August 18, 2014

The Slowdown In The Market Is Evident

The News Press reports from Florida. “The rebound in building permit activity is a positive indicator of stabilization. Single-family and multi-family permit activity in Lee, Collier and Charlotte counties — which we expect to end up at around 8,500 permits pulled by year-end — hasn’t reached year 2000 levels when around 10,000 permits were issued. This suggests the current level of permit activity is sustainable. However, sustainability of our current momentum will be affected by home price increases, interest rate increases, and the cost of land, materials and labor, along with initial signs of a potential oversupply in some market areas.”

“New home sales remain steady, but the large annual percentage increases may have come to an end. For example, a potential oversupply may spur on builder competition for buyers in the form of discounts and other incentives. New home prices have escalated so rapidly that the industry could be shutting out the primary middle-America homebuyers.”

The Orlando Sentinel. “Home prices in the core Orlando market continued a 37-month upward trend in July, but the number of sales dropped sharply from a year earlier and the previous month, a new report shows. Tom O’Brien, broker associate for Watson Realty in Lake Mary, said the slowdown in the market is evident. ‘I have four houses listed, and I’m struggling to get anyone to look at them,’ O’Brien said. ‘This time last year I would have had people clamoring to see them.’”

The Sun Sentinel. “Mom-and-pop landlords are making robust returns in South Florida, a new report says. Zillow ranks the region as the country’s second-best market for residential landlords who aren’t professional investors. But some landlords who bought at the pricing peak are still struggling. Mike Ablack, who rents the Coral Springs townhome he bought in 2005, falls just short of breaking even each month, in part because he doesn’t want to raise the rent and risk losing a good tenant. ‘I’m sure there are people out there making a killing,’ Ablack said. ‘But to me, it doesn’t make sense to raise the rent $50 and create animosity.’”

From WFLA. “Perry Garcia was thrilled to be able to buy his first house at the age of 21. He saved and started his home search for his growing family of four, including an 18-month old baby. He found a listing for a townhouse in Summerfield in Riverview. He purchased the foreclosed home from Fannie Mae and began renovations. But one day into remodeling his kitchen, he found toxic Chinese-made drywall, known to off-gas sulphuric gas that destroys appliances and could make people sick. The drywall in the kitchen is stamped, ‘Made in China.’ Then he removed electrical outlet covers, exposing corroded wires.”

“Fannie Mae spokeswoman Keosha Burns said Fannie Mae would never knowingly sell a home with toxic drywall. She said every home taken back in foreclosure is inspected. If an inspection showed this problem, the home would not have been sold, she said. Fannie Mae’s inspection missed the bad drywall, and so did Garcia’s. So what now? ‘We can’t disclose something we don’t know,’ Burns said. ‘It’s not our property anymore.’”

The Ocala Star Banner. “The Ocala metropolitan area had the dubious distinction during July of registering the highest foreclosure rate in the country — four times the national average. In recent months, 20 percent to 25 percent of all single-family home sales handled by Realtors have been foreclosures. Before the housing market collapse in mid-2008, such foreclosure sales were rare in Marion County.”

“Randy Alvord, president of the Ocala/Marion County Association of Realtors, said many of the foreclosures are a result of the struggling local job market, too many people not qualifying for government foreclosure help, and some people just walking away from their homes to find something cheaper to buy. Alvord worries that much of the local unemployment improvement is really because of low-paying jobs or part-time work.”

“Wayne Archer, executive director of the Kelley A. Bergstrom Center for Real Estate Studies at the University of Florida, said it is difficult to say why Ocala stands out. One reason is almost certainly the legal system, he said. In Florida, it takes an average of 1,000 days for a home to pass through the foreclosure process. That means it takes longer for foreclosures in Florida to be off the books — and off RealtyTrac’s lists. ‘So the sins of 2011 are still with us,’ Archer said. ‘It’s going to take several years.’”

The Destin Log. “Some reports show single family home sales were down nearly 17 percent in May. Condominium sales have been up one month and down the next. In contrast, luxury homes are seeing increased activity, while it appears that short sales and foreclosures are decreasing. The key word is ‘appears.’ Everything is not as it seems. In Florida it is estimated that there are still nearly 160,000 foreclosed properties. These are properties that are not on the market and not obtainable for purchase. Lenders have become strategic in the release of REO properties to the public.”

“Many of the largest lenders have created ’servicing companies’ to facilitate in removing the negative performing assets off their books. These companies are often actually owned by the lenders. This allows the banks to ‘appear,’ there’s that word again, to have stronger balance sheets than actually exist. This method gives the ‘appearance’ that the lenders quarterly performance is stronger than they really are.”

“To me, it is just a façade, a huge shell game. This deluge of foreclosed property is called ’shadow inventory.’ Because these large number of properties are not actively marketed for sale or a part of the multiple listing system which is used to calculate the number of months of inventory available in a specific market. The results published may not really be accurate.”

“A new term is Zombie foreclosure or Zombie Houses. According to RealtyTrac, ‘a zombie foreclosure exists when a homeowner abandons a house that is facing a pending foreclosure action. There are approximately 55,000 of these Zombie properties right here in Florida, more than triple the nearest state of Illinois, according to RealtyTrac.”

“When combined with bank-owned homes, the number is estimated to exceed 200,000 in Florida in either zombie or REO mode. Zombie homes in Florida have been in foreclosure process an average of 1,095 days, according to RealtyTrac. That is three years.”

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Comment by Ben Jones
2014-08-18 03:32:27

‘Eric Landry, a realtor with Keller Williams, says sales are up and the market looks strong right now. He says the vast majority of foreclosure percentages are for houses going for less than $200 thousand, especially for homes less than $100 thousand. “Once you break that 175, 200 thousand dollar range, the rate drops like a stone,” Landry says.’

‘Landry says in the tri-county area, Duval always has the most foreclosures, followed by Clay and then St. Johns. In June 2014, Landry says 37 percent of the market in Duval was “distressed,” meaning they’re either in short-sale or foreclosure.’

‘Clay County had 30 percent, and St. Johns had 14 percent. The research firm RealtyTrac says one out of 469 Florida homes had a foreclosure filing last July, more than 21 times the national average.’

Comment by Ben Jones
2014-08-18 03:44:40

‘Most of the current foreclosure activity in Florida involves the clearing of case backlogs from the housing bust, said Daren Blomquist, a vice president of RealtyTrac. Nearly three-quarters of the Florida homes in foreclosure had mortgages taken out from 2004 to 2008, he said.’

“Florida still is in the clean-up phase, dealing with leftover bad loans originated during the housing bubble,” Blomquist said.’

Here we see this little dance being done around prices and foreclosures. The “leftover bad loans originated during the bubble”. Uh, yeah, funny how those bad loans were made when prices were at the peak, and also interesting that most weren’t subprime or the like. And here we are 8-10 years later and it’s most of the foreclosures.

Comment by Blue Skye
2014-08-18 04:36:31

Possibly 8 to 10 years from now the pig in the python will be vintage 2013.

Comment by Housing Analyst
2014-08-18 04:41:44

I have my doubts it will take that long considering the sheer volume of excess empty defaulted houses has doubled then some.

New Orleans levees held until that tidal wave occurred.

(Comments wont nest below this level)
Comment by Blue Skye
2014-08-18 05:57:22

I wonder how it will play out, with the city being torn down to reinforce the levee.

Comment by Housing Analyst
2014-08-18 04:10:49

“To me, it is just a façade, a huge shell game. This deluge of foreclosed property is called ’shadow inventory.’

25 million of them. Have ever tried to hide a house?

Comment by Housing Analyst
2014-08-18 04:25:38

Tampa, Fl Housing Prices Crater 6% YoY; Inventory Surges 39% As Demand Plummets Nationally

Comment by Ben Jones
2014-08-18 05:23:16

‘Attorneys for homeowners seeking compensation from a Chinese drywall manufacturer may go so far as seize property of the company and its co-defendants, including a Chinese government agency.’

‘If Taishan Gypsum Co. and its related defendants keep defying federal court rulings that say they must pay, “we will take the full judgments against them, follow them all over the United States and all over the world to collect for our people,” Arnold Levin, lead attorney for the plaintiffs, said Friday. “They can run, but they can’t hide.”

‘Florida is the state with the most tainted drywall. Lee County was at the center of the problem, with nearly 2,000 homes and condos reported to the property appraiser’s office as having the defective product. Many of them have never received remediation.’

‘Lou Appelman, of Cape Coral, had Taishan drywall in his home and fixed it in 2010 at his own expense. “I’m really, at this point I’m all for anything that could be done,” Appelman said. “I mentioned the last time they probably have a lot more going on behind the scenes that we know of, and I hope it comes true,” he said. “I guess nobody’s going to know until they really give in.”

‘If the plaintiffs prevail, the defendants could be liable for more than $1.5 billion, Levin said. Richard Kampf, a Cape Coral homeowner who headed a grass-roots coalition of about 350 local drywall homeowners, lauded Fallon for trying his best to make homeowners solvent. The problem is there appears to be no sanctions the U.S. could apply to China that would make it pay, he said.’

‘If property is seized and Taishan and its entities are not allowed to do business in the United States, that may hurt them economically, he said. “I don’t know if it’s good enough to put money in the pocket of the homeowners.”

‘Kampf also questioned how it would work politically. China owns much U.S. debt, he said. So the U.S. owes the Chinese government “certainly a lot more money than it costs to fix all of these homes. That’s the down side of it,” he said.’

Comment by Blue Skye
Comment by doom
2014-08-18 07:34:09

World in turmoil, very slow recession recovery, full time jobs weak, confused Fed Reserve, student loans, politics, etc.

Consumers are in no mood or position to buy high ticket items let alone homes in this country, nobody should be surprised the country is in a funk.

Comment by Blue Skye
2014-08-18 08:13:10

It’s called debt exhaustion.

Comment by RioAmericanInBrasil
2014-08-18 19:43:26

It’s called debt exhaustion.

Which is a bi-product of America’s 40 year sprint towards our current gross wealth and income inequality.

Comment by Housing Analyst
2014-08-18 08:20:40

What is a recession recovery? It sounds like Tard-Talk.

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