July 31, 2008

A Cathartic Event In California

Bloomberg reports on California. “Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, said Mark Zandi, chief economist at Moody’s Economy.com. ‘California is having a wrenching decline in wealth, but this is a cathartic event that will lay the foundation for a recovery,’ said Zandi in an interview. ‘This signals the beginning of the end.’”

“Foreclosure sales accounted for 75 percent of June’s total in Merced County, home to the Merced metro area with the country’s second-highest foreclosure rate; 72 percent in Stanislaus County, home to the Modesto metro area with the third-highest foreclosure rate; and 66 percent in San Joaquin County, home to Stockton, data from DataQuick and RealtyTrac show.”

“Sales of foreclosed properties equaled 63 percent of the total in Sacramento County, 62 percent in Riverside County, 58 percent in Solano County, 57 percent in San Bernardino County and 49 percent in Contra Costa County. Prices dropped as much 37 percent in those counties, DataQuick reported.”

“Bruce Norris, president of the Norris Group investment firm in Riverside, said he purchased foreclosed properties for one- third of the outstanding loan value during the past two months.”

“Norris bought a three-bedroom home in the Moreno Valley section of Riverside for $106,000, a 65 percent discount on the $300,000 loan held by Bear Stearns Cos., now part of JPMorgan Chase & Co. He got a 61 percent discount on a home with $258,750 in loans held by Deutsche Bank AG, and a 63 percent discount for a home with $324,000 in loans held by Morgan Stanley, he said.”

“‘The banks are stuck wholesaling to people like me,’ Norris said. ‘They are starting to move product faster than the market would normally allow.’”

“The housing bill signed by President George W. Bush yesterday is intended to stem foreclosures. Homeowners like David Imig and his wife, who live in the Stockton area and owe more than their house is worth, aren’t helped by the bill. They paid $462,000 for a three-bedroom at the market peak in 2005. Now, their neighbor’s foreclosed home is on sale for half its original price.”

“‘We’re a good $100,000 down,’ Imig said. ‘If we could move without taking a huge bath, we would.’”

“Peggy Thorpe outbid seven offers for a foreclosed house in Vallejo, east of San Francisco, and still got a 34 percent discount. It was the sixth time since May she made an offer for a home in foreclosure.”

“‘This time I jumped higher,’ said Thorpe, who works at a vineyard in Napa and paid $190,500 for the three-bedroom home with a loan balance of $289,000. ‘There’s an extreme bidding war right now.’”

The San Francisco Chronicle. “The new law aims to help 400,000 homeowners with new guaranteed mortgages. Yet it remains unclear how many lenders and borrowers will participate. Lenders must write down mortgages 15 percent below a home’s current market value.”

“‘Those are all wild estimates,’ said banking consultant Bert Ely of the numbers of homeowners who may be helped. ‘It may have some effect at the margin, but you’re still going to have lots of homes go into foreclosure.’”

“Some lenders may choose foreclosure, and many homeowners have what are now known as ‘liar loans,’ made with no income documentation, and may not be able to afford even reduced-rate loans, along with the taxes, insurance and maintenance costs that accompany home ownership. ‘A lot of people will find out they’re better off renting, no matter how good a deal they’re cut,’ Ely said.”

The Union Tribune. “San Diego cities and the county are expected to receive several million dollars from the housing bill to buy foreclosed homes and resell them to needy families. But with $4 billion to be allocated nationwide through the Department of Housing and Urban Development’s community development block grant program, local officials said the effort will not be nearly enough .”

“In the first half of the year, nearly 8,500 homes were foreclosed on in the county, according to DataQuick Information Systems. If area agencies received $2 million in the program, that would be enough to buy and rehabilitate eight homes at $250,000 each.”

“‘A few million dollars is not going to do much in this market,’ said San Diego City Councilman Tony Young.”

The Daily Breeze. “A UC Irvine study released today shifts blame for the housing collapse from sub-prime lending to the use of aggressive, private mortgage securities that followed the reduced role of traditional mortgage backers Fannie Mae and Freddie Mac.”

“The study by the UCI Paul Merage School of Business Center for Real Estate ties the start of what became a massive real estate bubble burst to the 2003 pullback of the government-sponsored financial service corporations from the credit market and the change in the prevalent source of mortgage capital.”

“‘We were quite surprised to find the intensity of sub-prime lending was insignificant after controlling for all the other factors influencing the market, but we were really blown away when Fannie’s and Freddie’s continuing presence in the market was shown to be so important,’ said Kerry Vandell, a UCI finance professor and director of the Center for Real Estate.”

“The researchers found that rising home prices up to 2003 could be explained by economic fundamentals, such as low unemployment rates, expanding household incomes and population growth. Those factors fueled housing demand and, in turn, increased U.S. home prices.”

“But in 2003, certain factors caused the two entities to significantly slow their lending volume, including accounting irregularities that led to the resignation of senior officers and the capping of their retained loan portfolios.”

“Private funding stepped in, in the form of asset-backed securities and residential mortgage-backed securities, while a new credit environment allowed looser underwriting standards and increased tolerance for riskier, high-yield loan products that included adjustable-rate mortgages with low initial ‘teaser’ rates, Vandell said.”

“The climate gave formerly marginal borrowers greater access to credit, leading to a record increase in total mortgage volume and pushing up home prices with momentum that is characteristic of a bubble, the UCI team said.”

“The researchers also found that interest rates did not significantly affect housing prices, also a divergence from conventional wisdom.”

“‘These finding help us understand that the government can have a major role in affecting the mortgage and housing markets,’ Vandell said. ‘It’s important policymakers consider this influence when they attempt to shape the markets in the future.’”

The Press Enterprise. “Saying that loans to borrowers with poor credit is the reason for the bubble bursting is like blaming the tail for wagging the dog, says a study led by the Center for Real Estate at the UC Irvine Paul Merage School of Business.”

“‘The real problem is that all the stops were pulled out, allowing the private issuers to run amuck,’ said Vandell.”

“John Marcell, president of the California Association of Mortgage Brokers Education and Research Foundation, agreed that the housing crisis might not have occurred if Fannie Mae and Freddie Mac had been more active. That would have been possible, he said, if their loan limits had been lifted as they were Wednesday by the housing stimulus package signed into law by President Bush.”

“‘Had Congress listened to the real predicament that was forthcoming and had raised the loan limits back then and let Fannie and Freddie do their job properly, we would not have the problem we ultimately experienced,’ he said. ‘Because we opened up the flood gates of this loosey-goosey lending … we enticed people to become homeowners who were not in the position to do it.’”

“Vandell said Fannie Mae and Freddie Mac were ‘victims of circumstances’ and had no choice but to let private mortgage lenders take over the field.”

The Bakersfield Californian. “A local accountant’s signature was forged to help David Crisp’s wife get a loan in 2006, according to testimony Wednesday in the ongoing license hearings of former Crisp & Cole Real Estate principals Crisp, 28, and Carl Cole, 61.”

“Certified public accountant Timothy Hubbell of Bakersfield took the stand to answer questions about a letter dated September 2006 apparently bearing his signature. The letter was actually written by his former business partner, Kevin Sluga - Crisp’s father-in-law - Hubbell said after giving testimony.”

“The state’s attorney, Michael B. Rich, asked Hubbell if the signature was his. ‘No,’ Hubbell said. ‘Did you write that letter?’ asked Rich, who is representing the California Department of Real Estate in the administrative hearing. ‘No, I did not,’ Hubbell said.”

“The letter was in a 2006 loan file of Jennifer Crisp, David Crisp’s wife, submitted to Aegis Wholesale Corp. for what would be $475,000 worth of loans she received to buy 12706 Lanai Ave.”

“The letter was included in the file to clarify Jennifer Crisp’s supposed employment at California Business Solutions, a bookkeeping and accountancy firm co-owned by Sluga, her father.”

“Hubbell also testified the employment claim in the document, written on company letterhead, was false: Jennifer Crisp had not worked at the company for two years, as the letter claimed. She had never worked there, he said.”

“Later, Hubbell testified that Leslie Sluga worked a couple of days a week at California Business Solutions doing bookkeeping. She earned about $8 or $9 an hour, he said, bringing in about $400 a month.”

“In other loan files, the hearings have shown, Sluga claimed she had been a co-owner of the business for 15 years. Hubbell said after the hearing her income was stated as $40,000 a month in some loan applications.”

The Ventura County Star. “A Ventura-based builder appears to have fallen on hard times, and its state license is at stake. R.W. Hertel & Sons Inc. has disabled its Web site and put its building up for sale.”

“R.W. Hertel has a long history of accusations concerning defective building. In 2005, for example, residents complained of water leakage at the Rancho Obispo subdivision in San Luis Obispo County.”

“Presently in Stanislaus County, R.W. Hertel is facing a $250,000 fine for storm water damage violations in a subdivision that is home to several endangered species. In another sign of money woes, R.W. Hertel has ceased construction on a $25 million hotel and condominium resort project in Oregon.”

The Valley Voice. “Centex Corp. is relocating its Central Valley regional office from Visalia to Sacramento in a consolidation move that will mean many more lost jobs locally. After several rounds of layoffs in the past six months, a new round eliminated about 20 jobs in Visalia a few weeks ago, say sources familiar with the company.”

“The company eliminated chief planner for new projects, Cliff Ronk’s job, among others. Now, the company has put its big 50,000-square-foot regional headquarters on Akers up for sublease.”

“In addition to shutting down the regional office, sister company CTX Mortgage will be closing its retail office here at the end of August after a potential sale to another company didn’t happen.”

“Centex has been Tulare County’s largest builder for decades but its volume is less than a third of what it was just two years ago. Centex used Visalia as a regional office since it bought the operation of Andy Mangano in 1991 and expanded year after year in the number of subdivisions and towns it built in the Central Valley.”

“The big builder became a major employer here. For years, it was the busiest division for the Dallas-based builder in the state.”

“Centex moved to a vacant space in the big 150,000-square-foot Cigna Insurance building on Akers only a year ago, consolidating scattered offices into one location. Centex leased 50,000 square feet of the building that it now wants to sublease.”

“But a year later, the collapse of the new home market in California has apparently convinced Centex, like other builders, to pull up stakes here.”

The Sacramento Bee. “If you’re seeking ground zero of the real estate collapse, go no farther than Laguna Ridge. Four years ago, this 1,900-acre swath - characterized as Elk Grove’s ‘crown jewel’ - was master-planned for 7,767 homes. Roads, utilities, parks, and a new high school are all in place.”

“But the downturn hit so hard and so fast that only 310 houses have been sold so far. Thousands of phantom houses lend a surreal air to Laguna Ridge. Perfect residential streets with shiny nameplates wind through fields of waist-high grass. There are many speed bumps - but no cars. On Winkle Court, near a row of pristine model homes, the one sign of life is a jack rabbit streaking across the road.”

“No child plays at Constellation Park, despite tempting climbing structures, green grass and bright red picnic tables. The little park is encircled by a chain link rent-a-fence. Two blocks away, 15 occupied houses on Collie Way stand isolated on the lonely frontier of Laguna Ridge.”

“Among these pioneers are Chris and Jene Claude and their two kids. The Claudes say: If you’re seeking a sweet home and a great deal, go no farther than Laguna Ridge. ‘Right now, it is a little sparse around here,’ conceded Chris Claude. ‘But that makes the neighbors closer.’”

“Their house, 2,300 square feet with four bedrooms and two full baths, cost them $400,000 - probably about $125,000 less than they would have paid at the market’s peak. The Claudes aren’t worried about the paucity of neighbors in Laguna Ridge - they will come, they say. But they are irked by one facet of living in a 1,900-acre vacant lot.”

“‘The only thing that really bugs us is the fence around that park!’ the young mother said. ‘It wasn’t so bad when it was just an overgrown patch - but now it’s finished and the kids can’t get in.’”

“Real estate attorney John Hodgson represents developers who control about 90 percent of Laguna Ridge. ‘The bottom line is that this project got approved in 2004 when the market was at its pinnacle,’ Hodgson said. ‘With the delays of the city both before and after adoption of the plan, the fact is that this development missed the cycle.’”

“‘It breaks my heart,’ said Kathryn Boyce, a Northern California real estate analyst for Hanley Wood Market Intelligence. ‘Laguna Ridge would be perfect - a shining star. But the market crashed so quickly and deeply that it didn’t happen.’”

“Still, Boyce is a believer in real estate cycles. She sees pioneers like the Claude family as simply ahead of the curve.”

“‘If they just bought, they got a great deal and they’re in on the ground floor,’ she said. ‘The housing market will come back with a roar. At Laguna Ridge, all the infrastructure is in place and you’ll see a ton of houses all opening at once. It’s poised to come back like wildfire.’”

You’re Probably Better Off Renting In Florida

WPTV reports from Florida. “The ‘For Rent’ sign is hanging in more and more places these days, as homeowners open their doors to strangers to help close their budget gaps. ‘Everything’s here. Ready to move in and very comfortable,’ said homeowner Gary Friedman. He’s now turning his guest room into a rental. Friedman is offering everything, right down to linen sheets. ‘Were ready to have somebody move in here and go to sleep immediately,’ said Friedman jokingly. ‘Be comfortable.’”

“He and his partner of 27 years are looking to boost they’re monthly income by $650. They’ve been watching as their Lake Worth home struggles to sell, at a time when money is tight.”

“‘I think within hours of us purchasing this house, everybody stopped buying houses,’ said Friedman. ‘Everybody said ‘Thats it.’”

The Associated Press. “New figures out Tuesday showed home prices fell by a record 15.8 percent in May from a year ago. In fact, nine cities posted record declines, including Miami near where Sharon McKenney, 55, and her husband are trying to sell their four-bedroom, waterfront home.”

“They were asking $550,000 for their home in Palmetto Bay, a bargain, McKenney thought, compared to neighboring properties listed around $625,000. But there have been no offers, so they cut the price to $545,000.”

“‘I’m frustrated, however I still feel like it’s priced very well, and I don’t see myself lowering it,’ McKenney said. ‘The thing of it is, there’s so many (homes) on the market, people keep thinking, if they keep looking they’ll find something better, something cheaper.’”

The News Press. “The housing bill signed by President Bush on Wednesday won’t help Southwest Florida homeowners hit hardest by the economy. ‘This is one of those feel-good government intervention programs with only a marginal real impact,’ said said Charles Costello, a mortgage broker in Fort Myers.”

“The new loans do have strings, including required mortgage insurance and stipulations against taking home equity loans.”

“‘For five years you’re allowed no home equity loans, and which average family doesn’t need a home equity loan for liquidity?’ said Fort Myers-based bankruptcy attorney Charles Phoenix. Regulations will also have to deal with the issue of existing home equity lines, he said.”

“In addition, any homeowner in the program who sells his home within five years must share any profit with the FHA based on a sliding scale. ‘What’s the point of owning your own home when you can’t benefit from the profit? You’re probably better off renting,’ Phoenix said.”

“Fort Myers resident John Lee is baffled his city property taxes will not drop as much as he had expected. ‘It doesn’t seem like that much of a decrease considering the fact that our property values have declined a lot more than that,’ said Lee.”

“The average resident will end up paying the city about the same as last year. ‘My feeling is they’re going to get you one way or the other,’ said Lee, who bought his house in 2005.”

The Naples News. “David Farmer, assistant chair of ULI Southwest Florida and principal of Keystone Development Advisors, LLC, said a significant amount of the sales he has seen in recent months are investors buying several properties at once.”

“Farmer emphasized just how low prices have dropped. A three-bedroom house in Golden Gate Estates, with two bathrooms and a two-car garage, recently sold for $74,000, he said.”

“‘You could not even begin to build that house for three times that, but yet it sold,’ he said. ‘That’s going to continue on.’”

The St Petersburg Times. “Deeply in hock to banks in the housing downturn, Tampa’s Smith Family Homes has gone out of business, ending a 10-year run for a family partnership that raised rooftops in some of the region’s premier communities.”

“Smith Family was stuck holding lots and finished homes worth less on the market than was owed to the bank, said Scott Stichter, the company’s bankruptcy lawyer. A last-minute deal with an investor to infuse more cash into the business fizzled.”

“Some recent home buyers are receiving certified letters from contractors unpaid by Smith. They include Dominic DeQuarto, who closed on a Smith home on April 29 in Pasco County’s Grey Hawk neighborhood. Work interruptions plagued the project, DeQuarto said, and now he’s getting lien notices from various carpet installers, concrete guys and stucco contractors.”

“‘This was the most stressful process for building a home ever,’ DeQuarto said.”

“In its quest for financial health, the Tampa Bay area home building industry is grappling with a giant scab on the landscape: 31,900 vacant home sites waiting for buyers.”

“New-home closings in the region fell 42.6 percent this spring vs. the same time last year. But that’s nothing compared to the glut of vacant lots, enough home sites to last builders 51/2 years at current sales rates.”

“Hillsborough County’s supply is 49.6 months, or more than four years. Pasco and Pinellas counties have nearly five-year supplies. And Hernando County’s lot supply is 136 months, or 11 years.”

“It gets worse: Citrus County has a 508-month supply. At current sales, it would take 42 years to burn off all its finished home sites. Citrus’ new-home market has fallen off a cliff, with only 95 homes starts in the past year amid a surplus of 4,018 developed home sites.”

“In a glimmer of good news on the lot front, developers have largely ceased paving former cow pastures, orange groves and forests. ‘Hillsborough finally stopped adding lots this quarter,’ said Tony Polito, who compiled the new-home report. ‘The other counties stopped adding lots months before that.’”

“Up and down State Road 54, from Trinity to Wesley Chapel, the economic trend becomes evident: For lease. For sale. For lease. For sale. Those signs are not for houses. They are for office space.”

“‘There’s a lot of office space out there,’ said Matt Shaw of Prudential Commercial Real Estate. ‘It’s a tough time to be a landlord.’”

“Investors with plenty of money had seen the housing boom and figured they could turn a profit with professional office buildings to support the residential growth. ‘We’re in a position we’re in now because money was so easy to get,’ said Johnny Wild, owner of Wild Realty & Investment. ‘At a time, it was a frenzy.’”

“But millions more square feet of office space are in the project pipeline. And even some real estate agents, who tend to emphasize the upside of building trends, say they are surprised by how much office space continues to come on line.”

“‘I can’t believe they’re still building,’ Shaw said.”

From TC Palm. “Residential builders in the largest and most populous county of the Treasure Coast slowed the pace of new home construction to match the downturn of demand. Metrostudy found that construction began on only 60 single-family homes in St. Lucie County, down from 95 in the first quarter.”

“A total of 286 units were under construction at the end of the quarter, the lowest number since the second quarter of 2001. There were 918 finished vacant units in the county at the end of the second quarter versus the end of the first quarter.”

“Jack McCabe, CEO of McCabe Research and Consulting, said builders in St. Lucie County have cut back because of exorbitant levels of inventory. ‘It makes no sense for them to build on a speculative basis,’ McCabe said. ‘Building like they did in the boom years is a recipe for disaster.’”

“‘The low-end and the high-end homes are doing OK. It’s the middle-priced homes that are really getting murdered,’ said Don Santos, past president of the Treasure Coast Builders. ‘The problem now is finding creditworthy buyers willing to buy new construction.’”

“The Indian River Realtors Association reported 137 existing single-family homes sold in June, down from 154 in June 2007. At the same time, the median sales price of those homes was $160,000 in June, down from $255,000 in June 2007. The median sales price for condominiums fell from $287,500 to $152,000 year to year.”

The Orlando Sentinel. “An Orlando real estate agent arrested this week has been charged with mortgage fraud and grand theft. Orange County Sheriff’s detectives said Garry S. Martin, 35, forged signatures on various documents and wired home-sale proceeds to bank accounts that he controlled. Investigators said the fraudulent sales in 2006 involved one sale that netted $172,804 and another one that totaled $253,484.”

“Martin, a licensed real estate broker, was taken into custody at his office on Monday and booked into the Orange County Jail.”

The News Journal. “More than two dozen potential condominium owners have filed lawsuits in circuit court against one of the area’s newest developments — Halifax Landing on South Ridgewood Avenue in South Daytona — and more may be coming.”

“The 26 complaints, filed since mid-May, allege the developer significantly changed the project between the time units were reserved and contracts signed in 2005 and 2006, and when units were recently finished and buyers asked to close. Buyers want out of the contracts and deposits refunded. The first two units were closed earlier this month for $420,532 and $547,000.”

“‘The lawsuits are not unique to Halifax Landing. It’s happening all over the state since the market fell,’ said Scott Cichon, representing Halifax Landing. ‘The investors, flippers and speculators bought several years ago to make a profit reselling them. Now, they want to shift that risk back onto the developers. But they signed contracts and are not willing to take their lumps like everyone else.’”

“The contracts are void, however, because the changes are ‘material’ and ‘adversely impact’ the buyers, two legal standards required to break a condo purchase contract, said attorney Ben Zaeri, representing 10 clients suing Halifax Marina.”

“‘When you buy a Mercedes, you don’t want an Escort,’ Zaeri said. ‘It’s no surprise the real estate market has tanked, but that is not the motivating factor. My clients, for the most part, wanted to move in and get use of the property.’”

The Dunfermline Press. “Steven Pagdin (26) and his wife Alana (27) put their semi-detached house on the market over a month ago but have not had any viewers for the property, which is available for offers over £115,000.”

“Steven has even thrown his car into the deal - a three-year-old Mazda6 - in an attempt to sell the house by September, when he is due to start his new job in Panama City, Florida.”

“A designer in the oil and gas industry who currently works for Oceaneering Multiflex in Rosyth, Steven has secured a job with a sister company in America. ‘But,’ he said, ‘unless I sell my house, we can’t go. We have already agreed to go over to Florida to live. We have got our visas and everything else. It’s just a case of hoping the move isn’t going to be scuppered because we can’t sell the house.’”

“Last week, the Press reported on the major impact that the credit crunch and housing market slump are now having on home construction and sales in West Fife, with job losses in the building trade already reported.”

“Steven, of Birrell Drive, wondered, ‘Is the credit crunch affecting the way people are thinking? Are they thinking that the housing prices are going to crash? I don’t know. It’s usually quite a popular estate but for some reason the houses round here just aren’t selling.’”

“‘I suppose you would have to eventually lower the price but there’s got to be a cut-off. If you’re having to knock off too much it might not be worth going over (to America) in the first place,’ he said.”

“The couple, who were due their second child on Tuesday, bought the house five years ago when the market was more buoyant and houses were snapped up within a matter of days. Steven explained, ‘We went to view the house on the Friday night, put an offer in on the Monday and the house was sold on the Tuesday.’”

“‘Now it seems to be that people are wary of buying a house in case the value comes down the next month and they lose £10,000 on the house they’ve just bought,’ Steve said.”

“Alana added, ‘We’re a bit stressed out about it. They want us over in America as soon as possible.’”

Bits Bucket For July 31, 2008

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

July 30, 2008

The Seemingly Relentless Nose-Dive In California

The San Francisco Chronicle reports from California. “In the San Francisco metropolitan area - which Case-Shiller defines as the counties of Alameda, Contra Costa, Marin, San Francisco and San Mateo - prices fell 22.9 percent in May compared with a year ago. That made the area the sixth worst-performing region in the country, according to the index, after Las Vegas (down 28.4 percent), Miami (down 28.3 percent), Phoenix (down 26.5 percent), Los Angeles (down 24.5 percent) and San Diego (down 23.2 percent).”

“‘On a relative total performance basis, San Francisco is still a market that grew quite a lot from the mid-1990s to 2006; its prices increased very sharply during that time,’ said Maureen Maitland, VP at Standard & Poor’s, which publishes the index. ‘I don’t want to undermine the fact that … San Francisco is not doing well; prices are in sharp decline, but most people who owned a home for five, 10 or 15 years are still in relatively good shape if they want to sell their home today - they just can’t sell it for (as much) as last year.’”

The Los Altos Town Crier. “In Santa Clara County, single-family home sales appear to be on an upward trend, according to information from the MLS for the Silicon Valley Association of Realtors. The average price of homes in June was $922,149, down from $970,702 in May. The average price of homes in June 2007 was $1,066,610.”

“Today’s market offers long-term value for buyers, according to SILVAR President Leannah Hunt. ‘As home prices drop a bit, there are good opportunities out there for serious home buyers,’ she said.”

The Los Gatos Weekly Times. “Santa Clara County assessor Larry Stone has been in office since 1994, and he’s seen property values rise and fall as market conditions change. At a real estate tour meeting in Los Gatos last week, Stone admitted the current market is ‘rather a drastic market,’ but noted, ‘We’ve been through the downturns, but somehow the market always rebounds.’”

“Hardest hit these days are the condo and townhome markets, and Gilroy, Morgan Hill, Milpitas and East San Jose, which he described as ‘blood-baths.’”

Bay Area Newsgroup. “Lennar Corp. has jettisoned its ownership stake in two condominium projects near Marina Bay here, another indicator that the housing market has yet to escape its multi-faceted meltdown.”

“The company sold its interest in the 488-unit Marina Shores and the 224-unit Marina Cove, residential developments located in the Marina Bay area of Richmond. Both projects were launched as a venture consisting of Lennar and Emerald Fund. Kennedy Wilson bought Lennar’s stake in the two condo projects, which total 712 units.”

“‘Builders want to focus on the inventory they are sure they can sell,’ said Matthew Anderson, a partner with Oakland-based Foresight Analytics. ‘Builders don’t want to keep a project that no longer pencils out.’”

“About 515, or almost three-fourths, of the units in the two projects remained unsold as of a few weeks ago.”

“Kennedy Wilson’s strategy will be to auction some of the homes. The company plans to auction 40 of the condos in August for $140,000 to $255,000. The homes had been offered for $275,000 to $455,000 previously.”

“Despite this aggressive effort, the prospects for the managers for the Marina Cove and Marina Shores projects remain murky. That’s because of the seemingly relentless nose-dive in sales and residential property values.”

“‘We’re still in pretty uncertain territory right now,’ said Stuart Cramer, Kennedy Wilson’s managing director for residential investments and development.”

The Sacramento Bee. “The down payment-assistance programs pioneered by Sacramento nonprofit Nehemiah Corp. of America…and others like it, will be eliminated Oct. 1 under the new housing law. Federal officials had long complained that the program, under which the down payment is supplied by the seller, leads to more defaults because it effectively inflates the total price of the property.”

“Nehemiah CEO Scott Syphax urged President Bush on Monday to veto the bill.”

“‘Our leaders are ignoring a basic fact: Seller-funded down payment assistance is the only remaining safety net available to millions of families today seeking home ownership,’ Syphax said in a press release. ‘Killing these programs will not only negatively impact generations of low- to moderate-income Americans who would have been able to use homeownership as a tool to create wealth, stature and self esteem, but to our economy as a whole.’”

The Recordnet. “Terry Hull Sr. (who) operates Stockton-based Property Management Experts, said that even in the strong rental market, fed by people who have had to find other housing after losing their homes to foreclosure, landlords have been reluctant to boost rents because of the economic slowdown.”

“Stockton has consistently been at the top of metro areas nationally for home foreclosure activity. This puts many former homeowners into the rental market. But Thomas said that apartment occupancy numbers could be threatened in coming months by the rising number of foreclosure homes being snapped up by investors who intend to put them on the rental market.”

“As the number of rental houses in the county jumps, investor owners will probably have to lower their rents to compete for renters, Thomas said. ‘That spread can tighten, and that means it will ultimately impact apartments,’ he said. ‘Those homes will end up cannibalizing apartment rents at some level.’”

“Stockton area real estate brokers say that at least 80 percent of home sales this year are foreclosure homes and that as much as half of those sales involve investors.”

The LA Daily News. “Home values plunged by nearly a quarter-million dollars in the San Fernando Valley during June as a record number of foreclosures flooded the market and sales continued to lag, a trade group said Tuesday.”

“The median resale house price tumbled 34 percent, to $431,000 - a loss of $224,000 from the record high price of $655,000 the previous June, said the Southland Regional Association of Realtors. The price fell 4 percent, or $19,000, from May, and is now nearing the $425,000 median recorded in February 2004.”

“‘I think that’s indicative of the impact the (foreclosures) are having on the market,’ Jim Link, the association’s executive VP, said of the steep price decline. ‘It’s going to be a while yet before the (foreclosures) work their way through the market.’”

“Most of the foreclosures are concentrated in communities dominated by first-time buyers who got in as the market was peaking in 2005.”

The Orange County Register. “Four Santa Ana ZIP codes had the highest concentration of foreclosures in the county in the second quarter, according to an analysis by DataQuick for The Orange County Register. In some ZIPs, the ratio of foreclosures to the total number of houses and condos doubled from the first quarter.”

“In parts of Santa Ana in 2005, the peak of the housing boom, 75 percent of the money borrowed to buy homes was subprime.”

“Foreclosures also are spreading to areas not targeted by subprime lenders. Some South County ZIPs rank in the county’s top third for concentration of foreclosures, including parts of Lake Forest, Ladera Ranch, Rancho Santa Margarita and Aliso Viejo.”

“Steve Thomas, president of RE/MAX Real Estate Services in Aliso Viejo, said first-time homebuyers are scooping up bank-owned properties and other distressed sales in cities like Santa Ana. By his math, foreclosures and short sales make up about 75 percent of the homes for sale in Santa Ana.”

“‘Prices have come down to the point where the affordability is screaming, ‘First-time homebuyer, you can buy more home in Santa Ana, Garden Grove or Anaheim,’ Thomas said.”

The Union Tribune. “San Diego and many other metro areas around the country continued to see record home price declines in May, the Standard & Poor’s/Case-Shiller Home Price Index showed yesterday. According to Case-Shiller, San Diego’s index has dropped from a high of 250.34 in November 2005 to May’s 178.03, compared with a baseline of 100 in January 2000.”

“That means a house that sold for the county’s median price of $230,000 in January 2000 theoretically rose to a peak $575,800 before falling back to $409,500 in May.”

“Andrew LePage, an analyst for DataQuick, whose data shows similar trends to Case-Shiller, warned against drawing any conclusions about the immediate future. ‘It’s possible that the decline in prices in certain areas has subsided but that doesn’t mean it can’t pick up again,’ LePage said, noting that the proportion of high-priced home sales could grow and falsely suggest that overall prices are on the rise.”

“He said it will take another few months to see if overall prices are bottoming out. ‘Even the most pessimistic folks out there, I assume, don’t believe prices are going to zero,’ he said. ‘At some point, the curve has to change and we won’t be racing down as fast, especially in hard-hit areas.’”

The Daily Bulletin. “Kellee Hawkes is on the verge of losing her Upland home. She was laid off in December and isn’t making enough in her new job to make the mortgage payments and pay off the debt that she accrued when she was unemployed. She will have to be out by October unless she can do something to save her home.”

“Her credit score has been affected by the missed payments and although her house is on the market as a short sale, she does not think that she will be able to sell it before it goes to auction in October. She said that there are many homes for sale within her neighborhood and most are bank owned.”

“‘(The bank) seemed OK with short selling my home to a new buyer and writing off the total sum of my loan,’ Hawkins wrote. ‘Why not, in essence, do the same thing but with the person already in the home and motivated to keep it?’”

“Bruce Engles, a real estate agent in Upland, said it’s a situation he sees too often. It’s hard for people to consider all possible scenarios before committing to purchasing property, but it’s something that could save heartache in the end.”

“‘(They must) make sure that they can really afford it in the bad times, not just the good times,’ Engles said. The average price of a home in Upland (is) $403,529.”

“Nannette Miller has lived in Upland for most of her life and would like to buy a home in the city. The single mother of 13-year-old triplets is looking for a three-bedroom, one-bath house, but is finding it hard to find one within her price range.”

“‘In order to buy a house, there’s a lot of hoops to jump through,’ Miller said. ‘I’m wondering when the people in Upland that are selling their homes will realize that they need to lower their prices.’”

The Bakersfield Californian. “Multiple loan applications kept secret from lenders. Discrepancies in income and job statements sent to various mortgage banks. Such details, which will become the foundation of state real estate regulators’ case against Carl Cole, 61, and David Crisp, 28, continued to be laid into the record Tuesday during the second day of an administrative hearing in Bakersfield.”

“In one loan application, David Crisp’s gross income was listed as $350,000 a month. In another application made at the same time to a different lender, Crisp listed gross income as $99,000 a month, documents indicated.”

“Crisp, who is representing himself, went after lenders during cross examination. He questioned one witness about the large commission Crisp & Cole had received - $51,000 - for handling the sale of a Seven Oaks mansion Crisp himself bought.”

“An ongoing Californian tally has found nearly $78 million in troubled loans related to operations of Crisp & Cole’s employees, family members and business associates. Most involved homes in the Bakersfield area.”

“Of those home loans, 113 have so far been foreclosed on as of last week, the tally shows.”

The Manteca Bulletin. “Some advice from ‘The House Doctor’ might just help those struggling to make sense of the ailing Northern San Joaquin Valley housing market to get started on the road to recovery. Christine Papworth - aka ‘The House Doctor’ - fields questions from callers Saturdays from 10 to 10:30 a.m. on the Modesto news radio KFIV 1360AM on ‘the “House Calls’ show started six weeks ago.”

“Papworth - who is part of the Re/Max Executive team in Manteca - has 31 years of experience selling real estate.”

“Papworth doesn’t pull punches. She’ll tell you that this is one of the most challenging housing markets she’s ever seen but at the same time she’ll tell you it’s a good thing as the ‘cleansing’ taking place with problem loans, prices out of whack, loose lending standards, and a cavalier attitude of buyers was long over due and will be better for the economy and the housing market in the long run.”

“‘Every market has its problems,’ Papworth noted. ‘This one just has a lot more.’”

“Papworth agreed…that ‘houses are selling so that’s a good sign.’ But most of those homes - at least 90 percent of the 519 existing homes sold in Manteca through MLS since Jan. 1 have been under duress as short sales and banked-owned properties.”

“‘The House Doctor’s’ prognosis for Manteca is partciuarly upbeat. ‘It (Manteca) will be the No. 1 or No. 2 city in Northern California in terms of coming back first’ Papworth said. ‘Manteca is well positioned because of the growth.’”

“But even so, she doesn’t see the market bottoming out quite yet. Having said that, she noted buying makes a lot of sense as the good homes are going quick with multiple offers while interest rates are going to be a dicey gamble especially if the Federal Reserve Board decides to get tough on inflation.”

“Papworth also puts her money where her mouth is. She is going to…purchase another rental home for $100,000. She’s confident that in six years…she will have a home worth $350,000 that could then be sold to help pay for her grandchildren’s college.”

“‘You can’t go wrong on homes in California,’ Papworth said. ‘Prices will always come back.’”

It Turns Out, Fast And Easy Loans Are Not So Easy

The Fulton Sun reports from Missouri. “There is no doubt that the mortgage crisis has made its way to Missouri, and the effects are slowly trickling down to the state and county level. Mikki Starmer, a real estate agent, said she thought the reason for an increase in foreclosures was due to lenders giving loans to home-owners that do not have the ability to properly manage their debt.”

“‘They are too quick to loan,’ she said. ‘They call them fast and easy loans, and it turns out they are not so easy. In this area it has more to do with bad loans and people getting in over their head.’”

“Rick Gohring, president of the Callaway County Market for The Callaway Bank, said most of the banks that are responsible for foreclosures in the area are national or statewide lenders.”

“‘I would have to say that when you see a trustee that is handling a foreclosure, they are not the trustees that work with local banks - these are mortgage companies,’ he said. ‘This happens because of the way they were organized when they did the loans, they made deals that may not have been in the best interest of the consumers.’”

“Data from Callaway combined with other counties shows a sharp decrease in sales. ‘In looking at what all of Callaway and Cole did, we are down 35 percent from a year ago,’ Starmer said. ‘In Callaway and Audrain we are down 45 percent - we did 55 percent of what we did last year at this time.’”

“Gohring said even though interest rates are low and that it is a buyers’ market, there has been a decrease in customers at The Callaway Bank looking for home loans. Gohring attributed that fact to concerns that new home owners may have about the ailing economy and the future of the housing market.”

“‘There is a saying that the decision to by real estate is the most postponeable decision you can make,’ he said. ‘In terms of home sales, when you have uncertainty in the market… you can hold off on buying a house because you always have the option to continue to rent. Once you buy a house you are set in it no matter what happens.’”

The Post Dispatch from Missouri. “Jan Winters took a proactive approach with her lender, First National, for her 2-bedroom, 2½-bath town house in a new subdivision in O’Fallon, Mo. It was built for her two years ago while she was going through a divorce.”

“But shortly after the divorce, Winters quickly realized she was in trouble trying to make payments on her $199,000 mortgage. Her expenses exceeded income by $400 a month. By March 2007, she was constantly one mortgage payment behind, and that was before the interest rate rose on her adjustable mortgage.”

“‘I knew they didn’t want my house and I did. I tried selling the house but couldn’t,’ Winters said. ‘So I told the lender if they helped me through this, life’s going to turn around.’”

“In the end, she agreed to get a second job - in information technology - and seek credit counseling. First National let her skip three payments and added them to the end of her loan. So far, Winters has managed to make all of her payments on time.”

“Even borrowers like Winters who work out solutions to stave off foreclosure continue to teeter on the brink of financial ruin. Winters’ credit was hurt by the payments she missed, and that means she cannot refinance to a fixed-rate mortgage.”

“But First National recently agreed to keep the interest rate, which was due to reset this year, fixed for three more years. Still, more than half of her monthly income is going toward repaying debts, including the mortgage, credit cards and car loan. She recently lost her second job, and is now sewing clothing and upholstery out of her house.”

From WSBT South Bend in Indiana. “The relief bill…would give some home buyers a tax credit up to $7,500. Experts say it may encourage people to reconsider buying a home, especially with prices dropping on foreclosed homes.”

“The Nortons are searching for their dream home. One South Bend home caught their eye, but the price may still be a little high. ‘We only have $3,000 for the down or closing,’ explained Geri Norton, a first time home buyer. And they don’t qualify for low income help. ‘We fall between the cracks,’ said Norton.”

“The relief for first time homeowners could turn the Norton’s dream into a reality. ‘Yea that would be wonderful,’ said Norton. ‘We don’t want the house to own us.’”

The Journal Star from Illinois. “Belief that the U.S. housing market will not recover for an extended period of time played a large part in Standex International Corp.’s decision to close its Bartonville plant, the company said in a news release.”

In its first statement since informing nearly 60 employees of the Acme Standex Co. of the decision, the Salem, N.H.-based company issued a one-paragraph release.”

“‘The company made the decision to close the facility after careful consideration and in light of the continued severe recession in the new housing construction market…It was necessary considering that the housing market is not forecast to recover for an extended period of time,’ said the statement.”

From ABC 4. “Home prices have fallen as much as 50% in some cities around the country recently. That’s bad news if you’re selling, but great news if you’re buying. One prime example is a home in Cleveland, Ohio: a 3-bedroom, 2-bath multi-level house that had an estimated value of $112,692. Today, it’s yours for just under $37,000.”

“‘One thing that is really unprecedented is the speed at which the prices have fallen in these markets,’ said Paul Bishop, Ph.D. of the National Association of Realtors.”

“While hard-hit states like California, Nevada and Florida come to mind, some of the best deals for home buyers today can be found in Detroit, Michigan, where a whopping 1,754 homes are currently on the market, all for under $10,000.”

“‘Five years ago, this house would’ve gone for 69-89 thousand,’ said Carl Williams of Saturn Group Realty in Detroit. ‘Right now, this is one of Detroit’s great values, and it’s going for $7500 — a real steal.’”

“That home is located in a middle-class neighborhood, and experts say that when the market goes back up, the value will, too.”

“‘While it is painful for sellers, it is a good opportunity for buyers who are in the market to get a good deal on a house,’ Bishop said.”

The Pioneer Press from Minnesota. “U.S. home prices took their steepest dive yet in May by one key measure, though the erosion in the Twin Cities market appeared to moderate slightly. The Standard & Poor’s/Case-Shiller 20-city index dropped 15.8 percent in May compared with a year ago and the 10-city index dropped 16.9 percent - both record annual declines since the two gauges started in 2000 and 1987, respectively.”

“The Twin Cities index posted a glint of possible hope, plunging 14.8 percent from a year ago - a steep drop but not a record.”

“Persistent declines have returned Twin Cities prices to their 2003 levels, according to the index, wiping out years of gains for homeowners.”

“Have housing prices hit bottom? Jeff and Anne Deeb would like to know. They’ve had their Blaine town home on the market for nearly nine months and cut the price more than a dozen times, to $170,000.”

“Eager to move closer to their jobs in Minnetonka and Eden Prairie since they pay $700 a month to fuel long commutes, the Deebs are mulling another markdown - and possibly taking a loss on the home to get a sale done.”

“‘It’s frustrating,’ said Jeff Deeb. ‘We’re trying to figure out if it’s worth dropping now. Do you do it now and get rid of it and move on? Or do you try to wait it out? Maybe we’ve hit rock bottom. I don’t know.’”

“Christopher Galler, senior VP of the Minnesota Association of Realtors, describes the Twin Cities as being ‘in the midst of a muddy turnaround.’”

“It’s not clear when the tide of foreclosures and short sales that have flooded the overloaded market will subside. In the first half of this year, lenders have repossessed 9,176 homes in the seven-county Twin Cities area, according to a Pioneer Press survey of sheriff’s foreclosure auctions, compared with about 13,000 for all of 2007.”

“Warren Hanson, head of the Greater Minnesota Housing Fund, predicts metro foreclosures will climb more than 50 percent over last year, or reach nearly 20,000 by year’s end.”

“Such ‘lender-mediated sales’ make up about 20 percent of metro home sales, or more than 6,000 listings, pressuring down prices overall, according to a Minneapolis Area Association of Realtors study.”

“Finally, there’s still a lot of new construction that needs to be burned off. About 8,600 homes are under construction or finished and vacant around the Twin Cities, most of which aren’t counted in the total for-sale inventory the Realtor groups report.”

“The Deebs…two-bedroom town home in Blaine is 7 years old, with windows on both sides and a back patio that opens onto a small woods. But there’s an oversupply of brand-new empty town homes nearby in Blaine, said Ryan Karasek, the Deebs’ agent with Edina Realty’s Champlin Park office.”

“So the Deebs are stuck. They’ve held off hunting for a home closer to Minnetonka or Eden Prairie lest they fall in love with something before they can sell the town home, Jeff Deeb said.”

“‘When we first priced it, we thought we were right in the ballpark,’ Deeb said. ‘We don’t want to give it away.’”

From KFYR TV in North Dakota. “The housing bubble has not burst in western North Dakota like it has in many other areas, but there are more homes on the market in the Bismarck area waiting to be sold now than in the last four or five years.”

“Doug Scheetz`s northwest Bismarck home is for sale. His real estate agent says it has everything a buyer could want. The house has been on sale for two months. ‘We`ve had a lot of interest. A lot of people though the house, and then also online,’ says Doug.”

‘But so far, there hasn`t been a buyer who was willing to commit. Doug`s real estate agent says that`s because many interested buyers are scared to buy because of what might happen instead of what`s actually happening.”

“Century 21 real estate agent Sonja Tkach says, ‘What we`re seeing is that we have a lot of impact that`s coming from our national media. It`s a good market in Bismarck. And what people need to understand is we`ve been very insulated, and we`re not as affected by what we`re seeing nationally as what someone might think.’”

“Inventory levels are different for homes at different prices. Some have enough homes to last for a year and a half. Prospective buyers can be a little more picky. And once they do choose a home, they have extra wiggle room to haggle. Buyers might want to also consider the fact that it`s a good time to find a reasonable mortgage.”

“Tkach says, ‘If you`re looking at a $200,000 house in today`s market, interest rates are 6.25%. Logically, we`ll see that interest rates will probably go up. If they go up to 7.25%, that`s about a $200 difference in home payments.’”

“So buyers who wait could miss out on saving money on both the purchase price and the mortgage.”

Bits Bucket For July 30, 2008

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

July 29, 2008

They Just Plain Walk Away In California

The BBC News reports on California. “In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California - with money borrowed from her bank. By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less. So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase. ‘I thought ‘this is crazy,’ Ms Trainer says. ‘It just does not make financial sense.’”

“As a successful professional, Karen could comfortably have managed the higher mortgage payments her bank demanded. Instead, she decided to stop her mortgage payments altogether and let her bank repossess her apartment.”

“‘Generally speaking, within 5 years you are about back where you were, so my husband and I decided we’ll take the hit and live with it,’ she said.”

“‘This is the kind of conversation that’s going on at cocktail parties, at swimming pools,’ Professor Susan Wachter, professor of real estate and finance at Wharton School of Business says. ‘And suddenly this option which was truly unthinkable in the past becomes thinkable.’”

“Ms Trainer says she feels no moral obligation to go on paying a loan on a property that is going to go on losing her money. She says her friends support her decision. ‘I think people are taking a more cold-hearted look at it,’ she says. ‘Is the bank going to pay for my retirement because I was a good girl and paid my mortgage, even though legally I didn’t have to?’”

“In the city of Stockton - the foreclosure, or repossession, capital of the US for 2007 - estate agent Kevin Morgan sells repossessed houses on behalf of the banks that now own them. According to him, walking away has become commonplace.”

“‘I would say it’s probably 70% of the volume of our foreclosures right now,’ he says. ‘It’s a business decision for their family that the smartest thing they can do is walk away from their home.’”

“As a sign of the changing times, some 60% of borrowers do not even bother to contact their banks to attempt a renegotiation of their loan, Mr Moran explains. ‘They stop paying and they stop talking,’ he says. ‘They just plain walk away.’”

The North County Times. “San Diego County house prices fell by the largest margin yet, tumbling 23 percent from a year ago, according to a report released Tuesday. Year-over-year declines in San Diego County were the steepest on record for the index, which goes back to 1987.”

“House prices approached a 30 percent overall decline, down 28.9 percent from a November 2005 peak. Still, house prices are 78 percent higher than 2000 levels, according to the report.”

“Including inflation, house prices are 35.1 percent below the 2005 peak and just 38.7 percent above 2000 levels.”

“Low-end real estate, below $372,135, led the price decline for the 15th straight month. But for the first time in seven months, high-end houses, defined as those selling for more than $552,477, lost more in one month than the middle-tier, or those priced above $372,135.”

“That high-end houses declined at a faster rate ‘is not surprising, particularly now that we’re two years into a general decline,’ said Maureen Maitland, VP of index analysis. ‘It just shows the demographics of the market decline moving around.’”

The Press Enterprise. “A US. District Court judge on Monday set an Aug. 18, 2009, trial date for three Murrieta men that the Securities and Exchange Commission has accused of operating a real estate scam that defrauded at least 95 investors of more than $11 million and forced many into foreclosure.”

“Judge Virginia A. Phillips chose that date to hear the SEC case that accuses James B. Duncan, Hendrix Montecastro and Maurice E. McLeod of violating federal securities laws and seeks civil penalties and restitution of ‘ill-gotten gains’ derived from the scheme.”

“Also named as defendants are Pacific Wealth Management, Stonewood Consulting Inc. and Total Return Fund, all companies that Duncan, Montecasto and McLeod controlled.”

“The SEC lawsuit said Duncan and his colleagues solicited investors in Southern California and elsewhere who wanted to benefit from the Southern California real estate boom a few years ago. The scheme targeted military personnel at Davis-Monthan Air Force Base in Tucson, Ariz., as well as the Southern California Filipino community and church members.”

“Duncan, Montecastro and McLeod are accused of directing investors to purchase more than $118 million worth of homes, falsifying loan applications so they would afford to buy multiple houses. According to the lawsuit, the defendants would obtain an inflated appraisal on the houses and pay themselves a fee from the excess mortgage proceeds.”

“The complaint said the defendants agreed to make the monthly mortgage payments on the houses only to entice other investors. When the mortgage payments ultimately stopped amid a cooling real estate market, the investment houses fell into foreclosure.”

“About 20 angry investors, wearing distinctive orange t-shirts, attended Monday’s hearing. One of them, James Lheureux, said he believes the defendants have been able to hire ‘high-priced lawyers’ with the victims’ money and he would like to see them prosecuted criminally. ‘We are looking to put them in jail,’ he said.”

The Bakersfield Californian. “The hearing of state accusations against former Bakersfield real estate firm Crisp, Cole & Associates got off to a quiet start Monday in the basement of the Masonic Temple downtown.”

“Regulators say the company lied to lenders on more than $12 million worth of loans. As the designated broker, Cole was responsible for the activities of the company and its staff at all times, the complaint says.”

“Cole’s attorney, Glenn Kottcamp of Fresno, said his client had little to do with the transactions in the California Department of Real Estate’s 25-page complaint, filed last September.”

“In 2005, Kottcamp said, when most of the transactions took place, Cole’s attention was consumed by plans to erect giant towers at Cal State Bakersfield. The towers project later collapsed from lack of funding.”

“‘He didn’t know’ what Crisp & Cole employees were up to at the time, Kottcamp said. David Crisp, 28, a licensed sales agent, served as his own counsel.”

“Cole’s attorney implied Crisp had forged Cole’s signature on one set of documents. The judge ended the line of questioning when the state’s attorney objected.”

“Crisp was mostly quiet, but became bolder in cross-examining witnesses toward the end of the session. In one instance, he attempted to question underwriting standards of Fremont Investment & Loan, but was cut off by an objection.”

“The judge seemed to offer good-natured advice about the need to establish a line of questioning before Crisp could ask such questions of the Fremont witness, Laura Calmes.”

“Former Crisp & Cole employee Robinson Nguyen did not appear Monday. He will lose his license by default when the proceedings end, said Rich, the state attorney. Two other employees named in the complaint made deals prior to the hearing.”

“The downtown vintage shop Shabby Chic has closed its doors after eight years so that the owners can concentrate on another store. Shabby Chic is the latest in a string of downtown retailers that have closed in recent months, most of them casualties of a slow economy. ‘It was doing well, it’s just that we’ve opened another business and wanted to focus on that,’ (co-owner) Kelli Davis said. ‘We just didn’t want to deal with it anymore.’”

“Bambini Carini, a retailer of children’s furniture and apparel at 19th and Eye Streets, closed a few weeks ago.” Neighbor Jezabelle’s Unique Boutique is for sale. Owner Mario Delis said he put it on the market to focus on other business interests.”

“It’s not that downtown is weak, insisted Bakersfield Economic Development Director Donna Kunz. ‘Anything, anywhere, that is a high-end boutique or housing-related is really having a troublesome time right now because of the residential market,’ she said. ‘Between fuel costs and food prices, people just don’t have a lot to spend right now.’”

“‘”Unfortunately downtown doesn’t have that many, so when we lose even one there it’s kind of tragic. Hopefully our restaurants will be able to keep things going until our Mill Creek project gets going,’ she said.”

“The 10-acre South Mill Creek project is a mix of 85 high-rise apartments, 35 condos and 65,000 square feet of neighborhood shops and restaurants.”

The Desert Sun. “The Coachella Valley needs to go after higher-paying jobs, particularly in the health care industry, to diversify its economic base, a national community and economic development consultant said Monday.”

“The desert has ‘enviable assets,’ yet there are ‘troublesome trends’ when it comes to its decline in labor force participation and economic mix, said J. Mac Holladay, CEO of Atlanta-based Market Street Services.”

“‘We have never had, in the history of this country, this set of circumstances at the same time,’ he said, referring to the high prices of oil and food housing values as well as drops in home values, construction and jobs that plague the nation’s economy. ‘It is time for you to get very, very serious about this.’”

“The idea of regional economic development and stimulus is gaining steam among a number of local agencies, including the desert chapter of the Building Industry Association of Southern California, which helped sponsor Monday’s event.”

“‘We’re shifting gears to try to stimulate economic conversations that we have not had in the past and have not been required during economic booms,’ association executive director Fred Bell said.”

Things Were A Lot Different Two Years Ago

The Rocky Mountain News reports from Colorado. “Home prices in the Denver area fell by 4.8 percent in the one-year period ended in May, well below the record 15.8 percent drop in 20 major metropolitan areas surveyed around the country, according to the closely followed S&P/Case-Shiller Home Price Indices released today. ‘The overall real estate market continued to slide in May,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s.”

“‘Since August 2006, there has not been one month where we have seen overall price increases’ in the two composite indexes it tracks, Blitzer said. Blitzer noted that Sunbelt cities such as Miami; Tampa, Fla.; Phoenix; Las Vegas; San Diego and Los Angeles ’saw the biggest booms and now see the largest declines.’”

The Daily Sentinel from Colorado. “The time for rapid home building in the Grand Valley is becoming a far-off memory. ‘We have no construction going on right now,’ said Glen Whaley, president of Hunter Construction and Development.”

“‘To me, the good part is I think this needed to happen. Land prices were starting to get ridiculous,’ Whaley said. ‘I don’t know how people have afforded the houses they have now in the first place. My first house after college was $66,000, and I’m in my late 30s now. I don’t know how people are doing $280,000, $300,000 houses. For $300,000, $350,000 houses, I don’t know who makes that kind of money. What I made out of college, I don’t make 10 times that compared to what homes have gone up to.’”

“‘When I first started building, you could get a lot for $20,000,’ he said. ‘You build it for four times your lot. Now, they’re selling lots for $100,000. Now you’re selling for $300,000, $400,000 on those. The payment on that is ridiculous.’”

The Deseret News from Utah. “Utah ranked 14th in the nation in the rate of foreclosure filings in the second quarter of this year, up from 18th during the first quarter, according to a report. The St. George area saw filings jump 446 percent year-over-year and 56 percent from the first quarter of 2008 to the second quarter, the report said. The Provo/Orem area had the second-highest foreclosure rate among Utah cities.”

“Because of the poor loans made by numerous financial institutions, some borrowers are in the process of deciding whether to try to work out a solution with their bank to avoid losing their house or just walking away, said Salt Lake-area real-estate broker David Seiler.”

“‘The banking industry was stupid,’ Seiler said. ‘We’re starting to see the ramifications all over the place.’”

“‘If it doesn’t start to pick up in August, then we’re going to start to see people start to lower their prices,’ he said. ‘They don’t want to go into fall and winter and not sell, if they don’t have to.’”

“Home-sales numbers indicate that the Wasatch Front’s housing bubble has truly begun to burst: 61 of 81 ZIP codes in four counties saw decreases in median home prices during the second quarter of 2008, compared with the same period last year.”

“‘Last year’s reckless lending artificially inflated sales,’ said Jillinda Bowers, president of the Salt Lake Board of Realtors, in a prepared statement. ‘Finally, we have gotten rid of the rampant speculation and loose lending standards.’”

“Among the areas hit hardest by declining prices was Kaysville in Davis County, which saw its median sales price fall 23.2 percent year-over-year to $266,500. In Utah County, the median home sales price in Alpine fell nearly 27 percent from the second quarter of last year to the second quarter of this year.”

The Arizona Republic. “The stories from the Gardens in Gilbert are the same as many American communities. Times were great until the housing market plummeted. Now foreclosures and short sales are beginning to crop up in the development, like many others across the southeast Valley.”

“Take Celestial Williams. Her family is selling their home in the Gardens by Trend Homes but is moving to another house in the subdivision. The family is being forced into a short sale because foreclosures on the market have dragged down prices.”

“Their home had no chance to sell in 2007 because another family who sold a home comparable to the Williams’ home in the Gardens took a $100,000 hit.”

“Three years ago, when the family moved to subdivision from Orange County, Calif., the family didn’t foresee the market crash. Now they are being forced to sell the home to stay out of debt.”

“‘We planned on living here forever,’ Williams said. ‘House prices were still going up when we bought it.’”

“Above Alecia Sibio’s door is a black plaque her son made when she moved into her townhouse in the Gardens. The tri-level was the first home Sibio owned. The plaque engraved ‘Established 2005′ made her feel like she finally arrived in her new home.Three years later, Sibio’s dream home has turned into a short sale, and she’s being forced to look at homes in Queen Creek.”

“‘In the beginning you feel like you are a wretched loser that’s not smart, wise or frugal,’ Sibio said. ‘You start beating yourself up emotionally. But thousands of people in the country and hundreds in the town are going through the very same thing.’”

“The pop of the housing bubble has hit few groups harder than those in the mortgage industry. As mortgage companies continue to fold, employees are struggling, largely without success, to find jobs with comparable pay. Many who were making six-figures at the height of the housing boom are taking whatever they can to pay the bills.”

“Brian Hamerla said every time he goes to an interview, the employer asks for financial advice not about his skills. ‘Interviews that I have been on, they treat us like we have the plague,’ he said. ‘There’s a reputation out there of mortgage brokers being untrained.’”

“Hamerla said he’s earning about a third of the six-figure salary he was making a few years ago as a mortgage broker. He is looking for a management position but hasn’t had any offers, even though his girlfriend runs an agency.”

“‘The biggest struggle is the stereotype put on mortgage brokers,’ he said.”

The East Valley Tribune from Arizona. “Free rent! Move in free! Free big-screen TV with move-in! Pass by any apartment complex across the East Valley and chances are you’ll see banners or signs promising big savings to whoever wants to become a tenant.”

“‘The negative for apartments is the fact that there are so many empty single-family residences … that people tried to sell and couldn’t, and then they end up renting them,’ said Bob Kammrath, owner of Valley research firm Kammrath & Associates.”

“The apartment market was vastly overspeculated, meaning property values were driven unrealistically high, and it is now getting back to reality, said Pete TeKampe, senior investment associate with Marcus & Millichap, the nation’s largest commercial real estate brokerage.”

“‘It’s kind of like we had this big party and now there’s the hangover, and when you hit it really hard when you go party, the hangover seems more severe,’ he said. ‘There were a lot of deals that went down, and you’re left scratching your head thinking, why did that guy do that?’”

“Anita Collum, certified property manager with P.B. Bell, said this economic cycle is more severe than past ones. ‘The single-family residential products coming on line and competing with our apartment rentals is a phenomenon that we’ve never experienced before, just because of the quantity of them on the market,’ she said.”

“In addition, the collapse of the condominium-conversion market and the drop in population growth have contributed to higher apartment vacancy rates, Collum said.”

“One of the prime groups for apartment occupancy is new arrivals to the Valley, and it’s now clear that ‘almost everyone has overestimated how many people are coming here,’ Kammrath said.”

“‘We have negative job growth, no jobs, and if people can’t sell their homes elsewhere, why would they move here?’ he said.”

The Review Journal from Nevada. “Don’t call them layoffs. According to developer Donald Trump, roughly 70 employees at the Trump International Hotel & Tower were ‘impacted by changes in their schedules’ due to the slowdown in closing sales of the building’s 1,282 studio, one-bedroom and penthouse units.”

“‘This is not really any different than what has gone on in Las Vegas,’ Trump said. ‘We’re adjusting schedules because of the volume of business. As soon as the units open up, we’ll bring people back on.’”

“Before the building was topped off a year ago, Trump had said all the units had been reserved by potential buyers who plunked down 20 percent nonrefundable deposits for residences that carried prices of between $700,000 and $5 million.”

“The current mortgage crisis, he said, has slowed the closing process. In June, Trump said sales had been completed on 250 units. However, a report by Deutsche Bank a week later pegged the closings at almost 200 units as of June 12.”

“‘We’re working with people. We’re doing everything we can to help them,’ Trump said. ‘Look, I could have just taken the 20 percent deposits and moved on. But I wasn’t going to do that. We’re working very hard to help everybody who bought a unit to close their sale.’”

“Trump blamed the problems that befell Countrywide Financial for the slowdown in closings. ‘Countrywide really let us down,’ Trump said. ‘Things were a lot different two years ago.’”

“Plans for a second Trump tower have been placed on indefinite hold until the real estate and construction market recovers, Trump said.”

In Business Las Vegas from Nevada. “The Las Vegas economy is continuing its slump, and commercial real estate and development are paying the price. Pressured by overbuilding and retail outlets closing, Las Vegas recorded its highest retail and office vacancy rates in two decades. As a result, commercial construction has fallen 66 percent in the past year.”

“Triggered by Las Vegas’ 2-year-old housing slump and coupled with this year’s slowdown in tourism and gaming and commercial construction, the local economy is in a recession.”

“‘This is the worst I have seen it here in 20 years,’ says John Restrepo, an economist and principal of Restrepo Consulting. ‘People are in shock because they are used to the economy bouncing right back, but I don’t think we are going to have that quick of a recovery.’”

“‘We have had such a long period of economic expansion and growth, I don’t think anybody thought we could have a recession like this,’ says Keith Schwer, the UNLV’s Center for Business and Economic Research’s director. ‘With housing, we know it was a case where we overbuilt, overlent and overborrowed, and I think it was the same with commercial development.’”

“Some analysts attribute the weakness in the office market to ‘irrational exuberance’ two years ago when credit was easier to obtain and office developers not anticipating a housing bubble, credit crunch or slowdown. The problem should worsen because another 3.6 million square feet were under construction at the end of June.”

“Brad Schnepf, president of Marnell Properties, an office and commercial developer, agrees that a recovery could take time.”

“‘You would have to be nuts if you were not concerned,’ Schnepf says. ‘We were appreciating at double digits on an annual basis, and you wondered how far that could go.’”

“Las Vegas has obtained a national reputation as sort of a ground zero when it comes to home foreclosures. The City Council is cracking down by imposing $500-a-day civil penalties for properties that are creating blight in neighborhoods.”

“Last week, the council assessed its first three penalties against property owners of 6216, 6241 and 6225 Bellota Drive.”

“If the daily civil penalties don’t force the property owners to clean up sites, city officials are counting on the fines adding up to such large amounts that the owners would sign over the homes to the city.”

“In the past the city would clean and board up the properties and place liens on the property to recover its expenses, but that wasn’t having any effect on owners of foreclosure homes, Las Vegas Mayor Oscar Goodman says.”

“‘We just got tired of people creating blight in the community, and they wouldn’t contact us. That was the straw that broke the camel’s back,’ Goodman says. ‘They just left their properties there to become a nuisance.’”

Las Vegas Now from Nevada. “President Bush is expected to sign a bill aimed at helping hundreds of thousands of struggling homeowners. Jill is one of those homeowners in trouble. She agreed to tell us her story as long as we covered her face. She’s a professional, and says she’s embarrassed about the predicament she and her family are in.”

“‘I go home crying. I don’t have control that’s the worst thing not having control,’ she said.”

“Jill wishes this housing legislation would have been passed earlier. She says she and her husband took out a second mortgage to help him start his own business. Then he got sick and couldn’t work. Jill was left to support her family on a salary that didn’t cut it.”

“‘I had a decent job. I can’t make any more, we’ve been living on credit cards. We had to do something,’ she said.”

“The I-Team has uncovered a major mess for renters and homeowners in this valley. Elvis Nargi is an unlicensed broker and is accused of breaking into homes and renting them out. Since our story first aired, the I-Team has been flooded with calls from people who say they rented homes from Nargi.”

“Elvis impersonator Elvis Nargi does not have a proper license to be renting homes. Neither does the person who handles the rental agreements. The houses they rent out are going through foreclosure.”

“Those details are actually very easy to uncover. You can start with a property management permit. ‘Anyone should be able to produce their pocket card. You’re supposed to carry them with you,’ said Sue Naumann. She leads the Greater Las Vegas Association of Realtors.”

Seller Needs To Be Braced And Not Take Things Personally

The Seacoast reports from Maine. “A study released by Maine Real Estate Information System Inc. indicates that the drop in units sold statewide is a steep 24.32 percent, with the median sale price also dropping by almost 6 percent. According to MREIS, the median sale price for a home in Maine was down to $188,000 as of June. Among all the counties, Piscataquis suffered the largest drop at 37.5 percent in sales and 12.74 percent in median prices.”

“‘Buyers should negotiate aggressively for the property price and banking terms,’ said Jeffrey Wooster, the broker/owner of Lynam Real Estate Agency in Bar Harbor. ‘Buyers know they are in the driver’s seat and are asking for many concessions. The seller needs to be braced and not take things personally.’”

The Boston Herald from Massachusetts. “Massachusetts housing suffered its worst first half in nearly two decades this year, with sales down 19.1 percent and median prices off 9.2 percent, new figures show.”

“‘What’s clear from these numbers is we haven’t reached the bottom of the market yet,’ said Tim Warren of market tracker the Warren Group, which released yesterday’s data. ‘The rash of bad news about bank failures and Fannie Mae’s and Freddie Mac’s capital needs convinces us that a turnaround isn’t going to happen this year.’”

“‘The slump in condo sales is even worse than in the single-family sector,’ Warren said. ‘Condo prices haven’t retreated as much as single-family home prices, so condo units aren’t moving.’”

“‘We hoped that June (market conditions) would be better, but that just didn’t materialize,’ Massachusetts Association of Realtors President Susan Renfrew said.”

The Patriot Ledger from Massachusetts. “First-time home buyers with good credit histories currently have many opportunities, said Georgia Taft Pye, president of the Plymouth and South Shore Association of Realtors. With more than 35,500 houses and more than 15,000 condos on the market statewide, buyers can choose among a broad selection of inventory.”

“‘They can get a pretty good deal if they’re underwritten with a good lender and have a decent deposit,’ said Pye, in Duxbury. ‘(Lenders) seem to be holding people purchasing the upper-end homes to very strict requirements.’”

“‘The quality of buyer has improved, because the banks have tightened up,’ said Jean Dunn, a sales associate in Rockland. ‘Now when I see a pre-approval letter, you can almost rest assured they’re a solid buyer. It’s different than it was a year or two ago.’”

The Connecticut Post. “During the first six months of this year, sales prices of single family homes fell in 117 Connecticut communities, showing a 8.8 percent decline in value statewide, according to the Prudential Connecticut Realty report.”

“Peter Gioia, economist with the Connecticut Business & Industry Association, said Congressional action takes a long time to take effect and he doesn’t expect the proposed measures to be any different. But Gioia said what Congress is doing is helping investors in securities and lenders feel a bottom is in sight.’

“That doesn’t mean the market will rebound, he said, because lending standards will be tighter than they were during the boom.”

“‘The terms before were ridiculous,’ Gioia said.”

The Daily Gazette from New York. “The Capital Region’s mortgage crisis showed no signs of cooling down this summer, as the number of homes in various stages of foreclosure during the second quarter more than tripled over the year, according to RealtyTrac.”

“In the five-county area around Albany, foreclosure activity rose 276.6 percent, compared to a year earlier, to 1,062 by June 30. Foreclosure activity, which includes default and auction notices plus repossessions, was up 74.8 percent from 608 during the previous quarter.”

“Realtors are hopeful the $7,500 tax credit will spur sluggish housing sales by luring more first-time buyers into the market. ‘We’ll be looking to people who have been sitting on the fence,’ said Mary Trupo, a spokeswoman for the National Association of Realtors.”

“Barbara Whipple, president-elect of the Capital Region Bankruptcy Bar Association, said her Latham law office is getting unusually busy for summer.”

“New Yorkers are increasingly struggling with mortgage and credit card bills as record-high gasoline and food prices outpace lethargic wage growth. ‘It’s getting bad out there,’ said Whipple.”

The Post Gazette from Pennsylvania. “A total of 418 families lost their homes to foreclosure last month in the five-county region that includes Allegheny, Washington, Butler, Beaver and Westmoreland counties, according to RealSTATs. The bulk of the increased foreclosures, however, were in Allegheny County, where 257 homes were lost in June. So far this year, 2,320 homes have been lost to foreclosure.”

“Although residential foreclosures in metropolitan Pittsburgh were up 66.5 percent last month compared to June 2007, the numbers still have not eclipsed the spike in foreclosures that occurred in the first half of 2006, which was this area’s worse period on record for mortgage defaults.”

“Several major cities have in recent months imposed a moratorium on foreclosures. A similar plan to halt the wave of home losses in Allegheny County is being sponsored by Sheriff William Mullen.”

“Sheriff Mullen has asked Allegheny County Common Pleas President Judge Joseph James to order lenders to meet with borrowers to try to work out a solution before any delinquent mortgage in the county goes to a sheriff’s sale.”

“‘This is more or less the last-ditch effort on our part,’ Sheriff Mullen said. ‘I don’t know what else we can do.’”

“‘We looked at Philadelphia. They established a moratorium. But we felt the most important thing to do is not postpone, but to get the lenders and borrowers to the table to try to work out a plan to save their homes. We think a moratorium only delays the inevitable,’ he said.”

“‘In general, we don’t think moratoriums are a good idea,’ said Dan Reisteter, VP of government relations for the Pennsylvania Bankers Association. He said Pennsylvania already has one of the longest foreclosure processes in the nation. It can take more than a year, he said, from the time a mortgage lender sends a notice to the borrower of their intent to foreclose to the time a property actually goes to a sheriff’s sale.”

“‘There’s plenty of time for a borrower to work something out with a reputable lender,’ Mr. Reisteter said, adding that national lenders will be reluctant to invest in areas where local governments are inclined to intervene.”

“‘If lenders don’t have the certainty and security of seizing a loan, they will be more hesitant of making mortgage loans,’ he said. ‘That, in the long run, will harm consumers and borrowers.’”

“Michael Sichenzia, chief operating officer of a firm that renegotiates mortgage debt for distressed owners, said government intervention in the mortgage mess is the equivalent of a Band-aid for a serious wound.”

“‘Anything we do that upsets the sanctity of the contract between two parties can not bode well for the long-term health of the mortgage and credit markets,’ said Mr. Sichenzia. ‘We have some well-meaning public officials who want to score brownie points for doing good, but they can’t see the forest for the trees and miss the big picture completely.’”

“‘You can’t use the law to effectuate the economic outcome you want. When you try to do that you throw more uncertainty into an already uncertain marketplace,’ Sichenzia said.”

The Star Ledger from New Jersey. “Across the country, the number of homeowners facing foreclosure more than doubled in the second quarter compared to the same period last year, and New Jersey’s foreclosure rate spiked even more dramatically, newly released data show.”

“The number of foreclosure filings in New Jersey jumped 140 percent from April to June to more than 17,000, according to RealtyTrac. According to the latest figures from the state Office of Foreclosure, there were 47,668 New Jersey foreclosure filings in the year ended June 30 — up from 26,132 the previous year. The state now has the 12th-highest rate of foreclosure filings nationally.”

“New Jersey may not have had the speculation-driven building boom seen in the Sunbelt, but ‘we do have a problem and it is starting to hit home,’ said James Hughes, a Rutgers University economist. He predicted housing prices in New Jersey will continue to decline and foreclosures will continue to be a problem at least until 2010.”

“None of this is news to Ayesha Iphell-Boyd, now struggling to halt foreclosure proceedings on the Irvington home she shares with her four children and her mother.”

“Iphell-Boyd said her mortgage payment soared from $900 a month to $1,700 — as the interest rate doubled to 13 percent– after she refinanced last year to get additional money to make home repairs. She soon defaulted on the mortgage while keeping up the car payments so she could commute to her job in Rochelle Park.”

“‘The mortgage company told me they would get me a good rate, but I never knew what the payment would be until the very end,’ she said during a foreclosure-prevention workshop in Newark.”

Bits Bucket For July 29, 2008

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

July 28, 2008

A Flu That Would Become An Epidemic In California

The Press Democrat reports from California. “Every week in Sonoma County, banks take back 60 homes from owners who have fallen behind on their loan payments. Sensing an opportunity in an otherwise slow market, real estate agents and mortgage brokers are organizing tours to showcase foreclosure properties to potential buyers. Almost every weekend this summer, buses carrying first-time buyers and investors roll through neighborhoods across the county. Most foreclosure properties can be bought for less than $400,000 — sometimes much less.”

“‘Almost everything I look at these days is a foreclosure. I’m surprised when it isn’t,’ said Pete Deatherage, co-owner of Pacific Appraisals in Rohnert Park.”

“‘I can never remember the market dropping as much as it’s dropped and this many people rushing in to buy in this short time frame,’ said James Madison, a foreclosure specialist at Coldwell Banker with three decades in real estate.”

“Richard and Teja Faria paid $330,000 in the same Santa Rosa neighborhood where they sold a similar home for $590,000 three years ago — a 44 percent difference. ‘It’s scary because it’s a declining market. But we want to buy because we want an affordable mortgage payment,’ he said. ‘The timing is perfect.’”

“The couple recently returned to Sonoma County to raise their two children. Driving the county with his agent for several weeks, Faria found plenty of foreclosed homes, but twice came up short with purchase offers.”

“‘We were frustrated,’ he said. ‘But we took a shot and like everybody else in today’s market, that’s what you have to do.’”

“Not wanting to miss out again, Faria offered $12,000 above the bank’s price for the 1,700-square-foot home in southwest Santa Rosa. The deal should close within a month.”

“Tosh Lu took the tour to aid his search for investment property. ‘In one tour you get many neighborhoods. This saves a lot of time,’ said the Rohnert Park resident. ‘I’m going to buy before the market goes back up again.’”

“Now a renter, Gary Everson, a 19-year-old looking with his mom…figures he can buy a house and make the mortgage payment with help from roommates. ‘Before, I didn’t think I was ever going to be able to buy a house, not until I saw these prices,’ he said.”

The Sacramento Bee. “For two years and three months, Doug Pautsch ran a division of Centex Homes that routinely led the Sacramento region in sales of new homes. On July 11, Centex ousted Pautsch. Pautsch has called the move an apparent retaliation for his lawsuit against Centex, a publicly traded home builder based in Dallas. The lawsuit, filed in Placer Superior Court, alleges that Centex didn’t pay Pautsch $355,000 in promised bonus money.”

“Recently, the 16-year veteran of the region’s home-building scene talked about his bird’s-eye view of the housing downturn. Q: Sacramento was one of the first U.S. housing markets to fall apart. Was it a problem communicating that to headquarters?”

“A: The first nine months everyone was in denial: ‘That’s just a little cold that Sacramento has, just a little speed bump. We’ll get through it. It’s just Sacramento.’”

“They didn’t realize it was a flu that would become an epidemic. My local counterparts and I would talk about it. At their respective corporate offices, not just mine, people just didn’t understand. Across the country everyone was full speed ahead. Money was flowing and sales were happening. It must just be Sacramento because it went up so quickly.”

“It was six to nine months before people realized this wasn’t just a Sacramento issue. They’d say maybe it was just California or Florida, and maybe it was just Northern California. There was a lot of denial going on. But as we know, everybody caught the flu.”

“Q: Where is this market going? A: I think we’re at the bottom. We’re going to bounce around a little bit. We moved through the foreclosures. They’re being absorbed by the market. Inventory has been coming down so there’s not a huge inventory issue anymore. I believe we’re at the bottom.”

“I think it will be next year when we start to see recovery. I define that as prices starting to go up.”

“Q: What keeps you up at night? A: I think there’s going to be a shortage of lots…When the herd leaves and the market has changed, they will chase the same lots. There will be a shortage of developable lots.”

The Press Enterprise. “Canyon Lake resident Matthew Larson is trying to help fight the foreclosure crisis. His weapons of choice are gallons of green paint. The battlefields are dead, brown front lawns.”

“Armed with a sprayer that resembles a pearl-colored jet pack, Larson paints lawns with a turf colorant traditionally used at golf courses. ‘It gives a home instant curb appeal,’ Larson said as he sprayed the green paint on the lawn of a repossessed home on Longhorn Drive in Canyon Lake.”

“Riverside County has been among the counties hardest hit by the mortgage crisis nationwide, according to real estate statistics. ‘I got into this because this crisis is not going to get any smaller, and someone has to step up,’ Larson said. ‘We’ve got beautiful, new communities and it is a shame to see them fall apart.’”

“It was a fix Jerry DiBernardo, the real estate agent listed for the Longhorn Drive home Larson painted, was willing to try. ‘I’ve seen it done on other properties. It was an opportunity to see if it will help sell the property,’ DiBernardo said. ‘It’s got to look better than the dying brush. Anything is an improvement.’”

“Perhaps the biggest obstacle, however, is psychological, said Robert Green, a turfgrass research specialist at the UC Riverside College of Natural and Agricultural Sciences. ‘There will be some who just aren’t used to the idea of painting grass,’ Green said.”

The North County Times. “It’s called a note job. Someone, usually a man, walks up to a bank teller and slips a piece of paper across the counter. Note jobs are the most common kind of bank robbery, a crime that decreased nationwide in 2007, but increased in San Diego and Imperial counties, said Special Agent Darrell Foxworth of the FBI’s San Diego field office.”

“In 2006, the two-county area had 146 bank robberies. In 2007, that number went up to 171. By July 16 of this year, there had been 108 bank robberies and, if prior years are any indication, there will be more robberies in the second half of 2008 than there were in the first.”

“Though the majority of bank robbers are drug addicts, a certain type of robber —- likely to pull a note job —- may be particularly active in a stagnant economy, said William Rehder, a Los Angeles-based bank robbery consultant formerly with the FBI.”

“These so-called subsistence bandits aren’t necessarily trying to support an addiction. They may have lost their jobs, lost the financial stability of a marriage, or finally cracked under the stress of mounting credit-card debt, Rehder said.”

“‘More recently, of course, they face the home mortgage foreclosure problem,’ he said. ‘There have been a number of these folks that maybe wouldn’t consider bank robbery ever in their lives —- but they’re facing the world-shaking desperation of these problems and they see this as a last resort.’”

The Mercury. “In a bad economy, fun is often the first casualty. For James Hedrick, that means it’s a busy time in his line of work. He’s one of those dreaded ‘repo men’ who repossess items after people fall behind on their payments.”

“He spends his days scanning megayachts, sailboats and fishing skiffs. Hedrick is an agent with National Liquidators, considered by industry experts to be the world’s largest marine repo company.”

“The company has tripled its business in the past three years, and now takes possession of about 200 boats a month in Florida, Ohio and California. The company’s competitors also say they’ve seen similar increases in business.”

“‘They’re going to hang on to the car, they’re going to hang on to the house. But they’re going to give up on the boat,’ said Hedrick, whose employer has doubled its staff in two years to 85 repo agents so they can meet demand from the banks and lenders.”

“It’s not just boats: Repo agents say banks and lenders have been asking them to reclaim all-terrain vehicles, motorcycles, small planes, snowmobiles, semi-trucks and, of, course, cars. Vehicle repossessions were up 10 percent in 2007 over the previous year, said Tom Webb, an analyst for Manheim, the largest car auction company in the nation.”

“Sometimes, owners turn the boats in to the repo agencies when they realize they can no longer pay. But other times, they hide or vandalize the boats before they can be seized, said Megan McQuaide, the owner of Repo Yacht Sales in San Diego. She’s boarded boats with oil splashed around the cabin, engines intentionally overheated and feces on the deck.”

“‘Sometimes it’s really malicious stuff,’ she said.”

“One boat dealer, whose company also does recovery for banks and lenders, says those facing boat repossession were typically involved in the housing boom either as a real estate agent, construction worker or mortgage broker.”

“‘A lot of this is self-inflicted. It’s somebody who three years ago made $50-$60,000 and didn’t save a penny,’ said Ray Jones, the owner of Long Beach Yacht Sales in California. ‘They thought the income would never end. But the income stopped and the toys went away.’”

One Statistic Everyone Can Agree On In Florida

The News Press reports from Florida. “Michael and Judith Van Dress have a lot of privacy and not a lot of competition when they use the brand-new fitness center at their condominium in Concordia. They moved to the north Cape Coral community a year ago, just as construction of the project was grinding to a halt in Southwest Florida’s floundering residential real estate market.”

Living at Concordia is a strange mixture of sparkling new amenities and subtle signs of decay, says Judith, who with her husband retired from Ohio. ‘There’s not a lot of occupants here,’ she said.”

“Welcome to life at the half-builts, the many projects large and small that sit largely vacant and partly completed - left high and dry when the housing market tide went out.”

“Experts say the wave of speculation that peaked at the end of 2005 - when the median resale price of a home was $322,300 - caused a spurt of construction at prices nobody could pay. According to figures released Thursday, the median resale price in June was $172,400.”

“There are no exact statistics on how many such developments there are in Lee County, but ‘you’re not talking about a few units,’ according to commercial real estate broker Jim Simon.”

“‘It’s in the thousands,’ he said.”

“A typical condo in Concordia can be had for about $100,000. That’s 63 percent less than the $267,900 the Van Dresses paid in April 2007.”

“Concordia’s sales office is still open, but the developer ran out of money last summer when its main lender pulled the plug on financing and filed a foreclosure action for $23.4 million on the partially completed, 34-building, 340-unit condominium.”

“Robert Thomas signed a pre-construction contract to buy a condo in the new Green’s Edge development in December 2005, at the height of the housing boom. The market crashed the following month and his unit was never built at the huge project off Colonial Boulevard in Fort Myers.”

“Now he’s trying to get his $84,000 down payment back from builder Harp Development, because the builder never put up his building and he counts himself lucky. The project sits empty.”

“Thomas freely admits he was buying the Green’s Edge unit as an investment. He hoped to sell it for a profit after it was built.”

“‘I had no intention to live there,’ Thomas said.”

“For the Van Dresses, a little peace and quiet isn’t all bad, but ‘there’s a lot of little things you see that are going to wrack and ruin,’ Judith Van Dress said, such as clotheslines and basketball hoops and people walking large dogs without the use of pooper scoopers - all in violation of the community’s regulations.”

“‘It isn’t one thing, it’s a lot of things,’ she said. ‘It wouldn’t attract people to buy the property. I would never buy it at this point.’”

The Herald Tribune. “Gloria Chaignet’s attempt at real estate ‘flipping’ three years ago has left her life upside-down today. Chaignet and hundreds of others were trying to tap into the frenzied real estate market where homes and condos often ‘flipped,’ or resold, one or more times while being built — each time leaving many a buyer with a bucketload of money.”

“So with an eye out to help her children, Chaignet and some co-workers got wind of a can’t-miss deal — and bit.”

“But it turned out that pretty much everyone lost. ‘It wasn’t done by greed,’ Chaignet said. ‘I’m a single mom with two kids going into college and I thought this could help pay for their college.’”

“Ground was never broken on Chaignet’s North Port home, but the builder continued to take draws on the mortgage loan she signed for, that one that seemed oh-so-easy to get. She said her builder stopped returning phone calls. E-mails to the company bounced back as undeliverable.”

“‘It sounded like a really great deal, but the more we got involved in it we found out differently,’ she said. ‘They probably never had any intention of building any of the homes.’”

“She said her sons will still be able to go to college, but it will be paid for by a lot of credit cards instead of investment returns. ‘I feel like I was raked over the coals,’ she said. ‘I feel like I was part of a bank scam and I feel like I was completely snowed.’”

The Cape Coral Daily Breeze. “The tide of low sales in Cape Coral and Fort Myers may be turning, according to a June 2008 report from the Florida Association of Realtors. Last month 719 single family homes were sold in the region, an increase from 558 sold in June 2007. Some Realtors may consider these sales good news because it decreases the unprecedented vacant home supply, but while sales continue upward, prices dropped 32 percent.”

“Median prices for single family homes dropped from $253,900 a year earlier to $172,400 today.”

“‘In my opinion anytime we are up is a good sign,’ said Tommy Lee, president of the Cape Coral Realtor’s Association. ‘There is no doubt property is moving. It is the land of affordable properties again.’”

“Gloria Tate, a Realtor with Raso Realty, said that the sales increases are a result of the banks dealing more swiftly with pre-foreclosures and short sales. ‘A lot of listings we have are short sales. People are making offers on short sales and banks are getting a little more quicker on their response time making it easier to close,’ said Tate.”

“Today there are 4,835 pre-foreclosure properties in Cape Coral, according to Realty Trac. According to Tate, lower prices and an expedited foreclosures process ‘is making it affordable for people to own a home in Cape Coral.’”

The St Petersburg Times. “For two years, real estate agents have had no luck finding a buyer for the 3,800-square-foot home David Frishman built as an investment on Bradenton’s exclusive Hawk Island. Now, stuck with $12,000 monthly payments, Frishman is trying to sell the house in a less conventional way - he has put it up for bid on eBay.”

“With a day left to go, the responses have been disappointing. ‘Most are just sort of predatorial,’ says Frishman, who has heard from people wanting him to refinance or take less than his $1.5-million starting bid.”

“As of Sunday, eBay’s real estate category had 4,029 listings, a tiny but growing number of the site’s 17-million listings. Among the properties offered for sale were 348 in Florida.”

“A five-bedroom canal-front home in the MiraBay development of southern Hillsborough County. Bought for $695,000 in 2005 at the peak of the boom, it was foreclosed by the lender and is now listed for $399,999.”

“A two-story, lakefront home in the Lee County town of Estero for $265,000. The owners, who paid $346,800 for the house in 2005, need to sell because they have another place in foreclosure proceedings.”

“At a starting bid of $1.5-million, the assessed value, the Hawk Island house would seem a great deal in a new gated community where some lots alone are listed at the same price. But while the auction has drawn 3,804 views, not one bid had come in as of Sunday.”

“‘We’re just trying anything at this point,’ Frishman says of his eBay auction, which ends today. ‘It certainly wouldn’t be our first option, but when you’re trying to save your home, you don’t leave any option unturned.’”

My Fox Tampa Bay. “The Greater Tampa Association of realtors says home sales are up by 76% since January. At the same time, California based Realty Trac reports we have double the rate of home foreclosures.”

“All this conflicting information leaves some people feeling as though they’re caught in the middle. Morgan Barfield is one of them. He put $80,000.00 worth of renovations into a south Tampa home.”

“‘Countless people have come by offering just a real low ball offer, probably a third of the value,’ Barfield said.”

“If there is one statistic everyone can agree on, it’s the price of a home. It’s down by nearly 8% since January.”

The Palm Beach Post. “Melbourne-based Mercedes Homes continues to cleanse its books of land in Port St. Lucie. The latest deal: The builder’s 29.5-acre Savanna Trace development sold for $1.35 million this month. The buyer was not a house builder - it was a house of worship.”

“Mercedes was approved to build 80 homes on the property, but the market flagged and construction never started. The company bought the property in 2004, St. Lucie County property records show. Last year, it transferred it internally for $1.9 million, records show.”

“In December, the firm got rid of 130 of its vacant lots in Port St. Lucie, selling them for $2.52 million to investor William Brisben. Brisben snagged some of the lots for as much as $70,000 less than what Mercedes paid for them.”

The Orlando Sentinel. “Former Darden executive Doug Doran, who had partnered with Veranda Park developer Kevin Azzouz to develop restaurants for the Italian-themed town center in MetroWest, said last week he has parted ways with Azzouz.”

“Doran said he stopped working with Azzouz in late March as a result of the sharp downturn in the real-estate market. Doran, who had formed a partnership with Azzouz called Group Four Restaurants, said the ‘horrible economic’ environment made it ‘tough’ to open additional restaurants in Azzouz’s development.”

“‘It made no sense,’ Doran told the Orlando Sentinel.”

“Azzouz has run into financial trouble with condo developments in Veranda Park, facing several foreclosure lawsuits.”

The News Herald. “The population of every city in Bay County, except Panama City Beach, decreased between July 2006 and July 2007, according to recently released annual estimates from the U.S. Census Bureau. For Panama City, it was the third straight year of decline, from 37,526 in July 2005 and 37,227 in July 2006 to 36,805 for July 2007.”

“Panama City Mayor Scott Clemons was not alarmed by the numbers. ‘Our growth has been flat for many years,’ he said. ‘Our area has been affected by the economy, it’s more expensive to build and we’re landlocked, with the exception of northern Panama City and the current airport property.’”

“‘Our decrease in population in other municipalities could be due to the many Katrina evacuees that are slowly moving back to their home states,’ said Carol Roberts, president of the Bay County Chamber of Commerce. ‘In addition, individuals are also moving to unincorporated areas of our county, pursuing more affordable housing.’”

“Bay County Economic Development Alliance Executive Director Ted Clem said it’s hard to cite one cause of population decline in the area, but he believes the construction slowdown is a main player.”

“‘From 2003 to 2006, construction was our strongest engine for job growth. Since then, we’ve had 3,000 workers displaced’ in that field, he said.”

“Lynn Haven Commissioner Joseph Ashbrook said the minimal dip could be due to some people getting fed up with living in hurricane- and flood-prone areas, and new residential construction ‘isn’t selling.’”