August 28, 2008

It’s A Different World In California

The Berkeley Daily Planet reports from California. “Million-dollar condos? In Berkeley? Yes, says Don Peterson, president of SNK Development, the company now building the nine-story-plus Berkeley Arpeggio on Center Street. Asked who might buy the units, Peterson said, ‘We are looking at the university population and the Berkeley population,’ with ‘empty-nesters’ a target demographic as well as people who would like to live in the heart of the city’s theater district.’”

“The new Downtown Area Plan now under review…was funded by the City Council after a commission majority voted to recommend it. Buildings-both apartments and condos-could still be financed at six floors or fewer. But the tall buildings, seen as a way to fulfill some of the regional housing-needs allocation imposed by regional government, could only be bankrolled as for-sale units, not rentals, the report said.”

“‘We’re talking about million-dollar condos,’ Planning Commissioner Gene Poschman told fellow commissioners. ‘Who’s going to live in them?’”

Inside Bay Area. “Homebuilders are always trying to sell their homes, but these days they have an extra incentive - beating the clock. In a few weeks, a financing option used by almost 20 percent of new-home buyers to help scrape together a down payment is going away.”

“It’s a loophole in the Federal Housing Administration rules that let builders and other home sellers channel money through a charity to help homebuyers cover their down payment. But lawmakers axed the programs - effective Oct. 1 - because almost 40 percent of FHA borrowers who went into foreclosure since October had down payment assistance.”

“‘We’re trying to let everyone know, ‘Hey this is going away,’ said Brent Urban, a salesman for Lennar Corp., referring to a sales promotion running for one of the builder’s developments in Santa Clarita.”

“At Lennar’s Esperto community in Santa Clarita, north of Los Angeles, the incentives were tied to six, finished row-style townhomes priced in the mid-$300,000 range. Buyers have to be able to close before Sept. 11, said Urban.”

“While many builders are continuing to lobby for the down payment assistance programs to be reinstated, many have changed tactics and are promoting the temporary tax credit for first-time homebuyers, which was also part of the housing stimulus law passed last month.”

“But the clock is also ticking on this deal. The tax credit of up to $7,500 and expires in less than a year.”

“Some builders are exploring ways to give buyers some of their tax savings before they file their taxes. ‘If you can come up with some way to monetize it ahead of time, it could help to offset the loss of that down payment assistance,’ said Nishu Sood, a Deutsche Bank analyst.”

“Ultimately, however, it’s going to remain difficult for a builder to fully overcome when a buyer simply doesn’t have enough cash to make their down payment.

“‘You can offer lower rates, you can offer further incentives,’ Sood said, ‘but if a homebuyer is going to have trouble coming up with a down payment, that’s difficult to offset.’”

The Napa Valley Register. “California New Car Dealers Association statistics show that in the first two quarters of 2008 new car sales statewide slid 18 percent compared to last year. The DMV data shows some Napa County dealers have increased sales as much as 21 percent so far this year, while others are down as much as 40 percent.”

“‘Business certainly has been challenging, as it has been for all dealers this year,’ said Kevin Massie, owner of Napa Ford Lincoln Mercury, citing the down housing market and shaky consumer confidence.”

“‘We are seeing people that have challenged credit … (or) foreclosures pending’ said Bob Kleis, general manager of Jimmy Vasser Chevrolet-Toyota. ‘We are seeing more cars for sale in repossession wholesale auctions.’”

“‘The mess in the home industry has trickled down into the car industry,’ said Napa Nissan owner Vince Compagno.”

“At Napa Ford, Massie said, ‘We have customers that want to get vehicles but are in the process of losing a home.’ The number of buyers in distress ‘is much greater than this time a year ago.’”

“Why would someone in financial trouble buy a car? Even if people are moving or giving up on home ownership, he said, ‘They still need reliable transportation to get to work, school and church.’”

The Ventura County Reporter. “There are 15,000 to 20,000 rental units in the city of Ventura. The California Apartment Association (CAA), a statewide rental housing trade group that tracks things such as shifting rental costs and residential transiency, determined at the end of the second quarter for 2008 a 94.1-percent occupancy rate throughout Ventura County.”

“That leaves a near 6-percent vacancy rate, which explains some For Rent signs that never seem to come down.”

“‘The rental market in Ventura County is relatively flat over the last year,’ said CAA Deputy Director Eric Wiegers. ‘The trend is really flat. No real uptake in rents.’”

“Much like the price of oil can be correlated to record high fuel costs, could there be a decisive factor that may cause rental costs to lower themselves in Ventura? There is when considering a shaky real estate situation.”

“‘The only reason I’d suggest prices might come down is, it’s tied to this whole foreclosure mess,’ said Wiegers. ‘There are some markets where some houses being foreclosed upon are being bought by investors and putting them on the rental market.’”

The Globest. “If you’re looking for the bottom of the economic downturn, you may find it here in the Inland Empire–it’s just that the ‘when’ is another matter. Experts voiced some bleak near-term outlooks Wednesday at the third annual RealShare Inland Empire conference at the Ontario Convention Center.”

“‘There’s no nice way to spin it,’ keynote speaker Richard Green, director of the USC Lusk Center for Real Estate, said of the local economy. ‘The jobs picture in San Bernardino-Riverside County right now is not particularly good. People want to know when are things going to bottom. Will we have a ‘V’ or ‘U’ in terms of the recovery?’”

“There has never been, until now, a decline in the median home prices nationally since the Great Depression, Green pointed out. The median income is falling and ‘financial institutions are in an environment of fear,’ he added.”

“Ppanels throughout the day included sessions on the capital markets and how investors are getting deals done in today’s climate…what it takes and costs to finance deals.”

“G. Ryan Smith, a senior VP with Newport Beach-based Buchanan Street Partners, said that ‘It used to be if you had a heartbeat, you could get a loan. It’s a different world than it used to be.’”

The Daily Bulletin. “In the past, Juana Recinos sold up to 15 homes a year. Now, she can’t sell one. ‘Optimistic? Well, let’s just say I took a part-time job in addition to trying to sell the five homes I have,’ said the real estate agent. ‘It’s hard to sell a house, and the lenders are making it difficult to do so. I’m beginning to think even though it’s just speculation that lenders are making money off of waiting and wasting my time.’”

“Calling the market ‘a virus,’ Recinos said she doesn’t think it’s going to get any better and doesn’t expect to stay in the real-estate business for long.”

“Recinos’ biggest fear is losing another potential buyer on the short-sale home listed for $290,000 at 10127 Vernon Ave., Montclair. The home was on the market in December for $450,000. Recinos had a potential buyer within a month. The bid was $350,000.”

“‘But those people backed out last month because the lenders never called back,’ she said.”

“Now, someone is interested in the new price tag, but once again Recinos is left to play the waiting game. ‘I’m really beginning to feel they don’t care because I keep on waiting and calling and then I get an excuse of, ‘Sorry we lost the paperwork. You have to resend it,’ or, ‘We didn’t receive it,’ and I’m back to where I started,’ she said.”

“Recinos said she and her husband have been cleaning up the vacant house ‘in preparation for a foreclosure.’ If the lenders don’t call back in three weeks, the home will be foreclosed on, and Recinos said she expects the price to drop by as much as $50,000.”

“‘If the market continues to go in the direction it is, (the price) will be lower than that,’ she said.”

“Recinos said she knows her prospective buyers are getting tired of waiting. ‘I’m afraid they’re going to give up on this home,’ she said, ‘and I’m scared all the work I’ve done in the last six, seven months is going to go out the door.’”




They’re Not Popping Like They Use To

A report from Florida Today. “In today’s tough housing market, sometimes it takes some creative thinking to sell your house. Scott Bernard is having a picture-coloring contest and giving away his house in Sebastian to the winner — sort of. Each person who enters the contest pays a $49 entry fee. Bernard needs at least 5,400 people to enter the contest to raise enough money to pay off what he owes on the mortgage.”

“‘This was the only positive way I could come up with to sell the property,’ he said.”

“Bernard, like many people who bought homes before the housing market soured, said he could not sell his house for what he owes on it. He bought the 1,500-square-foot, three-bedroom, one-bathroom house in July 2005 for $217,000. But today, the house, built in 1957, has an estimated value of $140,000.”

“‘I bought it at the peak of the market,’ he said.”

“He’s not the first to try a unique approach to unload property in Florida’s struggling housing market. An effort this spring by St. Cloud developer Chris Wardlow to raffle off two houses fizzled with just a few dozen $250 tickets sold, well short of the 5,000 needed for him to recoup his costs and give some money to charity.”

“Merritt Island resident Dale Schamp used a buy-one-get-one-free deal earlier this year to try to sell his beach house, offering a second, smaller house on Merritt Island for free. The result: no sale.”

“‘We had tons of calls and publicity about it, but it was all to no avail. It’s just the market,’ Becker said. ‘Nobody made an offer.’”

The Bradenton Herald from Florida. “Gil Pearce’s perfectly groomed Summerfield Glen home is sandwiched between two vacant houses, one with cut screens and a wide open patio door, and the other with a ‘For Sale’ sign and an unkempt lawn. Pearce’s case is not unusual.”

“There are 35 homes currently vacant due to foreclosure or other reasons among the 1,800 homes in Summerfield and Riverwalk, said Alan Roth, chairman of the safety awareness committee for the Summerfield/Riverwalk Village Association.”

“Roth estimates that at least 60 to 70 homes are vacant because of foreclosures in all of Lakewood Ranch. He thinks that might be conservative. Every Summerfield and Riverwalk neighborhood, including the upscale Ridge, has vacancies, Roth said.”

“‘There are even foreclosures and empty houses in Country Club,’ Roth said. ‘Greenbrook probably has more than anyone.’”

The Miami Herald from Florida. “Thanks to the housing slump, professional couple Gladys and Raul Castillo finally found homes they could afford — new condo units in foreclosure within walking and biking distance of their jobs in Miami’s Brickell financial district.”

“They also had the credit record to meet lenders’ standards. But they couldn’t land an actual loan. ‘Almost all of them want 20 percent,’ said Gladys Castillo, speaking of lenders they had approached. The Castillos had saved only 10 percent, and lenders were loath to get into units in buildings rife with foreclosures.”

“So the couple have stopped searching while they save for a bigger down payment.”

“‘In areas like Brickell or the Biscayne corridor, there is no way to get a loan unless a borrower is willing to put 30 or 40 percent down,’ said William Zalaquett, a Realtor who specializes in the area.”

“Even wealthy individuals needing financing are having a tough time, said Alex Doce, president of Baron Mortgage, a lender with an office in Miami.”

“‘Right now, I have a couple of $4 million and $5 million loans, and it’s a nightmare to try and finance these people who have high net worth. The few people that were buying these loans, like Indymac, have gone out of business or don’t have the capital to lend,’ Doce said.”

The Atlanta Journal Constitution from Georgia. “Prospective homebuyers are pondering whether prices have hit rock bottom, so the housing industry is trying to create a sense of urgency. How? By touting the new $7,500 refundable tax credit contained in the massive housing-stimulus bill President Bush signed last month. The credit expires July 1.”

“Realtors, builders and lenders wearing ‘Buy Now!’ stickers gathered on the Capitol steps Wednesday at a rally to promote the incentive. Beazer Homes, the beleaguered Atlanta-based homebuilder, held an online seminar last week to do the same thing.”

“‘You will never see a better opportunity than the opportunity before us right now,’ U.S. Sen. Johnny Isakson said, standing before an umbrella-toting crowd.”

The Birmingham News from Alabama. “Some Birmingham mortgage professionals say they are experiencing a drop in mortgage applications, reflecting a national trend. Bill May, president of Accent Mortgage, said the number of applicants seeking mortgages from his firm is down significantly from a year ago and that others in the industry are experiencing similar drops. He said national media coverage of the housing market is scaring away potential homebuyers.”

“In addition, May blames fallout from recently approved federal legislation that prohibits loan down-payment assistance from nonprofits.”

“‘The housing industry is really struggling right now,’ said May, past president of Alabama Mortgage Brokers Association. ‘Realtors are having problems selling houses. Many builders are sweating every day because properties aren’t moving.’”

“Grayson Glaze, executive director of Alabama Center for Real Estate, said there is a reason for the decline - bad economic news in the housing sector. ‘The last two months of weekly mortgage application activity have revealed a mixed bag but with a common denominator - a significant decline in volume when compared to its prior year,’ he said.”

The Tuscaloosa News from Alabama. “A Mississippi-based developer is going ahead with plans to build an estimated $110 million hotel and condo tower next to Bryant-Denny Stadium, leaving land owned by the University of Alabama out of the project - for now.”

“Spectrum Capital wants to sell the 250 rooms, ranging from 450 square feet to 1,100 square feet, with a concept similar to beach condo hotels. With prices starting near $200,000, owners don’t have to put their rooms in the hotel rotation, but the practice will be encouraged, according to documents.”

“Spectrum also plans to build a tower with 65 condominium units, with an average size of more than 1,500 square feet. Starting at $500,000, Spectrum plans to market these primarily to baby boomers looking for a second home, likely Crimson Tide fans or those with connections to the university, according to planning commission documents.”

“UA spokeswoman Cathy Andreen didn’t offer any new details on when UA would award the development of its lot, and city planning director Bill Snowden said he has not heard either. ‘It’s got to be developed,’ he said. ‘It’s just too valuable to sit there as a parking lot.’”

The Daily Journal from Mississippi. “At a recent open house, a band played while attendees snacked on pork tenderloin, all the while admiring the views inside and out of the 8,000-square-foot home. Custom built four years ago, the Louisiana plantation-style home is for sale for almost $2 million, an unheard-of asking price for a home in Northeast Mississippi just a few years ago.”

“The home is among 52 area homes on the Multiple Listing Service for sale for $500,000 or more.”

“Area real estate agents say while there’s a growing list of sellers of these homes, more buyers are entering the market, too, despite some of the woes in the housing industry going on in other parts of the country.”

“‘If you look at the last two years, it’s really not much different now,’ said Jason Warren of Prudential Magnolia Realty in Tupelo. ‘We’re in a market that’s continued to grow.’”

“Brenda Spencer of Tommy Morgan Coldwell Banker is hoping to sell the home that’s in The Summit. Spencer, who has been in the real estate business for 31 years, said the first $1 million home to be listed for sale in Tupelo happened about three years ago.”

“‘It’s not that there weren’t any homes that weren’t worth that much, because there were,’ she said. ‘It’s just that people had built them. Appraisers really didn’t have anything to compare them to; nothing had ever sold for that much.’”

“But as some of these homes came on the market, a benchmark was established, and several $1 million homes have been sold since then.”

And several are on the market today. Of the 52 homes selling for $500,000 or more, seven are listed for at least $1 million. Topping the list is a 12,380-square-foot, five bedroom, 6 1/2 bath mansion sitting on 40 acres in Booneville. The selling price: $3.9 million.”

The Tri-Parish Times from Lousiana. “Luxury home market sales in Terrebonne and Lafourche have taken a slight decline over the past year, according to developers and realtors. However, luxury home prices have not fallen locally as they have in most American cities.”

“‘Anything under $200,000 is doing well right now,’ said V.J. Caro of V.J. Caro Jr. Building Contractors Inc. “Anything above has slowed down, but the prices haven’t dropped.’”

“The beginning cost for what defines a ‘luxury’ home depends on who one asks. Some start at $300,000, others say $500,000. Either way, the definition of luxury hime has changed significantly.”

“‘Higher-end today is no longer $250,000. Especially in this market, $350,000 has become the new starter home,’ said Mona Martin Christen, owner/broker of Mona & Company, Inc.”

“Industry professionals have various opinions as to why the market has soften recently. One major concern is the coverage of the national housing market slowdown effecting how people view the local market.”

“‘People have gotten nervous about buying because of the hype on TV,’ said Christen. ‘Louisiana is not suffering nearly as much the national media is reporting. We have barely been affected. We haven’t had nearly the number of foreclosures or loan failures. It’s unreal how Louisiana has floated to the top this time around.’”

“Another problem is the crackdown on certain lending practices has made mortage companies more cautious about whom they lend money.”

“‘For a long while many of the mortgage companies were doing 100 percent financing with no money down. That’s all gone now,’ Randolph A. Bazet, III co-owner of Bazet Reality & Associates, Inc. ‘Unless you have money to put down or have a substantial credit score, it’s going to be difficult to finance the purchase of a higher-end home.’”

“‘Zero-down lending created an artificial market called the mid-market,’ said Joey Esso, co-owner of The Wood Doctor. ‘Ten years ago, once you got past $300,000, that was a custom unit. Now that’s moved up to $500,000 and a $200,000 to $400,000 unit became a spec house. That was artificial created by a miracle of financing.’”

“As long as the local economy does well, contractors and realtors are confident the luxury home market will stay strong. They see the recent sales decline as a minor hiccup and not a sign of trouble ahead.’

“‘It’s just a little slow down in sales. They’re not popping like they use to,’ Christen said. ‘I remain optimistic though.’”




Bits Bucket For August 28, 2008

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