What Brought Us To This Dance
The Herald Tribune reports from Florida. “Phil Coon wanted the money. ‘The extra income. Pure and simple,’ said James E. Felman, Coon’s attorney, explaining the former Coast Bank executive’s motive for an illegal lending scheme that will send him to prison. ‘Simply stated, it was the most stupid thing he’s ever done in his life, a productive and admirable life,’ Felman said. Coon admitted in a plea agreement with federal prosectors last week that he conspired to commit wire fraud and money laundering.”
“In 2005 he made a $100,000 salary and $308,000 in commissions. Coon used the illegal proceeds to travel and buy real estate, jewelry, a piano, clothing and wine, the plea agreement states. He also contributed to a church and supported family members. Now, he will forfeit his Bradenton home, a second house, brokerage accounts, jewelry and other items to pay $1.5 million under the plea deal.”
“‘He will be penniless as a result of this,’ Felman said.”
The Palm Beach Post in Florida. “A West Palm Beach condo conversion is home to more foreclosures than any other condo project in South Florida. In one foreclosure, Selma Fuentes in 2006 paid $170,900 for a 731-square-foot unit at Ponte Verde and took a mortgage for the entire amount, property records show. Her lender filed foreclosure proceedings last month. The condo now is listed with an agent for $59,000.”
“‘Investors went out and bought tons of units thinking they were going to flip them and make money,’ said Debbie Smith, head of Home Run Real Estate in Greenacres.
“Fuentes hopes to do a short sale of her unit, said her agent, Eddy Vieira. He has slashed the price but has sparked no interest. ‘I’m not getting a single call,’ he said. ‘It’s unbelievable.’”
The Wall Street Journal on Florida. “Jorge Pérez is (the) CEO of Related Group, the biggest condo developer in south Florida, and perhaps the greatest optimist in brazenly overbuilt Miami. Having borrowed more than $1 billion to erect soaring towers in downtown Miami, he is scrambling to sell thousands of condos amid the deepest market swoon in decades.”
“Yet the 59-year-old entrepreneur — a fast talker whose marketing flair evokes comparisons to Donald Trump — also has emerged as one of the most aggressive buyers of condos on the cheap, starting with units in one of his own buildings.”
“Mr. Pérez has plenty more condos to market. Within blocks of each other on Miami’s prestigious Brickell Avenue, Related this year has opened two projects totaling some 1,600 condos. Its landmark three-tower, 1,800-unit complex, Icon Brickell, is soon to start taking residents. Mr. Pérez has other large projects in the works outside of Miami, and the rate at which buyers are walking away from deposits is higher than expected. ‘I may end up having to hold 1,000 units,’ he says.”
“Real-estate experts and rival developers are watching to see if Mr. Pérez will be savvy enough to emerge whole from a challenging predicament. ‘Miami is so flooded with product that even at 50 cents on the dollar, most of it doesn’t work as rental,’ says Lewis Goodkin. ‘If anybody can do it, Jorge can.’”
From Reuters on Florida. “Long before she filed for bankruptcy, Ann Neukomm was ‘under water.’ Like Neukomm, many people got into trouble by refinancing mortgages to pull out cash when rising property values made it seem like an almost risk-free deal. She ended up filing for bankruptcy in May after failing to keep up with mortgage payments on her home in Cape Coral, a once-booming town in southwest Florida.”
“‘It’s a dirty word,’ said Neukomm of her bankruptcy and personal feelings of failure. ‘Nobody wants to say it.’”
The Cape Coral Daily Breeze. “Cape Coral is…due to receive about $7.1 million in federal grant money to rehabilitate and redevelop foreclosed property. The median sales price for the Cape Coral-Fort Myers metro area is $146,900, down 41 percent from the August 2007 median sales price of $250,800, according to the Florida Association of Realtors.”
“Councilmember Bill Deile …wants to guard against providing assistance to people who cannot afford to stay in the home. He pointed to federal government policies that made it easier for low-income families to get a home mortgage as a reason for the current housing crisis.”
“‘I don’t want to see us duplicate the same mistakes,’ Deile said.”
The News Press from Florida. “There are 2,644 residences seized by lenders and offered for resale on the Multiple Listing Service in Lee County, said Steve Koffman, an agent with Century 21 Sunbelt. Jack McCabe, a Deerfield Beach-based real estate consultant who tracks the area’s home market, said sales of foreclosed houses are picking up all over the state. Often, he said, the houses have been stripped by vandals or by their former occupants.”
“At one, McCabe said, they’d ‘ripped the plants out of the ground’ and took them, along with items such as the bathroom vanity and light fixtures.”
The Naples News in Florida. “Economic forecasts are only necessary to make astrologists look good, a Florida economist told a room full of Naples business leaders Tuesday. Hank Fishkind then began interpreting constellations of economic charts, including rising unemployment claims, slowing population growth and a glut in real estate inventory.”
“Fishkind offered this prediction: 24 months of recession that he believes started at the end of 2007. Fishkind’s predictions haven’t always panned out. ‘I argue that housing has stopped going down. It is weak. It is painful, but it is not going to get any worse,’ Fishkind said in May 2007, the Sarasota Herald-Tribune reported.”
Voice of America on Florida. “Tammy Graham sells houses in the city of Lakeland, Florida. The real estate agent says many people who bought homes in recent years here using sub-prime loans are now facing foreclosure. ‘I’ve had people ask me, you know, ‘I’m having problems feeding my children,’ Graham said. ‘Should I stop paying my mortgage?’ And that’s a sad state of affairs.’”
The Orlando Sentinel in Florida. “Fewer than half of Orlando’s hotel rooms were filled in September. Occupancy in the Orlando market was 45.9 percent last month, compared with 51.1 percent in September 2007, according to data released Tuesday.”
“Revenue per available room, a key industry measure, was down 11.9 percent from a year ago. ‘That was probably one of the worst Septembers we’ve ever had,’ said Mark McHugh, chairman of the Orlando/Orange County Convention & Visitors Bureau. ‘As bad or worse than 9-11.’”
“Orlando was just one of several large hotel markets that recorded double-digit percentage declines in occupancy rates — Nashville, Tenn.; Virginia Beach, Va.; and the Tampa-St. Petersburg areas were among the others.”
“Orlando’s west Kissimmee submarket, just south of Walt Disney World, was hit the hardest: Its occupancy rate was slashed by nearly a third in September, from 44.5 percent of all rooms a year earlier to 30.9 percent. ‘The year started out very strong,’ noted Scott Smith, a lodging instructor at the University of Central Florida’s Rosen College of Hospitality Management, but now ‘it’s really falling way behind.’”
From Tallahassee Democrat in Florida. “In a talk he gave at the College of Business at Florida State University this month, Bank of America Market President Mike Fields recounted the events that have rattled Wall Street and undermined credit markets. ‘I think this is a critical, critical issue and it’s something you all ought to watch carefully,’ Fields told the business students. ‘Today capital is absolute king.’”
“The aftermath of the financial crisis will be lenders getting back to basics. ‘You really don’t want to loan money to somebody who can’t pay it back,’ Fields said. ‘Now there’s a novel thought, but apparently we kind of got away from that.’”
The Bryan County News from Georgia. “In general, the economy is good in Bryan County. The place where we’re taking a beating in the last five to six months is the housing industry. Chong Calabro, restaurant owner, Richmond Hill Café: ‘Our business has dropped by almost 75 percent from what it was last year. It (steep decline) started in June. Richmond Hill is growing and we got a lot of business from construction workers and from real estate when people would stop in here to eat when looking at houses. Now I don’t even see one person like that.’”
“Wilson Pickett, builder, Coastal Living Homes: The economy might be in a recession, but the real estate market is in a depression. Some people lost 10-15 percent of their values which is alarming thing, especially when you expect property to appreciate. In the housing market, anything over $250,000 is sitting idle right now.’”
“Ricky Bodaford, independent realtor: ‘I’ve actually been laid off as sales manager with Prudential, which is directly attributed to the housing market slowdown. I’m still a broker, but I also work for the railroad now.’”
The Atlanta Journal Constitution from Georgia. “One-fourth of Georgia’s 355 banks have delinquent loans that comprise 4 percent or more of their entire portfolios, according to federal data analyzed by The Atlanta Journal-Constitution. Some banking experts say a delinquency rate of even 2 percent suggests an institution faces serious financial challenges. In Georgia, 159 banks exceed that level. Twenty-five of them have seen seriously past-due loans rise into the double digits.”
“The statewide delinquency rate was six times higher this June than in June 2006, and now represents $6.6 billion in bad debt.”
“‘Literally, the bottom is falling out,’ said Byron Richardson, an Atlanta-based bank consultant. ‘The Atlanta economy was so driven by real estate for so many years. We’re seeing some very high rates of non-performing loans.’”
“For Chestatee State Bank in Dawsonville, the problems began long before anyone noticed. Dawsonville boomed in the 1990s. Retirees and wealthy Atlantans wanting second homes flocked to North Georgia’s mountains, and real estate developers were happy to accommodate them. A group of Dawsonville business people decided to join the boom and applied for a state charter to establish Chestatee. The new bank opened May 15, 1998.”
“A decade later, bank CEO Philip Hester said, Chestatee is a microcosm of the troubles facing Georgia banks. From the start, Chestatee had a singular focus: rather than writing subprime mortgages or other home loans, it would lend much larger chunks of money to developers, fueling the local housing market.”
“‘That’s what the business was,’ Hester said in an interview. ‘The primary business was real estate.’”
“By 2008, construction and development loans made up half of Chestatee’s $238 million portfolio, according to federal data. But around the middle of this decade, as subprime mortgages became available to riskier borrowers, ‘the market began to overheat,’ Hester said. Then, last year, ‘it kind of blew up on us all.’”
“The prices of oil, the Dow, and the election have taken most of our attention lately. And for good reason. But we almost seem to have forgotten what brought us to this dance.. The depressed housing market is still at the heart of this recession, as prices decline and inventories rise. Atlanta was spared the ridiculous price increases that afflicted California and Florida, but we managed to create a supply bubble.”
“‘A number of factors drove Atlanta’s housing supply run-up,’ Atlanta Federal Reserve President Dennis P. Lockhart told the Buckhead Rotary Club Monday.”
“Low-cost land, which lacks natural barriers, resulted in one of the nation’s strongest single-family housing markets. In 2005, a year before the bubble burst, Atlanta issued 61,000 permits to lead the nation, Lockhart said.”
“A hopeful sign: We’re now leading the nation in the decline in housing permits, down 81 percent since the peak at the end of 2005. That bad news is good news because we aren’t foolishly adding to the oversupply. Unfortunately, the supply is being fed by foreclosures.”
“‘Foreclosed properties coming on the market have aggravated the inventory situation,’ Lockhart said.”
“Georgia’s job losses in September were second-worst in the nation, behind only Michigan, the government reported Tuesday. Georgia companies dropped 22,300 jobs compared to August —- the sixth straight month of losses and the worst yet, said Michael Thurmond, state labor commissioner.”
“Since February, Georgia has lost 93,600 jobs, he said. ‘It is deteriorating —- that is what concerns us.’”
“At least 37,273 foreclosure sales occurred in Georgia in 2007 and the first half of this year; during that period, more than 350,000 Georgia homeowners fell at least 60 days behind on their mortgage payments, according to HOPE NOW, an alliance of lenders and consumer groups.”
“Going once, going twice, sold! —- a four-bedroom, red brick home in Smyrna. ‘It was just so fast. I guess that wasn’t for me. There were seven or eight of us bidding for that,’ said Cher Algarin of Douglasville.”
“She and her husband Frank came to an auction of hundreds of foreclosed homes Sunday at the Cobb Galleria Centre hoping to score a deal.”
“The Algarins, for example, already have a home but were interested in moving up, if the price was right. They brought three of their four children to the auction and sat through nearly two hours of bidding before the house they wanted came up on the screen. Then it was over in a flash. The Smyrna home, valued at $264,900, sold for $205,000 —- well below the previous valuation but much higher than they wanted to pay.”
“‘That was fun, but my nerves are shattered,’ Cher Algarin said as she pushed the baby’s stroller toward the exit. The Algarins will keep looking for a foreclosed home. ‘Make me a deal I can’t refuse,’ she said.”
“Things worked out well Sunday for investor Nicole Brown of Dallas, Ga., who bid $70,000 on a house valued at $129,000 and won. She said this is her seventh home purchase but her first auction. The property she bought is only 20 minutes from her personal home, and she knows the area well. The real estate market eventually will rebound, and those who bought low will profit, Brown said. ‘Everybody needs someplace to live,’ she said.”
