The Housing Bubble

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

The Miami Herald reports from Florida. “If you think the torrent of foreclosures affecting every city and nearly every neighborhood and street in South Florida is as bad as it can get, here is a harsh new reality: There’s a new wave of foreclosures making its way through the courts that has nothing to do with exotic subprime loans, real-estate flippers out to make a quick buck or people who bought way more house than they could afford. Now, double-digit unemployment, sagging home prices and a lingering recession are to blame.”

“The numbers already are staggering. During the second quarter of the year, nearly one in four Florida home loans were past due or in foreclosure, making Florida the most delinquent state in the nation, according to the Mortgage Bankers Association. In neighborhoods such as Malibu Bay, a gated community in Homestead…a two-bedroom, two-bath home that sold for $242,000 in August 2006, for example, is now listed for $70,000, said Karen Klores, a Realtor at The Keyes Company.”

“Leslee Ramos doesn’t often visit her three-bedroom townhome in Malibu Bay, which was built by Lennar Corp. during the housing boom, but she checked in last week. Ramos moved to Northeast 11th Drive in October 2006, paying $255,490. The home is now worth $121,800, according to property records.”

“After losing her job about two years ago, she started eating into her savings to make payments but still couldn’t afford the mortgage. Her home went into foreclosure earlier this year, and in May she moved back to Kendall to live with her mother. Now Ramos’ house is empty, and she expects the bank to sell it in February.”

“‘It feels horrible to go through foreclosure,’ said Ramos. ‘I can’t apply for anything. I have no credit.”’

“The Treasury Department announced last week that lenders have modified almost 500,000 mortgages in the eight months since the federal government announced its Making Home Affordable program, a plan to encourage — even pay — for loan modifications. Lenders hit that number a month earlier than expected. Still, only 16 percent of eligible home loans have been modified, out of 3.1 million delinquent mortgages in September.”

“Weston attorney Kraig Weiss and his wife, Ana, are living what they call a ‘loan modification horror story.’ Earlier this year, the Weisses agreed to a loan modification with Bank of America, only to have the bank rescind the offer. The Weisses sued. Now the bank is moving toward foreclosure, even though the Weisses are making mortgage payments.”

“‘The truth is, they don’t care. They feel they are above it all and they don’t have to answer to us,’ Kraig Weiss said.”

“A common misperception, said Ertha Brathwaite, manager of the Chase Homeownership Center in Aventur,, is that borrowers expect to get a loan modification because they are ‘underwater.’ Almost a third of all mortgages in South Florida were underwater as of June.”

“‘It’s what you borrowed,’ Brathwaite said. ‘You wouldn’t share in the gain [if you sold your home at a profit]. Why should the bank share in the loss?”’

The Star Banner. “Seven years of renting was enough for Joanna Jones. If she had to write a check each month for a roof over her family’s head, the 28-year-old veterinary technician, who got married two years ago, wanted it to be toward a mortgage and not a landlord. Jones wants a house now, while prices are down and interest rates are as low as they’ve been for decades. And she is in a race where crossing the finish line before Nov. 30 could net her $8,000.”

“‘It would be great getting that extra money. And now is the best time to buy … with home prices the way they are and interest rates. I was hoping we would find a house before the tax credit expires,’ Jones said. ‘We’ve got to find something or we won’t get the money.’”

“The National Association of Realtors reported that the tax credit coaxed 1.2 million new buyers into the market and that about a third would not have bought their home without the credit. A similar trend was seen in Florida. ‘The first-time homebuyer process could come to a screeching halt without the tax credit,’ said Bert Meadows, president of the Marion County Association of Realtors.”

“But it isn’t only first-time buyers who benefit from the tax credit. So do sellers having a tough time unloading properties amid a housing glut, and people afraid to buy because of rising unemployment. That has led many buyers to look for the best deals and turn to foreclosed properties to save money, knowing banks are eager to shed the properties off their books.”

“‘We had a few people look at our house, but they’re looking for spectacular deals. They’re looking for foreclosures,’ said James Jay Clark, while standing by a for-sale-by-owner sign in his yard. ‘They’ve made these offers on the house that are completely ridiculous; $60,000 less than the asking prices.’”

The Sun Sentinel. “Even after years of sinking real estate prices, thousands of South Florida property owners are fighting to further deflate the values of their homes and businesses. Appeals jumped a record 40 percent in Palm Beach County, where 18,325 taxpayers filed to challenge their 2009 assessments. In Broward County, the appeals increased 9 percent to 32,411.”

“Miami-Dade County, which usually leads the pack, has yet to finish counting how many appeals were filed by last month’s deadline. About 69,000 petitions have been entered into Miami-Dade’s appeals system. At that pace, the appeals are expected to far exceed the 70,000 filed last year, Value Adjustment Board Manager Robert Alfaro said.”

“Sherman Lein said he decided to appeal the tax assessment for his home west of Boca Raton. The Palm Beach County property appraiser decreased his home value by about $100,000, but his tax bill was still higher than last year.”

“‘It’s ridiculous,’ said Lein, 79, who owes about $6,000 in property taxes. ‘This house is not worth what they are saying it is. … It is just a matter of what is fair and reasonable.’”

The Orlando Sentinel. “The Dutch lender that initiated foreclosure on 55 West last year repossessed the property following a no-bid auction Friday. Grosse Pointe Development Co., of Fort Myers, has been successful at transition the units from condominiums to apartments, said Jeff Sweeney, commercial specialist with Grubb & Ellis Commercial Florida Inc., which is marketing part of the multi-use downtown Orlando highrise.”

“The bank is now moving forward aggressively with renting the units, as opposed to selling them as condominiums and that leasing effort has been very successful, he added. Zom Residential Services has been leasing studio lofts and other units, with rents starting at $1,100 and concessions of 1.5 months of free rent prorated over a 13-month lease.”

The Palm Beach Post. “The Promenade, Boynton Beach’s newest condo, boasts a luxurious lobby decorated in tones of cream and mahogany. Its two pools are filled, and the gym is stuffed with equipment. But nearly two months after receiving a certificate of occupancy from the city of Boynton Beach, the downtown property has not closed any sales of its 395 units.”

“‘My clients have not heard one thing - not one thing - from the developer. It’s a big building sitting there doing nothing,’ said June Dunlea of Tauriello & Co. Real Estate in Delray Beach. Dunlea represents several buyers with contracts in the Promenade.”

“The developer is trying to get buyers with contracts in the south tower to move their contracts to the north tower, so that at least one tower can be filled and opened, according to Lisa Bright, president of Boynton Beach’s Community Redevelopment Agency. The reason for the change: To comply with Fannie Mae requirements that 51 percent of a condo be pre-sold before Fannie Mae will buy mortgages made to that condo.”

“Without Fannie Mae certification, most mortgage lenders, who resell their loans, would not make a loan on the condo. In fact, the only people who would be able to buy Promenade condos are those paying cash or using a private lender, experts say. But even those buyers aren’t a sure bet. Given the depressed state of the condo market, Promenade buyers could walk away from their contracts. ‘No one wants to close anywhere,’ said Robert Cooper, a Miami attorney who specializes in representing condo buyers who are trying to undo their pre-construction contracts.”

“That goes for Dunlea’s clients, too. ‘The majority of my people are not going to close,’ Dunlea said. And anyway, ‘Who’s going to give them a mortgage?’ she asked.”

“The Promenade’s 77 condo-hotel suites also have uncertain future. Just ask Pamela Sherman. In 2006, Sherman put $57,000 down on a $285,000 condo hotel suite, with the understanding that it would be ‘professionally managed,’ she claims in a lawsuit. The professional management was important to Sherman, who lives in New Jersey.”

‘But in the lawsuit, which seeks a return of her deposit, Sherman accuses Boynton Waterways of fraud. That’s because Boynton Waterways told her in January, the suit says, that she would be in charge of renting out her own hotel suite.”

The Pensacola News Journal. “For the first time, more than 1 million Floridians are out of work. With unemployment hitting 11 percent for September, the chief economist of the state’s jobs agency said Friday that high jobless rates will probably persist despite any recovery. Because the population and size of the work force have grown in 34 years, the number of idled workers set a record last month.”

“‘It’s a continuing reminder that the recession began in the housing sector and it’s not going to end until we see some improvement in the housing sector,’ said Rick Harper, director of the Haas Center for Business Research and Economic Development at the University of West Florida. ‘We’re suffering disproportionately from the bursting of the housing bubble.’”

The St Petersburg Times. “Have you popped the bubbly to welcome some of the newest Floridians to our shores? Florida, hammered by the recession, also saw its overall population shrink for the first time since World War II. But there’s at least one subset still eyeing a move to Florida, arguably more so than in years past: the megarich.”

“The uberwealthy have long been drawn to income-tax-free havens like Florida. University of Florida economist David Denslow says any influx won’t save Florida from its $2.5 billion budget deficit, ‘but it has a noticeable, positive impact’ on bolstering property tax and sales tax receipts. ‘We’re delighted to have them,’ he says.”

“But demographer Peter Francese said it’s a bit soon for Florida to celebrate an influx of wealthy residents boosting tax coffers. ‘There are very, very few of them,’ he said. ‘The best you’re going to get is anecdotes.’”

“For one, he said, many of the multi-multimillionaires are still reluctant to move far away from family or give up the cultural lifestyle of a New York, Chicago or Los Angeles. Moreover, there are few signs the rest of the general population lower down the financial food chain will follow suit any time soon. In fact, Francese forecasts that net migration state-to-state will be close to zero this year as housing sales remain sluggish.”

“Once home prices do pick up, he said, don’t count on Florida returning to its old ways of drawing up to 10 percent of retirees to its borders. ‘Florida is going to have to get used to the fact that fewer and fewer people from the rest of the country will move to Florida when they retire,’ Francese said. ‘Going there to retire is a trend that in my view has reversed and is not likely to come back any time soon.’”

The St Augustine Record. “Two years ago, the Wall Street Journal startled the nation with the headline, ‘Is Florida over?’ Leaders of private industry and government did a double take over their coffee that September morning. They asked, ‘Over what?’”

“The story said people were moving out of the state at a faster rate than they were moving in, housing values were falling, hurricanes were doing greater damage thus escalating property insurance rates. On Tuesday, news reports out of Orlando quoted Florida Chamber President Mark Wilson saying, ‘the Florida we have known forever is over.’”

“To back up his claim, he cited 10.7 percent unemployment, 600,000 lost jobs in two years and one in five homes in foreclosure. But he added, ‘Don’t get caught up in that being a bad thing. (The question is) how quickly can we get to the next economy?’”

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