The Housing Bubble

The Post Independent reports from Colorado. “Garfield County Public Trustee Bob Slade isn’t concerned with the increase in foreclosures the county has seen in the first quarter of 2008, but it’s still a little early in the year. ‘Our numbers are up significantly over last year,’ Slade said. ‘But I’ve not had any go to sale yet.’”

“Slade said there are different statutes in foreclosures as of Jan. 1, giving the borrower more time between when the foreclosure is filed and when it proceeds to final sale. This change gives homeowners more time to get their situation in order, Slade said.”

“‘I’ve had several withdrawn already and have had none go to sale,’ Slade said. ‘So far everything I’ve had for May has been continued to future dates.’”

“With the foreclosures on the rise, home sales have plummeted over the first quarter, down 32 percent in total property transactions countywide. March alone saw a 49 percent decrease in property transactions over March 2007.”

The Standard Blade from Colorado. “A foreclosure report released last week by the Colorado Department of Local Affairs had bad news for the state in general and Adams County in particular. The report says new foreclosure filings in Colorado between January and March were 23 percent higher than in the first quarter of 2007.”

“Adams County had the dubious distinction of having the highest rate among all the counties. In total, 1,704 households were in foreclosure in Adams County in the first quarter of 2008, a 17 percent jump over the same period last year.”

“Local real estate brokers say they have seen the effects of the high foreclosure rates first hand. ‘I’ve been doing this for 16 years,’ said Deanne Kouba Day of Day and Co., Inc. ‘This is the weirdest market that I’ve ever seen. I’ve never seen the prices go this low, I’ve never seen auctions like this, I’ve never seen banks go so low.’”

“Day said the market is excellent for buyers, because banks are scrambling to get rid of an overabundance of properties. Local broker Brian Margolis, who sells properties on behalf of large national banks, agreed.”

“Margolis said home values are down about 5 percent this year in Brighton, and he predicts a double-digit decrease by the end of the year.”

“‘Business is really good right now, but it’s a shame it’s all bank-owned properties,’ Margolis said. ‘It is going to be very difficult for normal sellers to sell their homes.’”

The Daily Planet from Colorado. “An early-season slowdown in the local real-estate market is starting to ripple through Telluride’s finances and the town’s earnings from its all-important real-estate transfer tax. Revenues from the town’s 3 percent tax on property sales are lower now than they’ve been since 2005.”

“Property sales across the county are down some 32 percent for the first four months of the year. The decline follows a record-busting 2007 and years of nearly uninterrupted growth in the local real-estate market.”

“‘I’m hoping that it’s only an aberration and that it’s not a long-term thing,’ said council member Thom Carnevale. ‘But we can’t know for sure.’”

“The town officially expects to earn $4.7 million in transfer taxes this year, she said, after taking in $4.9 million last year. Last year’s haul was actually 6 percent below Telluride’s 2006 earnings of $5.3 million in RETT money, which represented an all-time high.”

“As Telluride built out over the 1990s and watched home prices rocket and property bounce from owner to owner, the transfer tax turned into a mint for town government, more than quadrupling over the past 15 years. In 1991, Telluride took in $952,000 in transfer taxes. In 2007, it grossed $972,000 in a single month.”

The East Valley Tribune from Arizona. “With home sales still in a slump, Valley builders and real estate agents are working to mend strained relationships between the two sides and boost business for everyone.”

“During the boom - when sales were nearly effortless - some builders slashed commissions to agents who brought in clients. Others offered flat fees that were a fraction of a standard commission amount.”

“Some agents felt, ‘You pushed us away when you didn’t need us, and now you do need us,’ said Diane Byrne, VP of marketing for Cachet Homes.”

“With so many abandoned homes, people think the best deal is always the foreclosure home, but that’s not necessarily true, said agent Alicia Conley.”

“Builders may be offering new homes in the same area for only a few thousand dollars more, said associate broker Dawn Matesi. Buyers also know what they’re getting instead of having to accept a foreclosure home ‘as is,’ Matesi said.”

“‘It’s brand new. It’s got the warranty,’ she said. ‘It’s really a no-brainer.’”

“With a massive oversupply of homes in today’s market, it’s crucial for builders and agents to work together, said Karl Tunberg, co-owner of Chandler-based Sanctuary Builder.”

“A little bit of distance has always existed between real estate agents and builders - a rift that widened during the boom, he said. Some builders gave agents a $1,500 flat fee on $300,000 and $400,000 homes, he said. Usually, that commission would be closer to $15,000, he said.”

“Many people in the industry are struggling and falling on hard times, he said. ‘It’s really easy right now to get down about what you’re doing and not feeling like you’re worthwhile,’ he said.”

“Two years after one big condo tower got the green light in Tempe, the site remains a fenced-off dirt lot. Just down University Drive from that site, a larger cluster of towers has yet to rise more than a year after the city signed off on that ritzy development.”

“The consensus is some of the planned luxury condo towers won’t sell in today’s economy and will have to wait years for demand to rebound.”

“Tempe Mayor Hugh Hallman, who holds an economics degree, expressed exasperation at the idea that some delays could jeopardize the larger vision for a denser, more cosmopolitan community.”

“‘The real story is: My God! - people are still investing hundreds of millions of dollars in Tempe,’ Hallman said.”

“Some city-approved projects won’t ever happen, Hallman acknowledged, but only because some ‘bottom-feeders’ structured unrealistic transactions that unfairly tarnish the reputation of other projects. ‘The silly deals are going to shake out,’ Hallman said.”

“City officials and developers will only privately speculate at what deals they consider silly or realistic.”

“Several forces have collided at once and hurt the condo market, said Randy Levin, the project manager for Hayden Ferry Lakeside. The credit crisis has left some buyers unable to get loans. Others can’t sell their existing homes. And the supply of condos has surged past demand.”

“‘What’s going on now is kind of a cleansing process,’ Levin said. ‘You have to ask yourself, were there really too many condos that were put on the board here? Was that too much all at one time?’”

From Sedona.biz in Arizona. “Scott Cole, the developer for the 158-unit Cole Sedona Preserve condominium project on both sides of Hwy. 89A in Uptown, successfully requested a 24-month extension for his development agreement with the city on May 13.”

“Mr. Cole said one major obstacle is he cannot get loan financing to do the project unless he can pre-sell up to 50 percent of their projects. The local condo market was good when he began the Preserves project more than two years ago, but he is not so excited about today’s market.”

“‘Banks have completely turned their backs on new condo projects so I am not sure an advance sellout of even more than 50 percent will turn bank heads at this point with the general softness in the market,’ said Laurence Ross, an investment sale broker with Bensen & Associates in New York.”

“‘What I have seen over the last few years is a ton of amateurs - fly-by-nights - who are now on the losing side of the game of hot potato; and are scrambling for dollars after paying astronomical numbers on a price per buildable square-foot,’ Mr. Ross said.”

The Tahoe Daily Tribune. “What does the Chapter 11 filing earlier this month by Tropicana Entertainment - the parent company of Horizon Casino Resort and MontBleu Resort Casino & Spa - mean in the future?”

“The unknown is nothing new for South Shore casinos. But the potentially higher stakes these days are reflected in the emergence of Indian gambling in California, the absence of major airline service to Tahoe, the continued growth of Las Vegas casinos as a worldwide destination and a fickleness among gamers themselves.”

“‘Overall, there’s been a tremendous growth in gaming. It just hasn’t been here,’ said Eadington, who has tracked casino gambling at Tahoe for 30 years. ‘Reno hasn’t done as well, either, but not as badly as South Tahoe.’”

“He pointed to Lake Tahoe’s North Shore condominium and timeshare projects planned for Cal-Neva and the Tahoe Biltmore. The idea is to focus less on gaming and more on high-end retail and destination visitors.”

“‘The old model is the hotel feeds the casino,’ Eadington explained. ‘The new model is the casino can’t do that, and so you generate business and condominiums. Right now, it might be a tough sell because of housing and the national markets.’”

“While the South Shore is separated by a state line, the effects of a Horizon closure would put further financial constraints on the city of South Lake Tahoe, said City Councilman Bill Crawford.”

“‘We have to make the adjustment to the reality, and the reality is Tropicana is in serious trouble,’ Crawford said. ‘It looks like within three years, the Horizon will not be a gambling house. The handwriting is on the wall there.’”

“Add to this a real-estate downturn and a convention center redevelopment project - considered among some as an economic silver bullet that has run into financing problems - and South Lake Tahoe could be in for a wild ride, Crawford said.”

“‘My position is we adjust to the reality,’ he said. ‘The reality here is we are in decline.’”

The Review Journal from Nevada. “Lehman Bros., which recently gained control of the financially troubled Vegas Grand luxury condominium project, has hired CB Richard Ellis, a commercial real estate brokerage, in Las Vegas to market the property.”

“‘What this really gives somebody is a clean slate,’ CB First VP Geoffrey West said. ‘It was originally intended as a for-sale condominium project, but that market has all but disintegrated. This gives an opportunity to utilize it as luxury apartments, a nongaming hotel and resort or a time share.’”

“As if waning taxable sales and slumping gaming revenue weren’t enough, you can add Clark County property taxes to the catalog of levies feeling the economic slowdown.”

“The number of delinquent parcels advertised in a public notice in Wednesday’s Review-Journal rose 51.2 percent when compared with the number of lots published in the paper a year ago, Clark County Treasurer Laura Fitzpatrick said Friday.”

“What’s more, 2.3 percent of the county’s properties in Wednesday’s notice were in arrears, compared with 1.4 percent a year earlier.”

“Astoria Homes claimed the single-biggest number of parcels on the list, with taxes due on about 1,300 pieces of property in the county. Astoria President Tom McCormick noted it’s the first time in the local builder’s 13-year history that the company missed the deadline on property-tax payments.

“But it’s what happens in a credit crunch, when banks stop lending construction financing, McCormick said. ‘It’s very embarrassing,’ he said.”

“Astoria, which has eight actively selling neighborhoods in Las Vegas and five more under development, had secured agreements for construction funding from three lenders who have since decided they want out of residential real estate nationwide.”

In Business Las Vegas from Nevada. “In April the 1,794 home sales on the MLS were 30 percent higher than April 2007, the first meaningful month-over-month gain amid the housing slowdown. No one is expecting a boom, but there is a sense of hope in the real estate community that the bottom has been reached and the market is inching back up.”

“‘There have been reports that the bottom has been hit,’ said said Bob Hamrick, CEO of Coldwell Banker Premier Realty. ‘I can’t guarantee this, but we can certainly see it from here. It’s not with great velocity, but we are bouncing off it.’”

“So far, May hasn’t been as good as April, and Hamrick said the market may be at a ’sloppy bottom,’ where there are monthly variations.”

“Properties owned by banks and other lenders continue to account for more than half of the homes being sold every month.”

“High-end buyers aren’t willing to pay $900,000 for a noncustom home that is only selling for that price because of appreciation, said said Mark Stark, CEO of Prudential Americana Group.”

“‘The middle range is the getting hit the hardest,’ Stark said. ‘The homes $400,000 to $900,000 are getting crushed.’”

The Las Vegas Sun. “Everything seems fine out at Lake Las Vegas. Except for the developer who couldn’t pay the mortgage, the four-diamond hotel that just filed for bankruptcy court protection, and home foreclosure rates roughly the same as in the rest of the valley.”

“At the beginning of the year Atalon Group, a firm that specializes in turning around financially troubled companies, acquired Lake Las Vegas after its original developer, Transcontinental Corp., defaulted on a $540 million loan.”

“‘Everybody who was there is out,’ said an investor familiar with recent changes at the community around a man-made lake southeast of Las Vegas. ‘The people who were there from the beginning are just gone.’”

“Plans call for about 9,000 homes near the 320-acre lake. Today, 1,500 houses exist. Clark County recorder documents show that 142 of those residences - roughly one in 10 - have been foreclosed on or have been on the brink of foreclosure since January.”

“More than 400 houses and condos were sold in 2006 during the boom in residential construction. In 2007 that number dropped to 234. This year only 54 have been sold.”

“Donna Gold knows something about the roller-coaster ride that’s Las Vegas real estate. After moving from California to Las Vegas in 2000, Gold thought she had come to the land of milk and honey.”

“A year after moving here, Gold got a license to sell real estate just like she once had California before quitting the business about 1985.”

“Gold bought nine homes and two condominiums in Las Vegas and four homes out of state. She couldn’t believe her timing: When she started buying homes in 2001 and 2002, the median price of existing homes was $136,500. The price rose to $275,000 by 2005, and Gold’s wealth grew to $4.5 million, not counting the six figures she earned a year as a Realtor.”

“She planned to sell a couple of properties and cash out on the appreciation and keep the others as rentals to produce income. She wasn’t buying real estate as a flipper, she says.”

“‘I came here in the golden age and realized this is a perfect time to make money. I felt for the first time that God blessed us,’ Gold says. ‘I was trying to create a future.’”

“But the market changed and with it Gold’s fortunes. She sold one of her Las Vegas homes, but the change in the real estate market made it difficult for her to sell any other properties at the end of 2006 and beginning of 2007.”

“She was able to refinance out of six adjustable rate mortgages, but found herself burdened by two others she was talked into by her mortgage brokers with the mistaken belief she could easily refinance them as she had the others.”

“After being able to make all her mortgage payments in the past through the end of 2007, Gold says she has fallen about $22,000 short each month on mortgage payments and is as much as four months behind on some payments. She lost access to her line of credit even though she is still paying it down. She also has to deal with some of her tenants’ inability to pay rent.”

“The real estate market was hurting her income as a Realtor. Her once six-figure income fell to nothing because of no commissions in 2007. Gold said she worries about prospect of foreclosure, but has no plans to file for bankruptcy. She remains adamant that she will survive these tough times.”

“‘I am going to come through this fine,’ Gold says. ‘I don’t blame anybody. I take responsibility, but I am going to forge on. I am going to dust myself off and keep going forward.’”

The Worchester Business Journal reports from Massachusetts. “The Falls at Arden Mills, a gated condominium development in Fitchburg, is eventually supposed to have 204 units. So far, though, only one building of the project, with 48 units, is standing, and only 11 of the condos are occupied. ‘It’s slowed down quite a bit, no secrets there,’ said Steve Callahan, president of Global Property Developers Corp. of Bridgewater, which is developing the project.”

“Indeed, Massachusetts condo sales were down 32.6 percent for the first quarter of 2008, according to The Warren Group. With lots of condos in Central Massachusetts sitting empty and more set to be built, Callahan and other developers say there are real costs to the slow market.”

“For some, there’s not much of a silver lining in the current condo market. University Park Lofts in Worcester has received plenty of publicity for selling only eight of its 37 units before going bankrupt. The remaining 29 condos are scheduled to be auctioned off on May 29.”

“Last December, Mark Biller, operations manager at Lifestyle Builders LLC in Holden, gave up on a planned 131-unit condo project in Fitchburg after a fight with the city over improvements to water lines in the area. He said he had already worked on the project for three years at that point, but today he wonders if it wasn’t a good thing that he got out when he did.”

“Biller also…handles three other condo developments in the area, and he said nothing is selling. At the Village at Westminster Place in Holden, he said, Milford-based Fafard Development planned for 125 units, but in the past three years it’s built only 16.”

“‘Unfortunately the market’s not there,’ Biller said. ‘I don’t foresee myself building anywhere.’”

The Morning Call from Pennsylvania. “For nearly a decade, tax-weary people from New Jersey and New York poured into the Lehigh Valley in search of a bigger home on a bigger lot, and developers couldn’t build so-called McMansions fast enough to meet demand.”

“But as a credit crisis sweeps the nation, forcing a record number of homeowners into foreclosure, home building, especially construction of large homes, in the Lehigh Valley has slowed to a crawl.”

“A housing downturn that has made credit more difficult to get, combined with rising energy costs, is pushing the market away from the McMansions built in the Valley the past decade, and toward a more affordable version of the American Dream.”

“‘We’re not looking to eliminate big homes, we just think there should be a balance,’ said Planning Commission Executive Director Michael Kaiser. ‘Most of what we see now is a 3,000-square-foot home with giant rooms and a cathedral ceiling. The typical firefighter, policeman or medical workers can’t afford it.’”

“Last year, the average size of a Valley home declined for the first time since 2001, as the number of new McMansion-style homes fell from a peak of 2,401 in 2005 to 1,088.”

“Bethlehem Township developer Abraham Atiyeh announced two weeks ago that he’s building a downtown Bethlehem development of town homes starting at $129,000, and national builder Pulte Homes has halted its large-home building in the area and last winter began marketing a new home, called ‘The Lehigh,’ with 1,050 square feet and starting price of $139,000.”

“Urban development expert Christopher Leinberger said one of the main reasons people flooded into the Valley to build giant homes is now gone — and it has little to do with the credit collapse.”

“‘That model where people took on a long commute to have a bigger house was predicated on cheap energy, but with $4-a-gallon gas, that market is shut down,’ Leinberger said. ‘This is the perfect time to reshape your efforts in the housing market.’”

“Consider what happened earlier in the decade: Valley population grew by more than 8 percent, largely spurred by the migration of people who work in the New York, New Jersey or Philadelphia areas. So developers, both local and national, began building the kind of giant homes the transplants demanded — the model not-so-affectionately nicknamed the McMansion.”

“The so-called ‘New Jersey invasion’ drove up home prices across the region. At the same time, the demand for those massive homes had developers gobbling up farmland, chewing up more than 4 square miles of open space each year Valleywide.”

“‘McMansion’ is a subjective term with no set definition. Avi Hornstein, part owner of one of the area’s largest builders, Allentown’s Omega Homes, said the term McMansion is more about a cultural trend than a particular size.

“‘The McMansion is an ‘I can have one, too’ product,’ Hornstein said. ‘It’s a production-line version of the mansion. Without the custom touches, it puts a lot of space at a price point that’s within reach of people of middle and upper-middle income.’”

“The average home built this decade in the Lehigh Valley is the McMansion. Of the 16,202 detached homes built since 2000, nearly 40 percent have square footage of more than 2,450.”

“‘Don’t blame us, we’re just building what the current zoning laws allow,’ said Chuck Hamilton, executive officer of the Lehigh Valley Builders Association. ‘If a township requires 1-acre lots, no one wants to put a small house on that. If these planners allow smaller lots, we’ll be happy to build smaller homes, if people want them.’”

“‘In the past 30 years, zoning that was designed to limit development ended up creating the McMansion market,’ Hornstein said. ‘You can’t build a small home on a 1- or 2-acre lot. The costs just don’t add up.’”

The Herald Mail from Maryland. “Geographically, the large duplexes going up behind Hagerstown’s old Pangborn Boulevard neighborhood are on a hillside. Economically, some of their owners are on a cliff.”

“The houses they moved into just a year or two ago are now worth as much as 24 percent less than they paid. ‘We don’t know what to do,’ said Armita Varjavand. Their savings gone, a loan from her mother is the only way they can pay the rising mortgage that the lender refuses to refinance as the property loses value.”

“Michael Davis, who lives a few doors away, is applying for refinancing because his mortgage is set to readjust this fall. ‘Yeah, but I know a lot of these people have tried,’ he said, gesturing up and down the street. ‘That’s why they have the ‘For Sale’ signs out.’”

“Such predicaments are typical among the more than 1,000 families who bought the houses that popped up quickly in Washington County during the market’s recent boom, an official said.”

“‘For a lot of these people who purchased with an adjustable rate, they now have a house of less value, they’re looking to refinance and they now have less equity,’ said Sharon Disque, executive director of a nonprofit organization whose work includes counseling families facing foreclosure.”

“Worse yet, Disque said, ‘a lot of the people that bought in ‘04, ‘05, ‘06 and ‘07 are from areas east of here,’ and they still commute to jobs there.”

“So when gasoline prices began to spike, ‘we had a convergence of a housing boom that went bust, and then, it was compounded by a sustained rise in gas prices,’ she said.”

“Kensington Villas is a 100-lot development on a long, skinny, 20-acre tract bought for $5 million in late 2004 by national home builder K. Hovnanian Homes. Since 2005, K. Hovnanian has been building large two-story duplexes.”

“Ten families moved in in 2005, 30 more in 2006 and 24 more in 2007, records show. Robert and Sharon Lopez were among the first. Lopez said he and his wife were living in ‘the ‘burbs of Washington’ when they decided to move here in 2005.”

“They read a study showing ‘that Hagerstown had the right growth potential, property values were going up,’ recalled Lopez, who began investing in real estate at least eight years ago.”

“In October 2005, they paid $324,650 for the 2,731-square-foot house at 215 Brynwood St. Looking back, Lopez said he can see now it was very much the wrong time for them to buy - as prices were soaring to their peak and just before they began to drop.”

“‘Of the investment properties we have,’ he said, ‘this is probably the worst. We put 20 percent down, and it’s (the loss of value) probably eaten up most of that 20 percent.’”

“According to a Herald-Mail examination of new property tax assessments in the Kensington development, Lopez’s house has lost 19.9 percent of its value already. The house’s worth sunk to just $259,780 in January, when the latest assessments were issued by the Maryland Department of Assessments and Taxation.”

“Fifty-six of the 64 Kensington houses assessed by January were actually worth less than what the owners paid. The combined value of all 64 properties has fallen 11.3 percent. The homeowners paid a total of $18.4 million but, by January, the properties were worth just $16.3 million.”

“Sitting in his Kensington house, Robert Lopez said he has seen the up-down of the economy firsthand. ‘We bought the first unit here and the (sales) girl told me, ‘Almost every time we sell, we raise the price,’ Lopez recalled. ‘But they started trickling down, trickling down. And here we are today. And, who knows where we go from here?’”

“Several houses up the block is the four-bedroom home of Malick and Brenda Thiam. The Thiams wanted something larger than the town house they had in Montgomery County, Md. Washington County offered ‘more home for less money,’ Brenda said.”

“They were happy in November 2006 when they paid $343,283 for the house here. Then came January 2008 and the assessment notice, saying the house is now worth $257,930 - a 24.8 percent drop in just less than a year.”

“Brenda and her husband were incredulous and outraged. ‘We wanted so badly to blame someone for the situation we’re in, but no one put a gun to our head,’ she said.”

“So now, they are resolved to work through the situation, pay down the debt and eventually, perhaps, sell and move elsewhere. But some of their neighbors are worse off. Lenders have foreclosed on at least two houses - including 254 Brynwood St., which is next door.”

“One homeowner still hoping not to have to sell is Varjavand. She and her husband bought their four-bedroom house for $306,413 early in 2006, according to assessment records. Now, the assessed value is $238,450 - 22 percent less.”

“Varjavand said their first real sign of trouble came when the interest rate on their mortgage rose from 8.5 percent to 11.5 percent, which is more than they can afford.”

“When their lender refused to lower the payments, the couple used their savings. Now that that is gone, she said, they’re borrowing from her mother. They don’t know where they can turn next.”

“To cope, ‘we try to use less water and electricity,’ she said. And, ‘less driving.’”

What do you see in your housing market this weekend? Lower prices? “A slowing housing market has led the Blaine County Assessor’s Office to reduce 2007 property valuations in several areas, County Assessor Valdi Pace told the Blaine County Commission Tuesday. County appraiser Mickey Dalin told the commission that without exception he is seeing softening property values in the south-county town.”

“‘I have no areas that are increasing,’ he said. ‘The lots in Bellevue are going down dramatically.’”

“Taney County has not escaped the nationwide downturn in the housing industry. The number of homes that were repossessed or subject to bankruptcy increased from 58 in 2006 to 124 in 2007, Taney County Assessor James Strahan said.”

“‘We have argued with the (state tax commission) that everything is not as rosy as everyone has presumed,’ Strahan said. ‘The entire state is a black rose - Taney County is a bright red rose in the housing industry. This is not so, and it can be proven through statistics in that (report).’”

Owner stress? “When L. J. Jensen purchased a home in Port Aransas five years ago, he wanted a place that would be his island retreat. But after seeing its new appraised value last week, he has put his retreat home up for sale.”

“‘I protested last year and settled on an appraisal of $171,706, although I believe even that value was inflated,’ Jensen said. ‘Now the property is appraised at $341,190, a doubling of value. This appraisal has priced me out of my island home.’”

Or foreclosures? “Cleveland’s Regional Economic Development Director Chris Warren says lenders are selling off their worst properties to wholesalers. The wholesalers then resell the houses any way they can.”

“Realtor Gary Kotlarsic lives in Cleveland’s Slavic Village neighborhood, an area with one of the highest foreclosure rates in the country. He says houses next door are going for virtually nothing, so he and his neighbors can’t get anything close to what they originally paid for their own houses.”

“James Odell Barnes says he’s helping investors buy 100 bank-owned properties a week in Cleveland and Detroit. ‘There’s either gotta be people like us, me and my investors, or you’re going to have to have a whole lot more bulldozers bulldozing these houses’ he said.”

Builder problems? “Only 272 lots were proposed during the first quarter this year, compared with 2,147 proposed during the same period of 2007, according to the Greenville County Planning Commission.”

“‘We’ve had national builders stop developing in Greenville. They had a lot of subdivisions that were in the development stage. They put them (lots) on the market to let local developers buy them up,’ said John Owings, the county’s manager of current planning.”

“At one point there were at least 10 national homebuilders developing in the Greenville area. Five either left or announced they were leaving in 2007, Owings said, but most didn’t cease operations until the fourth quarter. They left about 20 subdivisions in various stages of development.”

“So far this year, 60 properties are in foreclosure in Grand County, surpassing the number for all of 2007. Grand County has been a place primed for speculative building.”

“‘If it’s a builder, a lot of builders are walking away,’ said Judith Graham of Graham Mortgage in Winter Park.”

“Poor planning and money managing, for example, may lead to unfinished projects. ‘I know a number of cases like that in Grand County,’ she said.”

“Or, there may have been an inflated value when the speculative builder acquired a loan. ‘I’ve seen that happen, too,’ she said.”

Questionable statistics? “One sign of the Valley’s troubled housing market is the growing incidence of lenders assuming ownership of homes. Ironically, the increasing number of those transactions has led to a false perception that the real-estate market may be showing signs of recovery.”

“The confusion stems from a report on April home sales by Jay Butler, director of real-estate studies at Arizona State University.”

“Butler’s report does not differentiate between ‘trustee sales,’ in which banks take over properties from borrowers in default, and routine home resales. More than one-third of the sales reported by Butler for April, or 2,025 of the 5,585 total, were trustee sales.”

“When real-estate consultant Scott Smith saw Butler’s latest report, Smith said he knew something was wrong with the numbers. Smith, who owns a real-estate services firm and tracks area home sales ‘on a daily basis,’ said Butler’s April sales figures were simply too high.”

“‘After checking the data several times . . . there is no doubt that Mr. Butler made a big mistake,’ Smith said.”

“Butler said he agrees that trustee sales should not be lumped in with routine resales and would be reported separately from now on. Until recently, Butler said, trustee sales represented a very small portion of overall sales activity and often involved an actual sale, such as at a foreclosure auction, which is why he has always included them.”

“The market has changed so rapidly, he said, that the methodology he once relied on for accurate sales data suddenly has become obsolete.”

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