The Housing Bubble

The Sacramento Bee reports from California. “As California voters go to the polls today in a low-turnout primary, those who bother to show up aren’t likely to be happy. With a teetering economy and an unpopular war, only 17 percent of voters in a new state Field Poll believe the country is headed in the right direction, the most dour view in 16 years.”

“Vicki Cabrera, of Sacramento, who plans to vote, directly feels the effects of a lagging economy. She lost her job as an administrative assistant for a real estate firm due to the weak Sacramento housing market.”

“‘I’ve never in my life gone without a job. Never,’ said Cabrera, who had to let go three of her family’s five prized Sacramento Kings season tickets and is contemplating selling her sports memorabilia collection.”

The Associated Press. “Robert Lindsey was not surprised by new data last week that showed new home sales have fallen more than 40 percent from their peak almost three years ago. He can tell from his company’s bank account.”

“‘We’re literally losing money every month,’ said Lindsey, general manager of Signature Drywall Inc., in Sacramento, which installs drywall in new homes and apartments in the Sacramento and San Francisco areas.”

‘In 2005, the firm raked in some $30 million in sales. Last year, sales were less than half that, and this year Lindsey hopes he can make $8 million. ‘It’s kind of like bleeding to death,’ he said.”

“In California, subcontractors have laid off, on average, up to 80 percent of their staff, according to the California Professional Association of Specialty Contractors in Sacramento.”

“Kelly Bice had been working as vice president of construction for San Diego real estate developer Keystone Communities Inc. for more than seven years before he lost his job in February when the company filed for bankruptcy. Bice, who lives in Murrieta, east of Los Angeles, was pulling in around $136,000 a year with bonuses. Now he’s scraping by on $500 a week as a consultant on a home renovation project.”

“‘I’m living on my savings,’ he said. ‘That’s just buying the groceries.’”

The Salinas Californian. “The rising cost of gas and groceries combined with fallout from home foreclosures means increased business for thrift stores in Salinas and around the nation, say those who track the industry.”

“More people than ever are shopping for furniture at the Salvation Army on 326 N. Main St., employee Stella Ponce said. ‘A lot of people are coming here because they have lost their homes,’ Ponce said. ‘They need smaller furniture to fit apartments they move into.’”

The Gilroy Dispatch. “Property foreclosures do not usually conjure up images of mosquito clouds carrying the West Nile virus, but for a handful of Gilroyans who live near abandoned homes, the sour housing market implies more than just tough economic times.”

“Unattended pools can become breeding grounds for mosquitoes and watering holes for crows and other birds susceptible to the West Nile virus.”

“‘My wife and I stay indoors now when sunset comes,’ Weiler said outside his home on London Place.”

“‘The last thing people are worried about when their house is foreclosed is the pool,’ said John Ballard, a vector control technician with the County of Santa Clara Department of Environmental Health. ‘They’re more worried about where they’re going to live next than draining their pool.’”

The LA Times. “It wasn’t long ago that Andy Krotik was selling houses to out-of-town investors who would sometimes buy two at a time. Now, Krotik spends his days warily entering abandoned houses, checking for angry holdouts or startled squatters.”

“Few places in California flew as high in the real estate boom and crashed as hard as Merced. Three years ago, home values were rising at 30% a year or better, making it one of the hottest markets in the state. Now it has one of California’s highest foreclosure rates.”

“Merced officials say they’ll need to cut spending by 5%, forcing them to leave 20 open positions vacant. ‘The whole foreclosure problem and the economy is our major concern now,’ city spokesman Mike Conway said. ‘Some people are torn between spending their money driving to work in Silicon Valley or on the house payment.’”

“Faced with that choice, he said, the job will come first. ‘If they don’t have the job, they won’t be able to make the house payment anyway.’”

The Bakersfield Californian. “Kern County supervisors approved a $1,000 fine on individuals caught participating in an illegal party on private property. The nuisance fine was triggered by a rash of teen-powered parties in homes left vacant or abandoned by Kern County’s high foreclosure rates.”

“The penalty ‘applies to any party held on any property without the permission of the owner,’ said County Counsel Bernard Barmann.”

The Desert Sun. “Fern Rudd is known to many Palm Spring High School students as the ‘work permit lady’ and though she’s issued more than 400 work permits this school year, Rudd has noticed an unprecedented trend in the Coachella Valley.”

“‘I’ve done this for 10 years and, usually by the end of the school year, we see a lot of employers asking about our graduates - but for the first time, I haven’t had any calls yet,’ she said. ‘Something’s changed.’”

“Jose ‘Junior’ Rodriguez, 17, of Palm Springs let out a sigh of relief when he landed his job as a cashier at Manhattan in the Desert last month - he had been searching since October.”

“‘Many of them said they didn’t have the money or the hours,’ Junior said of his past attempts. ‘I think it was because of construction stalls, the slump in the real estate market and everything else going on in the world. It really slowed things down.’”

“In 1999, Gary and Debra Magsam bought a house in the Coachella Valley town of Bermuda Dunes. They paid $140,000 for that house and sold it the next year for $170,000. The Magsams scored again with their next home, which they bought in La Quinta for $215,000 in 2000. Four years later they sold it for $452,000, more than twice what they paid.”

“Proceeds from that sale enabled them to buy their current house in late 2004 for $685,000. They took out a mortgage for $537,000. A year later, with the house worth an estimated $865,000, they took out a second mortgage for $100,000.”

“Now it has…a foreclosure notice. Barring a last-minute reprieve, the Magsams’ house will be auctioned June 27. They’ve begun to pack. ‘We’ve accepted the fact that it’s going to have to take place,’ Gary said of their impending departure. ‘For a long time we felt, ‘Why did this have to happen to us?’”

“They say they simply got caught up in the excitement of the real estate boom and the bad judgment that went with it — on the part of lenders and borrowers alike. ‘The banks loaned money to all kinds of people they shouldn’t have, including us,’ Gary said.”

The Redlands Daily Facts. “Tonight, the City Council will consider an ordinance that would require lenders to maintain properties that are vacant because of foreclosures or owners’ leaving the homes. Through the end of May, there were about 500 home foreclosures in Rialto in 2008. In all of 2007, there were 480.”

“Also at the meeting, members of the council will decide whether to purchase a piece of downtown property for $450,000. ‘(The owner) finally relented, realized that Southern California real estate isn’t as high and mighty as it used to be,’ said Robb Steel, Rialto’s economic development director.”

The Pasadena Star News. “Despite national housing woes that have slowed sales across the country, high-end residential properties in Pasadena continue to sell - often with multiple offers greater than the asking price, local real estate agents say.”

“‘Pasadena is very healthy, at least on the upper end,’ said Rosey Bell, a Realtor with Coldwell Banker. ‘Compared with the rest of California, we are A-OK. I don’t want to call it bulletproof, but it kind of has been.’”

“Homes listed under $1 million - many more of which are on the market - are taking longer to sell, said Gretchen Seager, an agent in Pasadena.”

The Weho News. “In a report to be formally presented to West Hollywood’s City Council tonight, the Rent Stabilization Department reports that the rate of foreclosures in WeHo stands at half that of Los Angeles County’s.”

“Eric Scott of WeHo’s Prudential California Realty told WeHoNews that now could be the best time in decades to buy property. ‘If you can get financing or can come up with the down payment,’ Mr. Scott said, ‘it’s your time to buy; prices will only go up from here as financing loosens up.’”

“Supporting Mr. Scott’s urgings, the staff report says that homes in the state now sell for approximately the same price as they did April 2004, with the median price 20% below last year’s market peak of $505,000.”

“Furthermore, they say citing the LA Times, county-wide median asking prices have declined while the county’s inventory of unsold houses increased this year. ‘Of the 32 properties in foreclosure on the study date of April 8, 2008, 5 were single family dwellings and 27 were condominiums,’ the report requested by Council in January says.”

“‘Of the 32 properties in foreclosure, 31 owner addresses were the same as the property address, suggesting that nearly all of homes or condominiums in foreclosure are owner-occupied.’”

“The report noted that most of the properties in ‘pre-foreclosure’ during the study period ‘progress[ed] into further stages of bank-owned or auction status.’”

From LA Observed. “The dream of home ownership has long been part of life on 92nd Street and similar South Los Angeles working class neighborhoods. But making the dream come true has never been easy. The dream was the topic Saturday May 30 when ACORN, the community activist organization, held a press conference-demonstration in front of a small house at 755 East 92nd Street, a home headed for foreclosure.”

“Millicent (Mama) Hill, who was an English teacher at Crenshaw High School before she retired in 2000…set up a program in her home to help young women and men avoid the gang life and crime. ACORN volunteers, most of them older men and women, gathered in Mama Hill’s front yard, all of them wearing the organization’s bright red t-shirts.”

“Mama Hill has been operating the program on her pension, small donations and with the help of friends and supporters…in a neighborhood that is pretty thick with gang action despite its peaceful appearance on a Saturday.”

“With expenses exceeding income, and house prices rising fast, Hill refinanced her house. ‘I needed a loan quickly,’ she said.”

“She was promised one at 7.5 percent interest but before she signed the final papers, she was told the interest would be 10 percent ‘but they promised it could be renegotiated.’”

“When she obtained the loan, the house was appraised at $405,000 but has since dropped far below that. She fell behind in her payments, and the mortgage holder is now foreclosing.”

“One of her supporters, Cedric R. Brown, president of Youth Incentive Programs Inc said Hill got the loan at a time when housing prices were exploding, even in this modest neighborhood, and mortgage brokers flooded the area with tempting refinance offers. ‘The predatory lenders took advantage,’ he said.”

The Voice of San Diego. “I left off Thursday telling you I was trying to find out how much those condos up for auction had sold for, the ones that were once hotel suites in National City.”

“I heard Friday from Manoj Chawla, a regional manager at Pacifica Companies, the project’s developer. He said the auction should not be construed as a sign of insolvency at the company. Rather, hiring REDC, the auction company, was a marketing decision for a project that was not selling well, he said.”

“‘We have to do what the market says,’ he said. ‘As you know, housing is not a pretty picture.’”

“He said before the auction on May 17, 50 units had been sold. Add the 32 sold at auction — pending sales, not closed escrows yet — and the 172-unit building is about half sold. ‘We are not enjoying the price reductions — it’s unfortunate,’ he said, ‘but it’s better to have an occupied building than an empty one.’”

“Chawla said the units at auction sold for prices between $145,000 and $325,000. The units being auctioned in the building were once listed between $218,000 and $522,400.”

“Friday, Chawla told me if Pacifica would’ve known how tough the market would be, the project wouldn’t have happened. ‘We would have never converted them,’ he said. ‘That’s the reality. … It’s not a pretty picture. Housing is just tough anymore.’”

“I heard back from Mayor Ron Morrison in National City today with his reaction to the eye-catching banner hanging from BayView Tower in that city, advertising condos for auction bids starting from $59,000.”

“Morrison didn’t mince words. The auction’s over and the city has demanded the company take down the advertisements.”

“‘They’re causing us nothing but heartache,’ he said, ’cause there are people who are saying, ‘Gee, you can’t give condos away in National City.’ Those stupid signs.’”

“Morrison pointed out…the ’starting bid’ advertised is usually a lot lower than what the company will actually let the unit sell for. There’s a hidden reserve price that has to be met before the sale is made.”

“And in the meantime, the sign still hanging there makes it seem like condo prices in the city are scraping new lows, he said.”

“‘We’re demanding they take those signs down,’ he said. ‘It’s nothing but a marketing ploy that has nothing to do with the market, by a company that does this around the United States.’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Toll Brothers Inc., the largest U.S. luxury-home builder, reported its third straight quarterly loss as tumbling demand forced the company to write down land values. The five largest U.S. builders have reported a combined $3.4 billion in losses in their most recent quarters, hurt by what CEO Robert Toll described today as a ‘downward spiral’ of home prices.”

“The average price of net contracts signed in the second quarter was $534,000, down 26 percent from a year earlier and 7.9 percent lower than the previous three months. The lower sales prices were partly due to fewer sales in expensive markets such as California and Manhattan.”

“The net value of contracts fell 58 percent to $496.5 million from a year earlier. The order backlog, or homes under contract that have yet to be sold, declined 50 percent to $2.08 billion.”

The Associated Press. “Toll said the company will continue to offer incentives to get people to buy homes - a concession uncharacteristic of Toll Brothers that speaks to the severity of the housing market.”

“But Deutsche Bank analyst Nishu Sood said the builder should more aggressively discount because ‘by holding prices the company is just delaying the inevitable as prices are unlikely to revisit boom time levels for a prolonged period.’”

“The quarter included a pretax write-down of $288.1 million, which included $85 million from joint ventures with other builders on land development. Net contracts, an indication of future business, fell by 58 percent to $496.5 million in the quarter from a year ago. Cancellations totaled $234.1 million.”

“The average home price on net contracts fell to $534,000 from $710,000 in 2007’s second quarter.”

“Residential Capital LLC, the mortgage lending unit of GMAC LLC, said Tuesday it needs more than three times more cash to stay in business than it estimated just weeks ago.”

“ResCap estimates it now needs about $2 billion in cash by the end of June to meet liquidity demands, according to a regulatory filing with the Securities and Exchange Commission. It previously estimated it needed just $600 million by the end of the month.”

The Wall Street Journal. “Delinquencies on loans originated by GMAC-RFC (U.K.) Ltd. rose sharply this year, according to data from Moody’s Investors Service, potentially putting a host of U.S. and European banks at risk of losses on GMAC-RFC loans that they have purchased.”

“Bradford & Bingley PLC Monday said that 5% of acquired loans it holds, which include those from GMAC-RFC, are three months or more in arrears, leading it to take a £36 million ($70.7 million) impairment charge in the four months to April 30.”

The Independent. “The first signs of a collapse in Britain’s buy-to-let property market emerged yesterday as Bradford & Bingley, the UK’s largest lender to private landlords, revealed a 50 per cent jump in arrears on its mortgage book over the first four months of the year.”

“The picture was much worse within one of its books of business - which it acquired from the US lender GMAC-RFC in 2005 - where buy-to-let arrears were up almost 80 per cent to 3.5 per cent of the total.”

“B&B represents 20 per cent of lending across the British buy-to-let sector. The number of buy-to-let mortgages has more than doubled over the past four years, as thousands of new amateur landlords looked to cash in on the meteoric rise in residential property prices.”

“However, rents failed to keep up with the rise in prices, leaving many landlords committed to monthly mortgage payments which were greater than their regular rental income.”

“John Postlethwaite, of Punter Southall Financial Management, the financial consultants, said: ‘In the past three to four years we have experienced a buy-to-let boom, mainly fuelled by private landlords purchasing a second or third property, putting down a minimum deposit and borrowing the maximum available. At the time this was not a problem, as money was plentiful and cheap. Unfortunately, that happy scenario does not exist any more.’”

“Mr Postlethwaite added that many landlords could now see their mortgage rates jump by as much as 2 percentage points as they come to the end of their current deals, putting them under further pressure.”

“‘The worry is, if we get a situation where large numbers of private landlords are trying to offload properties at the same time and needing to do it quickly because they cannot afford the new mortgage payments, property prices will fall even further and faster than they are now,’ he said.”

“Ratings cuts at three of the biggest U.S. securities firms coupled with management shakeups at Wachovia Corp. and Washington Mutual Inc. yesterday triggered concern that the mortgage slump has yet to reach a bottom.”

“While Wall Street’s top executives have insisted the housing crisis is waning, mounting evidence suggests otherwise, said Robert Eisenbeis, head of research at the Federal Reserve Bank of Atlanta from 1996 to 2006. He expects losses to be higher than banks’ forecasts as the worst real-estate decline since the Great Depression continues and foreclosures rise.”

“‘There may be another shoe to fall,’ said Eisenbeis. ‘The real puzzle to me is why these firms didn’t jump on the opportunity to really come to grips with the financial situation they were facing.’”

“Lenders’ losses have accompanied declines in home prices in 20 U.S. metropolitan areas where they have dropped 17 percent from July 2006 through March, according to the S&P/Case-Shiller home-price index. Bank of America Corp. CEO Kenneth Lewis expects that number to reach 25 percent in the next two years.”

“‘It’s going to be bigger than that,’ said David Olson, president of Wholesale Access Mortgage Research in Columbia, Maryland, and a former economist at Freddie Mac. ‘People are walking away from homes. This is a new mentality.’”

From Newsday. “Paul Brennan never handled a short sale - and barely ever used the phrase - until about six months ago.”

“But since then, Prudential Douglas Elliman, where Brennan is The Hamptons regional manager, has handled about 10 short sales across the South Fork, he said. ‘It is a new phrase for me,’ said Brennan, who has worked in real estate in The Hamptons for nearly 30 years.”

“Over the past year across the East End there’s been a noticeable increase in ‘lis pendens’ - the first legal foreclosure notice - and even foreclosure auctions, which take place in courtrooms or on town hall steps. Among the houses in the initial stage of foreclosure is one now on the market for $19 million in very upscale Bridgehampton.”

“‘It’s more expensive out here, especially for the local people who are living out here every day,’ said East Hampton police dispatcher Steve Blanchard, who is about four months behind on his $650,000 mortgage and is now in contract for a short sale. ‘And with the economy going down, it’s going to get worse.’”

“Indeed, his real estate agent, John Brady now specializes in short sales, currently handling 14 in The Hamptons.”

“Homeowners have been getting their home equity lines of credit frozen or pared down by lenders trying to cut risks.”

“It happened to Bay Shore dentist Michael Sherman, who can’t touch his $100,000 line for bath renovations because he’s got little equity in his home, and to Lido Beach homeowner Suzanne Dzolan, whose $200,000 limit was halved soon after she paid back what she borrowed to redo the house.”

“‘It’s almost hurt me to be someone who was a good borrower,’ said Dzolan, who works for a mortgage broker. ‘They just felt they could take the luxury and cut it.’”

“Retired firefighter Paul Porcello said he was going to buy an Amityville house until a $5,000 check, drawn on a HELOC on a rental property, bounced. ‘The next day, I get a letter saying they lowered my line from $144,500 to $10,000,’ said Porcello, who lives in Rockaway Park.”

“Sherman expected his lender’s move because the value of his home, along with others, has dropped: ‘It’s hard to admit that it’s not worth $530,000 today.’”

The Star Telegram. “This weekend, 100 new North Texas homes will be auctioned — with starting bids as much as 60 percent off the original listing price. The homes up for auction were all built by Arlington-based Classic Century Homes. Original asking prices range from $112,000 for a home in Fort Worth to $469,950 for a home in Mansfield.”

“‘Our starting bid is $49,000, and previous values go up to almost half a million dollars,’ said Ted Embry, VP of Real Estate Disposition Corp., which is conducting the auction.”

“The auctioned homes could affect the values of neighboring homes, said Cheryl Hunt with Ebby Halliday Realtors. She has a listing in the Emerald Park development of far north Fort Worth, where 10 homes will be auctioned Saturday.”

“‘If everything were to sell under market value, it hurts every home,’ she said.”

“The three Elk Ridge homes up for auction have starting bids of $59,000 and were originally listed at more than $144,000, according to auction materials.”

“‘Even if you got the homes for $90,000 of $100,000, you’d be getting a bargain,’ said Nancy D’Angelo, a Burleson homeowner who often goes walking through nearby Elk Ridge. ‘I can’t even imagine them building them for that much.’”

The Rocky Mountain News. “Experts in the real estate community are divided over whether a Canadian developer’s decision to pull the plug on its $165 million, 51-story luxury condominium project at 1401 Lawrence is a harbinger of things to come or an isolated incident.”

“When the project was announced in January 2006, it was heralded as the tallest residential development in Denver’s history. It promised to change Denver’s skyline.”

“But that all came to a halt on Friday, when Great Gulf closed its $1.5 million sales center and released this statement: ‘As you are aware, the downturn in the U.S. real estate market continues, and unfortunately Denver is no exception. Due to these conditions, Great Gulf Colorado, LLC has not achieved the requisite pre-sales to go forward with the 1401 Lawrence project and, regrettably, is canceling the project.’”

“There are currently 1,787 condos and 1,339 rental units under construction in the Denver area, so the loss of 1401 Lawrence accounts for less than 5 percent of the 3,126 total units going forward, said John Desmond, of the Downtown Denver Partnerhip.”

“Jeff Selby, co-developer of the Four Seasons under construction across from 1401, said he is not surprised the tower isn’t going forward, because Gulf had not yet lined up its financing, which is extremely difficult since the subprime collapse last August.”

“For example, developer Randy Nichols lost his initial financing for the Spire condo project, a couple of blocks from 1401 Lawrence, before he found a new lender.”

“‘I do not think this is a sign of things to come, but a sign of things that already have happened’ in the financial markets, Selby said.”

The Review Journal. “It offered such a tidy solution for a land-constrained city: Go vertical, with luxury high-rises to draw in upscale buyers from around the world.”

“When it began three to four years ago, the push toward towering condominium skyscrapers quickly became one of the hottest real estate trends in Las Vegas, with high-profile names including Ivana Trump, George Clooney and New York’s Related Group jumping into the market to invest in, build or brand major projects.”

“But the same market realities restraining residential construction in Las Vegas have at least temporarily put a ceiling on the city’s reach for the skies.”

“Numbers from the Greater Las Vegas Association of Realtors and research firm SalesTraq show about 820 resale units in high-rise condo towers on the local market the first week in May, with closings in the month between March and April coming in at around 20 units. At that sales rate, it’ll take roughly 3 1/2 years to churn through the high-rise resales on the market.”

“Buyers who locked in sales agreements three years ago when the high-rise trend took flight and the broader local market peaked in sales and median prices are walking away at closing today, said Larry Murphy, president of SalesTraq.”

“‘People who bought units on contract in 2005 are aware the market in 2008 is nothing like the market they bought in,’ Murphy said. ‘But appraisals are coming in at whatever they agreed to pay on their contract three years ago. People are saying, ‘We don’t think that appraisal is right, and we don’t want to close at that price.’ A lot of people have been unwilling or unable to come to the closing table.’”

“Buyers who do close on their units often put them on the market immediately, compounding already-big supplies, said Renee Burrows, a Realtor with Nevada Realty Solutions. Speculators looking to flip condos populate the resale markets.”

“Even buyers with excellent credit, cash in the bank and 20 percent down payments aren’t having much luck — banks are quoting them the double-digit interest rates often associated with riskier hard-money loans, said Bruce Hiatt, co-owner of Luxury Realty Group in Las Vegas.”

“It could be years before supplies and prices stabilize, experts said. That’s because homeowners hungry to flip units aren’t the only contributors to rising condo supplies.”

“The 3 1/2-year stockpile of high-rise resales on the market doesn’t include new condos set to come online in the next few months and years.”

“Las Vegas contains 9,168 completed high-rise units, with an additional 794 condos in presale stages and another 12,497 condos under construction. Yet, the market moved just 4,202 units in the three-plus years between January 2005 and April 2008.”

“Burrows, in the meantime, is counseling her clients — just one of whom has purchased a resale high-rise unit — to purchase inside luxury towers only if they plan to hold the property for a while, either as a primary home or a vacation spot.”

“‘Short-term speculative flips have pretty much gotten our market where it is,’ she said. ‘To stabilize the market, we need a reversal of everything that’s happening now. We need buyers who actually want to live in these products, and we need mortgage-underwriting guidelines to loosen up.’”

“‘It’s all coming to a pretty sad ending right now,’ said Murphy of the housing oversupply and the loan shortage.”

The LA Times. “The opening of Plams Place was as celebrity-packed and media-saturated as you would expect from a George Maloof event associated with the Palms. This was vintage Maloof milking press out of each stage of his project’s development. And the plan worked with US, People, ABC radio and many others crowded for space on the valet side of the entrance behind a rope.”

“Maloof is opening his condominium/hotel tower (in which the rooms can be converted into hotel rooms if the owner is out of town) amid the worst real estate meltdown in Vegas history.”

“‘Sometimes you can’t help when you open. You just have to work hard and live through it. There are always challenges,’ Maloof says of the unfortunate timing of his two openings.”

“The final stage of Palms Place is proving ‘challenging’ (one of Maloof’s favorite words) as well. Palms place sold out its 599 units, including 21 penthouses, three years ago. But even that hasn’t proven total protection from the current economy.”

“Maloof notes: ‘People put 20% down. Now we just have to collect the rest for closing in very challenging financial times.’”

“Still, Palms Place has had it easier than most competitors, including Trump International, which still has available units in that recently opened hotel/condo.”

“Owner Jessica Simpson sounded as excited to own a condo as if she had completed a marathon: ‘Owning a condo in Vegas is surreal. I never thought I would own a condo in Vegas. But I went for it and did it, and I am proud that I did it, and I am impressed actually.’”

“As for how often the singer intends to be in residence at her Palms Place unit, Simpson offered one of her trademark headscratchers by way of an answer: ‘I hope that I stay here more than I ever thought that I would.’”

The News Press reports from Florida. “In historic fashion, taxable property values tumbled 12.4 percent across the county compared with last year, which means less money for local governments to spend on services or a tax-rate increase. Preliminary figures released Monday by Lee County Property Appraiser Ken Wilkinson show taxable values dropped to $84.5 billion, down $11.9 billion.”

“Market values, or the value the property would sell for on the open market, also fell 12 percent to $109.9 billion. Last year values increased 6 percent. In 2006 they jumped 40 percent.”

“Wilkinson said a drop in taxable value year-over-year has never happened in the last 50 years, and may not only have occurred during the depression.”

“‘This is the worst I’ve seen it in 30 years (as a Realtor in Southwest Florida) and I’ve gone through three recessions,’ said Ed Bonkowski, referring to today’s lean times as well the economic slumps of the early 1980s and 1990s. ‘And we’re not out of it yet.’”

“The problem, he said, is the inventory of homes, more than 3,500 of them. ‘The lenders will have to sell below market value,’ Bonkowski said. ‘While (the properties) are out there, it’s going to be an albatross on everybody’s neck.’”

“Cape Coral took the roughest knock, down 27 percent in taxable value. The Lehigh Acres area is down 23 percent. ‘I wasn’t surprised,’ Wilkinson said. ‘It was sort of a gut feeling I was having.’”

“Foreclosures are rocking not just the thousands of homeowners in Lee County, but the homeowners associations that represent them. The reason: Financially strapped residents or, in many cases, the lack of residents because of the growing foreclosures, simply aren’t paying their bills.”

“Foreclosures hit a record 2,160 in April as home prices collapsed: down 37 percent in April to $200,300 from an all-time high of $322,300 in December 2005.”

“In Southwest Florida, non-payment of fees is a problem mainly for newer projects that were built or converted from rentals in the real estate boom that reached its height in December 2005, said Joe Adams, who’s in charge of the Becker & Poliakoff office in Fort Myers.”

“‘It’s a huge problem,’ he said. ‘It’s not really just in conversions, but that was the craze in ‘03 and ‘04 and ‘05, and they were in the wrong place at the wrong time.’”

“One of the hardest hit is Renaissance, near the Edison Mall, converted from apartments three years ago at the height of the real estate boom. Foreclosure actions have been filed against 17 of the 112 units and five of those have already been taken back by the lender.”

“Bill Davis, a retired banker who lives in Marietta, Ga., bought a condo at Renaissance in February 2006 for $210,900 as a place where he could visit his son and two grandchildren in Fort Myers.”

“Now the condo is assessed by the Lee County property appraiser at $133,000, eight other units are listed for sale at $100,000 or less, and Davis said he’s not sure what the future will bring.”

“The 20 percent response to the special assessment was an eye-opener, he said. So far, foreclosure actions have been filed against the owners of an additional 28 units but many others are headed that way.”

“There’s no way they can stay in their homes or will stay in their homes, Davis said. ‘They’re just waiting to get kicked out, waiting for a year before the sheriff kicks them out’ after the foreclosure goes thorough.”

“Steve Bostwick, a Century 21 Sunbelt Realty agent who bought three Tuscany Gardens units three years ago, said increasing delinquency rates has caused his monthly fees to increase from $233.23 a month for a one-bedroom, one-bath unit up to $411.75 for the largest three-bedroom, two-bath unit. Thirty-four of the 248 units are in foreclosure.”

“Stoneybrook residents haven’t just sat and waited for their property values to go down as weeds grow on the community’s 23 abandoned properties. There have been at least 62 foreclosure actions filed against Stoneybrook residents, 30 of them this year, according to Lee County Clerk of Courts records.”

“‘The Estates Home Owners Association bought the mulch and the volunteers spread the mulch, trimmed the bushes and made the houses look good,’ said Sherry Bucar, who’s on the board. But that only goes so far, she added, noting that Gateway Estates only assesses its 694 homeowners an $87-a-year fee. ‘We don’t have the money to buy more bark mulch.’”

The Herald Tribune. “Jeffrey J. Lauro put almost all the pieces together to build as many as 1,400 condominiums and single-family homes in Charlotte and Sarasota counties during the real estate boom, say people who did business with the 37-year-old entrepreneur.”

“‘His plans made sense,’ said John Kingston, a Lake Suzy mortgage broker who helped assemble building lots for Lauro. ‘If he had gone through with them, he would be worth tens of millions of dollars today.’”

“Instead, Lauro is facing criminal charges in Charlotte County for allegedly stealing $198,000 through a construction loan scheme. Two of his companies are in bankruptcy with debts that could amount to more than $20 million.”

“In one of the bankruptcy cases, 177 investors from England, Scotland and Ireland are claiming that Lauro took their deposits totaling more than $6 million and never brought the homes and condos he promised out of the ground.”

“‘It doesn’t make sense why he didn’t follow through,’ Kingston said. ‘He had the sales. The Europeans loved his ideas. He just took their money.’”

“Prominent local real estate investors including Trey Desenberg and Greg Band lent him money, as did novice investors like Chiefland residents Lewis and Cherri Prevatt.”

“At a ‘Get Motivated’ seminar in December 2005..(an) associate suggested that the Prevatts attend a three-day seminar in Tampa that focused on ‘how to get rich in real estate,’ the Prevatts’ lawsuit states.”

“At that seminar, the Prevatts were persuaded to pay $23,995 to attend a more intensive…seminar on real estate investing. Lauro was one of the key speakers at that March 2006 gathering, and he ultimately persuaded the Prevatts to invest in three homes in North Port, the Prevatts’ lawsuit states.”

“According to documents…construction was proceeding on all three contracts when the Prevatts ‘refused to allow the lender to issue further draws for completion of construction.’”

“The Prevatts, the documents state, ‘are simply having buyer’s remorse over the investment in real estate in Florida. As is common knowledge, the real estate market in the state of Florida and nationwide has taken a substantial turn downward in the past several years.’”

“Kingston says Lauro owes him $2.275 million for the land he contracted to sell in Deep Creek and Burnt Store Lakes, as well as $212,000 in deposits and $45,000 that Kingston used to buy building lots.”

“‘Nothing makes sense to me anymore,’ Kingston said. ‘Lauro had everything he needed to succeed, but he never built anything.’”

“There was a time not too long ago when being a Realtor seemed to be a quick way to riches. When the housing market was hot from 2001 to 2005, the number of agents belonging to the Sarasota Association of Realtors doubled.”

“‘Many of the people who entered during the boom years felt like this was an easy business and an easy way to make money, and it’s not,’ said Moe Veissi, a Miami-based spokesman for the National Association of Realtors. ‘We drew a lot of people with dollar signs in their eyes.’”

“Nationally, the number of Realtors in 2001 grew by 104 percent by 2005. In Florida, the number grew 113 percent. In Sarasota, their ranks swelled by 69 percent during that same time period.”

“Returning to the basics as the market someday returns to a more normal balance of buyers and sellers is paramount, said Kathy Roberts, CEO of the Sarasota Association of Realtors. ‘We may have, in fact, seen the bottom of our market and, provided no big crises comes along that nobody expects, we should recover,’ she said. ‘We just want to get back to a normal market.’”

The St Petersburg Times. “The Tampa Bay area is suffering far worse than the rest of the country in the nationwide slump in auto sales.”

“New vehicle registrations in the Tampa Bay area fell 16 percent in the first quarter of this year compared with a year ago. That’s more than twice the national decline of 7 percent, according to automotive research firm R.L. Polk.”

“The housing crunch has been a double whammy. A lot of people use their home equity to buy cars - and much of that has evaporated, said Jack Nerad, market analyst for Kelley Blue Book.”

“Fernando Fernandez, a sales manager at Brandon Honda, said the number of gas-guzzler trade-ins at his dealership has soared recently. ‘We just had one customer trade in his (Cadillac) Escalade for a new Civic,’ he said.”

The Bradenton Herald. “Migrant workers aren’t flocking to Manatee County during peak seasons as they’ve done for decades. Economic conditions have left little work.”

“‘The overall population of migrants in Florida . . . is certainly shrinking,’ said Walter Kates, Florida Fruit and Vegetable director of the Labor Relations Division. ‘The number of people at least working in agriculture of migrant background seems to be decreasing every year.’”

“It’s difficult for anyone to determine exactly how many migrants have left and not returned. But in the past year, local service providers and activists agree, fewer migrants are calling Manatee County home.”

“One clear measure is in Manatee County’s schools. In the district’s migrant program, funded by grant money apart from the school budget, there are about 1,400 students migrant students enrolled this school year. In the 1980s and ’90s, there were an estimated 6,000 migrant students.”

The Orlando Sentinel. “Residential real-estate auctions are beginning to rack up some significant numbers and dollars in Central Florida for brokerages handling the growing list of foreclosed properties.”

“Coldwell Banker Ackley Realty held two auctions recently that netted 24 sales, including 14 from its own listings, broker-owner Rajia Ackley said. The combined value of the 24 sales: about $5.4 million.”

“Ackley said auctions can be a ‘win-win’ for sellers and buyers in a sluggish market. ‘During the real-estate boom 21/2 years ago, the auction concept wouldn’t work,’ she said. ‘Now, with the real-estate market in hibernation, it makes great sense and has helped many real-estate companies liquidate their listings.’”

The News Journal. “After years of often record increases, taxable property values in Volusia and Flagler counties are expected to fall significantly this year as a result of the depressed real-estate market and new, voter-approved tax exemptions.”

“‘It’s kind of an ugly little roller coaster we’re on here,’ Flagler County Property Appraiser Jay Gardner said.”

“According to Volusia County Property Appraiser Morgan Gilreath’s projections, Amendment 1 will account for much of the anticipated tax base reduction for most Volusia taxing authorities, other than schools.”

“Schools are less affected because their tax base is not included in an additional $25,000 homestead exemption that was part of the amendment.”

“Gilreath said the 2008 tax roll is probably the most difficult he’s handled. Appraisers are still working neighborhood to neighborhood to try to nail down the values for the July 1 preliminary tax roll, which Gilreath said might reflect somewhat larger decreases.”

“‘We’ve never seen values dropping this rapidly, and values have continued to drop into ‘08, which means next year’s roll is going to see this happen again . . . unless we see something happen in ‘09,’ he said. ‘At the same time, we had the tax revolt and the Amendment 1 changes.’”

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