February 28, 2010

The Perfect Storm Of Stupid In California

The Sacramento Bee reports from California. “Hundreds of area homeowners poured into the Sacramento Convention Center on Friday with tales of financial distress, worry, fear and anger. They were looking for hope at an eight-hour foreclosure prevention workshop. One of those in line, Peggy Tripp, a mother of three, said she has no financial reserves remaining to save her home. ‘I just don’t know who else to turn to. Nobody else will talk with me. So I’m hoping I can get some satisfaction here today.’”

“Mary Pendleton, who said she lives in the Rosemont area east of downtown Sacramento, said she has been struggling to make a $2,200-a-month payment ‘for a long time, long before all this began. We don’t have any savings left.’”

“Bob Tull of the El Dorado County community of Cool said he was hoping to get his nearly $3,000-a-month payment modified, having ‘burned through about all I have.’ Tull said he worked more than 30 years as a contractor, and now he’s delivering mail to help out.”

“Jonelle Smith of Sacramento said she showed up with home loan documents ‘because a friend of mine told me this was going on. … I’m hoping to get some help from somebody, anybody.’ A couple of hours later, a disconsolate Smith walked away, saying, ‘I couldn’t get help today.’”

“The California Association of Realtors said this week that 67 percent of all home sellers in California in 2009 did so as a result of difficulties related to meeting their mortgage obligations.”

The LA Times. “It’s been 16 months since Eugene and Patricia Harrison last paid the mortgage on their Perris home. Eleven months since the notice got slapped on their front door, warning that it would be sold at auction. ‘ Still, they remain in the yellow ranch-style home they bought seven years ago for $128,000, with its views of the San Jacinto Mountains. They’re not planning on going anywhere.”

“We’re kind of on pins and needles, but who’d want to leave when you put this kind of energy into a house?’ said Eugene Harrison.”

“In the Inland Empire, an estimated 100,000 homeowners are living rent-free, according to economist John Husing, who based that number on the difference between loan delinquencies and foreclosures. Industry experts say it’s difficult to say how many families are in that situation nationally because only banks know for sure how many customers have stopped paying entirely. Economists say the situation won’t last forever, but in the meantime the ‘amnesty’ may allow at least some homeowners to regain their financial footing and avoid eviction.”

“In Diamond Bar, the Fraguere family is finally moving on after living rent-free for 18 months. Job loss and other setbacks prevented them from paying their mortgage, but they say they didn’t hear anything from the bank, First Franklin, until a real estate agent showed up at their door last month saying she was going to sell their house. Sandy Fraguere wasn’t surprised that it had taken the bank so long to ask them to move.”

“‘I don’t think they really knew what was going on or who was there,’ she said.”

“Next stop for the Fragueres is a hotel, where they plan to stay for two weeks until their apartment in Chino Hills is ready for them to move in. Their dogs are being boarded and their belongings stored until they can retrieve them someday. Their children, ages 8 and 9, are being steeled for more instability. The Fragueres have started saying goodbye to their neighbors, adding yet another empty house to a block that has already seen two other families forced to pack up and leave.”

The Glendale News Press. “Area home prices rose in December for the seventh straight month, according to a real estate report released Tuesday. But the recent gains do not reflect the beginnings of a true recovery in the market, experts and agents said. Fifteen of the 20 metropolitan areas included in the report showed price declines in December.”

“The government’s efforts to ease regulations on banks while stimulating demand have brought high competition for limited inventory, said Barry Burnett, the owner of Barry Burnett Realty Inc. in Burbank. But banks have had no incentive to foreclose on properties that have lost significant value, with some still down as much as 22% from their peak values in 2006, Burnett said.”

“‘What we have is the perfect storm of stupid,’ said Barry Burnett.”

“Unless banks begin foreclosing on homes and putting them up for sale, the market will not begin to operate naturally and eventually grow in strength, he said. But when banks finally do begin selling foreclosed properties, the effect will likely be challenging for homeowners, said Keith Sorem, a Glendale-based agent for Keller Williams Real Estate. ‘The other side of the coin is that if we had a lot of inventory, values would probably depress, and we have no control over it,’ he said.”

The Press Democrat. “The North Coast wine industry, home to the highest concentration of high-end wineries and vineyards in the nation, is reeling from the impacts of a recession that has made it chic to drink cheap wine. ‘This is beyond a recession. This is a complete resetting of the clock,’ said Sebastopol winemaker Tim Olson, co-owner of the boutique Olson Ogden wine brand.”

“Banks are pressuring these wineries to put up additional cash or assets as collateral, and some are finding that a difficult task, according to Allan Hemphill, a financial adviser to several area wineries. ‘I think you are going to see foreclosures and I think there’s going to be quite a few of them,’ Hemphill said.”

“There is something of a standoff in the market at the moment, according to veteran Sonoma vineyard appraiser Tony Correia. The handful of buyers are largely expecting to find great deals, but winery owners are reluctant to sell at such steep discounts, Correia said. ‘Sellers think it’s 2007, and buyers think it’s the 1930s,’ Correia said.”

“‘A lot of property owners really haven’t faced up to reality. They are still in denial,’ Correia said. ‘They think they are going to work their way out of these things, but some of them have dug themselves a pretty deep hole.’”

The Times Herald. “A full 61 percent of Solano County homeowners, or 56,787 mortgage holders, owe more on their homes than they are worth at the end of last year, First American CoreLogic reported this week. The latest report showed that, with 35 percent of its mortgages are under water, California remains among the five states in which negative equity is concentrated. In numerical terms, the report’s authors found California’s 2.4 million and Florida’s 2.2 million upside down mortgages atop the pack. They account for 4.6 million, or 41 percent, of all negative equity loans, its authors noted.”

“The report found a close tie between negative equity and preforeclosure activity. It’s also a major factor in homeowner default behavior, it noted. ‘Once negative equity exceeds 25 percent, or the mortgage balance is $70,000 higher than the current property values, owners begin to default with the same propensity as investors,’ said First American CoreLogic Chief Economist Mark Fleming.”

“Calling the report ‘not an unrealistic interpretation of the statistics,’ local Realtor Jeff Dennis said, “When it becomes clear that you’re throwing good money after bad, some people will tend to walk away. But as things in the market stabilize — and with loan modification programs available — more people will hopefully decide to hang on to their homes a while longer and things will turn around.’”

“Solano County has seen an 1,100 percent increase in new home construction permits so far this year compared to 2009, a building industry organization reported Friday…far and away the biggest jump, according to the California Building Industry Association’s latest report. Merced came in a distant second with a 600 percent increase.”

“Home-building officials, however, caution against calling this a recovery, as the numbers for January 2009 were extremely low. ‘Anything from nothing is an up,’ local Realtor Jeff Dennis said.”

The Modesto Bee. “Stanislaus County home construction in January hit its lowest level in more than two decades, but at least one local builder thinks there’s an opportunity in this down market. Florsheim Homes of Stockton bought up vacant lots in Riverbank and started building modest-size homes with prices starting at $182,900.”

“Joseph Anfuso, who runs Florsheim, is convinced the renamed Valley Oaks development will be popular with buyers. That subdivision used to be very popular, back during the region’s building boom when it was called Sterling Ridge. In 2005 when the 200-lot subdivision was owned by JKB Homes, up to 100 would-be buyers were on the waiting list for homes that had base prices of $342,000 to $431,000.”

“By last spring, JKB had slashed its prices, offering a 1,575-square-foot home for $225,340. Anfuso said his company bought 11 of Sterling Ridge’s remaining lots from JKB and another 16 lots from Guaranty Bank, which had repossessed them. At the peak of the building boom, Anfuso said, similar finished lots cost $130,000 to $150,000 each for the land, government fees and infrastructure. He said some foreclosed lots in the Northern San Joaquin Valley are selling for less than $10,000 each, but the Riverbank lots cost more than that.”

“‘We bought those lots at a huge discount,’ said Anfuso, who would not reveal the purchase price.”

The Victorville Daily Press. “The city is on a pace this year to exceed the number of building permits it issued in 2009 by 25 percent, leading some in the industry to see the Victor Valley as an oasis of hope in an industry battered by recession. ‘There are buyers out there who see (Victorville) as the most affordable market there is,’ Frank Williams, CEO of the Baldy View Chapter of the Building Industry Association, said.”

The Desert Sun. “John Husing is a longtime economist who focuses on Riverside and San Bernardino counties. Husing, ‘The critical question is one that can’t be answered: We don’t know for sure whether banks are going to, at some point, act precipitously against homeowners who are in trouble, but who — up until now — they’ve been allowing to slide.’”

“‘There are roughly 250,000 Notices of Default on file in Riverside and San Bernardino counties. We know there are more houses that are upside-down than that, so we don’t know if banks are holding off on the trustee’s sale or on evictions, the final act of foreclosure. With inventory on bank-owned homes down 50 percent, the market is acting precisely as predicted: Prices are slowly rising. Volume has made a big jump. Realtors are complaining about lack of supply.’”

“‘If banks do change their mind, aggressively take people’s houses and dump them on the market, then all bets are off: We could get double-dip recession. My forecast is, that won’t happen.’ Best advice for buyers: ‘If you don’t buy now, you’re nuts.’”

The Pasadena Star News. “Construction of new homes on one of the last sizeable open lots in the city is scheduled to start in April. Located just north of Pasadena High School, in a tree-lined neighborhood off Altadena Drive, the Rosecrest Lanes development will consist of 35 single-family homes, all above 2,500 square feet.”

“The developer, Pulte Homes, targeted the area specifically because its executives thought it was one of the few places where high-priced homes would sell in a down real-estate market. ‘Our focus is currently looking to highly desirable areas where home prices haven’t been badly affected,’ said Chris Haines, the president of Pulte’s Southern California Division. ‘Right now there’s a supply constraint for nice larger homes in Pasadena - not enough to go around.’”

“The price of the homes will start around $800,000 and will be custom built, said Haines.”

The North County. “Want to buy an empty lot in Escondido for under 15 grand? Too late!”

“Those kinds of deals were available Friday at the annual San Diego Tax Auction, where San Diego County Tax Collector Dan McAllister briefly became the county auctioneer. He tried to sell a record 197 lots and timeshares owned by people who had gone five years without paying their property taxes. Future homeowners, builders, and investors crowded a room at the San Diego Convention Center to score good buys and enjoy the thrill of the bidding.”

“Holly Stevenson and her husband, Matt Wilson had their eyes on an Escondido property near Lake Hodges as the future site for their dream home. The lot started with a minimum bid of $4,000, the sum of costs of sale and the taxes owed on the property (lots with buildings on them start at half the appraised value). A competitive auction followed, with Stevenson duking it out with bidders on either side of the room, but eventually winning the property for $11,500.”

“‘Usually, an empty lot around there is going for $50,000,’ Stevenson said. ‘So I’m very happy.’”

The Tribune. “Permits for new single-family and multifamily housing have slowed to a trickle in San Luis Obispo County, according to data from the Home Builders Association of the Central Coast. A total of 15 permits was issued in January, compared to 18 in January 2009. Last year, 372 permits were issued, down from 597 in 2008. The number of permits issued has declined each year since reaching a peak of 2,263 in 2004.”

“Jerry Bunin, government affairs director for the Central Coast association, said the number of foreclosures on the market is slowing the pace of building, and more foreclosures are expected. Depending on the type of unit, he said, it often doesn’t make sound financial sense for a builder to move forward because of the bargains that are out there in the home resale market.”

“Another issue for builders is the lack of credit, he said. ‘Even if they had a qualified buyer or a project that made sense, it’s hard to get money to build it,’ Bunin said.”

“The association is hopeful that construction will pick up later in the year. ‘No one anticipated this level of downturn,’ he said.”

The Ventura County Star. “Cash-strapped individuals and families resigned to sleeping illegally in their vehicles in Ventura may soon get some relief. Starting Monday, people can apply to be part of a pilot program that would allow certain vehicles and qualified participants to legally park overnight in one of two designated church parking lots.”

“The program is modeled after city-sanctioned parking programs in Santa Barbara and Eugene, Ore. While not ideal, a sanctioned place to park provides temporary relief while people seek stable housing, said Bill Finley, a captain with the Ventura Salvation Army, which is administering the program for the city. ‘I think there is going to be more demand than the spots we have,’ Finley said.”

The Record Searchlight. “Housing affordability in the greater Redding metropolitan area peaked in the final three months of 2009. The area’s median sales price closed out 2009 at $175,000, down from $181,000 in the third quarter. Area affordability has skyrocketed since the spring of 2006, when the greater Redding area’s index reached an all-time low of 11 percent with a median sales price of $280,000. Redding’s median income back then was $49,000.”

“‘A combination of declining prices and extremely low interest rates’ are driving affordability, said Eric Smith of Keller Williams Realty in Redding. ‘I am not sure if there is going to be a better time to buy, when you factor in the low prices, interest rates and the ($8,000) tax incentive (for first-time buyers).’”

“But with Shasta County’s unemployment rate around 16 percent, the dream of home ownership remains out of reach for many, Smith said. ‘Again, the big if is you have to have a job,’ he added.”

“Home values in the Redding area, which includes Anderson and Shasta Lake, fell 7.3 percent over the final three months of 2009 compared with the same quarter in 2008, according to the Federal Housing Finance Agency’s house price index (HPI). In a sign that prices might be leveling off, Redding values dropped a mere .37 percent from the third quarter of 2009. Home values here have fallen 8 percent over the last five years, the Federal Housing Finance Agency reported.”

“Redding made news in 2003 when the same index ranked it as the top appreciating housing market in the nation. Prices in Redding during the first quarter of that year jumped 16.3 percent over the previous year. Chico (16.04 percent) ranked second behind Redding and the five fastest-appreciating markets in the nation were in California during the first three months of 2003.”

“Year-over-year values in Redding reached their zenith during third quarter 2004 when the HPI reported prices jumped 26 percent. How crazy was the market back then? Redding couldn’t even crack the top 10 with that 26-percent leap.”

“The two areas that had the fastest rates of appreciation during the late summer of 2004 were Las Vegas (42 percent) and Riverside (34 percent), communities that have both been hammered by foreclosures.”

“So who capped 2009 as the fastest-appreciating community? Terre Haute, Ind., where prices nudged forward 3.1 percent compared with a year ago. Dubuque, Iowa, was second at 2.12 percent. Times have changed. That kind of appreciation would have made you a bottom-feeder six years ago.”

“The real estate world was very different in the Coachella Valley five years ago. Prospective buyers streamed through model homes while real estate agents poked pins onto maps to reflect constant sales — some posting $10,000 price gains by the month. Phones rang incessantly. Common were bidding wars, waiting lists, lotteries and house-flippers, the latter often cashing out six-digit profits.”

“It was fast and frenzied in 2005 as price seemed to be no object and affordability dissipated, squeezing many families out of the market.”

“The picture is a stark contrast to today’s market. The data, filtered from the Multiple Listing Service, market activity in key valley areas show that sales are up 25 percent compared to 2008. Overall sales volume is down 15 percent. Of 9,238 total home sales, 8,204 sold for $500,000 or less. The average sales price of homes below $500,000 was $182,369. That was 22 percent less than in 2008, when the average sales price was $236,160.”

“The sale of homes priced from $500,000 to $750,000 fell 21 percent. Of 9,238 total home sales, 452 homes sold above $750,000. Prices are so low that prospective buyers with cash, a ‘golden’ credit record, resilient investment portfolio and job security are swooping in to snag homes at prices not seen in nearly a decade.”

Bits Bucket For February 28, 2010

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February 27, 2010

Bits Bucket For February 27, 2010

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February 26, 2010

An Investment That Went Bad

It’s Friday desk clearing time for this blogger. “Amid the housing market bust, developers are abandoning unfinished subdivisions, leaving hundreds of homeowners with the mess. The city of Nashville is at the center of some of the thorniest problems, both because it has dozens of stalled subdivisions and because city planners allowed the bank guarantees that would have paid for completion to expire on 27 now-abandoned developments.”

“Bril Peete was promised finished streets around her Cane Ridge home in 2007. Instead, manholes now stick up inches out of the rough pavement. They’re frustrated by never getting updates from Metro. ‘I like where I’m living, I like my neighborhood, it’s very quiet and safe,’ Bril Peete said with a weary sigh. ‘But if it takes years? Well, I guess this is where I’ll be, waiting.’”

“In a region where house prices have been cut in half in two years, a handful of investor-driven developments lost much more. Bermuda Dunes condominiums plummeted from an average sales price of $312,000 a unit in 2008 to $62,925 a year later — an 80 percent drop in one year. The 304-unit Cascades complex in Kissimmee has experienced the biggest price drops in Osceola County, according to the property appraiser there. Sales last year ranged from $140,000 to $185,000 a unit, but so far this year they range from $16,000 to $48,000 each — a drop of more than 70 percent in one year.”

“With sales in recent years driven mostly by out-of-state investors, fewer than 10 percent of the units are owner-occupied. Residents have complained that maintenance has been neglected as a result. ‘The homeowner fees are not getting paid, [and] the existing homeowners can’t make up the difference,’ Osceola County Property Appraiser Katrina Scarborough said.”

“‘Maybe, initially, they just had a higher price point, to be kind,’ said Seminole County Property Appraiser David Johnson. ‘Some have called it ‘creative financing,’ with investors putting no money down. … To be cliché, you had no skin in the game.’”

“Values in Bella Collina have dropped faster than a golf ball hit into Lake Apopka. Lots that fetched more than a million dollars each four years ago are selling for about $125,000 — a drop of more than 80 percent from their ‘06 peak. ‘I bought this lot for $700,000,’ said builder Keith Clarke of his hilltop model home. ‘Now I could buy the one next door for $25,000.’”

“With high-end furnishings inside and views of the Steamboat Springs ski resort outside, The Highmark sold the first of its 23 luxury condos for $3.17 million in 2008 and planned to wrap up sales that year. It didn’t happen. The developer’s lender failed in August 2008, and credit markets froze following the collapse of Lehman Brothers a month later.”

“Under pressure from the new lender, The Highmark’s developer will auction off 15 units next month with minimum bids as low as $630,000 — or $407 per square foot, down from $1,185 per square foot two years ago. ‘I kick myself, but what can you do,’ said Atlanta-area businesswoman Sharon Habibi, who with a friend bought a four-bedroom penthouse at The Highmark for about $3.1 million in 2008.”

“Wayne B and his wife are about to do something odd. The couple, with a pristine credit history, have decided to default on their $500,000 mortgage on a townhouse in Livermore. It is not that they are unable to afford the $4,600 monthly mortgage outgoings: they have never missed a payment. But the house they bought for $582,000 in May 2006 — at the peak of the US housing boom — is now not likely to be worth more than $315,000.”

“‘The process towards a default has started,’ says Wayne, whose lender does not yet know it will soon be left nursing losses on yet another foreclosed house. ‘We plan to retire in four years and will not be able to afford the mortgage payments then,’ he explains. ‘The loss if we sell will be so large that, after doing a lot of research, we have made a business decision to walk away.’”

“A few weeks ago, Shasta Gaughen, who works with a Native American tribe in California, stopped paying her mortgage. The one-bedroom condominium she bought for $196,000 in October 2005 is now worth just $60,000 and she has decided to default, ‘after two years of agonising.’ ‘The biggest problem is trying to convince myself it is not morally wrong to walk away,’ she says.”

“‘I’m approaching my home as an investment that went bad. I’m not stealing anything, the bank will get the property. But my parents raised me to be responsible.’ She has decided the ‘responsible’ thing for her to do is get out of the flat and rent somewhere else for less than the $1,200 monthly mortgage payments.”

“Rep. Dennis Kucinich and other members of Congress from Ohio on Thursday called the Obama administration on the carpet for excluding Ohio from a new $1.5 billion program to fight mortgage foreclosures. The program announced last week will redirect money from the bank bailout to state housing agencies in California, Nevada, Florida, Arizona and Michigan. Ohio gets nothing.”

“Gov. Ted Strickland and U.S. Sen Sherrod Brown say it’s unfair to limit aid to states where average prices fell by more than 20 percent from their peak. ‘If Ohio doesn’t meet the criteria in the President’s plan, the criteria are wrong,’ said Brown.”

“Decline in home prices should not be a deciding factor, as that seems to tilt relief to the states with the most speculation.”

“The buyer’s market continues for housing in the Northern San Joaquin Valley. That’s a nice way of saying home prices plunged again in January. There are plenty of buyers for distressed properties. ‘A lot of investors have an appetite to buy these homes, and they pay cash,’ said Larry Matos, president of Century 21 M&M and Associates. ‘Investors pick them up for 20 to 30 cents on the dollar. They fix them up and then flip them.’”

“‘We have double the number of buyers as we have inventory to sell them,’ said Matos. He said Stanislaus has half as many homes for sale now as there were a year ago.”

“Dallas-Fort Worth area home foreclosures for 2009 fell to their lowest level in three years. But the almost 12 percent drop doesn’t mean that fewer North Texans are threatened with losing their homes. Indeed, the number of D-FW homeowners with a loan in default is at a record high, and foreclosure filings continue to grow.”

“‘There are an awful lot of problem loans out there that should be foreclosed on and are not,’ said George Roddy, who heads Foreclosure Listing Service of Addison, which tracks foreclosures in 19 Texas counties. ‘Perhaps they think if they delay long enough, the situation will work itself out. Yes, foreclosures are down, but it’s artificial.’”

“Feelin’ lucky? A lot of regular Park City-area workers hope they are, judging from the flood of applications at City Hall for the ski town’s housing lottery. Thirteen lucky winners will qualify to buy — that’s right, buy — houses in Snow Creek with a nice view of ski runs and within spitting distance of the state wine store. Houses are in the mid $200,000-range, a far better deal than anything else around Utah’s glitterati stopover.”

“Mike Strachan is among the workers who keep Utah’s renowned ski town humming, but aren’t able to buy housing in its rarefied real estate market. ‘We’d both like to live here,’ Strachan said of long-term plans with his girlfriend. ‘But most things are too high for us.’”

“The lack of residential Canadian real estate listings is most acute in Toronto, contributing to upward pressure on pricing, according to ReMax Ontario Atlantic Canada. ‘The overall pressure on sales and price is significant across the board – and it’s not likely to subside until more inventory comes on stream,’ ReMax said.”

“There were 2,162 mew houses and condominiums sold last month, representing a stunning 237 per cent increase over January 2009. ‘The market is reasonably healthy, but certainly not frothy,’ said BILD president Stephen Dupuis.”

“With sales picking up in Calgary’s real estate market, realtor Claudia Walz has few doubts about what’s in store in the coming months. ‘It’s about ready to just go crazy,’ said Walz. ‘It’s almost like people want to spend now.’”

“‘Affordability is the catalyst for the vast majority of purchasers in today’s housing market,’ said Elton Ash, regional executive vice-president for Re/Max of Western Canada. ‘While home ownership is still within reach in many major centres, levels are slipping. There is a growing sense, on both sides of the fence, that the time to act is now.’”

“What happens to the cities that host the Olympics. This NY Times article is worried that Vancouver is going to suffer quite a hangover. Kennedy Stewart, a professor of public policy at Simon Fraser University in suburban Vancouver, remains unconvinced that showing potential investors a good time during the Olympics will resolve Vancouver’s long-term economic issues. ‘What’s the substantive thing Vancouver has to offer other than its nice mountains and vastly overpriced real estate?’ Professor Stewart asked.”

“A decade of cheap money and incredibly flexible loan programs offered by many lenders sparked overbuilding by developers, a flip-and-run mindset for speculators and unrealistic expectations for first-time home buyers blinded by the low payments of a short-term loan.”

“According to Edward Pinto, a consultant to the mortgage-finance industry and former chief credit officer at Fannie Mae, the over-stimulus provided by Fannie, Freddie, FHA and the Community Reinvestment Act created the housing boom that went bust. The response to the bust has been to provide yet more stimuli, which are serving to delay the market clearing process.”

“The ‘market clearing process’ means allowing the traditional housing forces to return to the scene.”

“Just what are traditional housing forces? In a nutshell, it means skin in the game: Make certain that those who can truly qualify to buy a home are also able to produce a down payment and an income that will allow the repayment of the mortgage, taxes, insurance and monthly essentials. ‘All we are doing is kicking the can down the street,’ Pinto said. ‘The loan modification programs that were designed to help people stay in their homes have been abject failures. The recent treasury action lifting the capital support caps did not help. It cleared the decks to use Fannie and Freddie as an open vessel for whatever the administration wants.’”

“The lending craziness of the 1990s and 2000s was not present in any other decade. Sixty years ago, the average home price in the United States was approximately $5,000 and the average debt against it was about $2,500. In the early 1950s, the prevailing loan-to-value (LTV) was 58 percent, while many of the loans made between 2004 and 2006 had an LTV of 97 percent to 100 percent. Some lenders, blinded by the 10-year run-up in home appreciation, were making 125 percent loans.”

“The housing road of the 1980s had its peaks and valleys, but it really took off in 1992-93 when homeownership became more of a priority and the government pushed for creative methods to get people into homes. The challenge is that housing is systemic. What helps you on the way up, pounds you on the way down. Inexpensive loans created demand and inflated prices. When rates adjusted, borrowers could not pay higher monthly obligations and the number of homes on the market (supply) soared.”

“It’s time to let the market correct itself. That means skin in the game for buyers.”

Bits Bucket For February 26, 2010

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February 25, 2010

Leverage Works Just As Swiftly In Reverse

Chicago Public Radio reports from Illinois. “Just a few years ago, homebuyers stampeded into brand-new condos all over Chicago. Then, reality hit. Water started leaking in. Mold crept up the walls. Elevators stopped working. Now the city of Chicago is trying to clean up the mess by chasing after developers responsible for shoddy work. But the city’s good intentions have, in some cases, made life even tougher for the homeowners. Mary Feeney and her neighbors contacted their alderman, who said to call the city. They did and the city sued their developer, Jerry Czerwik. But Feeney and her neighbors were also named on the lawsuit.”

“FEENEY: ‘I mean that’s what was so ironic when we were first found as defendants in the same pool as the developer, it was like, well the only reason you have a case is because we called you, and now we’re defendants?’”

“Greg Janes from the city’s law department….says it’s frustrating knowing he set out to help people only to have this happen. JANES: ‘You know, every time we try to work with a building and a general contractor, I think, let’s hope it doesn’t turn out that at the end the unit owners are still on the hook for over $100,000.’”

“Feeney says she now knows one thing for sure. FEENEY: ‘I will never buy a property in Chicago again.’”

The Chicago Sun Times in Illinois. “Last July, I wrote about the issue of condo contract ‘walkaways,’ people who never close on a condo sale because the unit’s value has fallen, and they lose less money by giving up their deposit. Since then, the walkaway situation, also known as ‘contract fallout,’ apparently has gotten worse.”

“Developers of new buildings had fallout rates of 25 percent to 40 percent last year. At the release of her company’s annual report on downtown condos, Appraisal Research Counselors Vice President Gail Lissner said the lucky developers have just 25 percent. Others are in the 50 percent range, she said. She said one building, which she wouldn’t name, may be well above 50 percent, but simply refuses to cancel sales agreements, hoping the buyer will eventually show up for a closing.”

Crain’s Chicago Business in Illinois. “Developer Gary Rosenberg says he has lined up $100 million in financing for a 220-unit condo tower in the West Loop. Developers still are sitting on about 3,000 unsold condos and townhomes that have been completed or are under construction, according to Appraisal Research. Though it may sound to like a crazy idea to some, Mr. Rosenberg says ‘it’s a good time’ to start a new condo tower.”

“Mr. Rosenberg doesn’t rule out the possibility of switching from condos to apartments, saying his capital source ‘is providing us total flexibility’ to respond to changes in market conditions. ‘We’re prepared to go rental if sales don’t go as well,’ he says.”

Medill reports Chicago in Illinois. “The Fed’s mortgage-buying will end March 31, and the home-buyer tax credit expires at the end of April. Many believe that the modest recovery during the last few months will prove to be a fiction when these government-backed programs end. ‘I see no evidence that this [industry] has the capacity to stand on its own two legs. Even with these dramatic government efforts to bolster home sales, they’re still languishing at recessionary levels,’ said David Rosenberg, chief global economist at Gluskin Sheff & Associates Inc.”

“Illinois is one of the markets likely to see a double dip. In Chicago, ‘Stability is eluding the market,’ said Genie Birch, president of the Chicago Association of Realtors. ‘Without revisions in lending regulations…Chicagoans will witness declining homeownership, loss of tax revenues and erosion of the equity they have placed and created in their homes.’”

The Northwestern in Wisconsin. “Realtors in northeast Wisconsin saw existing home sales surge during the last quarter of 2009 in response to what many thought was the end of a tax credit for first-time homebuyers, but agents are expecting those sales to continue after Congress extended the credit through the first part of this year.”

“With low home prices, interest rates hovering around 5 percent and the tax credit, now is a prime for people to explore the housing market, realtors said. ‘Now is a very good time for anybody who wants to own a house and commit to the obligations that go with home ownership,’ said Shellie Mathe, manager with First Weber Group.”

“Low interest rates and home prices along with the tax credit leave Realtors urging people to consider finding a piece of property they can call their own. ‘There was a big rush leading up to the first expiration date and I really feel Congress doesn’t have the appetite to extend this again,’ said Kevin Purtell, broker/owner of Premier Group.”

The Fond du Lac Reporter in Wisconsin. “Fond du Lac real estate agents are finally feeling a stir after enduring three years of a listless housing market. Thanks in part to new tax credits for homebuyers, real estate agents are answering more phone calls, scheduling more showings and greeting more new faces at open houses.”

“Broker associate Steve Klapperich added that growing interest in homes has given agents confidence, and it’ll be interesting to see what happens in early spring and summer. At this point, no one knows if the federal government will offer further incentives for homebuyers, he said. ‘Only time will tell,’ he said. ‘We don’t know if credits are in the cards. At some point, they (lawmakers) have to turn the tap off.’”

“The real estate market itself had been in trouble since 2006, when home prices across the country had ballooned to the point where many were unaffordable. Scott Swick, owner of First Weber and Winfield Homes in Fond du Lac, said sub-prime loans and ‘easy money’ allowed some consumers to buy more house than they could afford or invest too much money into upgrading a home. Stated-income loans caused some of the biggest problems, since buyers could tell lenders how much they earned and the bank wouldn’t verify the information. The market has since bottomed out and prices are more in line with what people can pay.”

“‘It’s painful for the sellers but a bonanza for buyers,’ Swick said.”

The Wisconsin Law Journal. “Faced with a dramatic increase in foreclosure filings in Milwaukee, last year the city launched a new mediation program. Edward Harness, who represents borrowers, acknowledges that the program is well-intentioned. But he says it has its limitations. ‘It’s not even a true mediation because you’re not allowed to mention the merits of any defense that may be raised as part of the action. It’s more like a foreclosure loan modification settlement conference,’ he says.”

The Michigan Messenger. “When Lansing Mayor Virgil Bernero kicked off his campaign for the Democratic nomination for governor earlier this month, he announced that his number one goal was an immediate two-year moratorium on home foreclosures. But this week Bernero’s foreclosure thunder may have been stolen when former Genesee County Treasurer Dan Kildee announced he was officially seeking the Democratic nomination as well. Kildee is a nationally recognized expert in foreclosure issues and his Genesee County Land Bank has drawn national praise and serves as a model for the way communities can handle large numbers of foreclosed and abandoned properties.”

“Wauwatosa lawyer Michael Maxwell, notes that the program’s effectiveness depends on ‘whether the person on the lender’s side of the table is a decision maker. In the civil litigation model, judges don’t hesitate to order that someone with … settlement authority be present at the mediation. That hasn’t happened in the foreclosure mediation system yet.’”

“Only one day after declaring his intent to run, Kildee took dead aim at Bernero’s proposal in an exclusive interview with the Michigan Messenger. ‘I agree with his sentiment. What I want to find is a practical solution that is constitutional,’ Kildee said.”

“‘The truth of the matter is that the 90 day reprieve doesn’t go far enough,’ Bernero said. ‘Yes, families need guidance and financial training to get them through this, which is something that I support, but they need a more realistic timeframe to learn how to get their finances in order without staring foreclosure in the face as they count down the 90 days.’”

“‘In many cases, we are not just talking about budgeting, we are talking about finding another job to deal with a mortgage that has doubled as quickly as Michigan’s unemployment rate,’ Bernero said.”

The Daily Record in Ohio. “Whether building, buying or borrowing, the housing market in Wayne and Holmes counties mirrored the economic climate of 2009: It was a tough year. Alan Ratliff’s company, Ratliff Custom Homes, had been building 35-40 homes a year, but it did about half of that in 2009, he said. About five years ago, Ratliff said people might decide to build in a very short time frame. If they saw something they liked, they would build. However, those people are out of the market right now, he said.”

“Since 2001, the high-water mark was 869 houses sold in 2003. Since then, the number dropped to 861 in 2004. The sharpest drop came between 2004 and 2005 when homes sold fell 16.3 percent to 721, this at a time when the Ohio Realtors Association was reporting record-breaking levels of sales.”

“Despite the economy and reports banks are not lending, ‘we have money to lend,’ Fitz Gibbon said. ‘There may be tightening by some banks in the country, but for Wayne Savings and most every other community bank, community banks are still lending money. That’s our job.’”

“However, borrowers need to be qualified, he said. ‘We are not doing a borrower any favors if we make them a loan they cannot afford,’ he added. ‘Look at foreclosure notices; a vast majority are from out-of-town banks.’”

The Des Moines Register in Iowa. “Banks’ troubles, in the form of mounting bad loans, are expected to continue this year, officials predicted Tuesday as they analyzed the results of a difficult 2009. ‘I don’t see any rapid recovery,’ said Iowa Banking Superintendent Tom Gronstal. ‘We are going to be working through this for more than a year.’”

“The drop in profits may have been bigger if not for extremely favorable interest rate conditions, said Eric Lohmeier, managing director of NCP Inc., an investment firm in Des Moines. Banks are currently able to borrow funds at close to zero percent, much lower than what they pay as interest on deposits. This is a positive for banks’ income, but it’s ‘not what we consider a sustainable practice,’ Lohmeier said.”

“‘Unemployment is a big factor right now,’ said Lohmeier. With unemployment in Iowa reaching 6.6 percent in December, up from 4.4 percent the previous year, ‘it’s going to get worse before it gets better,’ he said.”

The St Paul Business Journal in Minnesota. “The final developer-owned condo in the Carlyle tower in downtown Minneapolis has sold. The sixth-floor unit, a former sales office that overlooks the Mississippi River and the Stone Arch Bridge, sold in the first week of February for $830,000, about 7 percent above the listing price of $775,000.”

“When plans for the Carlyle were announced in 2004 at 100 Third Ave. S., the condo market was near its peak. About 30 people waited outside overnight to get a good spot in line when the sales office opened in 2004. By 9 a.m., there were 200 people waiting to reserve their units.”

“More than 85 percent of the units sold in the first 15 months, but then the housing market stalled for much of 2008. In the past two years, with the help of discounts on about the last 15 units, the developers sold them off one by one. There are still more than a dozen units available for sale at the Carlyle, but all are resales.”

“What closed the deal, said (listing agent) Barbara Brin, was the perception of value. The retired couple who bought it had actually considered buying a similar unit, but at a higher price, in the 255-unit, 39-floor tower for several years, Brin said. In that, the Carlyle’s last sale has something in common with a lot of homes that have sold this year — buyers believe they got a really good deal. Almost every condo building in downtown has units for sale that are priced $100,000 less than people paid for them a few years ago.”

“‘There are some really good values out there. I think they are almost jaw-dropping they seem so low to me,’ she said.”

The Star Tribune in Minnesota. “Despite the recession, numbers compiled by the St. Paul Area Association of Realtors show a more than 16 percent rise in home sales in the 13 counties surrounding the Twin Cities between 2008 and 2009 — growth sparked at least partly by unprecedented tax credits and low mortgage rates. The programs have been unable to stem falling home values, which slid 15 percent in 2009.”

“John Addler and his fiancée moved in together a little earlier than planned last month. In this economy, it was a sound financial decision. The 26-year-old Best Buy employee, who had planned to buy a home after his wedding this spring, got a jump-start and purchased a three-bedroom house in Shakopee, spurred by an $8,000 federal tax credit for first-time home buyers that will expire in April.”

“A separate federal program that has been keeping mortgage rates artificially low ends next month. Addler, still paying rent on his Bloomington apartment, said he couldn’t imagine buying a house without the extra boost. ‘When we were writing out that down payment check, it’s not too hard to write it out knowing that you’re getting it all back,’ he said of the tax credit.”

“Minnesota’s housing market is stabilizing, but prices dropped more here than the national average. Mortgage delinquency is at or over the national average in Isanti, Sherburne, and Chisago counties. These three, as well as Anoka and Scott counties, are among the state’s ten counties currently hardest hit by foreclosure, according to the New York Federal Reserve Bank.”

“The Twin Cities region has grown by up to 25 acres per day in recent years. Providing houses with water and sewer, roads and other infrastructure demands a long-term and expensive public commitment. The foreclosure wave serves to highlight how households, local and state governments are all leveraged by development that relies on cheap, distant commutes to workplaces and services. As we’ve relearned in recent years, leverage works just as swiftly in reverse as it does moving forward.”

Bits Bucket For February 25, 2010

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February 24, 2010

Bits Bucket For February 24, 2010

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February 23, 2010

If You Were Breathing You Could Get A Home Loan

The Press Register reports from Alabama. “In the aftermath of Hurricane Ivan, the owners of the Sapphire Beach condominium complex were nearly unanimous in their decision to halt repairs and sell their Gulf-front property to a developer. Some sold their stake for a shade under $1 million — in many cases, more than three times their investments in the four-story complex. Others passed on the instant cash and signed up for new condos in a proposed high-rise that never materialized. Each of them lost six figures. A few, those who bought into the complex at the height of the real estate boom, wound up $500,000 in the red.”

“Today, the property sits flecked with bits of concrete, ceramic tile and conduit. And because no one paid the $61,000 ad valorem tax bill, and there were no bidders at a tax sale last summer, it has joined the Alabama Department of Revenue’s vast land holdings.”

“‘All I wanted was my condo,’ Stephen Paul Farmer, a Mississippi man who owned a third-story unit, said in a February 2008 deposition given during a two-year legal battle over the property. ‘And if I didn’t get the condo, then I knew I had land for collateral. If I would have ever thought that we would be sitting in here today, I wouldn’t have held out for the big condo. I would have just, you know, took the money when I could have took it.’”

The Sun Herald in Mississippi. “At the Harrison County Courthouse, an extra display case was added recently to post the foreclosure notices. Now there are eight glass cases nearly full of foreclosure listings and the Sun Herald classified pages have dozens of listings each week. ‘We thought we had seen the bottom of foreclosures,’ said Carlene Alfonso, owner of Coldwell Banker Alfonso Real Estate, ‘But that’s not what the numbers say. We still just have too many listings.’

“Depending on the price range, there is up to 20 months of inventory on the local market. ‘A lot of people getting foreclosed on are investors,’ said attorney Mark Orgler in Gulfport. They often are from out of the local area and purchased property on the Coast when it was worth more than it is today.”

The Clarion Ledger in Mississippi. “The topsy-turvy economy caused new homes in Rankin County to dip by 38 percent. The county issued 246 permits for single-family homes in 2009, a big drop from the 397 in 2008. ‘Given the economic conditions of the country and state, the number of new houses being down is a reflection of the economy,’ said Tom Troxler, executive director of the county’s economic development authority. ‘You have a lot of people staying in their houses who in the past would be moving into larger homes.’”

“Madison County saw similar decline in home building with about 300 permits issued last year, a drop from the nearly 500 in 2008, said Brad Sellers, Madison’s zoning administrator. ‘That’s the lowest it’s been in a long time,’ Sellers said.”

The News Star in Louisiana. “For Southern Delta Homes owner Ronnie Savage, the residential home building business in the Ouachita Parish area has been lean over last two years. The company is the region’s highest volume home builder according to the Home Builders Association of Northeast Louisiana. But Savage is quick to point out that business just hasn’t been what it used to be. ‘It’s been real slow the last couple of years,’ said Savage, whose company primarily builds specification homes.”

“And recent data compiled by University of Louisiana at Monroe economist Robert Eisenstadt confirmed what Savage has been seeing in the industry. According to Eisenstadt, new housing starts last year in the Monroe area reached the lowest level in five years. Since 2005, residential building permits issued in the Monroe metropolitan statistical area have decreased 81 percent, according to Eisenstadt.”

“‘Basically, what we’ve seen is because of the tightening of the banking credit industry,’ said Home Builders Association Director Paul Stephenson. ‘Several years ago, if you were breathing you could get a home loan, which is what caused the bubble to eventually burst. Now, banks are requiring people to have a modest investment in their homes.’”

The Times Picayune in Louisiana. “With home prices declining throughout the metropolitan area, sellers have no shortage of things to blame for their unsold properties: too many homes, not enough people, and lending requirements that have gotten tougher at exactly the wrong time. But some are beginning to wonder whether there’s another culprit in the mix: apartments. ”

“In the next two years, about 5,000 brand-new units are expected to open for residents. ‘Your rent is less than a monthly note. And you don’t have to do a down payment. For first-time buyers, you have a decision of, do I buy now or do I stay a renter?’ said Wade Ragas, president of a firm that analyzes real estate sales for the New Orleans Metropolitan Association of Realtors.”

“The desirability of apartments could be a reflection of broader queasiness about the economy or challenges of the local housing market. ‘You potentially have a situation where you have an oversupply of single-family homes. We don’t have the migration of people into this city, and the job picture is pretty fuzzy, and that’s not a good combination,’ said apartment broker Larry Schedle, who notes that the apartment rental market is also flat.”

The Town Talk in Louisiana. “Roz Allemond hasn’t seen the type of foreclosure activity in the Alexandria area one might expect, given the recession and downward trends in the national housing market. But that doesn’t mean she isn’t preparing for it. The Alexandria Realtor is involved in several aspects of the foreclosure business. She has as good a read as anyone on the local foreclosure forecast. Though Rapides Parish has had relatively low foreclosure activity in the past two years, she sees an increase coming.”

“‘What I foresee — and this is just from my personal opinion and guidance from people I work with — is to be ready for the floodgates to open,’ Allemond said. ‘I think we’re going to have tons of stuff coming up.’”

The City Wire in Arkansas. “January homes sales activity in Crawford and Sebastian counties did not help continue regional housing sector gains made in the fourth quarter of 2009, according to the King Realty Group report authored by Realtor Ernie Schimmelman. Sales continue to be dominated by homes priced below $200,000. Homes priced below $200,000 in Crawford County and Sebastian County are 77.8% and 72.6% of the inventory of homes on the market, respectively.”

“‘Sellers continue to maintain an advantage on properties under $150,000, and buyers continue to have the stronger position above that. As long as this imbalance above $150,000 continues, the primary topic of discussion Realtors must have with their sellers will be market pricing,’ Schimmelman noted in his January report. ‘If sellers want their homes purchased in less than 12 months, they will have to seriously consider aggressive pricing within the comparable market for their property.’”

From KSPR. “New information tonight about two men charged with promoting prostitution in Branson. Investigators say they caught Thomas A. D’Alessandro and David L. House in an undercover sting. The two men are also known for bringing luxury condos to the tourist town. Celebration Cove Condos website lists D’Alessandro as the principal. ‘Tom has built hundreds of homes and a handful of subdivisions in the Ozarks since 1985,’ the website reads.”

“Undercover investigators say D’Alessandro also paid to bring three prostitutes from Arkansas to a Branson condo in Falls Creek Resort. KSPR also stopped by the address House listed as his home and business, Elite Realty, no one answered the door. His listed phone number was disconnected. Condo models are open and ready but no one at the site was willing to comment either. If KSPR would not leave the property, one employee threatened to break the camera.”

The OK Gazette in Oklahoma. “If it’s hard to find love in the ‘city that never sleeps,’ what’s it like to fly solo in a city that catches its Zs? After all, New York City took the top spot for 2009 Best Cities for Singles on Forbes.com’s annual list. While Oklahoma City didn’t make the list of top 40 cities, Howard Kurtz, a sociologist at Oklahoma City University, thinks the metro is fast becoming a contender.”

“Travis Caperton, a single dad of two children, believes the improvements, such as the downtown lofts, are nice, but really only benefit the independently wealthy without school-aged children. ‘Don’t most of us live where we live because of our job situation and the circumstances of our family ties? Leaving OKC is not an option for me. But I do appreciate the good-looking condos going up near Bricktown that I drive by every day,’ said Caperton.”

“Holley Mangham, a public relations practitioner with Oklahoma Housing Finance Agency, echoed Caperton’s sentiments. ‘I would like to see more housing that is affordable for single, middle-income professionals in the downtown/Midtown area,’ she said. ‘I see all of these really cool-looking new condos and homes in that area that I can’t afford on only my own income.’”

The Dallas Morning News in Texas. “More than one in 10 Texas homeowners with loans are behind in their payments. That’s up by about a percentage point from a year earlier. Texas’ mortgage delinquency rate is now just slightly behind the national average of 10.44 percent.”

“The number of homes going through foreclosure slowed in 2009 because of the large number of home mortgage modification programs designed to help troubled borrowers. But foreclosure filings remain high – reaching a record of almost 61,000 in North Texas last year.”

“The Mortgage Bankers Association said that 31 percent of home mortgage holders in Texas are considered ‘non-prime’ borrowers, compared with 22 percent of these loans nationwide. These non-prime mortgages were provided with the help of the government backed Federal Housing Administration or are subprime loans.”

The Austin Business Journal in Texas. “A large, mixed-use condo development in Northwest Austin is trying to dig out of $12 million in debt and restructure after unsuccessful management by Nebraska-based investors. Pecan Park Professional Plaza, a 32,000-square-foot office condo, and the neighboring Pecan Place Park Condominiums, a residential plan made up of more than 100 lots, are part of a Chapter 11 bankruptcy filed late last month by Pecan Park LLC.”

“The company is claiming $12.4 million in debts, mostly to Wells Fargo, against $17,000 of assets. It’s not known whether the bank will attempt to force project owners into Chapter 7, which can occur when a large mismatch of debt and equity is involved.”

“In November, the bank and debtors picked Vito Rotunno to salvage the project, Rotunno said. About 25 single-unit, attached residential condos are already built on the site, with about 17 sold, and more than $15 million has already been invested in the tract of land, Rotunno said.”

“Beyond available housing units, the development has about 17,000 square feet of empty office condos, said real estate dealer Steve Turner, who has the listing. Turner said he has not done a deal on the site since taking it three months ago. Out-of-state owners like Pecan Park’s are common, and experts said it is not characteristic for out-of-town-run projects to fall into shambles. But when projects such as this do get into trouble, it is often more reflective of an owner’s operational health than the health of the Austin market, said Charles Heimsath, president and founder of Capitol Market Research.”

Bits Bucket For February 23, 2010

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February 22, 2010

It Only Has One Way To Go In Florida

The Miami Herald reports from Florida. “The government threw a $1.5 billion lifeline to unemployed and underwater homeowners on Friday. Florida and four other states that have seen home prices fall by at least 20 percent since their peak will be eligible to apply for the funds. Since the end of 2006, Florida home prices have dropped 37 percent, according to the Federal Housing Finance Agency. Almost half of all homeowners in the Miami-Fort Lauderdale metropolitan area are underwater. And statewide, homeowners have lost hundreds of billions in equity.”

“With needs so great, it’s unclear what can or will be accomplished with the new funding, said William Hardin, a professor of real estate at Florida International University. ‘It sounds like a lot of money, but relative to the problem we have, it’s just a drop in the bucket,’ he said. ‘My initial impression is that [Obama] is just pandering to voters.”’

“For some, Friday’s initiative seems too little too late. Richard Feldman bought his Sunny Isles Beach condo five years ago for $270,000. Now it is worth less than half that. For more than a year he has been trying to save the property by getting a loan modification. ‘I have been calling my bank religiously every two weeks, I have been calling hot lines, I have been talking to nonprofit people,’ he said. Four months ago he gave up and quit making payments on the loan.”

The St Petersburg Times. “Kevin Parker (is) a flight attendant who bought this St. Petersburg house in 2007. In 2008, Parker was out of work for months. His lender, Bank of America, allowed him to skip payments on his home for 90 days. But when Parker sought a permanent loan modification, he began a journey as bumpy as anything he had encountered in the air. Five months and some 40 e-mails and phone calls later, Parker got the bank to reduce his payments by about $126 a month. But there was a big tradeoff: His late payments were tacked onto the balance, increasing the amount he owes to $157,805 — $10,300 more than he originally borrowed.”

“‘I’m back to work but I’m paying more for the house than it’s worth now and they (Bank of America) weren’t willing to just pick back on the principal,’ he said.”

“From 2005 to 2008, the bank issued 62,000 mortgage loans in Pinellas and Hillsborough counties. Since then, it has started foreclosing on more than 4,000 loans. Last year, though, the bank recorded modifications on only about 50 home mortgages in the two counties. In 2006, Martha Kramer borrowed $116,000 from the bank to buy a Largo condo. After losing her property manager’s job and missing three payments, she asked for a modification.”

“Kramer says it was ‘easily a year later’ — April 2009 — before she got a modification that reduced the interest rate and almost halved her base payment to $525 a month. ‘I can deal with it,’ says Kramer, who is still unemployed.

“But the new terms will make it even harder for her to build equity. The bank tacked part of the late fees onto the principal, meaning she now owes $116,880 on a condo worth about $100,000. And to keep the payments relatively low, the loan is for 40 years, not the once-typical 30 years. ‘If they stretch it out further, that’s sort of helping you in that it reduces the monthly burden,’ says Arnold Heggestad, a University of Florida finance professor. ‘But unless housing prices start coming back, it’s not going to do much good in the long run.”’

From Florida Today. “Cynthia Scott said she suffered nosebleeds while pregnant with her son, now 2, who had to be rushed to the emergency room twice during coughing fits. Everyone in the family of five, including two older children, suffered headaches. Then they came to suspect the cause: Chinese drywall. They had it inspected and moved out of the Brookhaven home they bought for $231,000 in 2006.”

“Since moving from their home in December, the Scotts pay $1,200 in rent each month. For now, they’ve stopped paying their $2,200 monthly mortgage payment, which they’re trying to negotiate down. After the housing bust, their home is valued at a little more than $128,000. And the Scotts said Chinese drywall gutted the value further. It would cost upwards of $100,000 to tear the house down to the studs, replace the drywall, wiring, plumbing and other items needed to clear up the problem. That doesn’t include rebuilding.”

“As of Feb. 1, there were more than 660 cases from 30 counties reported to the Florida Department of Health, including the 20 in Brevard. But the problem could be much bigger, based on the more than 400 million pounds imported into the state since 1999, said Rob Crangle, a minerals commodity specialist with the U.S. Geological Survey. A 2,000-square-foot house uses, on average, about 16,000 pounds of drywall, so as many as 25,000 homes in Florida may be infected.”

“Most gypsum imported into the U.S. comes from Canada and Mexico. Chinese drywall imports spiked between 2003 and 2008, especially when construction demand peaked. ‘I think these will continue to trickle in for a long time,’ Crangle said. ‘It still amazes me that that much wallboard came from China to begin with.’”

The Orlando Sentinel. “Guess which county has the highest foreclosure rate in Central Florida? Could that be Osceola County? Yes, it is. Why, then, did the County Commission last week approve a ‘new city’ of 17,000 acres that would have 30,000 new homes on top of all the foreclosures? It would also offer hundreds of acres for commercial and industrial use.”

“Well, somehow they have concluded that, yes, this is visionary. A ‘once-in-a-lifetime opportunity!’ bellows Commissioner John Quiñones. Sounds familiar. Didn’t Osceola just last year hype another megaproject as a visionary ‘new city’? That one was Destiny in Yeehaw Junction, an hour from anywhere. State planners were so critical of Destiny that the county sheepishly backed off, for now at least. Among other things, Destiny never really could pinpoint where the jobs would come from. Oh, well.”

The St Augustine Record. “This sprawling development off State Road 13 got approvals to build 4,500 homes in early 2004, but Jamie and Kerri Vandenheufel — one of only seven families living in Rivertown at present — came here in October and don’t care how empty their neighborhood appears. ‘We love it, because the kids can roam. We feel safe,’ Kerri Vandenheufel said.”

“County planners estimate that 60,000 to 80,000 homes approved for construction by the St. Johns County Commission over the years remain unbuilt, and that some of the county’s 14 developments of regional impact have few or no residents. Critics say these projects dilute the housing market, creating a massive supply of unsold new homes that sell for about the same as older homes.”

“However, Brian Teeple, executive director of Northeast Florida Regional Council, says an unbuilt surplus of homes is not necessarily a bad thing. ‘All will be absorbed over time,’ Teeple said.”

“Jamie Vandenheufe said homes in the project’s Bungalows district are close-set with front and back porches, much like Disney’s Celebration community. ‘Our house has four bedrooms and 3,000 square-feet,’ Vandenheufel said. ‘Prices have come down. It was a good buying opportunity, a good value.’”

“RiverTown has five other districts beside Bungalows: Main Street, Trails, Farm, Golf and Lakes. Only Bungalows has residents. Vandenheufel remains optimistic, despite the apparently glacial sales there. He looked around at the seven occupied homes and the three models, plus the wide-open grassy spaces where homes will eventually stand.”

“‘The economy recovery is going to take a little while,’ he said. ‘But slowly and surely, homes will be built out here.’”

The Tampa Tribune. “The federal government gave Florida more than a half-billion dollars last March to put new owners into homes left empty by the housing crisis. But the grant came with a ‘use it or lose it’ clause: Commit the money by September 2010 or send the balance back to Washington. With just six months until the deadline, few Florida communities have come close to dedicating all their funds. Since last spring, Pasco County has picked 19 houses in Regency Park and another 10 in neighboring Embassy Hills for rehab. Together, they make up about 15 percent of the 220 houses chosen countywide for the program. Just more than 10 percent of those houses have been returned to private hands.”

“Valerie and Jose Canales left a Clearwater apartment last December and moved with their children into the family’s first home, a four-bedroom on Aetna Lane in Port Richey. The Canales paid $105,000 for the house. Pasco County used stabilization dollars to cover 20 percent of the cost. The Canales have five years or more to start paying the county. Meantime, they’re paying the 80 percent of the loan held by Bank of America.”

“The home sits at the heart of Regency Park, a sprawling community of low-slung single-family homes. The housing bubble burst there two years ago. Vacant, deteriorating houses blight the area. ‘I’m happy,’ Valerie Canales said. ‘There’s no banging, no people screaming, no commotion outside. At the beginning, I felt out of place. I never had it so quiet.’”

From WINK News. “The Parade of Homes was attended by …thousands of people touring the dozens of home models on display in Southwest Florida. Paseo sales manager Tim Clark says…some are looking but he says other are buying. ‘We’ve got 22 deals that we’re putting together for the month of February.’”

“Riverview Homes builder Mark Stout says he’s been busy too. ‘There’s been plenty of traffic here and it’s been this way the entire show.’”

“Like everyone else, he says he’s had to make adjustments. He says, ‘The prices are probably down 25 percent so that makes a big difference to people, the land prices are definitely down so people can get a really good value for what they are doing today- and there is still really a demand out there.’”

“Something that shows that even though the housing market has been down, it seems if you build it, they will come. ‘I really feel like we’ve hit the bottom, so I think yeah it only has one way to go and it’s up from here on out.’”

The New York Times. “After a stint at Ford in the early ’70s, Ron and Patty Cooley left Detroit behind, taking over her family’s modest real estate business upstate. The company prospered: for 30 years the two worked together, helping to finance, build and sell more than 1,000 homes. With their two sons grown, Ron and Patty sold the business and semi-retired down to Naples, Fla.”

“But, unsurprisingly, the collapse of the housing market had a serious impact on a couple with a nest egg tied up in real estate. Ron and Patty looked around and did the math. Florida’s economy seemed to be declining even more steeply than the Motor City’s. Weighing their options, they came back. Talking about Florida, Ron sounds like someone who made it onto the lifeboat in the nick of time. Yes, they had to sell their home down there at a loss, but a former neighbor in Naples recently sold a similar house for less than half of what the Cooleys got.”

“The truth is that my Detroit — and Ron and Patty’s Detroit — might no longer be a city where dreams come true the way they once did. But this story still demonstrates some important things: how lives and businesses can thrive here, how rewarding it can be to have family close and, at the very least, how nice it is that we’re not in Florida.”

Bits Bucket For February 22, 2010

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