragged down nearly every other sector of the economy.”

“‘Hundreds who, a few months previously had doubted there was such a thing as poverty in the land, suddenly found themselves in possession of a few bulbs nobody would buy (and) the cry of distress resounded everywhere.’ - Mackay.”

“For April, Florida led the nation for the largest month-over-month drop in employment levels. From March to April, the state lost 25,300 jobs. Michigan, meanwhile, shed 18,600 positions over the month.”

“‘It’s certainly not a position we’re used to,’ said Rebecca Rust, economist with Florida’s Agency for Workforce Innovation. ‘We’ve been a leader in job creation for most of the last decade because of the construction boom. When you’re up so high, you have farther to fall.’”

“Florida actually had the highest number of month-over-month job losses five times since January 2007.”

“Sean Snaith, an economist with the University of Central Florida…said it wasn’t helpful to get hung up on Florida’s sudden appearance in the loser’s column with Michigan.”

“‘There are some real structural problems affecting that state and they’ve been in dire straits much longer,’ Snaith said of Michigan, where unemployment is 6.9 percent. ‘Our problems are more a cyclical function of the insane real estate market we’ve been in. Once we get out of 2008, things will start to brighten.’”

The News Press. “In Lee County, 17,300 of 245,405 homes are financed by subprime loans. Carol and Robert Rommel bought a condominium in Bell Tower Park in south Fort Myers in September 2005 for $390,000 with a subprime loan. As prices dropped, they decided they could afford a house in Reflection Lakes.”

“But the condo didn’t sell and now they’re struggling to cover two mortgages. They can’t even refinance the condo loan because they’d have to pay a $10,000 early-out penalty, common under subprime terms.”

“‘What we’re getting is a lot of them come through the door that there’s not enough equity and there’s nothing we can do,’ said said Vincent Patti, VP of Fort Myers-based First Capital Lending.”

“Their best bet is to throw themselves on the mercy of the lender, Patti said. ‘I have seen a lot of the lenders stretching the terms for the reset,’ he said. ‘If it looks like it can be done, they’ll extend the two years or three years. It’s happened to me personally on an investment property.’”

“For many, going to the bank would be an exercise in futility, said Robbie Roepstorff, president of Edison National Bank in Fort Myers.”

“Edison and most other local banks didn’t do subprime loans during the boom - it was the big banks like Countrywide and Bank of America - and the local banks aren’t getting any demand to refinance them now, she said.”

“‘When banks impose conservative, reasonable underwriting standards on someone who got into a subprime mortgage when fog on a mirror qualified you, and so many were self-employed and now are unemployed, independent contractors, that’s the kiss of death,’ said said Charles Costello, a real estate and mortgage broker in Fort Myers.”

“One bank, he said, recently asked a prospective lender for three years of pay stubs to prove a steady income.”

“Getting the lender to give you a better deal can be problematic as well, Costello said, because most subprimes were bundled up into mortgage-backed securities by Wall Street and sold to investors.”

“‘It’s difficult to modify a loan because nobody has the authority to do that,’ he said. ‘Because of the securitization, they’re sliced and diced, a piece owned all over the globe.’”

“The Rommels haven’t given up on selling their condo. ‘We’re willing to bring money to the table,’ Carol said. ‘We’ll take it out of our savings.’”

The Miami Herald. “Eastern Financial Florida Credit Union has survived hurricanes, recessions and the demise of its namesake airline. But now bad loans made during the housing boom have South Florida’s largest credit union reeling.”

“A $30 million loan for a waterside West Palm Beach condo project that never got built and went into foreclosure. The credit union lost $68.9 million last year — financial results that one trade journal called the worst ever for the industry. Eastern’s president and CEO resigned.”

“A banking industry ad campaign highlighting the losses at Eastern and other credit unions helped scuttle a federal deregulation bill this month that would have further erased the distinctions between banks and credit unions.”

“‘This will become the poster child for why credit unions should not be allowed to stray far from their traditional lending powers,’ said Miami bank analyst Kenneth Thomas.”

The Sun Sentinel. “At the end of April, almost 41,000 condos were listed for sale in Palm Beach and Broward counties, according to data from Coldwell Banker Residential Real Estate. Based on the current monthly sales pace, it would take roughly five years to sell all those condos if no new units came onto the market. Experts point to a huge number of still-unfinished condos that will keep a lid on prices for at least a year.”

“At the end of the first quarter, there were more than 30,000 unfinished condos in South Florida, 80 percent of them in Miami-Dade County, according to Metrostudy.”

“During the housing boom of 2000 to 2005, speculators bought condos at pre-construction prices and watched the units rise in value before having to close on the deals. But not enough long-term owners bought condos, leaving investors on the hook with empty units.”

“Some of the investors have tried to use loopholes in the sales contracts to get out of closing on the deals, while others are falling into foreclosure. And owners living in the condos are tiring of expensive maintenance costs and special assessments.”

“‘I used to show buyers six condos; now I show them 20,’ said Elaine Russell, a broker associate in Boca Raton. ‘They want the very best deal. If sellers are not motivated, I tell them, ‘Don’t even bother to list it.’”

“Two years ago, a two-bedroom condo at One City Plaza in West Palm Beach would have fetched $400,000 or more. Today, prices are in the $280,000 range. ‘That’s just the list price,” said Kendra Radicchi, a West Palm Beach agent. ‘What they sell for is typically much lower.’”

“In Fort Lauderdale, condos at Las Olas Beach Club that were selling for more than $1 million now are going for $750,000 to $800,000.”

“A townhouse on Northeast Second Avenue that was on the market in 2006 for $599,000 is listed for $214,500, a 64 percent discount. And a condo on North Ocean Boulevard that two years ago was listed at $899,000 is available for $479,900, a 47 percent cut.”

“Some offers are ‘almost embarrassingly low,’ said Pompano Beach agent Randy Bates, president of the Realtor Association of Greater Fort Lauderdale. Insulted, owners reject the bids, only to field subsequent offers just as low, Bates said.”

“One of his clients listed a three-bedroom Lauderdale-by-the-Sea condo for $1.4 million. The owner turned down several offers for two years before finally selling it for $1.05 million. Another of Bates’ clients listed a Lauderdale-by-the-Sea condo for $799,000 two years ago, only to sell it recently for $550,000.”

“‘A lot of these units selling at bargain prices have been on the market for a year or two, and their owners are just now realizing that the market is not going to turn around,’ Bates said. ‘They figure they’re better off taking the deal on the table, even though it’s not the best deal.’”

The Orlando Sentinel. “More than 200,000 subprime mortgages were issued across the region from 2004 through 2006, the Sentinel analysis found. That is about three of every 10 mortgages made during the three years studied.”

“Only eight of the top 100 U.S. census tracts with the most subprime loans in Central Florida are in low-income, urban areas such as Pine Hills and Azalea Park, according to the analysis. The rest are in suburban communities such as Avalon Park, Celebration, Winter Garden, Deltona, Poinciana and the Four Corners area near Disney World.”

“The stampede to the suburbs, which resulted in about $30 billion worth of subprimes in a seven-county area, was triggered by Wall Street’s desire at the time for high-return investments based on the high-risk mortgages, according to a former senior economist with the Federal Reserve.”

“‘There were just not enough people in inner cities to allow subprimes to grow into a really significant portion of the mortgage market,’ said Anthony Pennington-Cross, the former Federal Reserve Bank of St. Louis economist.”

“All seven counties in the region — Brevard, Lake, Orange, Osceola, Polk, Seminole and Volusia — ranked in the top third of Florida counties in the number of subprime loans issued from 2004-06.”

“‘There are too many’ subprimes in Central Florida, said Larry Tobin, CEO of Orlando-based Fairwinds Credit Union. ‘It is certainly not going to be this year that we will be able to work through all that. It is definitely going to be years.’”

“Martin and Linda Conroy bought a four-bedroom, three-bath home about three years ago in the Four Corners section of Lake County. Their lender was BNC Mortgage, a subsidiary of Lehman Brothers Holdings Inc., a global investment bank that during the housing boom was among the leaders in packaging subprime loans into securities for sale to big-time investors.”

“BNC gave the Conroys a $300,000 mortgage. The retired firefighter and his wife say they don’t know whether their loan is subprime, though it possesses many of the characteristics associated with one. ‘I was under the impression it was a fixed rate,’ Martin Conroy said of the mortgage.”

“Not until adjustable-rate loans became a regular subject of news reports did the Conroys reread their loan documents and discover they had one. They quickly put their house up for sale, but not a single person has come to see it in six months, they say.”

“One problem is that their home is sandwiched between a house already repossessed by its lender and another that has been vacant and for sale for about a year. The lender on the foreclosed neighbor was another Lehman Brothers mortgage unit that was renamed Lehman Mortgage Capital a couple of weeks after Lehman Brothers shut down BNC Mortgage.”

“While waiting for a buyer, Martin Conroy has taken a part-time job as a bus driver at Walt Disney World to generate extra income. But this is not how the couple envisioned their Central Florida retirement.”

“‘What we really need to do is downsize,’ Linda Conroy said. ‘Have a smaller place and half the mortgage.’”

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