In The New World
It’s Friday desk clearing time for this blogger. “Brooklyn, New York, home prices dropped 8.7 percent in the fourth quarter from a year earlier, the ninth straight decline, as unemployment and stricter lending standards sank property values. At 230 Ashland Place, a 30-story bank-owned condominium tower in Brooklyn’s Fort Greene neighborhood, the Corcoran Group has sold or received offers on 65 of 70 units it put on the market, said Frank Percesepe, senior regional VP in Brooklyn. Sales rose after asking prices fell to about $500 a square foot from the original $900, he said. ‘Condo prices I see coming down some more,’ he said.”
“A Virginia developer is moving ahead with a new townhouse community on an industrial swath of Baltimore’s Greektown neighborhood but scaling back more ambitious plans to build condos and apartments. To move forward, Kettler, a land and multifamily housing developer based in McLean, Va., needs city approval to modify the $200 million venture, which would have been one of the biggest residential developments in the city with more than 1,000 upscale condos, apartments and townhouses on 15 acres. Plans call for homes that are affordable for first-time buyers, possibly starting in the low- to mid-$200,000 range, said Luke Radlinski, director of land sales for Kettler.”
“‘We have the ability to get started on this block,’ said Charlie Kieler, a senior VP at Kettler.”
“The number of Peninsula-area properties facing foreclosure mushroomed from 86 in 2006 to 2,735 in 2009, according to RealtyTrac. Nearly a quarter of resale homes sold in December in Hampton Roads were distressed sales, bank-owned or short-sale listings. That’s the highest monthly percentage of distressed sales since the housing decline started. And there are more foreclosures on the way, with a wave of five-year adjustable-rate mortgages coming due, said Tom Sullivan, president of the Virginia Peninsula Association of Realtors.”
“At first, those seeking help were in trouble because of subprime loans. Now, the economy is taking center stage as the culprit, said uanne Gallagher, program director for Catholic Charities’ financial and housing counseling department. ‘We’re seeing people who are in very good loans and at their previous employment had no problem, but now hours have been cut back or they lost jobs,’ Gallagher said.”
“Edenmoor residents have dubbed the unique landmark the ‘Grand Canyon.’ Large crevasses have developed, some opening into cave-like pockets that drop more than 10 feet. And just like sites used by prehistoric man, drawings adorn the walls of the caves, except these were done by local teenagers.”
“The 800-acre development was originally to have included 2,000 homes. But the property has been sitting unfinished and mostly unused ever since three liens totaling $2.2 million were filed. Edenmoor residents Ernie Holmes and Wanda Rosa say their neighborhood is out of control. Rosa said she was caught off guard after closing on her house and learning she would be charged a yearly tax of $800 to pay for bonds on the property.”
“Rosa, who moved from Massachusetts a few years ago, said Edenmoor was supposed to be a cheaper place to live. ‘We had not been told about the $800 before we moved in,’ Rosa said. ‘We thought the taxes would be better here.’”
“Economist Hank Fishkind predicts 2010 will be ‘an ugly year for foreclosures’ in the Sarasota-Bradenton area and across Florida, putting further pressure on home prices, and that new housing starts will be ‘miserable.’ Some hard-hit areas of Florida may not be able to return to anything approaching normal activity anytime soon, he said. ‘There may be parts of Cape Coral and Lehigh Acres that won’t recover,’ Fishkind said. ‘It could be that 10 years from now, they are still having problems.’”
“‘In order to see a real recovery, we need to see that consumption, and to spur that we need employment,’ Fishkind said.”
“Orlando had more vacant houses, condos and apartments than any other major U.S. city during the third quarter, driving down rents and sparking landlord concessions just five years after finding an apartment was virtually impossible. ‘The reason why our vacancy rate is so high is because we had 400,000 units — and then just 350,000 a few years ago, when units started converting to condo,’ said Mark Smith, senior investment advisor at Smith Equities. ‘Now they’re going back on the market as rentals.’”
“Even taking into account Orlando’s foreclosed homes, empty condos and rental town homes, said Ed Malone, the Camden Trust’s regional vice president, it’s tough to believe Orlando has nation’s highest vacancy rate. ‘I still find it hard to believe that it’s worse than Vegas,’ he said.”
“David Crowe, the National Association of Home Builders’s chief economist, said he’s wasn’t optimistic for the Las Vegas housing market for 2010 because of a high number of foreclosures that continues to add to its inventory. He said Las Vegas doesn’t have enough demand to absorb the homes on the market through 2010 and most of 2011.”
“SalesTraq President Larry MurphyMurphy said that he’s concerned his foreclosure projection could be wrong, if people who can afford to pay their mortgages start walking away from their homes in larger numbers. Those who bought homes in the last two to five years have lost 50 percent on the value of their homes, and two of three Las Vegas residents owe more on their mortgages than their homes are worth, Murphy said.”
“Someone who bought a home for $300,000 has seen its valued drop to $150,000, and if prices appreciated at 5 percent a year, it would take 20 years to recoup that, he said. ‘Strategic defaults are a very real possibility,’ Murphy said. ‘People may lose hope and make a business decision and take a walk. Studies have shown this can go viral. If this were to happen, we could have a tsunami next year.’”
“Builders from around the country meeting in Las Vegas this week can expect to see the latest thing in home appliances, construction materials and homebuilding equipment. What they won’t see are the record crowds that the International Builders’ Show drew a few years ago. After peaking in 2006 with more than 105,000 in attendance, the big builders’ expo is expected to lure fewer than 60,000 visitors this year.”
“‘Yes, the numbers are down significantly,’ said Bob Morris, executive VP of the Home Builders Association of Greater Dallas.”
“‘Improvement will still be spotty – some local areas will see some new homes being built, others won’t,’ said James Gaines, an economist at the Real Estate Center at Texas A&M University. ‘Construction loans are still very difficult. I’m told some builders have trouble with construction loans even on new homes with strong contracts from buyers.’”
“Even though economists declared the recession over months ago, Oregonians had to take whatever work they could get in December. The construction industry that exploded during the real estate boom of 2004-2007 came crashing down. Contractors have shed 30,000 workers since the 2007 peak. Their payroll is now 11 percent below the 1999 levels.”
“Bart Eberwein, a VP at Hoffman Construction, said the prospects for new work are ‘very bleak through the end of 2012. … There’s no light at the end of the tunnel. None. Zero.’”
“You can almost hear the roar of the crowd at Target Field. Opening day at the new baseball stadium is set for April 12. But in the area surrounding the new ballpark, things are pretty quiet. Minneapolis-based Schafer Richardson previously developed three adjacent condo buildings in the area during the condo boom. The developer is still trying to sell the remaining units in the last building at 730 Fourth St. N. — which was completed in fall of 2007. David Frank, director of development with Schafer Richardson, said that the developer has sold 82 units, has rent-to-own deals for 12 others, and has 17 units still on the market.”
“Schafer Richardson has a proposal for 188 market-rate apartment units at a project called Third North. But so far, the developer has not secured financing and it’s unclear when the project would move forward. Maureen Michalski, a project manager with Schafer Richardson, said that they would like to start construction of Third North in the fall.”
“‘I think it’s a little too early to say how likely that is,’ Michalski said.”
“About 35 people attended a second public meeting to discuss the Westgate Land Use Plan Thursday night at the University of Illinois Extension office. At the end of the formal presentation, mixed use seemed to be the favorite scenario. Brad Key, who has owned a car stereo and supplies business, said he doesn’t want to see the area annexed into the city and he’s not in favor of any land-use scenario. ‘Danville is full of empty office buildings right now…,’ Key said.”
“Tough economic times call for thinking outside the box. And College of DuPage is ready to help people cope with the challenges of the most serious recession since the early 1980s. David Gay, director of the College of DuPage Small Business Development Center, spoke to the Naperville Area Homeowners Confederation at its monthly meeting.”
“One woman from Spring Hill spoke of gang-bangers living in Section 8 housing and ‘having to call the police constantly.’ Another, from the West Highlands, noted that an owner-occupied house there rented rooms to as many as eight people and she was often afraid to let her small children play outside. Still others noted that the some properties, including some brand-new ‘McMansions’ that didn’t sell in the down economy, were often in a state of extreme disrepair.”
“Roughly 100 buyers who have made down payments on units at downtown Denver’s new Spire condo tower are expected to close on those purchases in February. The Nichols Partnership Inc. of Denver, developer of the $175 million condo high-rise, is also in the process of renegotiating a $118 million construction loan for the project with the loan’s new owner.”
“‘There are a lot of things involved in our discussion with Starwood,’ said Spire developer Randy Nichols. ‘The main thing is we need to extend the loan. In the new world, it’s going to take longer to sell our units and operating costs [will be higher].’”
“For the newest marketing phase now under way, for more expensive units on floors 20-25, the developer is offering $40,000 to $80,000 off purchase price. Nichols discounts rumors that Starwood is pressuring him to convert Spire’s for-sale condos to for-rent apartments. ‘That’s not happening. … It doesn’t make sense,’ Nichols said.”
“Plans are moving forward to build 54 houses in March in the Sonora Wells housing community. Commissioner Greg Gustafson said he voted for the new design plans because of the concerns of residents who were living near empty lots and because the developer made the effort to talk to residents.”
“Sonora Wells residents Misti Fallis and her husband John were against D.R. Horton’s plans. The couple moved into the community in August 2006 expecting that the ‘homes throughout would look the same.’ ‘We felt that they were trying to save a buck and build some cheaper homes,’ she said.”
“Sonora Wells resident Adam Johnson supported D.R. Horton’s plan because it would mean construction on the empty lots near his home. ‘I don’t want to see empty lots for the next five years,’ he said. ‘There is graffiti, and they are unsightly. They are fenced off with construction gates with weeds growing, and I have to look at them every day.’”
“A proposal for a pedestrian-oriented town center in the Pacific Highlands Ranch community east of Carmel Valley has drawn fire from residents who say the plan has strayed from the original, voter-approved vision for the master-planned development. Pardee Homes, which owns most of the 27-acre site where the town center is planned, wants to build a mixed-use project including 294 residential units.”
“Dean Dubey, a Pacific Highlands Ranch resident and member of the planning board, appealed the Planning Commission’s approval of the project. Dubey said he and other residents bought their homes with the expectation that the town center would be built, and they are excited to see it happen. But he and others don’t believe the proposed plan matches the original vision for the town center.”
“‘They have lost really the main goal of making this a walkable village,’ said Dubey.”
“What remains of Valley Investments might not be worth even the $5 million that was estimated late last year, the receiver for the company told investors. After looking ‘with a hard, cold eye’ at the assets of Valley Investments, especially at some of the aging and decaying mobile homes in the parks it operated, attorney Kirk Rider said he is starting to question his original estimate. Valley Investments asked investors to invest $20,000 to $40,000 in low-income housing projects in Colorado, Idaho and Utah. Valley Investments collapsed last year. More than 400 investors lost about $31 million.”
“Rider said he is negotiating with the Lochmillers and family members to settle the receivership claims against their personal property, such as homes they own. He was unable to offer a date when he will be able to send out checks to investors, Rider told one investor during the call.’
“‘I just don’t have a timeline for you. I’m sorry,’ he said.”
“President Barack Obama’s proposal to regulate banks should include a requirement that CEO’s and their spouses forfeit their assets when companies fail, billionaire Warren Buffett said on Fox Business Network. ‘There ought to be a huge downside,’ said Buffett. ‘Make it so that the CEO of an institution that fails, or goes to the government and needs help, really gets destroyed himself financially.’”
“‘While the financial system is far stronger today than it was one year ago, it’s still operating under the same rules that led to its near collapse,’ Obama said at the White House today after meeting with former Federal Reserve Chairman Paul Volcker, who has been an advocate of taking such steps. ‘Never again will the American taxpayer be held hostage by a bank that is too big to fail.’”
“Buffett has repeatedly criticized bankers for failing to realize that housing prices could fall and said they exacerbated their mistakes by borrowing to increase the size of their failed bets.”
“‘I think you have to change the incentives,’ Buffett said on the cable news channel. ‘It’s nice to have carrots but you need sticks. The idea that some guy is worth $500 million and leaves and only has $50 million, that’s not much of a stick. There ought to be a huge downside.’”
