The Housing Bubble

The Associated Press reports on California. “Median home prices dropped 26.7 percent in May across Southern California’s six most populous counties compared with last year. DataQuick said it marked the steepest annual drop since the firm began keeping records in 1988. Median home prices fell to $370,000 in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties last month. It was the lowest median price reported since March 2004.”

“Sales volumes for the region were down nearly 15 percent from May 2007. Nearly 38 percent of all the homes sold in the region last month were in foreclosure at some point over the past 12 months.”

The Union Tribune. “Home prices continued to tumble in San Diego County last month, with the median of $380,000 reaching its lowest level since September 2003. San Diego’s median home price peaked in November 2005 at $517,500.”

“‘What horsepower this market can generate right now is mainly fueled by bargain shopping, especially by first-time buyers and investors in inland areas,’ said Andrew LePage, an analyst with DataQuick.”

“‘During the housing boom, we came to expect discounts on everything we buy except housing,’ LePage said. ‘Now we’ve re-shattered the notion that home prices can’t fall. The expectation is everybody is going to get a deal.’”

The Press Enterprise. “The spring activity usually expected in Southern California’s housing market was another disappointment last month. Shoppers looking for bargains helped push the region’s home sales higher in May compared to April, but it was still the fewest May home sales in the last 20 years.”

“A total of 16,917 homes closed escrow last month, up 1,300 from April but still 14.9 percent fewer than May 2007, DataQuick found.”

“In Riverside County, foreclosure-related sales accounted for 56.6 percent of all resale transactions.”

“The median home price fell to $290,000 in Riverside County and $250,250 in San Bernardino County. Both are down about 30 percent from where they were 12 months ago and also off about $130,000 from the peak median values hit in late 2006.”

The Ventura County Star. “There were 708 transactions for new and existing houses and condominiums in May, a 17.8 percent drop from 861 a year ago, DataQuick reported today. That was also a slight decline from 771 sales in April.”

“The median price fell 26.3 percent to $435,000 in May from $590,000 a year ago. In April, the median price was $445,000.”

“Sales remained especially slow in most higher-end markets, with jumbo mortgages comprising only a slightly higher percentage of all purchase loans in May than in April, said Andrew LePage, a DataQuick analyst, in a statement.”

The New York Times. “With sweeping canyon views, gated access and nearby homes owned by the likes of Britney Spears, Ed McMahon’s house above Beverly Hills looks like the symbol of a life well paid.”

“At 85, Mr. McMahon is in the twilight of a successful career, as a broadcast announcer, professional pitchman for brands like Alpo and Budweiser, and television host. His house is the one product he has not been able to sell.”

“In the two years the 7,000-square-foot property has been listed on the market, currently at $6.5 million, he has not received a single offer, he said. The recent publicity is turning that around. By the end of last week, there were two offers for the house, said his real estate agent, Alex Davis.”

“Earlier this year, he defaulted, he said, on a $4.8-million loan from a unit of Countrywide Financial Corporation. Mr. McMahon, who is more than $600,000 in arrears on the loan, refused to discuss any other details of that or any other debts.”

“But real estate agents in Beverly Hills say that an inability to sell in two years point at a too-high asking price. Originally $7.6 million in 2006, the price was lowered several times, to $5.7 million in January, then climbed to the current $6.5 million. (Mr. Davis said the increase was needed to cover Mr. McMahon’s debt.)”

“‘It’s not the market or Britney Spears,’ said Drew Mandile, an agent in Beverly Hills, who brought clients to see the house in 2006. ‘Two years means you’re a stubborn person and you refuse to face the reality of the value of the home.’”

“Mrs. McMahon offered another explanation. ‘Ed and I prayed that we wouldn’t sell it,’ she said, admitting that they don’t really want to move.”

“Mr. Davis, the real estate agent, said that there had been no urgency to sell until a few months ago, and that he had been selective in showing the property. One factor, he said, was the need to respect his clients’ privacy; but another, ‘for quite some time,’ was the need to avoid the paparazzi camped out outside the gate.”

“‘Everybody was following Britney Spears, and we thought a lot of people were trying to get into the community’ by posing as potential buyers, he said, adding that Ms. Spears’s home is now also for sale.”

From CNN.com. “When Shaun Yandell proposed to his long-time girlfriend on the doorstep of their new home in the sunny suburb of Elk Grove, California, four years ago, he never imagined things would get this bad. But they did, and it happened almost overnight.”

“Yandell’s marriage isn’t falling apart: his neighborhood is. ‘It is going to be heartbreak,’ Yandell told CNN. ‘But we are hanging on.’”

“Devastated by the subprime mortgage crisis, hundreds of homes have been foreclosed and thousands of residents have been forced to move, leaving in their wake a not-so-pleasant path of empty houses, unkempt lawns, vacant strip malls, graffiti-sprayed desolate sidewalks and even increased crime.”

“In Elk Grove, some homeowners not only cut their own grass but also trim the yards of vacant homes on their streets, hoping to deter gangs and criminals from moving in.”

“For Yandell, his wife and many other residents trying to stick it out, the white picket fence of an American dream has faded into a seemingly hopeless suburban nightmare. ‘The forecast is gloomy,’ he told CNN.”

“Arthur C. Nelson, director of Virginia Tech’s Metropolitan Institute, estimates that in 2025 there will be a surplus of 22 million large-lot homes that will not be left vacant in a suburban wasteland but instead occupied by lower classes who have been driven out of their once affordable inner-city apartments and houses.”

“The so-called McMansion, he said, will become the new multi-family home for the poor.”

“‘What is going to happen is lower and lower-middle income families squeezed out of downtown and glamorous suburban locations are going to be pushed economically into these McMansions at the suburban fringe,’ said Nelson. ‘There will probably be ten people living in one house.’”

“In Shaun Yandell’s neighborhood, this has already started to happen. Houses once filled with single families are now rented out by low-income tenants. Yandell speculates that they’re coming from nearby Sacramento, where the downtown is undergoing substantial gentrification, or perhaps from some other area where prices have gotten too high. He isn’t really sure.”

“But one thing Yandell is sure about is that he isn’t going to leave his sunny suburban neighborhood unless he has to, and if that happens, he says he would only want to move to another one just like it.”

“‘It’s the American dream, you know,’ he said. ‘The American dream.’”

The Appeal Democrat. “Every day Steve Nickless and his crew load up a trailer with mowers and weed trimmers and get to work on lawns. The homes they visit, though, are unoccupied. Nickless is hired to maintain hundreds of abandoned and foreclosed homes in the Central Valley.”

“Yuba County alone had 357 foreclosed homes and another 650 in pre-foreclosure stages for the first quarter of 2008, according to DQNews. Many of those foreclosures were in the Plumas Lake and Edgewater communities.”

“Mike Meyers, vice president of BV Home Services, said the company is contracted by banks for minimum upkeep and maintenance. Not all homes, though, are tended to.”

“‘This is unacceptable,’ said BV owner Vianey Santibanez, of the 2-foot-tall weeds and dry grass at two homes on Branding Iron Way.”

“‘Banks don’t turn on the water because the cost would be astronomical,’ he said referring to the number of homes that are bank-owned. ‘Some neighbors have asked if they could water the property, and I tell them go ahead because this is an allergy nightmare.’”

“Plumas Lake homeowner Sue Cason said she hasn’t seen this many foreclosures in one neighborhood. ‘We moved here because it was new,’ she said. ‘It hurts to see it.’”

“The position of Cason’s front door provides a direct view of other well-manicured yards in the neighborhood, but that is not the case right next door.”

“‘When I go to the mailbox, I shield my eyes,’ she said jokingly of 2-foot-tall dead weeds on the lawn adjoining her property.”

The Union. “Thousands of Nevada County properties bought at the height of the real estate boom could receive tax reductions this year, because some homes have plunged by as much as one-fourth of their value, according to the assessor’s office.”

“‘The market value of many homes has decreased. Our responsibility is to place the market value or assessed value on a property,’ said county assessor Dale Flippin.”

“Early last year and the previous year, the real estate market peaked and was followed by a prolonged slump. ‘That’s primarily who we are trying to target - the ones who got trapped in that peak market,’ Flippin said.”

“From 2000 to 2006, the real estate market in Nevada County boomed, with property tax revenue reaching highs of 14 percent, Flippin said. The prolonged housing slump has helped steer the nation to the brink of a recession. Reductions are temporary and will return to the original assessed value when home markets rise again.”

“‘We’ll now have to review these properties every year,’ Flippin said. ‘I don’t think we’ll come out of this quickly, but I do think we’ve reached bottom.’”

Some housing bubble news from Wall Street and Washington. New York Times, “The chief executive of Lehman Brothers, Richard S. Fuld Jr., stepped up to the microphone on Monday morning. Mr. Fuld started off the bank’s earnings call, responding to analysts who said they wanted to hear from him. He did not take part in last Monday’s call when the bank warned that it would lose $2.8 billion in the second quarter and would raise $6 billion from investors.”

“The $2.8 billion loss was in large part caused by $4.1 billion in write-downs on mortgage investments.”

“Mr. Fuld faced toughed questions from analysts Monday about Lehman’s earnings power. They questioned the way Lehman values assets that are hard to value, like mortgage investments.”

“‘The general question is: have you taken sufficient write-downs?’ asked Michael Mayo, an analyst with Deutsche Bank. ‘The reason I ask is there are cases of other top management officials at other companies saying they were finished and then other quarters, they had big write-downs again.’”

“Mr. Fuld admitted that the firm had made missteps in its mortgage business - once one of the strongest on Wall Street.”

“‘We made active decisions to deploy our capital, some of which in hindsight were poor choices because we really didn’t act quickly enough to the eroding environment,’ he said during the conference call.”

“Seven large financial companies - Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley - have since last July written down the value of the assets they hold by $107.2 billion, gutting their earnings and share prices. That is nearly half of the combined $254 billion in profits those seven firms earned from 2004 through middle of 2007.”

“Worldwide, the write-downs total $380 billion, much of which reflects a plunge in the value of tricky mortgage investments.”

“As the tally of losses keeps growing, many bank executives - and their shareholders - keep asking the same question: When will the pain end? But the finish line just seems to keep moving further away.”

“‘It’s a fairly unique situation, that you would give so much back,’ said Alec Young, global equity strategist for Standard & Poor’s Equity Research. ‘The industry did enjoy real salad days over that period, but now the write-downs and losses have been so huge. It’s a significant percentage of the money generated.’”

From Bloomberg. “American International Group Inc., the world’s biggest insurer, ousted CEO Martin Sullivan after record losses, a sagging stock price and criticism from the man he succeeded in 2005, Maurice Greenberg.”

“Sullivan becomes part of an exodus of CEOs from companies including Citigroup Inc., Merrill Lynch & Co. and Wachovia Corp. that underestimated how badly profits would be hurt by the collapse of the U.S. subprime mortgage market. AIG posted more than $13 billion in quarterly losses after Sullivan assured investors in December that writedowns tied to housing would be ‘manageable.’”

“AIG’s financial-products unit issues credit-default swaps, contracts that promise to reimburse investors for losses on securities that included subprime assets. The business started issuing swaps a decade ago under Greenberg.”

“Those guarantees declined in value by about $20 billion in the past two quarters. The financial products business was co- founded in 1987 by Joseph Cassano, a former executive at Drexel Burnham Lambert, the securities firm that helped popularize ‘junk-bond’ investing before it collapsed. Cassano stepped down in February.”

“‘Shareholders’ value has been diluted,’ Greenberg said in a telephone interview in May. ‘That makes you unhappy, to say the least.’”

“Pressure on Sullivan intensified June 6 when AIG said the U.S. Securities and Exchange Commission and the Justice Department were probing the way AIG valued financial products customers used to manage credit risk.”

“New York state regulators disclosed their own inquiry on June 13. U.S. and state probes into AIG’s accounting led to Greenberg’s departure in 2005.”

From Portfolio. “The collapses of two Bear Stearns hedge funds last year were the first crashes in the credit crisis’ yearlong slow-motion highway pileup. After a long investigation, federal prosecutors in the Brooklyn are now close to seeking indictments in their investigation of the funds’ collapse, Kate Kelly of the Wall Street Journal reports.”

“According to lawyers with interest in the case, the former managers of the fund, Ralph Cioffi and Matthew Tannin, could be charged with securities fraud within the next week, Kelly reports.”

‘The investigation by the U.S. attorney’s office in Brooklyn is part of a nationwide effort by the Justice Department, F.B.I., and Internal Revenue Service into whether crimes were committed when the subprime-mortgage market collapsed.”

From Reuters. “Credit rating agencies will face mandatory new European Union regulation, EU Internal Market Commissioner Charlie McCreevy said on Monday, following criticism of their role in the U.S. subprime crisis.”

‘The new rules would affect agencies including Moody’s, Standard & Poor’s and Fitch, which dominate the hitherto lightly regulated sector.”

“McCreevy said in a speech that self-regulation had proved insufficient, calling their voluntary code of conduct ‘a toothless wonder.’”

“Structured products backed by mortgages were highly rated by agencies but quickly sank in value and became untradeable, forcing banks to write down billions of dollars.”

“Measures announced by the rating agencies themselves were also insufficient, McCreevy added. Agencies also face tougher regulation in the United States, where the authorities want them to use a separate system for rating structured products.”

“Allen Blewitt, CEO of the Association of Chartered Certified Accountants, said that rating agencies ‘have for too long had the luxury of not having to adhere to good governance and oversight procedures.’”

“‘The fact is that despite the checks on compliance with the (International Organisation of Securities Commissions) code, no supervisor appears to have got as much as a sniff of the rot at the heart of the structured finance rating process before it all blew up,’ McCreevy said.”

The Pioneer Press. “The pitch went like this: Just show up at the closing and you’ll pocket $5,000. The investment company uses your name and credit to get a zero-down mortgage for a new home, carves its management fee from the loan and resells the property fast, handling the mortgage payments until then. Cost to you: zero.”

“That’s what buyers heard. It was simple, and it worked over and over again, coaxing more than 60 people in Minnesota and Wisconsin to buy hundreds of new homes in the past few years that they never intended to live in, or even really own, according to buyers and a search warrant affidavit filed in Hennepin County District Court last August by Eagan police Detective Rich Evans.”

“And by most accounts, it made 33-year-old Michael Prieskorn a wealthy man. The former Plymouth resident and his companies remain the subject of a federal investigation, according to Evans and several buyers. If allegations prove true, it would be the largest mortgage fraud scheme to surface in Minnesota.”

“Michael Bohn, a 28-year-old real estate agent in Plymouth who arranged loans for many Prieskorn deals, said he bought three homes himself. ‘Whether he’s in Chicago, whether he’s in Florida, whether he’s dead, who knows,’ Bohn said. ‘There’s a lot of people unhappy with him.’”

“In 2006, the Twin Cities was awash in stone and Tyvek. Home builders - local and national names alike - still were on a construction bender that hatched neighborhoods out of cornfields.”

“Bloated home values were peaking, inventory was piling up, and builders were looking to get empty, unsold homes off their books.”

“Prieskorn walked into the fray, buyers and associates say, providing builders just what they needed: credit-worthy people to buy not just one but several properties in one fell swoop.”

“Prieskorn’s purchase arrangement is laid out in a three-page investment summary distributed to some buyers, one of whom gave a copy to the Pioneer Press. The document calls the investment ‘virtually risk free for the investor,’ even though buyers are on the hook for sizable mortgages.”

“Yee Thao, a payment processor in Blaine with six children, said he ended up with mortgage debt totaling nearly $1 million. Thao said his nephew pressured him into buying three houses from Pulte Homes in a Prieskorn deal. Thao said his nephew told him that Prieskorn’s own parents bought properties this way and that someone would have sued Prieskorn if the arrangement was no good.”

“Thao said he resisted but ultimately figured the $15,000 would help pay for his son’s university tuition. The lender on all three mortgages, arranged by agent Bohn, was SunTrust Mortgage. Thao said he never saw the loan applications and has no idea how his income was stated. Like other buyers, he also never saw the properties he was buying.”

“Bohn said in an interview that incomes weren’t doctored on the loan applications. He said SunTrust had a particularly generous no-document loan program at the time that allowed a single buyer to purchase multiple properties as long as the total loan amount was less than $1.5 million. At the time, home loans were still flowing like water.”

“‘You didn’t even have to put down if you had a damn job back then,’ Bohn said.”

The Star Telegram. “People are always moving to Ronay Drive. But they don’t stay long. Within months, many find themselves facing foreclosure, saddled with high interest rates on loans for thousands of dollars more than their homes are worth.”

“The quiet neighborhood, where residents say homeownership is as much a dead end as the cul-de-sacs at each end of the street, is at the heart of the subprime-mortgage crisis.”

“More than half of the 56 homes on Ronay Drive have been posted for foreclosure at least once since August 2005, and eight are scheduled for foreclosure in July. Nine others are now for sale.”

“Residents say they have found anything but the happy homes promised in the name of Houston-based real estate and finance company CasAlegria.”

“John Rentz, CasAlegria’s top broker, said his company has done nothing but extend homeownership to people who would not otherwise qualify. He said the complaints are based on misinformation.”

“‘Some individuals, unable or unwilling to responsibly manage their financial affairs, may see a company that has provided them with an extremely positive financial opportunity as the source of their dissatisfaction,’ Rentz said.”

“Homeowners along Ronay Drive admit they weren’t the savviest buyers. Many were first-time home buyers without the financial advantages of good credit. Some were undocumented immigrants drawn to CasAlegria’s ‘no Social Security number needed’ pitch.”

“They knew that the interest rates were high, but they believed that they would be able to refinance within a year or two with the good credit they would build up. Some quickly learned that wouldn’t happen.”

“Victor and Maribel Munoz have tried unsuccessfully to refinance their mortgage, with its interest rate of 10.49 percent. They’ve invested $20,000 in the three-bedroom house, but Victor Munoz is now working far fewer hours than he had been, and the couple say walking away may be the only option.”

“The house, like many in the neighborhood, is on the tax rolls at a value far less than the couple owes on it. ‘We’re looking at maybe just leaving the home,’ Maribel Munoz said last week.”

“Homes that make it to the foreclosure sale on the courthouse steps are typically purchased back by CasAlegria. Then, a blue-and-white CasAlegria sign will reappear on the front lawn, advertising the home for sale once again.”

“‘Prestamos Faciles,’ the sign reads. ‘Easy Financing.’”

The Chatham Daily News. “If a poor credit record forced you into a high-risk mortgage, you might end up in the same situation as Rod and Joyce Marentette. The Chatham couple are perplexed as to why, after never missing a payment for the three-year term of their mortgage, they are being dumped by their lender — Xceed Mortgage Corporation of Toronto.”

“Joyce and Rod were married in May of 2005. Less than two weeks later, they purchased a home on Patteson Avenue. Then in September of that year, the couple suffered a loss of income, sending their finances into a nose-dive. But, they scrimped and saved — sometimes going without food themselves so their four children could eat — to make sure they never missed a mortgage payment.”

“However, their financial situation left them unable to pay other bills, including a credit card and cellphone bill. Despite their current financial woes, the couple figured if they make their mortgage payments, it would be renewed.”

“The Marentettes were shocked when they received a letter in mid-March from Xceed stating the company would not be renewing their mortgage, which came due on Friday.”

“‘There are a number of reasons why we have decided not to renew your mortgage,’ stated the letter. ‘These may include missed mortgage payments and/or a deterioration in your credit.’”

“The letter strongly recommended the couple arrange to find another lender, because if they fail to discharge their mortgage by June 13, Xceed will begin legal action to collect the $93,000 the couple still owes on their home. Xceed has since given the couple until the end of June to find another lender.”

“Reluctantly, they have put their home up for sale, because they have been unable to find another lender to give them a mortgage.”

“Richard Wertheim, spokesman for Xceed, told The Chatham Daily News the dilemma facing the Marentettes ‘is not really related to them directly.’ The Marentettes have been caught up in a financial situation created by the collapse of the asset-backed commercial paper market on Aug. 13, 2007, he said.”

“‘Up until that time, virtually all of the funding for Xceed’s mortgage business came from that kind of security (asset-backed commercial paper),’ Wertheim said. ‘When that market evaporated, so did the funding for those kinds of mortgages.’”

“Being informed by The Daily News about the situation provided little solace for the Marentettes. ‘I worked hard and I still get screwed,’ Joyce said.”

The Houston Chronicle. “Carole Hackett has some high-level management jobs to fill. But the vice president of human resources of The Methodist Hospital is having trouble because of the slumping real estate market.”

“Not in Houston, mind you. Hackett’s problems are in Michigan, Illinois and Ohio. That’s because when Hackett identifies promising candidates for the vice president of quality and key nursing director positions, they can’t move.”

“Since about January, good candidates from the Midwest and beyond have been saying: ‘I’d love to come to Houston, but there is no way I can sell my house,’ said Hackett.”

“‘In this stage of the countercyclical economy, you would expect mass migration to Houston,’ said Barton Smith, director of the Institute for Regional Forecasting at the University of Houston.”

“But the city hasn’t been flooded by out-of-state license plates, and one explanation is negative equity - people owe more on a house back home than it’s worth so they’re stuck unless they’re willing to eat a big loss.”

“Companies have been footing the bill on their employees’ closing costs for decades, Smith said. But today, to cover the negative equity, the price tag could easily run in excess of $100,000. A company might pay that for a top-notch senior officer, Smith said, but not a middle manager.”

“Roger Ghinelli realizes the predicament he’s in. He lives in Sterling Heights, Mich., a suburb of Detroit, and lost his human resource manager’s job last year at a small engineering company.”

“Ghinelli has been running traps for jobs in Houston. But Ghinelli’s two-bedroom, two-bathroom condo is weighing him down. Two similar condos in his complex have been for sale more than a year.”

“He won’t just walk away from the condo he bought 10 years ago for $125,000, and he isn’t permitted to lease it. It makes him wonder if he’ll ever be able to take a sales or recruiting job in Houston if he gets one.”

“‘I’m not even sure why I’m doing this,’ he said.”

The News Journal reports from Florida. “The glut of unsold real estate on the local market has begun to shrink, but that doesn’t mean more houses are getting sold. The inventory of homes, condominiums, businesses and lots being marketed by agents in Volusia and Flagler counties hit a record 9,541 listings last November but since then it has started to decline gradually, falling to 8,544 by April, the most recent tally available.”

“Since Jan. 1, the number of area properties getting sold by agents has averaged 237 a month…below last year’s depressed rate of 280 sales a month. At the same time, hundreds of listings expire each month after having languished unsold for three to six months. Hundreds of others simply are taken off the market as owners change their minds about trying to sell, according to MLS statistics.”

“Yet more than 1,000 fresh properties continue to be added to the Realtors’ database each month. What’s fueling the new business? Some Realtors say the additions reflect the growing number of homeowners who are in trouble with their mortgages.”

“Nearly 1,000 area owners were served notices during April that they were in danger of foreclosure, and 200 of those were near the point of facing eviction, according to RealtyTrac.”

“Very few sellers still cling to hope they’ll get an offer close to the asking prices that prevailed in 2005, said Bob Millward, co-owner of the RE/MAX All Pro Realty agency in Port Orange.”

“‘It took a little while for sellers to get realistic with their prices, but we’re finally there,’ Millward said.”

The Sun Sentinel. “Setting the right price for a home sounds simple, but too many sellers aren’t doing it. They insist that their properties are special and holding value, even though the median prices for existing homes have plummeted 26 percent and 24 percent, respectively, in Palm Beach and Broward counties since late 2005.”

“Olga and Manuel Delacruz listed their three-bedroom home in central Palm Beach County for $199,000 about four months ago. When it didn’t sell, they dropped the price twice. Now they’re asking $169,999, which is where they probably should have started, their agent, Douglas Rill, said.”

“The Delacruzes and other owners of lower-priced homes are likely competing with an increasing number of foreclosures. Lenders don’t want to hold these properties, so they’re slashing prices. Individual sellers must do the same if they have any hope of finding buyers.”

“‘It’s a little frustrating,’ said Olga Delacruz. ‘If we have to lower it one more time, we will.’”

“Many sellers asking too much for their homes now are doing so because they paid inflated prices during the housing boom of 2000 to 2005. Agents cringe when they hear clients say they have to get a certain amount of money out of their properties.”

“‘Your need doesn’t change the market value of the house,’ said Rill of Century 21 America’s Choice Realty in West Palm Beach. ‘Sellers will say, ‘Can you at least try it at this price?’ I’m happy to try, but it’s not going to work.’”

“Terry Story, (an) agent in Palm Beach and Broward counties wanted to list a Boca Raton home last summer for $575,000, but her client held firm at $625,000. Meanwhile, a similar house across the street was priced more competitively from the start and sold quickly for $482,500. Story’s seller could do nothing but cut his price, finally finding a buyer to pay $460,000 after six frustrating months.”

“‘He chased down the market,” said Story .”

“Virginia Goss first tried to sell her Boca Raton house on her own, but had no luck. So she listed it with Story, who suggested she put it on the market in the low $300,000 range. Although that was much lower than she preferred, Goss listened and immediately sold the home, albeit at a loss.”

“‘It’s hard to swallow a loss, but we’re moving on,’ Goss said. ‘There’s value in that.’”

The Miami Herald. “The Meruelo family spent nearly four decades building a real estate empire stretching from California to Florida. But…the Meruelo-owned companies now face mounting financial problems and a stack of lawsuits.”

“‘Like so many of the developers in Miami, the Merco Group rode the crest of the wave and was highly successful,’ said Jack McCabe, CEO of McCabe Research & Consulting. ‘Like many others, they were overly aggressive in pursuing too many projects.’”

“One of the costliest problems is the Palladio Terrace project. While Eastern Financial Florida Credit Union has won the right to auction the 4.5-acre waterfront property next month, several dozen condo purchasers are still fighting the Merco Group of the Palm Beaches for allegedly failing to return one of their two deposits after the project was canceled.”

“One Palladio buyer, Greg Pill, said he drove around West Palm Beach three years ago and liked the proposed project and site so much he signed up to buy one town house to live in and another as an investment.”

“‘I wish I would have checked out Merco more,’ said Pilla, a resident of Redwood Shores, Calif. ‘There has been a grand injustice perpetrated. They made a deal and didn’t stand by the deal they made.’”

The Calgary Herald. “The sub-prime market fallout has hit Florida hard, but that hasn’t stopped one Calgary-based company that has a project in St. Petersburg. It’s been less than a month since the Lucid Group of Companies first announced it was selling 240 condo units in St. Petersburg at bargain prices, says a news release.”

“With prices starting at $70 per square foot, nearly 70 per cent of the Sunrise Palms development has already sold, primarily to Calgary and Edmonton buyers, it says.”

“‘Buyers are telling us they know it’s a great deal and they are confident that it is just a matter of time before the housing market rebounds in the holiday and retirement community of St. Petersburg. Long-term, they believe it’s a great real estate and lifestyle investment,’ says Adam Drybrough, a partner with the Lucid Group of Companies, in the news release.”

The Bradenton Herald. “The housing foreclosure fallout carries a very real price tag for all of Manatee County. The court system’s backlog of foreclosure cases has tripled in the past year.”

“Home values in some neighborhoods have dropped 30 percent or more as a result of the foreclosures and the real estate downturn. And residents are struggling to preserve the character of their neighborhoods as more homeowners are evicted or walk away from homes that are worth less than they owe.”

“‘It’s actually going to drive the values down on even the homes that aren’t distressed,’ said Bill Kersey, director of appraisal services with Manatee County Property Appraiser’s office. ‘Any sale that occurs now tends to be distressed. Even though it’s not a foreclosure sale, it’s a distressed market. If you want to sell it, you’re going to get a lot less for it than you did two years ago. And what this does is drive all of the values in the neighborhood down.’”

“”Already in the first six months of 2008, there have been more than 2,300 cases filed - nearly as many as during all of 2007.”

“‘It’s never been like this,’ said Manatee Circuit Court Judge Paul Logan. ‘I haven’t seen any signs that it’s getting better. In fact, I’ve talked to a few local attorneys who represent lenders and I’ve said, ‘Hopefully we’ve seen the entirety of the problem.’ But all of them have told me we’ve only seen the tip of the iceberg.’”

“‘At this point there is just an incredible amount of bank foreclosures, which is absolutely affecting the homeowners associations’ ability to collect their assessments,’ said Kevin Edwards of (a) firm in Sarasota, which represents about 400 neighborhood and condo associations in Manatee and Sarasota counties.”

“‘It’s more of a problem I think in condos,’ he said. ‘Most of them were investors who bought these condo units or, in some cases, single-family homes when the market was at its peak and the bank was giving them these no-money down or low-money down loans. These people were counting on flipping them for a profit, and that didn’t occur.’”

“‘A lot of times, they’re not going to get that money back,’ Edwards said. ‘We have cases in condos where the owners have abandoned their units and we’ve had to, as associations, go back in and turn the electricity on to prevent mold growing in those units. And the association is stuck with that bill and the other unit owners are having to pay for it (through increased assessments). It’s pretty bad.’”

The Herald Tribune. “The overall trend in the market for vacant land continues to be downward with respect to price and the number of closings.”

“‘There are a lot of buyers and a lot of sellers out there, but they’re miles apart in their philosophy at the moment,’ said Stan Rutstein, an agent in Bradenton. ‘Buyers are evaluating land values with a microscope, while sellers, who either got in too high or are too leveraged, are operating with unrealistic expectations.’”

“‘How many thousands of vacant residential lots are out there that we don’t have buyers for?’ asked John Stephens, an undeveloped land specialist in Palmetto. ‘Until those lots are absorbed, there won’t be any demand for raw land.’”

“Manatee County property appraiser statistics show that falling demand for empty land is having an impact on prices. Where land was selling for an average of $78,210 per acre in 2006, the average price for the 17 deals that have closed this year is just $25,182 per acre — a level not seen since 2004.”

“Carlos Beruff, a longtime Southwest Florida builder and developer, bought 47 acres for $1.1 million, or $23,787 per acre, in December, according to property appraiser records. That price was 74 percent less than the $4.2 million, or $89,362 per acre, that Kimball Hill Homes paid for the South Manatee property in April 2005.”

The Naples News. “Last month, troubled homebuilder WCI Communities Inc. sold its high-end, Italian-inspired Tuscany Reserve community to foreign investors for $65 million.”

“But it’s still in a legal battle to keep a $1 million deposit from other investors that contracted to buy the 470-acre golf course community in North Naples last year and never did because of disagreements over the terms of the sale, including the price.”

“‘We showed up on Dec. 24. We had all the documents that were required and we were ready to go, and they just simply didn’t show up,’ said Thomas Roehn, a Tampa attorney who represents WCI.”

“WCI designed Tuscany Reserve as its most exclusive golf course haven and expected to sell a limited number of homes for $2 million to $5 million, with golf membership in the range of $200,000. But it never really took off.”

“In the past year, WCI has repositioned the community, offering homes for less than $1 million. It’s permitted for 530 homes and only about 30 have been built.”

The News Press. “Southwest Florida’s real estate crash has left a record amount of garbage at abandoned construction sites and empty street lots, according to the Lee County Solid Waste Division.”

“The county has picked up 140 tons of refuse since April from commercial or home project sites where construction was halted, an unprecedented statistic.”

“‘Nobody abandons construction sites, but that’s what we have now,’ said Brigitte Kantor, solid waste coordinator for the county. ‘We normally have hardly any of those.’”

“The county also has seen a tremendous spike in the number of illegal dumpings, usually discarded belongings such as furniture left on empty street lots. Despite the escalating number of illegal dump sites, the department will propose a $59 million operating budget for the coming fiscal year, about the same as last year, said Lindsey Sampson director of Waste Division.”

“That’s because even a foreclosed home is subject to Waste Division taxes. ‘We have more empty houses sitting out there and empty houses have to pay too,’ Sampson said.”

“Real estate investors turned off by the housing market have another option under construction in south Fort Myers. Two storage condominium projects are underway near Southwest Florida International Airport.”

“The storage condos are on sale and offer storage options for those with boats, motor homes or large car collections that won’t fit in their homes or in traditional storage facilities. Construction started June 4 on the first phase.”

“John Allen, president of The Treasure Chest, said potential owners plan to use the condos to store large motor homes, boats and furniture collections.”

“‘It doesn’t make a lot of sense to keep renting,’ he said. ‘It makes a good investment in real estate.’”

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