Just When It Looked Like The Lunacy Would Last Forever…
The Denver Post reports from Colorado. “The pitch was made to a group of San Francisco immigrants packed into a windowless Holiday Inn room over plates of cold chicken and glossy photos of Colorado vistas. Three years ago, Edwin Resplandor was tantalized by the deal: Put down merely $2,500 and he’d wind up owning an investment home — its construction and mortgage neatly packaged into one loan handled by American Dream Seminars of Denver. Months later, however, ADS withdrew more than a half-million from his loan account and abandoned the project without driving a nail, he claims in a lawsuit joined by seven other investors, leaving him holding a half-million-dollar debt and only empty land.”
“‘Now we’re in limbo — we’re just trying to survive,’ said Resplandor, a Filipino transit driver in San Francisco now working two other jobs to support his wife and 2-year-old daughter.”
“Once regulators shut down New Frontier in April, the investors’ collective bank debt and property titles shifted to the Federal Deposit Insurance Corp. And in at least a half dozen counties across Colorado, the over-valued properties with names like Sunflower and Fountain Village either sit empty or are only partially completed. A former ADS attorney said he’s not sure where his former clients are located. ‘They hosed us too,’ Denver attorney Mike Bohn said without elaborating.”
“Real estate brokers and economic development officials are scratching their heads over a Forbes report that ranked the Denver area among the worst-selling housing markets in the country. Citing data from Zillow, the story last week said there were 42,000 homes on the market in January, a 27 percent increase over the previous year. But local data indicates there are fewer than half that number of homes for sale.”
“Forbes reporter Francesca Levy could not be reached, and other magazine officials did not respond to requests for comment. Levy culled the 42,000 figure from the number of listings on the Zillow website in January, said Katie Curnutte, a Zillow spokeswoman. The number includes foreclosures and homes for sale by owners as well as data from multiple-listing services. ‘Inventory can be a tough thing to pin down,’ Curnutte said. ‘This includes any home for sale from any source.’”
The Telluride Watch in Colorado. “‘According to Telluride Building Official David Samuelson, ‘If you have the cash or ability to get it, things are going to get done quicker and cheaper. People are hustling to find jobs.’”
“Things have certainly changed since the last building boom. ‘Five to eight years ago everybody was just crazy [busy],’ said Montrose County Building Official Greg Pink. ‘They didn’t have enough help; getting work was not an issue, all they had to do to start a job was finish the last one.’”
“But it’s a different story now, with more workers bidding on the same jobs and many carpenters scrambling to find the most basic work. ‘All in all I see our region being down,’ said Jay Kyne, owner of K&K Concrete in Ridgway. ‘People that want to do projects are unable to get funding. Our glory days are certainly well behind us for a while and I don’t see it changing in the next year.’”
From Vail Daily in Colorado. “First quarter construction activity in Vail is showing some signs of growth compared to the first three months of 2009. Building valuation totaled $6.44 million as of March 31 this year, compared to $4.7 million during the same period in 2009, a 37 percent increase. Vail’s record year for valuation was $496 million in 2007.”
The Yuma Sun in Arizona. “Yuman Ruben Garcia stood in line Wednesday morning long before the doors to the job fair at the Main Library opened. He said he got there at 7:30 a.m. The job fair didn’t start until 9 a.m. And it wasn’t long until he was joined by hundreds of others. Out of work since January, Garcia said he’ll take ‘any job’ right now - he just wants to work.”
“The unemployment rate in Yuma was just shy of 30 percent in February.”
The Kingman Daily Miner in Arizona. “Like a number of other proposed large housing developments in Mohave County, Pravada may be a thing of the past. The Las Vegas Review-Journal reported that 1,300 acres of the Rhodes Homes Pravada master-planned community will be sold. Rhodes Homes filed for Chapter 11 bankruptcy last April. A bankruptcy judge approved an agreement between Rhodes Homes and its creditors in January. That agreement declares that Rhodes Homes will sell all of its Las Vegas holdings and the 1,300 acres from Pravada. The exact date and the terms of the land sale have not yet been set. Rhodes Homes may hold onto the remaining 4,000-plus acres of the property.”
“During the housing boom, Rhodes Homes used Rhodes Ranch and Tuscany as collateral for a $500 million loan. The company used the funds to expand during the boom, but because of the downturn in the market, the company was not able to make a March 2009 payment and was forced to file for bankruptcy.”
“Jim Rhodes was allegedly involved in several real estate scandals in the Las Vegas area. Former Clark County Nevada Commissioner Erin Kenny testified in a federal case that Rhodes paid her $16,800 a month or about $200,000 a year for consulting services.”
The Phoenix Business Journal in Arizona. “Gov. Jan Brewer’s appointed head of the Arizona Department of Housing is one of the principals of a company that defaulted on a $97 million loan used to construct Safari Drive in Scottsdale. The mixed-use project near Camelback and Scottsdale roads has been mired in foreclosure proceedings, complicated by the demise of both Lehman Brothers and Corus Bank. Mike Trailor is a principal of Vanguard City Home, which received the loan from Corus through an entity called Riverwalk Square Development LLC.”
“Trailor said he never met with Brewer, but he passed muster with two staff members who interviewed him, including Brian McNeil, the governor’s deputy chief of staff in charge of operations. ‘If people are disqualified because of real estate issues, there won’t be enough people for these jobs,’ he said.”
The Spectrum in Utah. “Bolstered by an influx of affordable bank owned-properties coupled with attractively low interest rates, Washington County recorded 993 sales in the first quarter, representing an increase of 287 sales from last year’s quarterly figure, according to data collected by Southern Utah Title Company. St. George real estate agent Jeremy Larkin described the region’s housing situation as ‘the tale of two markets,’ with prospective buyers flocking to distressed properties and other residential units boasting impressive savings opportunities, but little activity occurring in the overpriced and high-end segments of the market.”
“‘It’s as though they don’t exist,’ Larkin said of the overpriced homes in competition with an influx of foreclosures and other distressed properties.”
“Foreclosures and short sales remain prevalent in Iron County, with distressed properties representing approximately 85 percent of the county’s sales in the fourth quarter of 2009. The county’s market is rife with distressed properties, said Chris Dahlin, president of the Iron County Board of Realtors, and he expects the trend to continue at its current inflated rate for another three to six months.”
“‘We still have a crop of foreclosures still coming on the market,’ he said. ‘Which means prices won’t be going up.’”
The Deseret News in Utah. “If hearing is believing, Utah’s housing market is in the midst of recovery. Check out all those rebound sounds emanating from a new subdivision near you. The incentivized truth, though, is that those are really only the sounds of the federal and state governments working mightily to keep the sickly homebuilding industry on respirator. It turns out nearly all new construction taking place in the first quarter of 2010 was spec in nature as builders have been bolstering inventory to cash in on the last-minute rush by people taking advantage of expiring federal and state tax incentives.”
“One homebuilder who won’t miss federal and state incentives when they go away is Bill Perry Sr., CEO of Perry Homes. He sees the stimulus doing as much harm as good, artificially propping up the market. With or without government subsidies, homebuilders are of the mind that they’re not going to be able to sell houses for much less than they already are.”
“‘We’re not going to lower prices. There’s no more room to go. We’re at our bottom. The only way for us to lower our prices is if we could find cheaper lots, but that’s becoming difficult,’ said Perry, who has snapped up a few land bargains over the past year that he’ll be repurposing for market.”
“After 37 years working in the business, Perry also believes ‘fundamental changes’ are coming. He sees Utah’s housing market morphing into a different animal out of necessity. He said Utah’s penchant for big homes on big lots is no longer practical or affordable. ‘Both the family size and size of house will need to be reduced in Utah to something that’s more efficient,’ the homebuilder predicts.”
“Oh for those boom times of early in 2007 when Utah was the toast of American residential real estate, boasting the strongest housing market in the nation. Real estate know-it-alls were everywhere capturing appreciation and tapping equity that was being inflated to the moon by seemingly insatiable demand. The rather quaint notion that someone’s home could serve as a family piggy bank for special occasions, such as paying for a child’s wedding or college, mutated into this idea that houses were no-limit ATM machines.”
“But just when it looked like the lunacy would last forever, the repurposed Ponzi scheme went Madoff, leaving Utahns scrambling, as when the music stops in a game of musical chairs. Except that in musical chairs, only one player is left seatless. This time, all the chairs seemed to have disappeared. And the music doesn’t appear anywhere close to starting back up.”
Casino Gaming Stock. “Last week MGM Mirage reported a preliminary first quarter 2010 loss of $96.7 million, explaining that the loss is the result of decreasing property value in Las Vegas causing problems with condo sales at the CityCenter. The gaming company has said that they plan on taking a $171 million non-cash impairment charge on condos at the mega casino resort complex on the strip.”
“MGM has reduced prices of the condos by about 30% to bring them in-line with the general fall in Nevada property prices. Net revenue for the quarter is expected to be $1.46 billion which is a 4% drop on last year. ‘Las Vegas was still very weak … there were some pockets of strength, like international business, but for the most part it was very challenging,’ MGM Mirage CEO Jim Murren said.”
