Driven By Things That Weren’t Real
The Herald Tribune reports from Florida. “The number of people preparing to buy a home in November fell sharply in the latest sign that the housing market, which had been rebounding strongly, may be headed for a ‘double-dip’ downturn over the winter. The figures echoed what home builders saw in November and showed how dependent the housing market is on government programs to lower interest rates and lure buyers with tax credits. The drop was far larger than the 2 percent expected from economists surveyed by Thomson Reuters, and analysts were surprised.”
“‘This was bound to happen at some point, although not by this much,’ wrote a startled Jennifer Lee, senior economist with BMO Capital Markets. ‘Gulp,’ she added.”
“Lowered rents and concessions are being made by professional landlords, most often someone with multiple properties in Sarasota and Manatee counties, all in the ‘workforce’ range of monthly rents from $500 to $800. ‘There isn’t the demand that there was a few years ago because we’ve lost our construction workers,’ said Harvey Vengroff, who owns more than 150 single-family homes from Venice to Bradenton. ‘The working class people are not here now.’”
“A typical rental for Vengroff is a three-bedroom home for $700 to $800 per month, enough to cover the taxes and maintenance and still pocket a profit. ‘We certainly have a lot of empty units,’ he said.”
“Caroline Phillips, who rents out 10 single-family homes and duplexes in Manatee and Sarasota counties, also said that unemployment is a key problem in the work force rental market. ‘The foreclosures have nothing to do with it,’ Phillips said. ‘What it is is people are not making enough money to pay the rent and they are leaving in droves.’”
“Phillips said most landlords like her have had to reduce rents by at least a third. That is fine by her to keep a stable tenant in a unit. ‘The last six months we have had to lower our rents to keep our good tenants and we may have to lower them more,’ she said. ‘And this is not because they want to, but because we have to. I’ve had a lot of move outs and one even left me a note of apology. They just didn’t have the money.’”
“Vengroff, a landlord with one of the region’s largest holdings, worries about others in the landlord community in which most know each other. ‘The smaller ones are the ones in trouble,’ he said. ‘They are getting foreclosed upon because they are getting 25 percent less in rent and they have 25 percent vacancy.’”
“Some are hoping to get foreclosed upon because they cannot continue to operate.”
The News Journal. “Communities with lots of workers building big-ticket items have suffered worst in the nation in the past year, according to a report Tuesday from the U.S. Bureau of Labor Statistics. The Palm Coast and Muskegon-Norton Shores, Mich., metro areas recorded the largest jobless rate increases in November from the previous year. The housing bust hit Palm Coast hard, leaving thousands of building tradesmen without work.”
“The Palm Coast metro area covers all of Flagler County, which The Daytona Beach News-Journal previously reported, had the highest unemployment rate among counties in Florida in November at 16.8 percent.”
From TC Palm. “In 2009, foreclosures and short sales seemed to dominate the Treasure Coast’s housing landscape. Curtis Lowe, president of the Realtor Association of St. Lucie County, said that on the Treasure Coast, it wasn’t builders walking away from projects after the boom, it was buyers walking away from builders. ‘There were a lot of vacant spec homes that people just walked away from, even with deposits, and they just didn’t move into the homes,’ Lowe said.”
“‘We have made about 500 sales this year and have not sold one unfinished house,’ said Bonnie Peters, president of the Martin County Realtor Association. ‘I think that’s a very scarce phenomenon here. I’ve heard of people walking away from deposits, but not builders walking away from homes.’”
The St Petersburg Times. “Pulte Homes, the nation’s top home builder, has pulled out of Wiregrass Ranch, Tampa Bay’s largest proposed development. The dissolution of the partnership between the two housing heavyweights shows how little confidence Florida builders have in a short-term business turnaround.”
“Pulte called it quits Dec. 30 by selling its 800-acre stake in the Wesley Chapel development to semiretired Tampa developer Bob Sierra. Pulte paid $12.8 million for the land in 2004. Five years and one historic housing slump later, Sierra took the real estate off Pulte’s hands for $5 million.”
The New Times. “Before ‘04, Chinese businesses like Knauf Tianjin had rarely exported drywall to the States. But then a housing bubble inflated the demand of homes and depleted construction supplies. In South Florida, dozens of new condo towers sprouted along every stretch of beach and bay front, and hundreds of new golf-course-centered suburbs sprouted from Florida City to Jupiter.”
“The market exploded so quickly that American gypsum mines and drywall makers simply couldn’t keep up. Chinese-based companies like Knauf gladly filled the void, and it sent drywall the company eventually knew was faulty. Developers claim they didn’t know that the imported drywall was flawed when they installed it in as many as 100,000 homes nationwide. But homeowners began reporting problems immediately.”
“No one admits to doing anything wrong. The builders, suppliers, and contractors are hiding behind lawyers. The state is waiting idly by for someone to decide exactly what’s wrong while protecting politically connected developers. And the Chinese manufacturers can rest easy in the knowledge that it’s all but impossible for U.S. homeowners to sue Chinese businesses.”
“By 2006, Wendy Senior and her fiancé had spent more than a year looking at homes around Miami-Dade. Senior found a nearly finished Lennar Corp. subdivision just east of Kendall-Tamiami Executive Airport. ‘It had everything,’ Senior says. ‘We decided that this is where we would start our family.’”
“Senior initially liked the neighborhood so much that she talked her mom and her sister into buying townhomes in the same development, right down the street. The couple closed the deal August 25, 2006, for $320,590. They moved in the next day, and Wendy immediately noticed an odd odor — a biting, industrial scent. ‘Our Lennar contact told us it was just a ‘new house smell,’ Senior says. ‘We didn’t think anything else about it. It was just a really happy day for us.’”
“But by the second half of 2007, Senior’s whole extended family was growing exasperated with the same litany of problems. Air conditioners broke every few months. Electrical outlets corroded. Nosebleeds, coughs, and constant allergies swept through the neighborhood.”
“A leading cause of the foreclosure deluge that has swamped Tampa Bay’s housing market is mortgage fraud, so it was welcome news in November when federal prosecutors announced they had nailed some of the culprits. But of the 22 Tampa Bay area cases that were disclosed, none involves the kind of major fraud that helped crash the U.S. economy. They name 29 people who are accused mostly of minor scams.”
“The U.S. attorney for the Middle District of Florida said he hoped the sweep would send a clear message to the public. ‘Mortgage fraud will not be tolerated,’ said A. Brian Albritton. ‘You don’t indict your way out of what is a regulatory problem in large part,’ said. ‘(The surge) is not in lieu of greater regulation.’”
The Naples News. “In the early morning darkness, Nathaniel Keith hitched his pontoon boat to his white Ford F150 pick-up, got in the truck’s cab and drove out of River Park, leaving his home of 47 years behind. His small, white house in Naples will be sold in a foreclosure sale on Thursday.”
“Keith got a big loan from a sub-prime lender with an adjustable-interest rate and high payments. Six months later, another company promised him a reverse mortgage to pay back the home equity loan in exchange for his house. The reverse mortgage company told him to stop making payments on the home equity loan.”
“Keith went back and forth with the reverse mortgage company for months, but nothing materialized — so he defaulted on the home equity loan. He knows he made a mistake when he trusted the reverse mortgage company and stopped making payments, but that doesn’t make it easier. He’s losing his home and his life in Naples.”
“He’s given up trying to save the house. The stress was taking its toll on his body. ‘I’ve been worrying quite a bit,’ he says. ‘It’s sort of releasing a load off me now, like I was freeing myself up. I’m doing something I don’t really want to do, but I just gotta do it.’”
From WFTV. “Dozens of people were left homeless Tuesday after a massive condo fire in Ocoee forced residents out into the cold. In a strange twist, a man was found shot to death inside. Police think it was a neighbor, whose home may have been in foreclosure, who started the fire and then committed suicide. Officers located a 9-mm handgun.”
“‘It was one person who was unhappy. Now, dozens of people have to figure out what to do,’fire victim Melissa Grady said.”
The News Press. “Tough times are especially tough on Southwest Florida’s condominium and homeowners’ associations, often faced with massive defections from the quarterly dues payments. Some condo boards are playing hardball: hiring lawyers and consultants to make sure they’re paid what they are owed.owners who don’t pay their fees are by far the biggest problem.”
“‘I can tell you it’s across the board,’ said Paul Kaplan, managing partner of Miami-based KW Property Management & Consulting, which provides services for condo and homeowner’s associations. ‘This is our No. 1 largest problem right now, dealing with delinquencies.’”
The Star Banner. “2009 was a hideous year for the real estate business. There are 4,475 foreclosed homes in Marion County, and despite a Florida Supreme Court order - announced last week - that future foreclosures would have to go to mediation, many in the industry predict 2010 won’t be much better. ‘I don’t really see it slowing down next year,’ said local real estate lawyer Daniel Hicks.”
“Burt Meadows, former president of the Marion County Association of Realtors, said that currently many banks aren’t working with their borrowers, and he didn’t understand why bankers weren’t more innovative in trying to keep property owners in their homes. ‘If you can see a train wreck coming, why go full speed ahead? It doesn’t make sense,’ Meadows said. ‘I think it’s bureaucracy at the banks. They’re not taking control.’”
From Jacksonville.com. “There won’t likely be any relief from the spate of foreclosures in Jacksonville anytime soon, said Richard Zeisel, a certified distressed property specialist . Foreclosures will continue next year if no legislation slows the interest rate increases coming on adjustable rate mortgages, he said. Additionally, he estimated there’s about 7 months’ worth of ’shadow inventory,’ or homes mired in foreclosure but not yet available. That shadow inventory is about equal to the inventory currently on the market.”
“Some 9 percent of Jacksonville metropolitan area homeowners are 60 days delinquent on their mortgage, meaning they’re three payments behind, said F.J. Guarrera, TransUnion vice president of financial services. That’s up from about 2 percent in 2006 and about 7 percent at the end of 2008 — but less than the statewide delinquency rate, which stands at 13.3 percent, he said.”
“Guarrera said the delinquency rate is expected to get better by mid-year in 2010. Rates are worsening more slowly, but Florida’s is still expected to hit 16.86 percent by the end of 2010. The 2010 projection for Jacksonville wasn’t available, he said. Because mortgage delinquencies are a lagging indicator, they probably won’t return to their normal ranges of between 1.5 and 2 percent until the rest of the economy does, he said.”
“‘We’re seeing historic highs,’ he said. ‘It will take longer to get better than it did to get this bad.’”
From Florida Weekly. “Punta Gorda had a 55 percent increase in sales of existing single-family homes from November 2008 to this November, according to housing data released this month by Florida Realtors. The median sales price increased by 2 percent to $100,000, the data indicates. Inventory is moving because many sellers have become realistic about property values. The inflated sales prices are history, although Don Atwell, Realtor at RE/MAX Anchor Realty, said some customers struggle with a concession. ‘It really wasn’t worth that,’ he said about the inflated price points of a few years ago. ‘It was driven by things that weren’t , real weren’t natural.’”
“People who paid for newer homes can’t expect values to approach the purchase price. A North Port customer paid $180,000 for a home in 2006, Realtor Kim Platzer said, but a comparable home in square footage hasn’t sold for $131,000 since Oct. 1.”
“Because it’s a buyer’s market, nonlocals are discovering they have a lot of competition as they bid for properties. Debra Dees, Realtor…in Punta Gorda, mentioned an Ohio couple who were surprised at the rapid pace of the market. ‘Of the 20 homes they selected on the Internet to see, by Monday 10 were gone,’ she said. ‘They were shocked.’”
“A Kentucky couple four years from retirement purchased a vacant lot to build a home here. ‘Vacant lots are still vacant,’ Mr. Atwell said. ‘To get rid of it now, you have to give it away.’”
