June 30, 2008

The Sellers Aren’t People, They’re Banks

The Monterey County Herald reports from California. “The state Department of Real Estate has accused a local broker and his former partner of fraud in connection with Fresno’s controversial and long-delayed Running Horse Golf and Country Club. Tom O’Meara of Carmel and Scott Webb of Fresno are accused of fraudulently soliciting more than $6 million in loans from 15 people, many of them Monterey Peninsula residents.”

“Webb and O’Meara were the original partners in the project, once viewed as a catalyst for redevelopment in southwest Fresno. It was promoted as 780 upscale homes around an 18-hole, Jack Nicklaus-designed golf course that was slated for a PGA Tour tournament in 2007. ”

“Only two holes of the course were finished, and none of the homes around the links was built. No one is taking the blame for the mess.”

“Webb said said investors knew their loans were recorded, at best, as second trust deeds because they were aware La Jolla Loans Inc. loaned the project $10 million. ‘People loaned us money to invest in Running Horse and we took it,’ Webb said.”

“O’Meara, Webb and Running Horse LLC reportedly are under investigation for possible criminal wrongdoing in connection with the golf development. ‘I am familiar with that company, but my understanding is the feds are handling that,’ said Assistant Monterey County District Attorney Annie Michaels.”

“O’Meara, reached at his Pebble Beach home, said he plans to fight the state’s accusation. ‘The truth always prevails. The accusations eventually will be proven false and I have the paperwork to prove it,’ he said. ‘In the meantime, I got wiped out.’”

“Gary Vigen, a developer, architect and Running Horse investor, said Webb and O’Meara ‘lost virtually everything’ on the project, with O’Meara losing his Pebble Beach home, a house in Bass Lake and two houses in Fresno.”

“But other Running Horse investors don’t agree or sympathize. Joyce Scampa said many of O’Meara’s lenders were, like her, professionals who were experienced in real estate investment. She said they believed O’Meara and Webb because, ‘they’re very good at what they do. They lied.’”

“Scampa said she and other investors were duped by the seeming legitimacy lent to the project by the involvement of Jack Nicklaus and the PGA. ‘We had faith in Jack Nicklaus putting his name on there,’ she said.”

“Investors lost more than $35 million. ‘I know a lot of people are upset. A lot of people are angry,’ Vigen said of the investors.”

“The architect said the project’s design, with a course sunken beneath elevated house pads, gives pancake-flat Fresno a feeling of altitude. He said he is not alone in his continuing faith.”

“‘It’s a unique project and a lot of people still feel it,’ he said. ‘Eighty percent of the lots have spectacular golf course views.’”

The Milpitas Post. “Santa Clara County District Attorney’s Office investigators arrested former real estate agent Gloria Alvarez and her son, Ricardo Alvarez, in San Jose last week.”

“Gloria Alvarez, who had most recently been living in Mexico, faces 11 felony chargest. Ricardo Alvarez (also known as Felix Alvarez, Ricardo Pedraza, Ricardo Alvarez Pedraza, Felix Ricardo, Pedraza Alvarez, and Ricardo Rios), a licensed notary, faces seven felony counts.”

“Both mother and son could be sentenced to more than 14 years in state prison if convicted. Also charged in the complaint is Gloria Alvarez’s sister. The charged felonies involve three 2006 property transactions.”

“Alvarez has been the subject of more complaints to the Santa Clara District Attorney’s Office Real Estate Fraud Unit than any other individual real estate agent. Because many of her complaining victims have lost their home to foreclosure, investigators are having difficulty locating victims.”

The Burlingame Daily News. “The slumping economy and housing market apparently have led the developer of an 11-acre parcel with retirement residences in Foster City to ask for an increase in the number of units so that it pencils out financially.”

“‘If they don’t approve it, then I guess you might say we are back to the drawing board,’ said Sares Regis VP John Igoe. ‘Because as it is currently structured, it would be difficult to finance.’”

“Mayor Pam Frisella said the city has done its research on the project and such a facility is needed in the city. ‘(Friends of Foster City and other opponents) think we are getting taken advantage of and bamboozled. … do they think we are stupid and we haven’t done our homework?’ she said. ‘We have done our homework.’”

The San Gabriel Valley News. “A slowing economy may be responsible for a noticeable rise in the number of homes having their electricity shut off, utility officials and economic experts said.”

“Rosemead-based Southern California Edison, the county’s largest electricity provider, has pulled the plug on nearly 165,000 of its 4.8 million customers over the past six months thanks to unpaid bills, officials said. That’s up nearly 14 percent from the first five months of 2007, said Southern California Edison spokesman Gil Alexander.”

“‘This is another part of the downturn of the economy,’ Alexander said. “‘It shows the challenging times that customers are going through.’”

“‘The economy has slowed dramatically,’ said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. ‘You have a lot of people that are under financial pressure.’”

The LA Daily News. “Times can be tough in the current economy, even for debt collectors. While San Fernando Valley area collection agencies report an uptick in business from companies seeking payment of overdue bills, they say it’s increasingly difficult to collect on outstanding debts.”

“‘Business is not great,’ said Ron Grossblatt, CEO of Grant and Weber in Calabasas, ‘If they don’t have the money, they can’t pay us.’”

“Clint Sallee, CEO of Fidelity Creditor Service Inc., said the Glendale-based firm is working more accounts but that revenue for each has ‘contracted.’”

“At Account Control Technologies in Canoga Park, president Dale Van Dellen’s company collects debt for educational institutions and the U.S. Department of Education, contacting people who have defaulted on their student loans.”

“The major difference in the current economic atmosphere that Van Dellen sees is that people can’t as easily refinance their homes to raise money to pay their debt.”

“‘The average payment is lower,’ Van Dellen said, ‘much less than a year ago.’”

“The debt collection industry can be an economic indicator of various economic trends, Sallee believes. ‘We are a month or two ahead of a CNN headline,’ he said.”

“‘We’re a barometer for unemployment,’ Sallee said, and likewise for the subprime mortgage crunch. ‘We knew about it before most people.’”

“One of the ‘most intriguing things’ that Sallee has learned about the debt collection business is the tendency that those with the ‘most ability to pay are the ones that are the most challenging to collect,’ he said.”

“Those people without the money to pay are the ones he called the ‘most honorable.’”

The Inland Valley Daily Bulletin. “The cost of purchasing a home has dramatically lowered over the past year, opening doors to those who may have been previously shut out of the market. Evelia Perez is a rural carrier assistant in Chino and has been renting homes in Fontana for the past eight years. She has decided to make the transition from renter to homeowner now that she has the opportunity.”

“‘I don’t want to rent forever,’ Perez said. ‘If I feel like if I can do something better for the house, or make it look better, I want to go ahead and do it. I won’t have to ask for permission. I want to have the security to be able to say that it’s up to me.’”

“‘That’s the silver lining in this market,’ said Vicki Carpenter, a real-estate agent from Coldwell Banker. ‘Sales were at an all-time low prior to this market. It’s exciting to see the people who were pushed out come back in.’”

“Along with her real estate agent Yolanda Ramirez, Perez has looked at more than 50 homes and made offers on five. ‘There’s a lot of shopping going on,’ Perez said. ‘This week we wanted to turn in an offer of $180,000, but there were already 14 bids.’”

“Ramirez said there have been thousands of foreclosures in the Inland Valley region and more repossessed homes are being added to housing listings every day. The Remax Champions Real Estate Web site shows more than 300 listings in Fontana alone.”

“‘Foreclosures are the hot item right now,’ Ramirez said. ‘You have to jump on it or lose out. When you walk into a house and it’s in decent shape then there will be multiple offers right off the bat.’”

“Looking to buy a home during a time when the market is offering more affordable houses also means dealing with banks will be more common. ‘We’re in uncharted waters,’ Ramirez said. ‘The sellers aren’t people, they’re banks. It is different dealing with that. It has been a roller-coaster ride so far.’”

“Although a significant number of foreclosures may increase opportunities for first-time home buyers, there is a downside. ‘Some of the houses have been broken into, people are upset when they have to leave their homes and sometimes they will make holes in the walls and damage the home really badly,’ Ramirez said.”

“So far, Perez has saved the necessary 3 percent required by her credit union to receive her loan, but in order to afford any repairs and home furnishings, Perez and Ramirez are looking into the Federal Housing Administration’s down- payment assistance programs.”

“The FHA ‘could help me with my closing costs so I can save that money and keep it for the future,’ Perez said. ‘My agent said I could pay $2,000 out of my own pocket so I can save $6,000 to furnish my home.’”

Value No Longer Really Matters

Some housing bubble News from Wall Street and Washington. Bloomberg, “Taylor Wimpey Plc, reeling from the worst U.K. housing slump in 30 years, will write down 660 million pounds ($1.3 billion) of real estate. Taylor Wimpey will write down U.K. land and projects by 550 million pounds. That would be an industry record, according to Merrill Lynch data. Further charges of 70 million pounds and 40 million pounds will be made for sites in the U.S. and Spain.”

“British mortgage lenders have refused to pass on three interest rate cuts since December and have withdrawn loans for those with smaller deposits. This has starved first-time buyers and buy-to-let investors of credit and pushed down house prices.”

“The declines in April were the most widespread since at least records began in 1978, the Royal Institution of Chartered Surveyors.”

“U.K. mortgage approvals fell to the lowest in at least nine years in May. Banks granted 42,000 loans for house purchase, compared with 58,000 in April, the Bank of England said in London today. The result was the lowest since the bank’s series began in 1999.”

“‘For approvals to fall by so much in one month having already collapsed over the last year underlines the ferocity of the housing market slowdown,’ said Alan Clarke, an economist at BNP Paribas SA in London. The report ’suggests the pace of house price declines will continue or even accelerate and the risks to economic growth have also risen.’”

“Trevor Williams, an economist at Lloyds TSB Bank Plc, said today’s ‘huge drop’ in mortgage approvals shows first-time buyers have ‘been abandoning the market almost completely.’ Home loans in May were about one third of last year’s peak.”

“‘There’s no end in sight,’ said David Tinsley, an economist at National Australia Bank in London, who formerly worked for the U.K. central bank. ‘With inflation remaining elevated, we’re unlikely to see rate cuts. But even if we did, it probably wouldn’t help much.’”

The JCN Network. “The Development Bank of Japan said Monday its unconsolidated net profit in fiscal 2007 fell from the previous year to 53.9 billion yen due mainly to losses on U.S. subprime-related and other securities.”

“Losses on securitized products, including those related to U.S. subprime mortgages, totaled 33.8 billion yen on a consolidated basis in the year to March 2008, the government-affiliated bank said.”

“Newly delinquent homeowners outnumbered those who caught up on overdue payments for a 26th straight month in May, according to a trade group that tracks loans to people who put down less than 20 percent.”

“In the worst housing slump since the Great Depression, 67,967 homeowners with mortgage insurance fell at least 60 days behind on their loans, compared with 40,687 who got back on track, the Mortgage Insurance Companies of America reported today.”

“‘There’s no doubt that 2008 is going to continue to be a challenging year,’ said Michael Fraizer, CEO of Genworth Financial Inc., the fourth-largest U.S. mortgage insurer.”

“Insurers are tightening standards on mortgages they cover to stem further losses. The new requirements contributed to a 48 percent drop in the number of policies issued to new homeowners in May, compared with the same month a year earlier, according to the Mortgage Insurance Companies of America.”

“Subprime and Alt-A mortgage bonds, trading at or near record lows, may continue their declines as banks limit purchases of some securities and are forced to sell off what they hold, JPMorgan Chase & Co. analysts said.”

“Prices for typical fixed-rate Alt-A bonds rated AAA have tumbled to near an all-time low of less than $84 per $100 of principal from about $87 in April, JPMorgan said. Subprime debt is also down, as AAA bonds lost 5.1 percent in three months, Lehman Brothers Holdings Inc. index data show.”

“A year after the subprime meltdown roiled credit investors, the market for new non-agency mortgage bonds is no closer to reopening. Banks have a ‘long way to go,’ after raising about $400 billion of capital, JPMorgan analyst Chris Flanagan said in a report.”

“Banks will need about $115 billion simply to offset downgrades among the $1 trillion of AAA subprime and Alt-A bonds, he wrote, as lower quarter-end prices suggest new writedowns.”

“‘In a world of insufficient capital, value no longer really matters,’ Flanagan wrote in the New York-based bank’s June 27 weekly report on securitized debt.”

The Atlanta Journal Constitution. “Georgia’s banks have built up the nation’s heaviest concentration of loans to now-struggling home builders and real estate developers. Nearly $1 out of every $5 on Georgia banks’ loan books bankrolled homebuilders and real estate developers - by far the highest proportion in the state in at least 30 years, according to federal regulators’ data.”

“Nine Georgia banks were among the top 25 banks on a list research firm SNL Financial published earlier this month based on their high ‘Texas ratios’ - a measure used during the savings-and-loan meltdown in the 1980s to gauge increased risk of insolvency.”

“Industry insiders say there are now almost four dozen banks on Georgia’s watch list for problem banks. Robert Braswell, Georgia’s banking commissioner, said the figure is in the ‘right ballpark,’ and has been rising.”

“By 2007, construction and real estate development loans on Georgia banks’ books had mushroomed to more than $41 billion, from $7.4 billion in 2000, according to figures from the FDIC. Such loans equal 19.5 percent of Georgia banks’ total loans.”

“But what got things rolling first was a flood of money into the Atlanta market that helped launch a wave of new banks. According to the Georgia Bankers Association, 109 start-up community banks have been launched in the state since 2000.”

“Meanwhile, subprime loans made it easy for investors to snap up homes that they hoped to flip later for a quick profit.”

” ‘The huge proportion of sales in 2005 and 2006 were financed by subprime mortgages,’ said Walt Moeling, a lawyer with Atlanta firm Powell Goldstein who has been representing local banking firms since 1968. Developers were ’selling every house they [could] build,’ he said, which encouraged them to borrow more money to expand.”

“‘In Atlanta, this is the worst market we’ve had, ever,’ said Moeling. ‘Everything went splat.’”

“Now many of the developers who got those loans are out of business. They’ve saddled the banks with assets worth much less than the loans, including unsold new houses and subdivisions that are growing weeds rather than bungalows.”

“Some insiders call the unfinished subdivisions ‘PVC farms’ for the forests of plastic pipes installed for houses that were never built.”

“Braswell, the state banking commissioner, says the situation sometimes keeps him awake. ‘This one occurred almost overnight,’ Braswell said of the abrupt deterioration of developers’ ability to repay their loans.”

“‘You can warn someone about the pitfalls of over-reliance on one market segment, but some of the guidance may have fallen on deaf ears due to the amount of profits that were being made,’ Braswell said. Still, he said, in hindsight ’state regulators could have sounded the bell more loudly.’”

The Chicago Tribune. “Rev. Jesse Jackson kicked off the five-day annual Rainbow/PUSH Coalition conference by urging people to vote and to remember the struggles of generations who fought for basic rights.”

“Saturday’s discussion focused on home foreclosures, with Illinois Atty. Gen. Lisa Madigan and U.S. Rep. Barney Frank describing their efforts to stem damage from the crisis.”

“Madigan talked about her office’s lawsuit against Countrywide, the nation’s largest mortgage lender. In May, there were 9,670 foreclosure filings in Illinois, up more than 40 percent from May 2007, Madigan said.”

“‘There was clearly a pattern of unfairness, a pattern of deception,’ Madigan said, describing results of a nine-month investigation. ‘What we are seeking to do is make them accountable.’”

“Madigan said that she will seek a 90-day stay on foreclosures, giving her office time to review individual home loans and try to modify them so that owners can afford to keep their houses.”

“Frank, chairman of the House Financial Services Committee, blamed the industry’s problems on a lack of federal regulation.”

“‘These are hardworking, decent people who made a mistake,’ he said. ‘People who listened to deceptive advice.’”

The Herald Tribune. “Like countless other investors in Southwest Florida, U.S. Rep. Vern Buchanan, R-Longboat Key, played the real estate game during the boom and is now suffering the consequences.”

“At least two of his investments, a house overlooking Sarasota Bay and a condominium in the Ritz-Carlton Tower Residences, have turned into significant money losers. All told, Buchanan and his partners spent nearly $33 million on six Southwest Florida properties from 2004 to 2006.”

“In Charlotte County, Buchanan got involved in The Preserve at Boca Creek project at a time when most developers had stopped investing in raw land.”

“It was the summer of 2006, and Buchanan and his three partners — Asher Bernstein, John Murray and Michael Gould — believed there was still room for a high-end project that would include as many as 83 single-family homes and 263 condo units. The partners bought the 153-acre tract from tobacco billionaire Brad Kelley for $15 million.”

“In 2004, Buchanan bought a 5,200-square-foot bayfront home near the Stickney Point Road bridge through his 6430 Hollywood Blvd. LLC for $3.2 million. That four-bedroom house is now on the market with a list price of $2.595 million, or about $600,000 less than Buchanan paid.”

“In January 2005, Buchanan bought a condo at the Ritz Tower Residences for $1.9 million and sold it in November 2006 for $1.6 million, taking a $300,000 loss in the process.”

“‘I guess it doesn’t help to be a congressman,’ said Perry Corneau, a Sarasota condo specialist. ‘Anyone who bought in 2005 or 2006 are going to find prices are lower today.’”

Why Buy Now When It May Go Down More?

The Sun News reports from New Mexico. “Kevin Romney has been trying to sell his house in Las Cruces since 2007. He believes he would have had an easier time moving the property had he put it on the market a little sooner. ‘We’ve had it on the market several times for about a year,’ the 54-year-old Las Crucen said. ‘We started selling ours right when everything was really starting to dip. We just got a late start on it.’”

“Real estate agent Gailen Hooper said different priced homes seem to selling at different rates. ‘The lower-priced homes are selling,’ he said. ‘It’s once you get up to $300,000 and $400,000, those are taking a while.’”

“Don Schroeder has a new house for sale on the East Mesa that he built with a partner. He said it’s been on the market for about six months. ‘It’s been slower than I would have hoped,’ he said.”

The Arizona Daily Sun. “Local homeowner Bill Cherry grew frustrated watching his home sit empty for more than nine months while it was on the market. His huge, sprawling house nearly sold twice last fall, but the deals fell through at the last moment. As snow began to descend on his empty driveway this winter, Cherry found himself regularly paying for a plow on the hope buyers might tour his home. ‘It is a little like hemorrhaging money,’ he said.”

“He turned to Matt and Ryian Brydenthal, a husband and wife Realtor team specializing in property management. Ryian said part of the demand for renting a home in Flagstaff is that it is cheaper on a monthly basis than purchasing.”

“‘They can rent a place, for instance, in Boulder Pointe for $1,650, where to purchase the same home in the high $300,000 to $400,000 range — their payments would be a lot higher,’ Ryian said.”

“For comparison, the average monthly mortgage payment for a $380,000 home with a 30-year loan at 6.5 percent interest would be $2,400. ‘People without a large down payment are able to get more house for their money if they choose to rent,’ Matt added.”

“For Cherry, his home is still listed for sale. He said he is unwilling slash the price of his home to force a sale. ‘I won’t have a fire sale,’ he said.”

The East Valley Tribune from Arizona. “Crashing home prices have sent dozens of units in a Scottsdale luxury loft development tumbling into foreclosure over the past year and a half. Since early 2007, lenders have foreclosed on 33 of the 84 units in downtown’s Third Avenue Lofts.”

“The project’s troubles mirror a Valleywide epidemic. Tens of thousands of properties have entered the foreclosure process this year with more than 3,000 actually being foreclosed on so far in June.”

“‘People were over their heads,’ Scottsdale real estate agent John Wake said.”

“Price drops at the lofts have been severe. In one case, a 905-square-foot unit was purchased for $369,277 in 2005, then resold a year later for $950,000, according to data from the Arizona Regional MLS. The property was eventually foreclosed on and sold in April for $289,900.”

The Arizona Republic. “A celebrity chef was planning the menus, brides were negotiating room rates and 250 staffers were on the payroll. But four months before Hotel Monroe was scheduled to open, its lender went bankrupt. It’s unclear what the future holds for the hotel and an entertainment district, two high-profile downtown Phoenix projects tangled in Mortgages Ltd.’s web of legal and financial woes.”

“‘This one hurt, bad,’ said Jonathan Vento, a principal at Grace Communities. The developer is also wrapping up construction on 44 Monroe, a 34-story condo tower a block away from the Hotel Monroe.”

“Developments that have ‘end users’ are easier to finance than housing, which involves more speculation, said Larry Lazarus, a veteran Valley development attorney working on the Jackson Street project.”

“Lazarus is also an example of how the Mortgages Ltd. debacle has permeated the region’s development circle. He invested in the firm, as did his parents, friends and some former clients, the lawyer says.”

“The economic slump has all but shut off the credit tap for many commercial projects, said Anthony Sanders a professor at Arizona State University. ‘I would love to see downtown Phoenix blossom,’ the professor said. ‘Right now, it’s not a sure thing that downtown Phoenix will be like downtown Manhattan.’”

The Review Journal from Nevada. “As a time clock set by Clark County runs down toward a Tuesday deadline for the Meridian Luxury Suites to cease short-term rentals, it appears the condo property is still taking overnight guests. The county says the Meridian is running an illegal hotel operation, and has ordered it to stop.”

“Two Meridian residents said the condo project is still operating as a resort, despite the county’s warnings. ‘It’s still renting. Bellmen are walking around and driving around. All the cleaning people are going unit to unit,’ Kathleen Mannix said.”

“Her permanent home is the Meridian unit she paid for in full before moving to Las Vegas in May 2007. Mannix said no one informed her at the time of her purchase that any of the units would be leased for periods of less than 31 days.”

“According to a county report, the Meridian has 678 units but only about 12 owners living in their units.”

“Most of the 50 or so people gathered May 18 around a Meridian swimming pool were short-term paying guests. Many praised the Meridian’s rates, which ranged from $119 to $169 for a two-bedroom ’suite,’ according to Kirk Wayne of Melbourne, Fla., who was in town for a convention.”

“But not all investors want the hotel operation halted. Las Vegan Ron Chapman, who with his wife owns two Meridian units, has contacted fellow owners by e-mail in support of the hotel, to urge them to protect their investments. Both his units are in the pool for short-term rental.”

“Chapman, a real-estate agent, also has clients who bought at the Meridian as an investment.”

“Almost 6 percent of the units at the Meridian are either in foreclosure, are being sold at foreclosure or are being sold ’short,’ said Michael Mackenzie, president of the Meridian Private Residences Homeowners Association.”

“The Meridian units are now worth only about 50 cents on the dollar, Mackenzie said.”

“In his e-mail, Chapman said the Meridian fell victim to the real estate downturn. ‘It’s no secret,’ he wrote, ‘that the Las Vegas real-estate market has given back most if not all of its gains, and that homeowners’ equity …. over the past two years, including Meridan’s, has vaporized.’”

“In another indication of economic hard times, Vestin Group’s two mortgage loan real estate investment trusts announced that they are suspending their dividends because of weak financial results. The two REITs, Vestin Realty Mortgage I and II, together have $393 million in assets and typically make short-term commercial mortgage loans to developers willing to pay double-digit interest rates.”

“Under law, the REITs must pay out 90 percent of their taxable income, but the announcement indicates that the REITs’ income is being reduced by nonperforming loans, loan write-downs and the expense of defending the company in lawsuits. Analysts say realty loan problems pervade the financial markets in Southern Nevada.”

“‘The whole entire country, real estate, is having a tough time,’ said Mike Shustek, CEO of Vestin Group. Shustek said he has been investing about $40,000 a week in Vestin shares and is increasing the amount to $50,000. Over the last year, he estimated he has invested more than $2 million in the shares.”

In Business Las Vegas from Nevada. “Las Vegas’ land market has crawled to a virtual standstill and prices continue to fall. Only two of 15 properties on the block at the June 17 Bureau of Land Management auction received offers, and the winning bids reflect how far the market has fallen.”

“Nava Properties paid $252,000 for 2.5 acres of residential land near Blue Diamond Road, a price of $100,800 per acre. The going price per acre in that area two years ago was $650,000, land analysts say.”

“Also near Blue Diamond Road, Phil Davis paid more than $1.9 million for five acres of commercial property. The $385,200 per acre is well below the market price two years ago when similar land would fetch more than $1 million an acre, said Craig Cherney, head of West Coast operations of American Land Fund, a private real estate acquisition fund.”

“‘It shows me the direction we are headed,’ Cherney says.”

“In May, one residential land sale is believed to be helping set the market. DBSI, an investment group, reportedly paid $289,000 per acre for 21.7 acres zoned for 15 units an acre in Providence, Focus Property Group’s master-planned community in north-west Las Vegas.”

“That’s a dramatic swing in prices - buyers were paying more than $750,000 to $850,000 two years ago, Cherney says.”

“There are even fewer deals in the pipeline now, says Derek Rafie, CB Richard Ellis’ first vice president.”

“The land market could be facing its own foreclosure problem just like the housing sec- tor, Rafie says. Property owners are negotiating with banks to delay payments or extensions, but banks are starting to take control of properties with the hope they can sell to foreign buyers, he says.

Property owners are arguing that the market is down, and banks should wait for it to improve to recoup money rather than take it over and try and dump it. Property owners are telling the banks they know their sites best.”

“But that argument may not be winning over lenders that appear ready to take back land and sell it to get it off their books, Rafie says.”

“The poor shape of the housing market will continue to wreak havoc with land sales, Rafie says. With concerns that housing foreclosures will continue to rise into 2009, that will dampen the need for raw land to build homes.”

“‘It has been extremely slow. The only buyers looking out there are those who can purchase it heavily discounted,’ Rafie says. ‘They are taking their time to see what’s going to happen in the market. They think, ‘Why buy now when it may go down more?’”

The Salt Lake Tribune from Utah. “Zions Bank now owns the 3,000-plus acre SunCrest project atop Draper’s Traverse Ridge. A judge late Thursday afternoon approved the bank’s $25.3 million bid for the bankrupt property despite a long list of concerns from an attorney who argued that the property could garner more cash and better repay its investors.”

“Though he acknowledged that the mountaintop project’s value has likely declined in the midst of a bad housing market, creditors’ attorney David Leta argued SunCrest had surely not lost $25 million over the six months since a December 2007 appraisal, which pegged the scenic property at $51.6 million.”

“SunCrest consultant Bruce Baird testified that a foreclosure sale could mean the SunCrest Clubhouse would never open, the SunCrest Market would close shop, and it could mean the demise of the entire mountaintop project.”

“The developer’s Dallas-based bankruptcy attorney Bill Wallander said nobody is pleased that the sale did not cover the debts, but he praised property marketer Gary Nelson’s 71-day effort to attract bidders. ”

“Zions does not plan to develop the property itself, said spokesman Rob Brough. ‘It’s likely to take a bit of time for that to happen,’ Brough said. ‘But now that the judge has ruled and the sale is final, our primary objective is to get it sold. We’d like to do that as quickly as we can.’”

Bits Bucket For June 30, 2008

Please post off-topic ideas, links and Craigslist finds here.

June 29, 2008

You Can’t Sell Anything Right Now In California

Today’s Local News reports from California. “Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard. Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County.”

“The credit crunch and economic turmoil is sending bigger fish their way. ‘We’re seeing lots of people that we wouldn’t have seen before,’ said Mike Robinson, treasurer of the Collateral Loan & Secondhand Dealers Association (CLSDA) and owner of Crown Jewelry and Loan in San Diego. ‘We’re definitely seeing more affluent people coming through because I’m seeing bigger diamonds.’”

“Irene Longoria, store manager of the Oceanside Gems N’ Loans, estimates that about 30 percent of her customers are new this year. She said they’re coming from Del Mar, Solana Beach and other upscale residential areas.”

“‘We’ve had people come in with sandwich bags of jewelry. This recession is hitting everybody,’ Longoria said.”

“New customers are finding out a lot more than they bargained for at their local pawnshop. John Martin, a jewelry professional at Gems N’ Loans, which has locations in Vista and Escondido, said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium.”

“‘She said, ‘It’s a diamond,’ and I said, ‘It’s not,’ Martin recalled. ‘Then she said, ‘That son of a b… !’”

The North County Times. “Continuing a downward trend that began nearly two years ago, sales tax revenue in Escondido was 7.1 percent lower during the first three months of 2008 than it had been in the first three months of 2007.”

“Escondido and Carlsbad are more susceptible to economic downturns than most other cities, because most of their revenue comes from sales tax generated by auto dealers and megamalls. Such businesses tend to thrive in flush economic times but are typically hit hardest in a recession.”

“Councilman Daniels said the new numbers dash some hopes for a quick recovery. ‘This makes it clear to me that it’s premature to begin hoping for a recovery,’ said Daniels. ‘I think this is going to take longer than anyone expected.’”

The Daily Bulletin. “Recent home buyers may be distressed over slumping home values, but many can at least look forward to a reduced tax burden. Assessor’s offices in the Inland Valley’s three counties have been reviewing the value of properties purchased since 2004.”

“Since the peak of the market in 2006, median home prices have fallen 28 percent in the Riverside-San Bernardino-Ontario metropolitan area - from $400,700 to $287,100, according to the National Association of Realtors.”

“The San Bernardino County office will be reviewing all properties sold since Jan. 1, 2004, a total of 60,000 to 100,000 properties, said spokesman Ted Lehrer.”

“In Los Angeles County, officials have reviewed about 320,000 homes sold since July 1, 2004, and have reduced the assessed value of about 120,000 residences by an average of $73,000 each, said spokesman Robert Knowles.”

“‘We’re hoping it won’t have any impact,’ said John Gillison, deputy city manager in Rancho Cucamonga. ‘Over the last couple of years, the city has been experiencing about 11 percent growth in property-tax revenue. For next year, we only budgeted 3.5 percent. We were trying to accommodate the expected reassessment, as well as all the foreclosures and all the other issues, by ratcheting down to 3.5 percent.’”

“Grant Yee, Ontario finance director, believes the impact on the city’s property-tax revenue will be minimal because, he says, there has not been a lot of new residential development in the city since 2004. Yee said cities with more recent residential development such as Fontana or Highland might be hit harder by lowered property assessments.”

The Desert Sun. “The Riverside County assessor will reduce property taxes for more than 200,000 homeowners - more than one out of every four homes in the county - beginning July 7. It’s yet another side effect of the housing and economic slump in and outside the Coachella Valley.”

“Valley cities in recent years could rely on exponential growth in property tax revenues due to rapid development and skyrocketing home values. But city officials and tax-funded public agencies now face sobering new realities. ‘From last year to this year, it’s a substantial reduction,’ said county Assessor-Clerk-Recorder Larry Ward. The average home value has dropped about $40,000, Ward said in late April.”

“Among those expecting to get notice of a property assessed valuation reduction from the county is Cathedral City resident Joe DiMaggio, who said he’s a distant relative to the famous New York Yankees baseball player.”

“‘You can’t sell anything right now,’ he said. ‘Every year we turn around, (property tax) increases so much, and everything else is going up. Now (home equities) have devalued, and we’re still paying high taxes.’”

“Ward said the assessor’s office is getting 200 to 300 calls and e-mails per day from concerned property owners. ‘We’re trying to be very proactive,’ Ward said. ‘We’re making reductions pretty much across the board where warranted, whether we’ve gotten contact from a property owner or not.’”

“In 30 years of working for the county, Ward said he could not remember such a significant decline.”

“‘During the mid-90s, we had a similar situation, but it wasn’t as dramatic or as quick,’ he said. ‘It happened over two or three years. (The current situation) happened in the last 18 months.’”

“Overall, Riverside County projects growth of 1 percent this year, compared to nearly 17 percent growth last year. ‘You tighten your belt,’ county CEO Larry Parrish said. ‘We’ve had good times, so we’ll have an opportunity to do some of that.’”

The Fresno Bee. “Pity the large SUV. Once highly sought after for size and status, models like the Ford Expedition have seen sales drop 32% in the first five months of the year. Some dealerships…are refusing SUVs as trade-ins because they are worth so little, and the SUVs that do sell go at dirt-cheap prices.”

“A 2003 Ford Explorer that last year sold for about $16,000 or $17,000 is now priced at $9,999, said Rancho Grande Auto Center finance manager Gabe Martinez. ‘You’re getting a bargain,’ Martinez said. ‘It’s like houses. It’s a good time to buy.’”

The Modesto Bee. “At the end of each quarter, we ask the visiting editors to provide their opinions on a topic of their choosing. Bill Zoslocki: ‘Having spent most of my adult life in the real estate business (35 years), people approach me and ask, ‘What do you think will happen to real estate prices?’ My answer often centers on market variables, but I always include one caveat with my advice: ‘You always get what you pay for.’”

“First, properties in foreclosure and short sales (called REOs because real estate companies own the properties) are driving this market. If you have not noticed, we are in one of the strongest sales markets I have ever experienced. But this time it’s an historic buyers’ market.”

“‘For example, 606 homes were sold in Stanislaus County in May, and about 484 of those were REOs. That’s the highest number of sales since the booming days of September ‘05, a sellers’ market.’”

“‘Second, if the unemployment and interest rates remain largely unchanged, Stanislaus County is expected to have about 10,836 foreclosures through 2009. Estimating that 2,150 REOs have been sold, that leaves about 7,930 REO homes yet to be sold from July 2008 to July 2009.’”

“‘Since sales of REOs run about 450 to 500 a month, we would have a 16- to 18-month supply of REOs. So REOs should remain the driving force in the market until they run out in winter 2009 or spring 2010.’”

From KCBS.com. “A once little-known agency in bankrupt Vallejo is getting more recognition now. ‘We used to just have 10 phone calls each month, then it was 10 phone calls a day. Now, it’s up to 80 to 100 phone calls a month,’ said Carol Hardy, Interim Director (of) Vallejo Neighborhood Housing Services, an agency that works on preventing foreclosures.”

“Hardy says Vallejo has been particularly hard-hit by the foreclosure crisis. The majority of her clients were caught in the sub-prime lending web. Others, she says, simply fell behind on payments.”

“‘We actually had someone who called yesterday at 9 a.m., and her house was going on the court steps to be auctioned off at 10 a.m. That’s too late,’ said Hardy.”

The Bakersfield Californian. “Eight months after winning a house in a charity raffle, Carol Williams says the whole experience was fun but expensive. The ticket netted her a house in the northeast’s Juliana’s Garden development. At the time, the brand new house was valued at $345,000.”

“And that meant meeting some hefty tax obligations - $111,000 worth - before she could claim the deed. After the excitement of having her name called, it was time for the 57-year-old retiree to figure out how to make the windfall work financially.”

“Williams was lucky to get loans from friends for the taxes, she said. She briefly considered moving into the house she won. ‘I love the house,’ she said. ‘The kitchen was gorgeous. The master bedroom - you couldn’t ask for anything bigger.’”

“But moving would have meant homeowners association dues, new blinds and other overhead costs. In the end, she kept the television that came with the house and decided to stay put in her modest south Bakersfield home.”

“Deciding to sell the house proved tricky, because some buyers knew she had won a raffle and assumed she hadn’t paid a dime for the house. She went into escrow twice with one unsuccessful would-be buyer. Williams finally sold the house last month for $225,000, records show. She made a little profit.”

“‘People just want you to give it away,’ Williams said.”

People Were Drinking The Kool-Aid In Florida

The Tampa Tribune reports from Florida. “The three-bedroom, 1,484-square-foot ranch house needed some work, but it had a big family room and a large back yard. Most important: Javier and Esmeralda Arroyo qualified for a loan on the $166,900 home…after being turned down for loans five times in a year. About a year later, the excitement started to fizzle.”

“The Arroyos couldn’t have known how bad their timing was when they signed mortgage documents in July 2006 for the home in Plant City. That month was the absolute height of the local housing market. In August, prices in the Tampa Bay area started falling, and they haven’t stopped.”

“The couple were notified in December that the interest rate on their mortgage will adjust in September. The Arroyos, who speak primarily Spanish, say they didn’t understand they were signing up for an adjustable-rate mortgage.”

“‘I guess that’s why we qualified,’ Javier said, shaking his head.”

“Robert Ramirez awoke in the middle of the night to clanging metal and a rumbling moving truck in the back yard next door. Evicted neighbors loaded their belongings and fled the two-story stucco home.”

“They left doors and windows open, and trash and debris strewn across the lawn. It has been eight weeks, and no one has shown up to take care of it.”

“‘This used to be a really nice, close-knit community,’ Ramirez said. ‘Now, with that house here, there’s no way I could sell my house. I’m stuck, and my property value is falling.’”

“The effects of the foreclosure wave can be seen just inside the entrance to Lakeside. There are 16 homes with for-sale signs, and rent signs line streets. A pile of household trash and an old mattress are stacked at the curb in front of one house, the molding evidence of homeowners vacating in a hurry.”

“Signs advertise homes as ‘pre-foreclosure’ and ’short-sale’ deals.”

“Such scenes already frighten potential buyers who come looking for a deal on their next home. ‘We get a couple streets into the neighborhood, and the client asks me to turn the car around,’ said Frank Monte of Monte Real Estate.”

“When Ramirez bought his home in 2004, he said, all of his neighbors knew one another. Life was good for about two years. Then the housing market tanked as many of his neighbors absorbed skyrocketing payments from adjusting mortgage rates and rising insurance premiums. To avoid foreclosure, some sold their homes in fire sales. Others walked away.”

“The house next door to Ramirez’s went into foreclosure in December. Renters moved in shortly thereafter. Two weeks before they left in the night, he says, he found them stealing water from his garden hose.”

“Ramirez paid $140,000 for his house and recently had it appraised so he could refinance for a better interest rate. He was turned down.”

“‘The guy from the bank said I’m about $20,000 in the hole,’ Ramirez said. ‘He said I’d probably be OK if the house next door didn’t look so bad.’”

“The Tampa-St. Petersburg-Clearwater area had 4,773 foreclosure filings in May alone. That was up 15 percent from April and 29 percent from the same month last year.”

“Along with the construction of homes, the foreclosure spike is contributing to a housing glut that has depressed prices. The median sales price in the area was $176,100 in May, down 16 percent from $209,300 a year earlier.”

“The Greater Tampa Association of Realtors says there is a 15-month inventory of homes on the market in this area, compared with one to two months in 2004-05. One key to a housing turnaround would involve removing a big chunk of the 19,800 listings on the local market.”

“Returning homes to mint condition and targeting an audience of family owners and occupiers is a trend that has developed in recent years, says Robert Klein, CEO of the nation’s largest mortgage field services company.”

“‘You used to put signs out that would say ‘REO Foreclosure,’ hinting, ‘Hey, come on in and get a bargain on me,’ Klein says. ‘We’re now well aware that the answer is not simply to sell to a flipper. You sell to a flipper right now, and in three years it’s right back where it was.’”

The Herald Tribune. “Sarasota attorney John Yanchek has been found guilty by a Florida Bar referee of violating seven Bar rules, including engagement in dishonesty, fraud, deceit or misrepresentation.”

“Yanchek is best known for assisting real estate investor Neal Mohammad Husani in a series of real estate deals from 2004 to 2006 in which land prices were vastly inflated, enabling Husani and his partners to obtain tens of millions of dollars in mortgage loans.”

“Testifying on his own behalf, Yanchek said his misdeeds occurred during a short period of time when the real estate world was booming and he became overburdened with work.”

“‘It was just me and two secretaries,’ Yanchek said. ‘I couldn’t keep up with it all. That probably had something to do with it.’”

“Yanchek added that by signing letters saying he was in possession of escrow money he did not have, he ‘destroyed’ his life. ‘I’ve lost almost my entire practice,’ Yanchek said. ‘If there was a way for me to erase the past two and a half years, I would.’”

“Since March, the number of homes listed for sale in the Sarasota MLS has dropped by 12 percent, or nearly a thousand homes. That still leaves more than 7,000 homes on the market, about three times the normal number.”

“As recently as December 2007, however, the Sarasota MLS showed a glut of about 140 weeks of inventory on hand. As of early June, that figure had dropped to 82 weeks and kept falling.”

“Helping fuel sales is more realistic pricing on the part of sellers, who appear to be getting the message that the boom is dead and buried. Buyers are looking, but many are looking for deals, and all are being discriminating about price. Adding to the mix is a wave of foreclosure sales that are further bringing prices down.”

“In 1994, the median price in Sarasota-Bradenton was just $94,000. Two years later, it crossed the $100,000 threshold, rising to $102,000. By 2000, it had grown to $138,500. The year-end median sales price in 2003 was $189,700, according to Florida Association of Realtors data.”

“By the end of 2004, it had skyrocketed another 29 percent to $244,100. The bubble had arrived.”

“The biggest jump was yet to come. In 2005, the median price rose 32 percent to $322,700.”

“‘It wasn’t a lot different than the dot-com bust,’ said Jody Hudgins, executive VP of First National Bank’s Florida region. ‘It was greed; it was unsustainable. You had easy, irresponsible mortgage money leading to an inflated demand, and you had people who were able to buy and sell their homes for profit without even trying. People were drinking the Kool-Aid.’”

The News Press. “While a slumbering economy has only exacerbated the problem of a housing market riddled with oversupply, the byproduct for golfers has been one of the most attractive golf summers in recent memory.”

“Magnolia Landing, which opened in February 2007, did not advertise for public play in its first summer of business. This summer, though, like many other clubs, it’s taking outside play for as little as $30 while also waiving its $5,000 membership fee in 2008 for home buyers.”

“‘We were trying to sell exclusivity, but it’s hard to sell people on a notion if they haven’t seen the product,’ said Magnolia Landing general manager Jim Whitmore. ‘For us it’s definitely about exposure. We are real estate driven as opposed to membership or golf-revenue driven. Our goal is to sell homes.’”

“A seasonal resident from Michigan, Rollin Bondar has seen firsthand the effects of the slumping economy in the Detroit area.”

“‘I have so many people who have gone out of business it’s scary,’ said Bondar, who lives in Burnt Store Marina but is looking to move if he can sell his condominium. ‘The economy is terrible up here. It’s affected the golf. The country club I belong to here is probably one of the finest in the state. It’s gone from $50,000 to join (to) $5,000.’”

“Back in Florida, he’s seeing the same results of a slowed housing market and glut of golf course communities.”

“‘The economy has affected everything,’ said Bondar, who similarly bounced around a half-dozen private courses in the area before settling on Magnolia Landing to buy a membership. ‘The price was right.’”

“A growing sense of unease, caused by fallout from the current economic slump and the struggle to make ends meet, is seeping into the middle class. In Florida, the uneasiness can be seen in the June drop in the state monthly consumer confidence index to its lowest level. The previous low was in December 1991.”

“Dawn Blauvelt of south Fort Myers feels the uneasiness. ‘My husband and I are in the construction industry and therefore we are affected a lot by the economy the way it is, and have had to make drastic lifestyle changes in order to survive,’ she said.”

“The couple’s business is surviving, but they cut their employees from 130 to 20. ‘You almost turn numb over time,’ she said. ‘It was a big blow. When we went south we went fast.’”

“They still have their home. But they sold extra vehicles like a car and boat. They took their three children out of day care. Blauvelt became a stay-at-home mom, because it’s more economical. ‘We plan to do whatever it takes,’ she said.”

One positive aspect is that when people share a universal cause or condition, their depression and stress can be eased by the knowledge that they’re all in this together, said Dr. Frederick Schaerf, an area psychiatrist.”

“That helps Blauvelt. ‘To know we’re not alone - it’s comforting,’ she said. ‘It’s nothing we did wrong. It’s been out of our control.’”

From WINK News. “Joseph Cardona has lived in his Habitat home for the past three years. ‘It’s a great deal. The house is very comfortable,’ Cardona said.”

“Cardona helped build his own Habitat home, as well as the Habitat house next door. That home is now empty because its in foreclosure. ‘It’s pretty bad,’ Trisha Goins, Habitat for Humanity of Lee County said.”

“Goins says tenants are losing their jobs and not paying their mortgage, so the agency has no other choice but to foreclose on the owners. The price of a Habitat home is in the low one hundred thousands. The monthly mortgage rate is 30% of the owner’s yearly income.”

“In exchange for the hours worked, the owners get a 0% interest mortgage, but Goins say even that has become tough to pay. ‘It’s very scary to see that families are put in a situation where they can’t even pay on a zero interest mortgage,’ Goins said.”

The News Journal. “They offer potentially lucrative returns. But sales of tax certificates — property liens for late taxes — have dragged this year in Volusia and Flagler counties.”

“In Volusia County, more than 2,200 certificates were unsold after two online sales. In 2007, a single sale left only two of 14,911 certificates unclaimed.”

“‘It’s a trend that’s not just with Volusia County,’ said Sally Bruner, Volusia County’s revenue tax manager, of this year’s number. ‘It’s statewide.’”

“Flagler County Tax Collector Suzanne Johnston said she thought large-scale institutional investors had less money to spend this year and were less likely to buy vacant parcels. In Seminole County, Tax Collector Ray Valdes said smaller investors hadn’t been prepared to move into the vacuum created when big players came in with less cash.”

“Still, although almost 1,000 certificates were unclaimed after the county’s first sale, all but a dozen or so were bought in the second, he said. ‘This is my 20th year,’ Valdes said. ‘We’ve never had to do more than one sale.’”

“Roseann Javurek, a Daytona Beach-based Realtor who has been investing in tax certificates for years with her husband, said returns appear to have slowed and investors are leery.”

“‘I still think it’s a great investment, but I think the economy truly has taken its toll,’ she said. ‘I don’t think people have the extra income, if you will, or don’t want to spend the extra income on certificates, even though they are a good return.’”

The Destin Log. “Last week, Destin developer Peter Bos sat down for an interview with the editorial board of the Northwest Florida Daily News. Over the past three decades, Bos has been at the center of a number of upscale developments on the Emerald Coast.”

“BOS: ‘I think we’ve had some horrible growth in the last 25 years. I think what happened was this spike in demand, where a second home became everybody’s entitlement, and financing was readily available.’”

“‘And we had an explosive mark at rental, too, which helped subsidize the carrying cost of these homes for people. I think we ended up with a lot of people developing who really shouldn’t have been in the development business.’”

“‘If you could pre-sell something, and it’s all sold, the next decision after the sales were done was to sit down and decide what you could take out of the building, because it wasn’t promised, because it would fall right to the bottom line. ‘We didn’t promise the pool furniture - outta here. We didn’t promise them tile in the hallways - outta here.’”

“‘We ended up with a whole lot of development that in my opinion was extremely low-quality development.’”

“DN: Real estate sales along the Emerald Coast have plummeted from where they were in 2004 and 2005…Has it been as tough for you as it has for everyone else in real estate?”

“BOS: ‘I think that whenever everyone stopped smoking dope or smelling ether or whatever was going on driving 30 or 40 percent appreciation numbers, all of us knew that would not sustain itself.’”

“‘However, we did not anticipate the pullback and the speed with which it pulled back. We were all making changes and adjusting, but we never anticipated the speed at which everything would literally stop. It didn’t slow down; it stopped.’”

“DAILY NEWS: Where do you foresee the trough, the point where (real estate) hits bottom or starts going north?”

“BOS: ‘I need to put this into context. If you asked me last year, I would have thought we’d already been there. I was absolutely convinced of it. Now that I’ve destroyed my credibility on predicting, it’s my opinion there’s a lot of signs out there that we’re already there.’”

“‘I don’t think ‘there’ - meaning at the trough - is a constant, though, across the board. I think there are products out in the marketplace that are going to be very difficult to sell going forward and I don’t know how low they go, because their only way to compete is price.’”

Local Market Observations!

What do you see in your housing market this weekend? Builder incentives? “D.R. Horton’s Las Vegas Division will hold a ‘100 Under 200 Sale’ June 28 and 29. During the weekend event, the builder will offer 100 new homes priced below $200,000 with special incentives. Qualified buyers also may be eligible to participate in the FHA Nehemiah Down Payment Assistance program.”

“All Square neighborhoods are gated and feature floor plans from 1,071 to 1,400 square feet with two-car garages. Pricing begins from the mid-$170,000s. D.R. Horton’s Las Vegas division has an inventory of more than 100 homes ready for immediate move-in.”

Halted projects? “Sales agents for a large metro Atlanta homebuilder, Robert Harris Homes, were told Thursday to head home. Robert Harris Homes says on its Web site that Builder Magazine recognized the company in 2004 as one of the fastest-growing home builders. Prior to starting his Georgia business, founder Robert Harris had built more than 1,000 homes on the west coast of Florida, the company says.”

“‘I got an e-mail to pack up my stuff and leave,’ said Don Silverberg, a broker at the Arbor Walk subdivision in Acworth, one of about 18 local communities where Robert Harris Homes has built houses. ‘I’m going to take a little vacation and decide what to do.’”

Or nervous buyers? “It took Tim and Nikki Hartin 30 days to buy their first home, a duplex in south Harrisonburg. For the Hartins, who have been married for two years and moved from Staunton, being first-time homebuyers put them in an advantageous position given today’s housing market, said Keith May, owner of KlineMay Realty. ‘The first-time buyer is basically king of the market right now,’ May said.”

“A large part of determining realistic prices and financing comes from a real estate agent’s guidance, both May and Hartin said. The guidance was a ‘hallmark’ of the buying experience for the Hartins. ‘We came in knowing hardly anything,’ Hartin said.”

“‘I think the moment when we were putting the offer down we were the most nervous,’ Hartin said. ‘We knew that if they accepted it, that was it: We were buying a house.’”

Or protests? “The 40 or so protesters marching through East Liberty yesterday morning traveled only five blocks. But they’re hoping that the effort will be a step toward stopping the foreclosures that are throwing people out of their homes.”

“‘When he got the loan three years ago, it was an adjustable rate mortgage and they knew that and they were told it might go up,’ said ACORN spokeswoman Jennifer England. ‘But they were also told it might go down. And they expected [any change] would be within a few percentage points.’”

“The mortgage loan — taken out with First Franklin Bank, which was then owned by National City — originally cost the Abbotts $340 a month. ‘Within three years, it’s over $1,200 a month, not including taxes and fees,’ Ms. England said. ‘And he makes about $2,000 a month.’”

Lower prices? “Single-family homes off the island of Montreal are becoming harder to sell, in part because of high gas prices, and some homeowners are throwing in free cars and SUVs to entice potential buyers.”

“‘Off-island houses, like in Hudson or in the swank neighbourhoods of St. Lazare, are not selling,’ said Montreal real estate agent Laurie MacDonald.”

“Off-island home owner Dan Loiselle said his 4,000-square-foot home in St. Lazare, complete with an in-ground pool, has been on the market since 2005. The price has fallen to $795,000 from $925,000.”

“‘I’m not giving away a car. If someone can afford an $800,000 house, I don’t think a used car will make a big difference. But I have included a $2,500 gas card on top of the normal commission for the agent who sells my house,’ Loiselle said.”

“‘There was a big hoopla when these houses were first built’ and prices were ‘ridiculous,’ Middleton said. ‘The new prices just reflect market value, not rising gas prices.’”

“‘If we’re having trouble selling, it’s because less people are buying homes priced above half a million,’ Middleton said. ‘Many new development projects are building houses (priced) between $350,000 and $400,000.’”

Bits Bucket For June 29, 2008

Please post off-topic ideas, links and Craigslist finds here.

June 28, 2008

Everybody Got It Wrong In California

The San Diego Business Journal reports from California. “LandAmerica Financial Group Inc., the Richmond, Va.-based title company issued an internal memo to its San Diego employees June 12, saying it intends to reduce operations here, according to Peter Habenicht, VP of communications for LandAmerica. ‘The real estate market … presents a number of challenges,’ he said. ‘This is a down cycle, and we all understand down cycles are part of the industry.’”

“‘If you look at employment in the real estate sector of the economy, it’s down. The title companies would be part of that,’ said Alan Gin, a University of San Diego economist.”

“Coldwell Banker Real Estate LLC has reduced its metro San Diego work staff 38 percent from 300 agents in 2005 to 189 agents today, says Liz Piccolomini, manager of Coldwell Banker’s downtown and Mission Valley offices. ‘I think that everyone is curbing because a lot of agents can’t afford to stay in the business.’”

“To make ends meet, title companies are trying to pick up contracts with banks that are selling foreclosed properties, also known as real estate owned, or REO, properties.”

“‘That’s keeping us going,’ said says Lindsay Riddle, membership chair of the San Diego County Escrow Association, noting that foreclosures represent about 80 percent of her business. ‘That’s pretty much all there is right now.’”

“‘I think we had 80 refinance openings a month,’ said Riddle. ‘It’s gone down to one or two a month now. The refinance business … has been eliminated.’”

The San Gabriel Valley Tribune. “Coldwell Banker’s office at 300 W. Colorado Blvd. in Old Pasadena is preparing to close next month, and another location in La Ca ada Flintridge will be reduced to a satellite office, a company official said.”

“James Joseph, owner of Century 21 Ambassador in Whittier and Brea and Coldwell Banker Ambassador in Whittier, said his business has already absorbed 16 other real estate operations that have closed.”

“‘Everyone is closing because there aren’t enough transactions to support the overhead that offices have,’ he said. ‘The mood among Realtors is that this happened a lot faster and is a lot worse than people thought.’”

“Jerry Jervis, who owns Century 21 Jervis & Associates, closed down his Brea location early this year and moved most of the employees to another La Habra office.”

“Jervis said his company’s real estate transactions have fallen off by about 50 percent, a figure he says is about the norm for most real estate agencies in today’s market.”

“‘Right now we’re really cranking … but a lot of that comes from selling foreclosures,’ he said.”

“IndyMac Bancorp Inc. appeared to edge closer to a meltdown Friday as its stock fell to 75 cents a share amid concerns that a collapse could leave the Pasadena-based bank’s borrowers and depositors in the lurch.”

” ‘If the economy erodes further from here it will probably get worse for them,’ said Jason Arnold, an equity analyst. ‘I wouldn’t rule out receivership. My gut feeling is that they won’t pull themselves out of this unless something changes dramatically over the near term.’”

The Daily Breeze. “The South Bay’s real estate market had been relatively insulated from the worst of the region’s downturn. That changed in the past two months, with the median price of a single-family home sold in May at $675,000, down 6.6 percent over May of last year, according to the South Bay Association of Realtors.”

“In April, the median price dropped 10.6 percent, year over year, to $625,000, the association said.”

“‘The downturn in the real estate market over the past 18 months has hit many areas of Los Angeles County very hard,’ said Carol Olney, the association’s president, in a statement. ‘As has been the case in other declining markets, real estate in the South Bay remained somewhat insulated from the depreciation experienced in these other areas. This changed, however, over the past two months.’”

“The sales volume also dropped significantly. The median price for a single-family home was down 22.8 percent year over year in May, with an annual drop of 36.3 percent in April, the report says.”

The County Sun. “Last time real estate agent Linda Brechtel checked, asking someone to leave their home was not in her job description. But that’s just the position she found herself in when showing a recently foreclosed house in Ontario.”

“‘I have never done that before,’ said the agent in Corona. ‘But they were really nice about it.’”

“The North Baker Avenue home is owned by the bank now and has been on the market for a week at $207,000. And it’s not alone. Brechtel said that in a one-mile radius of the home there are 18 other bank-owned properties, many of which are short sales in the price range of $175,000 to $225,000.”

“‘That’s the trend now, short sales,’ she said. ‘Before foreclosing, the owner is asking the bank to take less money than what’s owed or the loan amount. If this doesn’t work the home is foreclosed.’”

From ABC 7.com. “‘Home swapping’ is a novel way for homeowners to get out of the home they’re living in without taking a financial hit on declining property values. Jerry Stussman is a longtime resident of Southern California and a veteran homeowner, swapped (a) home he owned in Thousand Oaks for a home in Virginia that he uses as a rental property. Now he’s considering swapping the Virginia home for another property, either in California or in another state.”

“Jerry took me to the home he bought about a year ago in Westlake Village. He was hoping to keep it, but since the real estate market has been on a downward spiral since, he’s changed his original plan. ‘We’ve got it rented now, the market has crashed on it, and because of that, we’ll probably swap it,’ said Sussman.”

From KSBY.com. “The California Association of Realtors shows May’s median price in North Santa Barbara County fell to $297,000. That is down 32.8 percent. However, sales volume soared 85 percent from May 2007.”

“‘For Sale’ signs are a familiar sight in Santa Maria, and as sellers struggle to survive in the current housing market, first-time buyers like Mark Ghenu are the silver lining. ‘We were in the market for a house. As the housing market crashed, it made it feasible for us to buy a house,’ Ghenu said.”

“The median price in San Luis Obispo County was just above $442,000, that is down 23.7 percent from May of last year. The number of sales was up more than seven percent. In South Santa Barbara County, where the median price was $1.2 million, down nearly 11 percent from May of last year. Sales volume there dropped by almost 17 percent.”

The Santa Cruz Sentinel. “Don’t expect the housing market to recover this year. Robert Kleinhenz, deputy chief economist for the California Association of Realtors, forecasts a turnaround next spring. He made that prediction Friday, speaking to 65 people at a luncheon sponsored by the Santa Cruz Association of Realtors.”

“Statewide, the number of sales has increased since late last year, but Kleinhenz doesn’t want to use the word ‘recovery’ until prices turn around. His figures show a 42 percent price drop in Watsonville from a year ago and 15 percent declines in Santa Cruz and Scotts Valley.”

“Many homeowners got mortgages they couldn’t afford. They didn’t make enough money to cover the payments, but they bought houses that were beyond their means using loans that didn’t require proof of income.”

“Analysts who expected a quick recovery were overly optimistic. ‘Everybody got it wrong,’ Kleinhenz said.”

“As for mortgages where initial payments don’t cover the cost, and debt grows rather than shrinks, Kleinhenz predicts that by the time borrowers must make higher payments, the economy will have improved, home prices will have risen and refinancing will be possible.”

The Oakland Tribune. “In one 1½-mile swath of Oakland surrounding Arroyo Viejo Park, residents have counted more than 150 houses and apartments in foreclosure. Many are abandoned and locked up. Many have foot-high grass growing around them and junk mail piling up at their doorsteps. Some have become havens for drug dealers.”

“‘We want to reclaim our neighborhood,’ said Annie McKinzie, a resident of Krause Avenue between 74th and 75th avenues, whose neatly landscaped house faces three foreclosed or for-sale homes.”

“One of these houses has had four sets of tenants in the past year, McKinzie said, but she added that some of the people may just have been using it.”

“In some areas, such as parts of 85th and 86th avenues, three or more foreclosed homes can be found in a single block. People living in this neighborhood used to find it difficult to obtain mortgages. Then, in the early to mid-2000s, mortgage lenders became very willing to lend.”

The Marin Independent Journal. “Some Marin real estate agents are turning to a higher power amid slumping home sales. The Marin Association of Realtors reports brisk sales of small statues of St. Joseph, the patron saint of real estate, since the association started selling the religious figurine at its San Rafael store a month ago.”

“Edward Segal, the agency’s executive officer, said the agency, which has sold 15 figurines, is believed to be the first realty association in the country to sell the item.”

“Realtor Susan Gordon of Pacific Union is a believer. Gordon, an agent for 18 years, bought statues on a whim with fellow agent Cathy Youngling a few weeks back. A day after the duo buried one at a Mill Valley home that had been on the market for six months, a buyer was found at an open house. Those buyers closed escrow this week.”

“‘We figured, let’s just give it a try. I mean what have we got to lose?’ Gordon said. ‘After that, we went back and bought four more. I couldn’t believe it that (the realty association) had these little statues here.’”

“Dianne Burford, who has worked at the Mission San Rafael Arcangel gift shop for two years, said the figurines are big sellers. ‘Real estate people will come in and buy four at a time,’ she said. ‘Other folks that have their homes up for sale will come up and buy them.’”

“The California Association of Realtors also sells St. Josephs statues through its online store. The association Web site notes, ‘In a changing market, Realtors can use all the help they can get to sell listings.’”

Buyers In A Sharply Declining Market

Readers suggested a topic on where the housing bust is headed. “Now that we may finally be heading into an economy-wide recession, will it become difficult for borrowers with good credit and a down payment to buy even if housing prices drop to affordable levels? In NYC and places like it, where land constraints limited overbuilding, affordable housing will attract occupants. But in places where supply boomed (or population is falling) prices might get really, really low.”

“Think of the 1940s and 1950s, when incomes were constrained and new housing boomed in the suburbs. It was possible to pay almost nothing for housing in many city and small town locations. This will raise some interesting political issues in the suburbs and exurbs. You’ll have less well off people able to live where less well off people were zoned out previously.”

A reply. “This happened in the last SoCal bust. I personally knew a number of ordinary engineers who were able to buy houses in Palos Verdes and Manhattan Beach without stretching too hard in the mid 1990s.”

One observed, “In the town of Bakersfield, I have been purchasing my house for 16 years, and the neighborhood is changing. All the homes have at least 4 bedrooms. I live in a cul-de-sac with only 6 homes, and two of them have lots of tenants (mostly field workers) and one is in foreclosure with squatters in it.”

“The neighbor across the street is trying to sell his home, it was put up for sale last week. I really feel sorry for him if he decides to leave it empty and move before it sells. The town is slowing down, you can see it all around.”

Another point, “The pace of sales has been seen to rapidly increase during stock market sell offs. I submit that increasing sales and accelerating price declines can go hand-in-hand under certain market conditions.”

One replied, “Couldn’t that happen if potential sellers finally realize bubble prices aren’t coming back and all head for the exits at the same time? You still need buyers to make this happen. How many would buy into a sharply declining market and would have the means to do so if so inclined?”

Another answered, “There are always buyers in a sharply declining market. They get a house for 15% below asking price and they thing they got a steal.”

“How quickly they find out that the 15% cushion of so called equity can evaporate in a heartbeat. They also remember that the house they just bought for 250k that they think is 15% below market once sold for 500k. They pull rib cage muscles from patting themselves on the back.”

The New York Times. “The euphoria is past. The era of rampant house flipping is gone. What was once a seemingly unstoppable climb in home prices has given way to a plunge in value in many areas. Yet, there is a bit of good news: This might be the right time to find a bargain, especially for buyers approaching their retirement years who can afford to take their time.”

“Of course, anyone looking to buy can also find good reasons to take a wait-and-see attitude, like the fact that good deals may not exist in every location, and no one really knows if prices will continue to decline.”

“‘It’s like missing the top of the market - it’s the same thing with the bottom,’ said Maurice Veissi, president of Veissi and Associates in Miami.”

“Franke Watson II, a 69-year-old retiree from New Orleans, purchased a home in Prescott, Ariz., in February for more than $100,000 below its initial list price.”

“‘The house had originally been listed for $430,000,’ he said. ‘When I looked at it, it was $349,000. I offered them $300,000 and we finally settled at $309,000.’”

“When he relocated to Prescott last July he decided to rent at first rather than buy. ‘I didn’t think the real estate market was where I wanted it to be,’ he explained. He finally purchased a three-bedroom brick ranch once prices came down to what he expected to pay.”

“Mercedes Gutierrez and her husband are looking for a second home where they will eventually retire. They currently live with their 9-year-old daughter in Cooper City, Fla., but would like to buy a home in the Keys to use as a weekend getaway until Mr. Gutierrez retires in a few years.”

“But so far, prices haven’t fallen into the $500,000 to $520,000 range they hope to pay for a three-bedroom home on the ocean side of the Keys — ideally on a canal, since Mr. Gutierrez plans to spend some of his free time fishing.”

“‘We’ve found a few things, but at the same time we’re not in a hurry because we have time on our side,’ Ms. Gutierrez said. ‘We’re playing the waiting game to see how much people will drop their prices.’”

From Business Week. “When home values fall low enough, hard-pressed homeowners become less able or less willing to keep paying their mortgages. That forces lenders to repossess homes and then dump them back on the market at fire-sale prices, which depresses prices further and leads to even more foreclosures. That process has already started in parts of Arizona, California, Florida, and Nevada.”

“The drop in those markets ‘is being fueled with jet fuel,’ says James L. Smith, executive VP for portfolio services at Fiserv.”

“His unit works with borrowers to restructure delinquent mortgage loans. Smith worries that instead of settling at a reasonable price level, ‘we’re going to blow past [it] without even looking back.’”

“Some economists and politicians say that the effects of the housing bust will be modest and that low prices will attract new buyers. ‘We’re seeing people go into the market that weren’t there before,’ says Alfred A. DelliBovi, president of the Federal Home Loan Bank of New York.”

“Still, the housing optimists have systematically misjudged the market. Some became convinced that the huge runup was justified by fundamentals such as population growth, rising incomes, and land scarcity. And because sharp national housing price declines are so rare in U.S. history, analysts assumed that prices would, at worst, flatten out for a few years.”

“What they forgot was that markets can overshoot on the downside just as easily as on the upside, with both financial and psychological forces feeding the decline.”

“Naturally, this state of affairs is working out for buyers with ready down payments, such as George Farraye, (who) just paid $359,000 for a 3,500-square-foot house in Murrieta, Calif., that sold for $630,000 in 2006. Farraye says tighter lending standards ’shook out all the riffraff.’”

“At the same time, the fall in house prices is so precipitous that it is changing homeowner psychology, eroding the long-held taboo against walking away from a home. In hard-hit markets such as Las Vegas and Phoenix, many homeowners are beginning to conclude that their home purchase comes with a ‘put option’-the right to hand the keys back to the lender if things don’t work out.”

“Fiserv’s Smith, whose unit began handling loan modifications for Countrywide Home Loans in May, attributes the rise in walkaways to ‘the ticked-off factor.’ Even homeowners with high credit scores feel cheated that they’re paying more than they can afford for a house that is worth far less than the debt on it, he says.”

“Steve Hawks, owner of (a) real estate agency in Henderson, Nev., says he has been flooded with calls from people interested in ‘buying and bailing’-that is, buying an additional house while their credit is still good, then walking away from the old one unless they can cut a favorable deal with the lender.”

“Kim, a Las Vegas bartender, says she and her husband are about to purchase another house in Las Vegas, move into it, and then try to get the lender on their old house to erase their mortgage for whatever they manage to sell the place for-a so-called short sale.”

“Says Kim: ‘I’m going to lose the house no matter what. I just want to make sure my family’s set, taken care of.’”

Bits Bucket For June 28, 2008

Please post off-topic ideas, links and Craigslist finds here.

June 27, 2008

A Louder Echo

It’s Friday desk clearing time for this blogger. “Columbia home sales have dropped significantly from May of last year. Amy Hamby and her husband put their home up for sale last month. They have had plenty of interest, but say potential buyers don’t seem ready to plunge into an uncertain housing market. ‘The problem seems to be that they either aren’t qualified for a loan and so they can’t buy the house,’ says Hamby, ‘Or there seems to be some anxiety about investing the money into a home at this time.’”

“While agent Bettye Lay of Carolina Towne Realty said her phone is not ringing as much in 2008, she doesn’t think the sky is falling, either.”

“‘I feel that many buyers watching the news feel that prices should drop more dramatically than they have since the ‘bubble’ has burst,’ she said. ‘However, I don’t feel that Burke County saw the kind of upswing in home prices that other areas of the country saw; therefore, we are definitely not going to see the downturn in prices.’”

“‘Everyone has an expectation,’ said Mike Watts with GMAC Carolina Realty. ‘They live in a home for a couple of years and they want to make the big check when it is time to sell. Say they live in a house for five years. Instead of making $100,000, how about $50,000 or $20,000? That still is a respectable appreciation.’”

“During April and May, North Carolina’s construction labor force did something it had not done in seven years: It shrank two months in a row after a record high. ‘It’s abysmal in the residential side, and employment is falling on the commercial side as well,’ says Tony Plath, a UNC-Charlotte professor.”

“Workers from those harder-hit parts of the country are flowing to North Carolina, looking for work. The problem: Once they get here, they are finding fewer available jobs. ‘Other parts of the country haven’t gotten the memo yet,’ Plath says.”

“Mississippi likely will dodge a mortgage bust because it did not benefit from the housing boom of places such as Florida and California, Federal Reserve Bank representatives said.”

“The Mortgage Bankers Association report showed nearly 10 percent of mortgages in Mississippi were delinquent in the first quarter of 2008. ‘(But now) be glad you’re not in Florida, because that’s a disaster,’ said said Bill Emmons, a senior economist with the Federal Reserve Bank of St. Louis, which serves northern Mississippi.”

“Luxury condos have become a common sight in Austin, but recent statistics suggest that the city’s realtors may be having trouble finding buyers.

“‘Austin real estate has really slowed down in the last few months,’ said Sam Carroll, a broker at RE/MAX Downtown Austin. ‘This may be especially surprising because it’s supposed to be the busiest time of the year.’”

“Carroll said that in many cases the only way realtors can sell condominiums and homes within a reasonable time period is to lower the price. ‘If you have a time line, lowering prices is just about the only thing you can do right now,’ he said.”

“A 13 percent increase in existing home sales in May in the Battle Creek area dwarfed the 2 percent sales rise nationally. Low-end home sales more than doubled, to 139 so far this year from 61 by this time in 2007. And many of those homes, said Realtor Joy Brown, are foreclosure sales.”

“‘I had somebody actually buy a foreclosure on their credit card,’ she said.”

“Austin and Viola Lee bought their two-bedroom condo more than three years ago. Last year, they tried to upgrade, but took it off the market after four months. ‘Little did we know the market was going to continue to be on the down spiral,’ said Austin.”

“A month ago they tried again, and so far, no showings. Two weeks ago they had their third child and need to sell– fast.”

“‘Right now its definitely a buyer’s market,’ said Jeff Boals, a Colorado springs realtor for fourteen years. He says homes used to sell in less than sixty days. Now the average is about a hundred, largely because of foreclosures. Realtors who work with ’short sales’ are as busy as he used to be– the consequences of relaxed standards.”

“‘Everybody, no matter who you are or what you did or how much you made, you qualified to buy a house,’ said Boals.”

“Kent families are feeling the repossession squeeze. Canterbury homeowners are bearing the biggest burden, with a 20 per cent increase in orders compared to last year. Peter Tullett, advice work supervisor Citizens Advice Bureau, added that the number of mortgage repossession cases being brought before Tunbridge Wells County Court was also increasing, and that the credit crunch was not just affecting social housing or low income tenants.”

“He said: ‘We can expect the cards to start falling in the next few months. People have been putting off the day of reckoning for a while now, hoping that house prices will increase for ever.’”

“A homeowner who is losing £12,000-a-month while trying to sell his £1million property hopes to beat the credit crunch by selling it in a raffle. Brian Wilshaw is selling 46,000 tickets at £25 each for a chance to win his 11.5 acre Oldborough Retreat.”

“Brian said: ‘This has been our dream home but now we are retiring we want to let ordinary people have the chance of a lifetime to live here. Rising house and land prices have put property like this one way out of the reach of most people.’”

“Brian said: ‘It’s well worth £25 a ticket. At 46,000-to-one our odds are a lot better than winning the Lottery. We don’t want to make any money out of this. We just want what it’s worth.’”

“Saipan’s ongoing economic downturn is prompting scores of local landlords to drop prices in a bid to stand out among the hundreds of starkly vacant rental properties available on the island. The decline in rental prices is visible every day in housing advertisements.”

“‘Rents for everything, commercial property and apartments, are going down,’ one informed real estate expert on the island said, speaking on condition of anonymity. ‘All of these factors combined have meant economic suicide.’”

“In spite of the price drop, the prospects in Saipan’s real estate markets still have some rental agents and brokers optimistic that conditions could attract new investors banking that the economy will later revive. ‘Now is the right time for people who have the means and the money and want to put in the investment,’ said Mustafa Shakir, chief of Shakir’s Realty, adding that Saipan has seen increasing interest from Korean investors.”

“Rhonda Witty, a real estate agent and foreclosure specialist, said she and fellow agent Yvonne Johnson had heard about foreclosure tours in other cities, and wanted to bring the idea to Toledo.”

“Ms. Johnson, also a foreclosure specialist, said it was important to bring the tour to Toledo. ‘Unfortunately, we’re right up there with Las Vegas in terms of the number of foreclosures,’ she said.”

“For the most part, eastern Oregon real estate has been isolated from the downward spiraling national housing trend, but now it’s starting to catch up.”

“”Last year, houses were being sold before they could be built, but now the market is slowing down. Realtor Fred Oits attributes the recent decline in part to politics.”

“‘Election years usually slow down for the six months prior to an election,’ said Otis. ‘I think people are concerned with who’s going to be elected or what’s happening, although it really doesn’t affect it. They still need a home to live in.’”

“For the first time in nearly six years, the number of Jackson County workers in nonfarm jobs declined compared with the same month the previous year. ‘I think you can attribute a lot of that to the downturn in residential construction and all that it encompasses,’ said Bill Thorndike Jr., a co-chairman of the Portland branch of the regional Federal Reserve Bank of San Francisco.”

“‘Historically, housing cycles were regional and localized,’ Thorndike said. ‘One of the differences this time is that the housing crisis is more of a national phenomenon. Not only from the national downturn in housing but from the economic health of Southern California and Phoenix areas that a lot of our housing stock is dependent on. We’ve received a louder echo.”

“(Washington) state tax collections have dropped for the third straight quarter, bolstering the likelihood the Legislature will have a sizable budget hole to plug come January. And real estate excise tax collections continue to fall in dramatic fashion with the souring housing market.”

“‘We are forecasting what would essentially be the worst downturn in 25 years,’ said Steve Lerch, the state’s interim chief economist.”

“It is important to keep in mind that some segments of the Manteca market have probably hit bottom, but a lot of other segments haven’t quite yet such as McMansions and, depending upon how you view them, the diamonds in the rough or dog houses.”

“Without a doubt the one segment that is probably going to fall more is the condo conversion resales. The Cherry Lane complex - which was selling 18 months ago for $179,000 for a 944-square-unit - has had only one resale unit sell since February and that was for $114,000.’

“There are two same-sized units on the foreclosure list - one for $89,900 and the other for $94,900. There are three on the short sale list - $94,500, $114,000 and $119,000.”

“If the unit listed for $89,000 manages to fetch that much, it will represent the biggest single drop of housing value in Manteca of 50 percent in 18 months.”

“Tooele County’s residential construction industry appears to be at a virtual standstill. ‘I only get 10 percent of the calls I used to get last year, so I’ve lost 90 percent of all work because of the high costs to build,’ said Dan Grgich, owner of DG Construction in Tooele.”

“‘A lot of this stuff gets so expensive, and it drives the costs of the market up,’ he said. ‘That’s why home prices became so expensive. It doesn’t help that banks won’t give any money for spec home building, but they can’t because the federal government won’t lend them any money.’”

“Brad Sutton, broker in Tooele, said the entire homebuilding industry is hurting because of overbuilding. ‘Because there are so many houses that are already up and available, builders and contractors don’t want to build more spec homes,’ Sutton said.”

“‘Tooele County is generally in line with what’s happening throughout the Wasatch Front and the rest of the state,’ said James Robson, regional economist with the Utah Department of Workforce Services. ‘A big part is the tightening of lending standards, and there was also that major housing boom of ‘06-’07.’”

“Throughout the housing crisis, we have heard demands for every variety of government bailout. If we had a spokesman, this is what I wish he would say: ‘Dear Struggling Borrowers and Lenders…”

“It is universally recognized that when you invest in stocks, you are taking a risk-and just as you deserve the profits if the investment goes well, so you must accept the losses if it doesn’t. The same holds true for real estate.”

“The question we face today is: Do we let the market function? There is no conflict between individual responsibility and a functioning housing market; to the contrary, the second requires the first. If we let the market function, home values would fall to some market bottom, new buyers would eagerly seize on lower home prices, borrowing from lenders who would have learned to lend rationally.”

“Clearly, the just and the American solution is for all of us to tell the government that we will take responsibility for our decisions, and that no one has the right to make anyone else pay for his mistakes.”