“The Housing Boom Has Come To A Screeching Halt”
The News Observer reports from North Carolina. “The coastal housing boom of the past few years has come to a screeching halt. In Myrtle Beach, new and existing condo sales dropped 37 percent in the third quarter from a year earlier. In Wilmington existing home sales fell 17 percent in the same July-to-September period, according to the N.C. Association of Realtors.”
“Nearby Brunswick County, home to miles of beach towns, saw a 64 percent drop, while there was a 30 percent drop in sales on the Outer Banks. ‘There is going to be a huge number of units on the market next year, and lots of them vacant,’ said Carl Van Horn of Market Opportunity Research.”
“There are about 10,000 condos on the market along South Carolina’s Grand Strand, several thousand more than a year ago, according to Tom Maeser, a real estate marketing analyst in Myrtle Beach.”
“Van Horn said that many of the buyers of coastal property in the past two years have been speculators or investors who purchase a property with the intention of selling it for more in the near term. Continued drop in demand could leave them, as well as developers, with unsold inventory and no cash to pay back their loans.”
“That’s a potentially big hit to coastal community banks, which funded much of the housing boom of the past three years. Community lenders tend to hold on to the loans they originate, rather than sell them to other investors on secondary markets, as bigger banks do.”
“‘Banking institutions with a lot of exposure to [condo] projects are going to have a difficult time,’ said Grant Yarber, CEO of Raleigh-based Capital Bank.”
The Ledger from Florida. “Polk County’s building permit totals dropped again in November, for the ninth consecutive month, and builders don’t see any relief in sight. Last month’s 315 permits was nearly a 60 percent drop from 782 in November 2005. The inventory of new homes is at an all-time high.”
“‘That is kind of expected in the reports we are hearing,’ said Joel Adams, VP of Highland Homes in Lakeland. ‘Sales are off about 35 to 40 percent in most of the major markets around the state.’”
“Auburndale’s permits fell from 22 a year ago to 18 last month, and Lakeland’s permits dropped a staggering 71 percent in November, from 98 in November 2005 to 28 last month.”
“An increased inventory of new homes has forced some builders, like Highland Homes and Southern Homes, to offer more incentives for new home buyers. ‘It’s going to take most of 2007 to move that inventory,’ Adams said.”
From TC Palm in Florida. “Layoffs at another leading Treasure Coast homebuilder again raises questions as to when the new-home market will rebound. DiVosta Building Corp. executives said Tuesday they will lay off 218 employees in the Treasure Coast and Palm Beach County.”
“‘I think this is a continuing indication of larger national builders downsizing to accommodate the changes in the residential housing market,’ said Don Santos, past president of the Treasure Coast Builders Association. ‘I think there’s a lot more of this going on in the field, but we don’t hear about it.’”
The Herald Tribune from Florida. “Tuesday was the day that Sheila Schaller decided her problems as an Avalon Homes customer had gone beyond a civil matter.”
“As the informal leader of a group of disgruntled Avalon customers, she took the matter to the North Port Police Department, requesting a criminal probe against Avalon Homes and its owner Joseph Pufta.”
“Sheila and Fred Schaller’s struggles with Avalon started when the Ortonville, Mich., couple bought two $228,000 North Port houses and lots from Avalon in May 2005. One was meant for the couple and the other for Sheila Schaller’s retired mother. Pufta promised the homes would be ready in August.”
“The family moved into a $1,500 monthly rental to await their homes’ completion. Then, the couple got hit with liens totaling about $10,000 from various subcontractors.”
“Another lien came in from a window supplier. That is when Sheila Schaller ‘knew we had a problem’ because there were no windows installed in the houses yet. Then the couple noticed that all work had stopped on their homes.”
“The Schallers hired a lawyer and sent Pufta a letter. On Oct. 10, the Schallers got a letter from Pufta’s Tampa attorney. ‘It is not the intention of Avalon Homes to close its doors,’ Bernard J. Morse said.”
“That was the last time that the Schallers heard anything from Morse, Avalon or Pufta before Avalon closed its doors in late October or early November.”
“Morse said Pufta remained in Sarasota but had changed his home and cell phone numbers because Pufta ‘had received several death threats and threats of violence against his family.’”
The Palm Beach Post. “A housing developer has defaulted on a $9.5 million contract to buy and demolish the Kokomo Mobile Home Park. As a result, Kokomo’s longtime owner says he will continue to operate the Old Florida-style trailer park.”
“The developer’s agent, Robert M. Hall, didn’t return phone messages requesting comment. In June, Hall had vowed that condos would be built to replace the trailer park. ‘The people who live there now need to get out,’ he said at the time.”
“‘It will stay the way it is,’ said John C. Mitchell, whose family opened Kokomo in 1960. Mitchell blamed the collapse of Palm Beach County’s housing market for the developer’s failure to raise $9.5 million for a purchase.”
“‘The whole year has been a disaster,’ Mitchell said. ‘The economy went to hell and everything fell apart.’”
“Mitchell gave the developer a 10-day extension to restructure his project. But bankers apparently remained leery. ‘In the end, the buyer just didn’t have the money,’ he said.”
“Mitchell hopes to keep the developer’s $375,000 deposit. But Palm Beach Kokomo has asked a judge to return its deposit, which is now in a court escrow account.”
“Park resident Joanne Stifter said she and other neighbors believe their ordeal has reached a happy ending. ‘We are all so relieved that we will have our homes. It’s been a very tough year,’ she said. ‘It will be nice to have a quiet Christmas,’ her husband Bob agreed.”
From the North Carolina article:
‘In the Myrtle Beach area, Tidelands Bank, Anderson Brothers Bank and Beach First National Bank doubled the amount loaned to builders and developers in the third quarter, compared with a year earlier. Tidelands now has 90 percent of its total portfolio in residential and commercial real estate.’
‘That’s a lot of eggs in one basket, said Tony Plath, a professor of finance at UNC-Charlotte who tracks North Carolina’s banking and commercial real estate markets. ‘If the downturn in housing continues, there will be banks out there under stress because developers can’t turn enough inventory to service their debt,’ Plath said.’
‘State regulators on Tuesday approved a rate increase of 8.2 percent for Allstate’s two Florida insurance companies. That was far less than the 24.2 percent to 33.6 percent boost the company initially wanted for 320,000 homeowners and condominium insurance policies.’
‘That could include going back to the state for another rate increase. Or it could mean further reducing its exposure in Florida, where Allstate has already dropped 270,000 policies. Allstate stopped writing new homeowners policies in Florida last year. Allstate also is in the process of dumping its 53,000 ’specialty lines’ customers, which include mobile homes, landlord package and residential fire policies. ‘All options are on the table,’ Priest said when asked about more policy cutbacks.’
Why don’t they just leave Florida altogether? I bet other insurance companies will take their place. Allstate in particular has a hard time understanding that the insurance business is not just about raking in the cash; you do have to pay claims from time to time. Last year was a really bad hurricane season, but look at this year. That is what insurance company reserves are for, they build them up during good times to pay out for the bad times.
check out this home in San Diego’s 4S Ranch, it’s got it all:
-new construction flip gone sour
-zero down/100% financing
-subprime lending thru “SuperSize my 80/20 Jumbo” program
-first payment mortgage default
-notice of default within 5 months
-flipper still in denial and attempting to sell at >$100/sqft higher than current new constructions
-and a Cadillac Escalade out in front
Bubble Markets Inventory Tracking
ocrenter that is a very good site! Very funny too. I guess this is a view into our future here in So. Calif. This is only the beginning.
Agreed - great site.
ocrenter — although I have often visited the BMIT site, your pointer to it today was enormously helpful to my officemate here at Caltech. This dude really works at U of Hawaii, and like any naive 35-year-old with his head in the outer solar system, he is seeing prices soften and thinking, “Oh! Now’s the time to buy a condo.” I told him NONONONO,
and it was highly useful to be able to show him even the San Diego foreclosure data, where he intuitively grasped the accelerating tendency of the problem. I admitted HI is not SD, but insisted that everyplace where construction cos said to themselves “If You Build It Baby Boomers Will Come” is a place that is now going down the toilet.
So a planetary scientist from Austria via Honolulu thanks you.
you’re very welcome. if we can help one person a day from being sucked into certain financial ruin it is all worth it. a marriage and a family may be saved in the process too.
az_l, what do you do at Caltech?
I was shocked by the extreme disconnect where a new comparable is selling for 2/3 the cost of this resale. The only hope this guy has is mortgage fraud.
Here come the lawyers! As more and more of these stories hit the press, the potential out of state purchasers go away (those few that are left). In Florida, that’s most of your new home buyers. This is just getting started.
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
CRISPY THAT QUOTE NEVER GETS OLD
sure to be a classic for years to come
Yes, I get a big laugh at that one, too!
But, could you also please post the name of the moron that is quoted. I would like everyone who has claimed that we are “priced out forever” to be full credit for their financial advice. Had i taken it a couple years back, I would be in financial for-ever-indebted land.
Yes it’s called the columbian coka cola economy. Florida seems to be a paradise turning into hell. Hope they all burn under the sun. Floridians gave us soo much of these wonderful surprises. They gave us George W. Bush, the most competent president in US history. They gave us the Cuban mafia monopolizing all the US policy with their stupid and useless fight against Castro. OK. It’s a joke. Anyways just for that, Florida desserves to go down in flames. And hope the bursting of the Florida bubble wakes up a couple of these stupid cows that still pretend that everything is just fine.
“That’s a potentially big hit to coastal community banks, which funded much of the housing boom of the past three years. Community lenders tend to hold on to the loans they originate, rather than sell them to other investors on secondary markets, as bigger banks do.”
Does anyone wonder if there was anyone of the loan committees of these banks who could see past their greed the inordinate amount of risk they were taking especially if they were not reselling the loans? These types of small local banks were the first dominoes to fall in the 1989 time period (anyone remember Danny Faulkner or Jack Harvard?). Why should it be any different this time?
this time?
1.cause only 35% of all jobs since 2000 are RE
2. cause 9.8% of emp was RE in 05 vs historical mean of 6%
3. balance of econ is transfer payment via military bs
it’s ALL good this time
flatffplan,
What? You don’t like the REIC Based economy? What could possibly be the problem?
az_lender is a one-person loan committee whose policy was abruptly changed, partly due to this blog. Apparently, soon enough. But only time will tell. One difference is, az_lender does not have a problem just turning off the mortgage spigot and lending to a govt instead.
Sounds like a plan.
(Buy them bonds.)
wow, these banks sound more levered than S&L whackos
increasing loans in 3rd qtr? this has to be fraud
dude
flatffplan,
Good point. It struck me a little odd too. Saying that of the 3rd qtr. 2005? Maybe if you’re still OD’ing on kool aid but 3rd. of 2006! It’s as if they’ve written off any prayer of salvaging the bank (let alone their reputation) so it’s fraud time!
Not necessarily fraud, they may have just dug themselves in to deep that they think they have to keep digging. They probably have already loaned a lot of money on the builders projects already and when the bubble started deflating outside banks stepped away so the local banks had a decision. Either stop lending and have the projects stop with nothing to sell or keep lending and complete the projects and have something to sell. And since the lenders are in the business of lending just like the builders are in the business of building they kept on since without lending or building they are out of business.
Yes they are much much much much much much more leveraged than the S & L. No problem. You will be paying the bill. Thanks to Easy Al and his hustlers.
Hey, I just got a weird email cc’d to me from someone who is a mortgage broker. Here’s the text. Can someone in the biz tell me what this means?
Does anyone know of a lender beside Fremont and First Franklin that swaps borrowers scores for 100%??
Thanks.
_________________
Senior Loan Officer
Sounds pretty shady to me.Looks like they are looking for 100% financeing and someone who is willing to maybe swap a credit score.By swaping maybe they are looking to swap the middle score for the highest of three fico scores.That is my best guess but not in the mortgage business.
I’ve got a whole string of these emails now. Keeping them all. Very shady, as you said.
The question should read “Beside Fremont and First Franklin, is there a lender that will use the higher of the borrowers credit score (FICO) for a 100% LTV?” Could be refinance or purchase.
“Pufta ‘had received several death threats and threats of violence’”
Ya think? Steal their life savings and people will get that way.
I think we are going to see a lot more of this as more people lose their life savings and any hope for a retirement.
Actually it’s a good reason to buy from a reseller and not from a developer. If only we could get the resellers to match or beat the developers’ prices.
az, I couldn’t agree more. In more stable times of the past, perhaps it was possible to contract to have a home built, but these days, it looks like a foolish thing to do. When and if I buy again, I want to be sure the house I purchase has stood the test of at least a little time, not to mention free of liens.
None of that should be a problem if the construction lender is performing inspections and releasing draw payments to the builder based on completion. If these people simply gave this guy full purchase price for a yet-to-be-built home, then they took a foolish risk.
Anybody have any info on the condo market on Hilton Head?
HH condo sales not dead but on life support. Very faint pulse. Have a friend who owns two houses in Sun City HH, which is actually on the mainland in Bluffton (I guess Sun City Bluffton doesn’t have the same ring to it, LOL). Wants to sell one; it’s vacant after he bought it and soon realized it wasn’t big enough so he bought a bigger one.
He’s got the financial assets to feed this alligator for a VERY long time, but still- it’s a pile of money out of his pocket that he may as well be burning every month.
OT:
Can anyone confirm if Casey was arrested?
Where did you see that? Oh, that would be a riot. An XMAS present for the nasty TX Beyatch. Show me!
Just the thought of it put a smile on my face.
I disagree, very on topic.
“Does my little canary still chirp in the dark mine?”
Looks like he might be interviewing for sanctuary in a Phoenix church.
(the Church of Latter-Day Mortgage Wealth….)
Don’t know if he’s been arrested, but his blog has been silent for a couple of days (both his and visitor’s comments).
Its not too far fetched, they got Martha Stewart for seemingly nothing only because the evidence was there - ez case. So is Casey?
He must be changing title of his book to “How to do ’subject to’ wraps from prison”
Just another irresponsible rumor spread by JBR’s that don’t understand how money and RE “really” work!
(Actually he’s had to change his URL) to: iamfacing3-5formortgagefraudandshoweringwithsexuallyfrustratedmales.com
I’ve checked every Phoenix newspaper, TV, and radio news site I can find, and nothing. Anybody else have any luck?
Sacramento papers. I was going to do that when the market closes.
Good idea. According to the http://www.whofailedtoday.com/bbs/ site, he was arrested in Phoenix and the reportage comes from there, but you’d think Sacto would pick it up pretty quickly.
Nothing on Sacramento TV web pages
I checked the Sacramento Sheriff’s Department’s inmate registry (?) and there were no Serins listed.
I couldnt find his phone #. Funny how can he sell those homes if you cant call him. His address per whois on his domain is
Registrant:
Casey Serin
1420 E Roseville Pkwy
Suite 140-331
Roseville, California 95661
Hey Ben, You should find out if hes arrested and do a story from scratch, SCOOP OF THE YEAR!!! Interview his wife !! wow im getting ahead of things here a bit.
That’s a UPS store just up the street from where I work. Man, I’m tempted to see if I could slip something official and scary looking in his box, but he probably gets enough scary looking and actually official things in his mail as it is.
His site now appears to be down. Either taken offline or being hammered.
Ok this alwasy pisses me off, the owner of the mobile home park wants to keep the HUGE deposit of $375,000 cuz the poor developer can’t get a loan.
Probably the developer has an out in the contract. But people are DICKS aren’t they. You cold almost retire on that much money. OT but I would never fight for this country in a foriegn war, you come home and get reamed by every crook in the county.
In his defense, this park owner took his property off the market while the developer was doing is due diligence and trying to raise money. Keeping the deposit is supposed to be his compensation for forgoing other potential deals.
having trouble posting comments in bits blog can someone give me sudgestions as to why
My experience has been that a straight post goes through but if I add any links to it it is delayed for quite awhile.
Hope this helps.
Tinfoil_Hat,
It does seem a little over-the-top for the $375K, but objectively he probably deserves “something”. He likely lost tenants because they were all told to disappear. Humans are wicked and it wouldn’t surprise me if some destoryed property thinking it wouldn’t matter.
The seller had a signed, legal contract with a buyer who planned to demolish the trailer park and make a whole lot of money in the process. He could have done this himself but obviously decided a lower return of money was worth forgoing the hassle. It could be argued that the $375K was also a reason to allow the developer to take on the risk.
I’m not so convinced the developer who was obviously somewhat arrogant should be entitled to his deposit. He would have lost his shirt if he had figured this out a year into the project so $375K may be a comparatively small price to pay.
That’s my 2 cents…
Unless otherwise noted in the contract, he’s probably entitled to keep the deposit. Although, if it was contingent upon financing, then he has to give it back, just like a prospective home buyer whose closing is contingent upon financing.
This has been part of the fallout from the boom/bust in Florida, mobile home parks with long time residents selling out to developers.
It isn’t that much when you consider that the price was $9.5M. $375k only 3.4% of the purchase price.
Speaking of a screeching halt, Casey Serin has been silent the past few days. He hasn’t even updated the replies. I wonder if the Feds finally nabbed him?
Or he is on a plane back to Uzbekistan (did I spell that right?)
Yeah well maybe he’d be allowed to come back under the tinfoil hat scenario postulated in the bits bucket.
Maybe if he gets a black curly wig and a nice pair of speedos.
If Casey gets arrested this year I think we JBR bubbleheads can declare 2006 ‘The Greatest Year Ever’.
Ben should do a ‘Best Of 2006′ for the RE Crash. Maybe its too soon. I know f’dcompany.com was pretty good fun for about a year, hopefully Ben can make this site relevant for a longer period.
This isn’t over for a bit… 2007 is when most of the downward pricing will occur. Its getting interesting… that I have to admit.
Neil
Can hardly wait to see his mug shot in the photo area!
Looks like Mr Pufta was all puffed up like the phoney housung market and the Coastal lending bank employees were assleep at the wheel, probably too busy buying multiple condos to get rich quick themselves. “Fools rush in”
“…Community lenders tend to hold on to the loans they originate, rather than sell them to other investors on secondary markets, as bigger banks do.”
Say it ain’t so…
Housing Boom? How about Housing Doom…or Hosing Boom… Great new series on TV: Desperate House Flipping Wives.
I see “Pimp my Ride” and “Extreme Home Makeover” merging soon.
Cultural learnings of Borat