The Housing Bubble

The East Valley Tribune reports from Arizona. “In the first quarter of 2008, there were 310 resales of homes in Maricopa at a median price of $170,000, according to a real estate report issued by Arizona State University. In the same quarter of 2007, there were 90 resales with a median value of $246,500. Paul Jepson, an assistant to Maricopa’s city manager, said that about 31 to 34 percent of resales in the city have been of such underwater, or ‘distressed’ as he called them, homes.”

“One of the market casualties is Daryl Fox, a recently unemployed cosmetics salesman. After his divorce several years back, Fox and his ex-wife sold their home in Chandler. It took a while to sell the house, and they had to reduce the price to find a buyer in the already-slumping Valley real-estate market, he said.”

“In April 2006, Fox took his half of the equity from the Chandler home and whatever other savings he had scraped up through the years and used them to pay 15 percent down on a three-bedroom home in Rancho El Dorado. The $212,000 purchase price was down from the home’s highest value.”

“He thought he was hitting the market at the right time, getting the most bang for his buck. ‘I thought the market had bottomed out when I bought it,’ Fox said. That’s why he was willing to take out a 2/28 adjustable rate mortgage from Chase Bank.”

“He did refinance right after closing, drawing the equity of that 15 percent down out of the house to finance a few renovations, he said. He owed the full $212,000 now. ‘My intention was to live in that house as my primary residence, that’s why I remodeled it,’ Fox said.”

“In June 2006, Fox met Teri Parks, his future wife, at the Native New Yorker. Parks soon moved from Minnesota to Maricopa, buying a home in Acacia Crossings. Parks’ house was the larger of the two, so it made sense for Fox to move in there and sell his place.”

“But the short market downturn Fox had expected turned into a free fall. ‘The median housing price in Pinal County ‘has steadily eroded from $220,000 in fourth quarter 2005 to $193,000 in third quarter 2007 and $156,160 for the current quarter,’ stated a report released by Jay Butler, director of Realty Studies t Arizona State University.”

“After spending thousands trying to hang on, Fox was staring down the barrel at foreclosure. A lawyer advised him just to walk away from the home, but he decided that he would try to sell the property in a short sale. Fox has a buyer willing to pay $90,000 as of early May…if the bank accepts that offer.”

“Fox said the bank told him that the house would be foreclosed upon on May 19. Even if the short-sale offer was on the table? He referred me to his real estate agent, Rita Weiss, broker in Maricopa.”

“‘I’ve spoken to Chase but they won’t tell me,’ Weiss said. ‘If there’s an offer on the table, they’re going to try to make it work. There’s a flood of homes on the market. They don’t want to take back the houses.’”

“‘Forty-two percent of all houses that are actively on the market in Pinal County are either foreclosures or short sales,’ she said. ‘There are 56,000 listings in the MLS right now. When we were in the big boom in 2005, there were only 8,000 houses on the market.’”

The Tucson Citizen. in Arizona. “Between 2003 and 2005, the Tucson real estate market went gangbusters - homes sold within days of being listed and values kept going up. Thousands of homeowners cashed in on rising values, refinancing their home loans, sometimes repeatedly, and taking out the increase in value in cash.”

“When ARM interest rates began resetting to higher rates in 2006…they began defaulting on the loans, the housing bubble burst. In 2007 there were nearly 4,500 foreclosure filings in Pima County, according to RealtyTrac. Foreclosed homes can be found in every neighborhood in the metro area.”

“When Ricardo Heredia signed the loan agreement for the home he and Claudia Estrada live in, the assistant tile setter and native Spanish speaker didn’t know what a teaser rate was or even understand the language the contract was printed in - English.”

“Now the couple face…loan resets every six months and the loan servicer they are working with is threatening foreclosure. Their teaser rate was set at 7.5 percent in 2005, which was relatively high then. Now the loan carries an 11.5 percent rate and could increase to as much as 13 percent.”

“The difference is about $200 a month, enough to keep the young couple from dining out, renting movies or fixing up their house, which they say is overvalued at $73,000.”

“Claudia Estrada said her mother took out a loan on the home they have lived in for seven years in order to fix up the place. Increasing interest rates have forced them to put it on the market to avoid foreclosure.”

“‘We thought about our kids, we thought about getting the best things for our house, and it’s just going down the drain like nothing,’ Estrada said. ‘There’s nothing we can do about it. This is the consequences of what we’ve done but we did it because they assured us everything was going to be fine.’”

“Cris Poor, director of homebuyer programs at the local non-profit Family Housing Resources, said that there is more than enough blame to go around for effects of the spike in subprime loans and the spate of home purchases by underqualified buyers in 2005 and 2006.”

“‘It was not whether or not you can get a loan, it was which loan you can get,’ she said. Borrowers ‘went on the goodwill of what someone was telling them or what someone was not telling them. They share a part (of the blame), but I think a majority of them were misinformed.’”

“It is possible to work out a solution and stop the process right up until the home is on the auction block. ‘It just depends on what you want to do,’ Poor said. ‘Do you want to keep your home or do you want to walk out?’”

“David Guthrie, a real estate agent specializing in foreclosures, said that although inventory may be overstocked, that doesn’t mean homes aren’t selling.”

“‘I see it as a natural correction in our market, which has been needing to happen for the last couple of years,’ Guthrie said. ‘Average people with regular jobs and regular families just had trouble buying a home to live in before. Now there’s plenty of homes.’”

The Arizona Republic. “Home sellers in the West Valley have slashed their asking prices up to 30 percent since February, and the price cuts are spurring sales in Surprise, El Mirage and Goodyear, according to a report from ASU.”

“‘You really got two sets of communities: Glendale and Peoria are older, more mature communities. And then, there are the new ones under development like Surprise, El Mirage to some degree, and Goodyear . . . those are the ones that really got hit hard (by the housing slowdown),’ said Jay Butler.”

“The number of Phoenix-area bankruptcy filings more than doubled in April as the soft economy and lingering housing ills came home to roost.”

“‘Housing is really the main thing right now,’ said Ericka Young, a personal-finance coach in Mesa. ‘Most of my clients having money problems are at least a month or two behind on their mortgage payments.’”

“Gilbert attorney Chris Dutkiewicz says many people have been trying to save their homes by racking up credit-card bills or borrowing from retirement accounts to meet other payments, with rising gas and food prices making things worse.”

“‘Eventually, some will realize they still can’t make it,’ he said. ‘They now have high housing payments and high credit-card payments’ and turn to bankruptcy as a last resort.”

“While a new national survey says Arizona’s economy is in a recession, a leading economist here says our problems go even deeper — into a depression.”

“Pete Ewen forecasts state growth for Arizona Public Service, the state’s largest utility, and he says this is the worst stretch for Arizona’s economy since World War II. ‘If you’re in the construction industry it’s going to feel like a depression,’ Ewen, chief economist at APS, said in an interview.”

“The housing market is choking on a year’s supply of unsold homes, the state is losing jobs for the first time in a 25 years and governments are starving for the tax revenue generated by the Arizona growth machine.”

“Even if you have no direct connection to the industry, you might feel the housing depression. Take the example of the Power Ranch neighborhood in Gilbert. Homes there that sold for $875,000 less than two years ago are now selling at a $400,000-plus discount.”

“Most have good incomes, says Ericka Young, a financial advisor in Gilbert, but they’re desperate to save their homes. ‘If we’re going to be in this state for three years, a lot of people won’t be able to make three years,’ Young says. ‘Six months is a long time.’”

The Las Vegas Sun from Nevada. “In a sign of how the mortgage crisis is rippling through Nevada and across the national political landscape, the state’s two Republican House members broke ranks with their party Thursday and defied President Bush’s veto threat to vote for the main provisions of a Democratic housing rescue package.”

“‘My constituents who have met their payment schedules and my constituents who are seeking assistance are all negatively impacted by the crash in housing prices,’ said Republican Rep. Jon Porter. ‘The subprime mortgage crisis has been a major catalyst in triggering the economic challenges Nevada is facing.’”

“Democratic Rep. Shelley Berkley, who voted for all provisions of the package, said the bills are designed ‘to help ordinary working families who are in danger of losing their homes so they can keep a roof over their head.’”

“‘You cannot have row after row of unoccupied homes in neighborhoods,’ Berkley said in an interview. ‘It drives down values.’”

“Elliott Parker, an economics professor at the University of Nevada, Reno, said he understands the complaints of those who say taxpayers should not help buyers who overreached for homes they could not afford. But he said the package could aid Nevada, where home prices are continuing to drop, affecting the housing market and the state treasury.”

“‘What people tend to forget about bubbles is they can happen downward, too,’ Parker said, explaining the need to avoid letting prices dip so low that homes are undervalued. ‘The Great Depression was a great example’ of a downward bubble, he said.”

In Business Las Vegas from Nevada. “As home prices and interest rates keep falling in the Las Vegas Valley, more and more buyers are snatching up houses. The Greater Las Vegas Association of Realtors reported May 6 that 1,794 homes were sold in April, a 21 percent jump over March’s 1,478 home sales. The sales are 30 percent higher than April 2007.”

“Properties owned by banks and other lenders accounted for more than half of the homes sold in April and that has created bargains since those homes are being sold below market prices, said association president, Patty Kelley.”

“The increase in sales comes as prices continue to fall. The median price of single-family homes sold in April was $235,875, down 3 percent from $243,169 in March. Prices are down 23 percent from April 2007.”

“Las Vegas housing analyst Steve Bottfeld said the valley will have to deal with thousands of foreclosures in 2008, but the increase in sales is a good sign. The Federal Reserve’s reduction in interest rates has been the difference, he added.”

“‘It is not about price, not about floor plan and not about design or location,’ Bottfeld said. ‘It is about the monthly payment.’”

“The increase in sales, however, has prompted an increase in the housing inventory, which had been dropping in previous months. There were 22,942 homes listed for sales in April…3 percent higher than it was in April 2007. Of those new listings, the median price was 3.6 percent lower than March and 23 percent below April 2007.”

Business Week on Nevada. “Banks—particularly in hard-hit real estate markets such as Arizona, California, Florida, Michigan, and Nevada—are slashing prices to entice buyers and clear away rising inventories of homes. The banks are competing with desperate builders and sellers facing foreclosure and, as a result, bargains are abundant.”

“At the end of 2006 a new 4,000-square-foot home with a three-car garage in a small gated subdivision in Las Vegas sold for $1 million. On May 6 the bank that owns the now foreclosed property at 7604 Noche Oscura Circle agreed to sell it for $500,000 ($32,900 below the already discounted asking price).”

“‘It’s an exceptionally good deal,’ agent Dillon England, said of the house, which is listed with his company. ‘What holds a lot of people back is when they walk into a small, 20-home subdivision like this one that has eight foreclosed houses.… It would scare you, wouldn’t it?’”

The Deseret News from Utah. “Most Utah homeowners are coping in the current housing market, but some people who have adjustable-rate mortgages say they are having difficulty making their house payments, according to a recent poll.”

“Results from the Deseret News/KSL TV survey of 404 Utah residents…showed that nearly 60 percent of respondents said they have fixed-rate mortgages on their homes, while 3 percent said they have adjustable-rate home loans. The poll had a margin of error of 5.2 percent.”

“Among those surveyed, 87 percent said they were current homeowners or in the process of purchasing a home, while 10 percent said they were renters. Of those with adjustable-rate mortgages, 45 percent of those people said it was not difficult to meet their house payment, while 45 percent said it was somewhat or very difficult to do so.”

“The number of respondents identifying themselves as having adjustable-rate mortgages was small — just 11 people — so the margin of error for the question was high, at 20 percent, making the statistic less reliable, said Dan Jones and Associates research director Diane Meppen.”

“The number of foreclosures in the Beehive State increased 34 percent from the fourth quarter 2007 to the first quarter of this year, according to RealtyTrac.”

“Brian Miller said he and his wife purchased their Herriman home in 2005 using an adjustable-rate mortgage. At the time, it made the most sense, he said, because it was their first house and they were newlyweds.”

“When they initially took out the adjustable-rate loan, it had a lower interest rate for the first five years of the loan, and they believed that the lower payment would allow them to strengthen their financial circumstances as the adjusted to married life and paid off wedding expenses.”

“Since then, Miller said, they have watched the housing market change and believe it is time to pursue a more stable financial option.”

“‘We did a five-year ARM thinking we weren’t certain we were going to be there longer than five years,’ he said. ‘We were kind of looking at it as a possible investment opportunity, but we’ve loved it out there and decided we’ll be there awhile.’”

Readers suggested a topic on subprime lenders. “Are Mozilo and the other subprime lenders the Devil, and has the loss of folk wisdom by Americans gotten them into the HELOC/cash out refi mess? I refer to the old idea that the Devil isn’t a powerful being who can coerce people into giving up their souls (like the government), but rather someone who has to trick them into doing it (like a businessman).”

“The devil will give you worldly goods, power or knowledge now but later…well, we’ll worry about that later.”

“Stories of this type demonstrated an age-old skepticism by Americans of those offering something for nothing, and asking people to sign a contract. Americans expected to have to work for things, or give something up to get something else.”

“Very different from ‘genie’ cultures where three wishes are offered with nothing in exchange. Of course, in many countries like that poverty borne of years of low effort was suddently reversed (for some) by oil popping out of the ground.”

“The argument for Mozilo being the Devil: in each case a person has an illiquid asset with a temporarily inflated value — houses with values puffed up the housing bubble, or the souls of the greedy. Both the Devil and the subprime lenders offered a way to monetize the inflated value of that asset before it depreciated back to a realistic level.”

“The case against the subprime lenders being the Devil is this…in none of the ‘deal with the Devil’ stories was Satan ever accused of disguising the eventual cost of the up-front benefit.”

A reply, “People (vast majority) can be brainwashed and one can create a culture that makes people very susceptible to, or easy victims of, propaganda. Maybe we have that condition whereby people are very easy to brainwash in the areas of politics, economics (finance) and investments.”

One noted, “Many Americans have evolved into people manipulated by soundbites. Whoever applies the sound bite with the strongest emotional power wins the dollars from these people.”

“People who can think past sound bites become immune to the manipulation and end up with the dollars.”

One said, “I don’t believe anyone needs ‘coercion’ to enter into the arena of ‘the devil.’ Man is lead of his own lusts–innate. It takes power to resist ‘the devil.’”

The San Francisco Chronicle from California. “Roger Abraham stands in his driveway, one hand holding the newspaper, the other sweeping across the homes on Brentwood’s Solitude Street. ‘This one,’ he points, ‘this one, this one.’ All empty.”

“Hundreds of families have lost their homes to foreclosure since the beginning of last year, and in a sign of more to come, at least 1 out of every 16 households has received default notices.”

“‘Brentwood is kind of the poster child for what’s going on in the housing market,’ said Howard Sword, the former community development director. ‘We were so active in the years where the subprime finance creative tools got rolled out, we were issuing like 1,400 to 1,600 building permits a year.’”

“Dave Myers, was the first buyer at Trilogy at the Vineyards by Shea Homes, closing in October 2006 for around $750,000. The unfinished amenities and housing downturn have chopped 40 percent off the value of his home, he said.”

“‘Trilogy was advertised as the place ‘where dreams take flight,’ he said. ‘Well, pretty much they’ve flown away. We’re now the house on the dirty hill that doesn’t have any trees, and doesn’t have any vineyard, and doesn’t have a clubhouse.’”

“On the horseshoe formed by Margaret Lane and Handel Way, about 15 homes have been resold, foreclosed or traded for less than the value of the outstanding loan, said Dave Thornton, who bought on the block two years ago.”

“In the struggle against blight, he had taken to mowing the patch of lawn between his driveway and his erstwhile neighbor’s. He recently gave up, deciding it was less trouble to let it die. The line where green turns to tan now marks the property line.”

“Thorton and his wife moved to Brentwood in 2006, thinking they’d found the quintessential little-town neighborhood for their three children. ‘When we first moved in, there were a lot of good people, neighborhood watch types,’ he said. ‘They’re all gone. There is no sense of community here.’”

The Daily Page from Wisconsin. “Alicia Emerson always dreamed about owning her own home. But what she bought was a house of cards.”

“Looking back on her experience, Emerson realizes she was too trusting of promises made by the Minnesota-based mortgage company that approved a $248,000 loan for her and her boyfriend even though their joint income was less than $50,000 a year. Now she gets it — she signed up for a subprime mortgage.”

“‘They told us we could refinance when the construction was finished with a negative amortization mortgage, which would make our payments between $800 and $900 a month,’ says Emerson. ‘But when the time came, they told us that kind of loan was no longer available, and our payments were going to be $1,700 a month. There was no way we could afford that.’”

“The hot housing market fueled an explosion of high-risk subprime mortgage loans. People with no down payment and an income too low to qualify for a standard ‘prime’ mortgage found they could get a home loan with a low introductory interest rate and the promise that they could refinance when that rate expired.”

“Underlying this whole scheme was the assumption that the housing boom would never end and houses would continue to increase in value. It was a bad bet.”

“Last year, many subprime borrowers discovered they couldn’t refinance because their houses had lost value, so now they owed more than their properties were worth. This caused a nationwide spike in foreclosures — nearly 1.3 million in 2007, an increase of 79% over 2006.”

“Emerson and her boyfriend moved into their new Mount Horeb house in August 2006. Faced with payments they couldn’t afford, they tried and failed to find a house mate. They also tried selling the house, and found they couldn’t do that either. They were trying to refinance to a loan with lower payments when Alicia’s boyfriend lost his job.”

“She ended up taking out a new mortgage in her name alone, from a different lender, with payments of $1,100 a month. She also took out a second mortgage for $28,000 to help her catch up on other financial obligations. Then, Emerson and her boyfriend spilt up. She was left with a house and a mortgage she could not afford.”

“‘It was awful,’ she recalls. ‘I was living in the biggest mistake of my entire life, and I didn’t know what to do about it.’”

“Before a foreclosure sale was scheduled, her house was purchased from her mortgage company as a ’short sale.’ She thinks the buyer got it for about $100,000 less than its market value.”

“Emerson has moved to Georgia, where she hopes to make a fresh start. But her troubles are not quite over. Although the short sale satisfied the first mortgage, she still owes about $30,000 on the second mortgage. She’s consulted with a bankruptcy lawyer to try to get that debt reduced, but she may have to declare bankruptcy.”

“One thing’s for sure: Emerson has lost all interest in becoming a homeowner again. ‘After all that’s happened,’ she says, ‘I’ve decided that renting is not so bad.’”

What do you see in your local housing market this weekend? Defaults? “Our foreclosure rate is nowhere nearly as bad as parts of California and Vegas, but realtors say it is getting worse here. A five bedroom house in Kaimuki. A three bedroom fixer-upper in Waipahu. A two bedroom townhouse in Mililani. Another one in Kapahulu. And a four bedroom house in Kailua.”

“‘Foreclosures have doubled from last year to this year,’ said realtor Carlin Yamashita.”

“There are currently 422 homes in foreclosure on Oahu that are listed for sale, including this four bedroom, three bath house on Kaimake Loop in Kailua. ‘I was surprised to hear it was in foreclosure. The house has been empty for two years,’ said neighbor Nani Kauka.”

“Neighbors say a family from the mainland had purchased this house in 2005 for a little over a million dollars. ‘Which really surprised us because it’s a two-story house in a regular neighborhood,’ said Kauka. The asking price is now $875,900.”

“‘What the foreclosures is caused by is the value is declining and the homeowner having slight problems with the payment, but the value isn’t there so they’re more likely to walk away from the property,’ said Yamashita.”

Lower prices? “The average medium price of a single-family home in the state dropped by about 10 percent, from $272,000 in 2007 to $245,000 this year. ‘There was a feeding frenzy for investment properties from 2000 to 2005 which drove prices up,’ said Robert Scaralia, President of the Rhode Island Association of Realtors. ‘Now we’re seeing a correction of that market sector.’”

“According to University of Rhode Island Professor Leonard Lardaro, who is often interviewed by the Rhode Island news media, a downturn is a needed remedy for an overextension of the market.”

“‘We don’t operate under a profit system. We operate under a profit and loss system, and loss serves a purpose. Loss cleans out inefficiencies in both production and management methods, and it also better aligns production with consumer preferences,’ said Lardaro. ‘Our free market economy is cleaning house, and we’ll be a lot stronger going forward when it’s finished.’”

More inventory? “Calgary’s MLS listings are ‘totally out of whack,’ surpassing 10,000 in April and growing by the day while sales are slumping. Listings for single-family homes and condominiums have hit an all-time record.”

“April MLS sales of single-family homes (1,363) in Calgary metro were the lowest for the month since 2000 while condo activity (581 sales) was the slowest since 2003 — even before the years immediately leading up to the city housing market boom in 2006 and 2007.”

“If inventory were a 10th of what it is right now, overall sales would still be pretty good, said realtor Gary MacLean, ‘but we have an inventory that is way out of control.’”

“‘The other factor is a lot of people got in the market when it was peaked and paid a lot for their house. With the cost of living going through the roof, the first thing to go is the house because they’re overextended. They’re house-poor,’ MacLean said recent data showing declines in housing starts and residential building permits also have a ripple effect on the local real estate market, as do speculators.”

“‘Those are the people that went out and bought four, five, six, seven condos in a building that wasn’t going to be built for two years. All of those buildings are now being completed. Those people did not want to be landlords. They were going to buy the condo, hold it until the building came due and put it on the market,’ said MacLean. ‘Well, the problem is of course we have the highest number of condos in history for sale.’”

Desperate sellers? “St. Joseph is the patron of fathers, carpenters, the dying, social justice and the universal church. But this saint’s popularity surges when the housing market tanks. Longmont real estate agent Diane Stow said, ‘Whenever the market gets tough, there’s a run on those little statues, without question.’”

“Phil Cates, a mortgage banker for 22 years and a Lutheran, said he began the online business in the 1990s after hearing from a friend about the practice of burying the holy statue. After listening to the woman’s woes on the housing market, her mother asked, ‘Have you buried a Joe?’”

“Critics have told Cates that he was ‘going to hell’ with this promotion of devil worship or voodoo. But he dismisses those claims, adding that ‘most people have tremendous amount of fun with this.’ And, he quipped, ‘in this housing market, we’re all praying for a miracle.’”

Please post off-topic ideas, links and Craigslist finds here.

The Union Tribune reports from California. “Although the current real estate market downturn eventually will reverse itself, agents should prepare for difficult times, California Real Estate Commissioner Jeff Davi yesterday told about 300 members and guests of the San Diego Association of Realtors. Several years ago, during the fevered housing boom, some agents could make sales simply by going to work and answering the telephone, Davi said. ‘Well, those days are over.’”

“Because the ranks of agents grew rapidly during the recent boom, competition now is keen, he said. ‘One in 53 adults in California has a real estate license,’ Davi said, drawing laughter from the crowd.”

“Taking the stage after Davi, Greg Smith, the county’s assessor, recorder and clerk, predicted that the housing market will soon rebound. ‘We’re going to be in a trough for a while, but ‘08 is basically the bottom,’ Smith said. ‘This is an outstanding time to buy real estate.’”

“Smith criticized the loose loan underwriting standards that enabled people to continue purchasing homes as prices soared. ‘We had people offering 1 percent teaser rates, no down (payments), stated income. How in the world do you suspend the laws of economics?’”

The Los Angeles Business Journal. “Los Angeles County home sales are sharply down from a year ago…a 43 percent drop year-over-year. Foreclosures rose 130 percent in Los Angeles County in the first quarter year-over-year, with 20,339 homeowners receiving foreclosure notices, according to DataQuick.”

“In Lancaster’s 93536 ZIP code, sales fell 42 percent in March year-over-year, but in April jumped 28 percent year-over-year. At the same time, the April median price fell to $285,000 –$9,000 less than March and $90,000 less than a year ago.”

“Conversely, home sales in the county’s priciest neighborhoods were at a virtual dead standstill – the opposite of last year when luxury home sales were propping up the market. In Beverly Hills’ 90212 and 90210 Zip codes, where median prices top $2 million, there were a total of just 10 sales.”

“Cal Poly Pomona finance and real estate professor Michael Carney said he is worried about the sharp drop in prices, especially when compared to the last real estate bubble that burst in the early 1990s. He believes it may mean the bottom is even further off than most people expect.”

“‘That prices are falling faster than sales is not a good sign in terms that the bottom is near,’ said Carney, noting that in the 1990s housing bust it took almost six years for prices to drop 20 percent. ‘You’ll start seeing year-to-year sales volume pick up long before we see a turnaround in prices.’”

“In Covina’s 91722 ZIP code, sales volume rose 80 percent to 27 homes, as the median price fell 30 percent to $345,000. In Palmdale’s 93550 ZIP code, the median price fell 39 percent to $202,000 as sales rose to 62 homes, 35 percent higher than a year ago and 63 percent higher than March.”

“Even so, just three years ago a typical month in that once fast-growing Palmdale neighborhood might see more than 150 sales.”

“Rhett Winchell, president of Beverly Hills’ Kennedy Wilson Auction Group, has an auction scheduled June 1 to help builders in the Palmdale-Lancaster area dispose of 17 luxury model homes. Winchell said that given the current market conditions, the starting price will range only between $125,000 and $250,000 – for homes that during the height of the boom would have sold for $289,000 to $605,000 on the open market.”

“That’s much lower than the discounted minimum starting bid Kennedy Wilson normally sets.”

“‘There are properties in this area that have been on the market six months to a year,’ Winchell said. ‘We don’t have that much time to sell these (model) homes. Our program works for builders because we price them below market, and let the buyers determine the market.’”

The San Fernando Business Journal. “Developer Rick Caruso’s Americana at Brand in Glendale has enjoyed nearly two weeks of immense publicity surrounding its May 2 opening. But success of the so-called ‘lifestyle center’ could come down to two issues – parking and the development’s residential element.”

“These are tough times for those in the luxury living sector of the industry, with a large supply of both high-end apartments and condominiums recently opened or coming online soon between Pasadena, Downtown L.A. and Woodland Hills.”

“The Americana has two categories of residences: 238 luxury apartments aptly named The Residences were 20 percent leased prior to the grand opening, while 100 condominiums are expected to open later in the year. When asked what his target market was for the residences, Caruso quipped, ‘Anybody with a buck.’”

“Rents for the apartments range from $2,000 to $5,500 per month. According to Glendale native and Realtor Phyllis Harb, those prices are going to be a tough sell. A typical one-bedroom in Glendale rents for about $1,100.”

“Jodi Taylor-Zens, director of marketing for the retail portion of the project, said the biggest challenge of the apartment-over-retail concept is noise. ‘I think you have to be the kind of person who understands you’re living in a downtown environment where trash trucks come early and stores get deliveries early in the morning and at night restaurants and bars are open late with music and people,’ she said.”

“The Paseo has one thing the Americana doesn’t – its own grocery store. ‘It certainly makes it easier,’ said Taylor-Zens, but it shouldn’t be a deal-breaker, she added.”

The Desert Sun. “Real estate professionals at the sixth annual Commercial Real Estate Investors Forum on Friday talked about making concessions to weather the current storm, finding opportunities and bargains where possible, and being prepared for the eventual market turnaround.”

“‘The truth is, the market is still declining,’ said Peggy Sue Lane, VP of Stewart Title Insurance in Palm Desert.”

“‘We’re not quite at ground zero, but many economists and appraisers are suggesting that we’re close. Economists expect the Coachella Valley to recover before the rest of the Inland Empire,’ Lane said. ‘We’re going to recover first. We have too much to offer.’”

The Press Enterprise. “State officials will probably decide within the next two weeks which agencies will teach idled construction workers the skills they need to work on state-funded projects, a spokesman said. California has allocated about $4.5 million in emergency funding for the retraining efforts.”

“Construction workers in Riverside and San Bernardino counties are among the biggest losers in the housing slowdown, according to the Employment Development Department’s latest report on the job market. Once seen as a sure thing by Inland blue-collar workers, construction has sent nearly 15,000 workers to the unemployment line within the past 12 months, the report shows.”

“The state also has a $5.6 million federal grant to retrain financial services workers idled by the housing slowdown. The Inland area has lost 3,600 financial services jobs within the past year, about 7 percent of the work force in that sector.”

The Bakersfield Californian. “On Miranda Court the little things have been left undone. And some worry big things — such as home warranties — may vanish. The developer of Tehachapi’s partially built Alta Estates neighborhood filed for bankruptcy protection April 25.”

“‘We have seen or heard nothing from them at all,’ homeowner Fayetta Lapham said of the San Bernardino County homebuilder behind her new house.”

“These days, empty dirt lots surround Miranda Court and nearby roads. Streets need finish work. Residents complain about peeling paint and cracked windows. If and when such tasks will be finished is up in the air.”

“Lapham and her husband moved into their $250,000 house in September, comforted by the idea of being in a new development where a builder could fix any small problems that might arise.”

“‘My husband just didn’t want something he was going to have to put a lot of work into,’ she said. Now they worry they’ll be stuck doing repairs.”

“Chapter 11 allows a company to operate while it restructures finances. But that doesn’t mean the Laphams and their neighbors will have access to a familiar company that will fix broken windows as expected.”

“‘It’s not that simple,’ said Empire’s attorney, Richard Pachulski, ‘because the company will probably not survive at the end of the day.’”

The Merced Sun Star. “Zack Guettinger’s alarm sounds at 3:45 a.m., bringing with it a cruel reminder that he must drag himself out of bed for another three-hour drive to his job in San Ramon.”

“On a typical day, he drives 200 miles there and back. It’s not a short drive, but as he explained, it’s what must be done.”

“Guettinger, along with other Merced County residents, is willing to trade endless hours on the road for their own corner of the American Dream. There’s a phrase, ‘Drive until you qualify,’ meaning that a Bay Area worker can afford a house only if he moves farther from his job.”

“‘I struggle through every day with the drive so they can have somewhere nice to live,’ the 31-year-old Guettinger explained. ‘I really wanted to get a house down in the Valley for everyone to grow up in.’”

The Recordnet. “Caroline Latham, CEO of RealFacts, said some analysts of the troubled single-family home market have speculated that people forced out of foreclosure houses would move into apartments. But the RealFacts survey suggests that this isn’t happening, she said.”

“‘There has been no increase in demand for apartments, as would be the case if former homeowners were turning into apartment renters,’ she said.”

“Latham said many people bumped by foreclosures may be renting houses rather than apartments and are part of a ’shadow market’ not being measured.”

“Ada Ulloa and her family of four will be moving out of their Morada home next month after four years because their monthly adjustable-rate mortgage is jumping by $500, to $3,300. Knowing they’ll not be able to make those higher payments, they’ll be walking away, giving up a house now worth $100,000 less than what they owe on it.”

“But from a renter’s perspective, she said she’s having no trouble finding at least a half-dozen good house rental possibilities at pretty good prices.”

“‘It feels like it’s a good time for renters,’ she said as she was checking out a three-bedroom, two-bath rental house with a huge backyard in the Country Club area listed at $1,450 per month.”

The Monitor reports from Texas. “Two national magazines have pointed to Hidalgo County’s job and real estate markets as among the best in the nation. The area has seen record home sales and prices during the last five years. At the end of 2007, the median home price was $106,300, up 25 percent from five years earlier. ‘The long range for job growth and population growth make it a desirable area to own a home,’ Randall Allsup, a real estate analyst with Metrostudy, said of the McAllen metro area. ‘If you are willing to own your home for more than three years, buyers stand to make some money.’”

“A glut of vacant housing lots and a dwindling interest in new homes are leading many McAllen developers to look into a new direction - condos and townhouses.”

“Almost counterintuitive in a region where a new home can cost as little as $80,000, developers across the Upper Rio Grande Valley are turning to community dwellings to target young professionals, retirees and Mexican nationals.”

“Several new condominium projects, mostly in McAllen, are expected to add hundreds of new units to the area during the next 18 months. Developers plan to break ground this month on a $16 million high-end condo project in South McAllen and another group is planning a high-rise tower in Edinburg.”

“‘It’s kind of a gamble because it’s out of the norm,’ said Fred Harms, a developer of a town home project in central McAllen.”

“Mortgage market problems and oversupply of new homes significantly hurt sales during the last nine months of 2007, but real estate agents and homeowners are crossing their fingers and hoping the worst is over.”

“‘The Valley appears to be adjusting to get back to a normal market,’ said Metrostudy’s Randall Allsup.”

“The average sale price for homes in the area took a hit during the first quarter of this year, falling nearly $20,000 from the fourth quarter of 2007. The median sale price for a home in Hidalgo County was $89,400 in March, the lowest since April 2004.”

“There is currently a 14.4-month supply of homes on the local market, which is extremely high for any market, according to Allsup. Also, the Valley’s large number of low-income residents means the tightening of the lending market is hurting this area more than most.”

From The Sun. “Quarter-million dollar homes up for auction with bids starting at $80,000. What’s the catch?”

“With real estate not moving as quickly as it once was…many developers are turning to the auction process as a means to move their product – with a quickness.”

“‘For builders who have excess inventory, the time is really what’s costing them now and if the auction can eliminate some of that time, that’s a cost savings to them,’ said Texas A&M University Research Economist Jim Gaines.”

“Bob Stratton, President of Verandah Development which owns Champions Townhomes, said they chose the method of sale to ‘create urgency’ because the homes aren’t selling at the pace they had anticipated.”

“Built while the market was booming, by the time the project was complete, things had changed, he said. ‘We have a number of people who are interested in buying townhomes, but don’t want to pull the trigger because they continue to read national headlines,’ he said. ‘And the national headlines aren’t necessarily affecting the Houston market.’”

“Sheldon Good President Alan Kravets said the company conducted successful auctions all over the country in the last year including Dallas, Boston, California and Chicago. ‘It’s interesting this is not troubled property,’ Kravetz said. ‘This is just a smart builder who is saying that they are being sold too slowly. Let’s just sell a bunch of them now and the buyers can get the benefit.’”

“Kravets said Verandah Builders engaged their firm to sell out the development so they could move forward to other projects.”

“‘Despite what people may have heard, now is the best time to buy because the market for residential properties is the lowest it’s ever been,’ said Kravets. ‘Prices are going down, but that means that prices on extraordinary homes are going down as well.’”

The American Statesman. “Equity Residential, the nation’s largest publicly traded owner and operator of multifamily housing, is pulling out of Texas and selling its entire Austin apartment portfolio, totaling nearly 3,000 units. Equity has sold its Houston portfolio, and a pullout from Texas would mean sales of 17 properties in the Dallas area and two in San Antonio.”

“Marty McKenna, a spokesman for Chicago-based Equity, said the firm is leaving because it has ‘been investing in markets that have better long-term prospects.’ He did not elaborate.”

“Although there is much investor interest in the Austin rental market, Robin Davis, president of Austin Investor Interests, said, there are a few concerns, including the nearly 10,000 new units expected to be completed in the next year.”

“But Austin’s multifamily market isn’t prone to being overbuilt, partly because of environmental restrictions, said George Deuillet, senior investment adviser for an apartment investor research firm.”

“‘We have some insulation for being overbuilt,’ he said. ‘It is a really good time to sell because we have a large demand, but the fundamentals of the Austin multifamily market remain strong, so it is a good time to buy, too.’”

The News Journal. “The Texas real estate market remains stronger than much of the rest of the nation with the Longview area doing its part to buck that national trend, according to James P. Gaines, research economist with the Texas Real Estate Center at Texas A&M University.”

“In a several county East Texas area that includes Longview, Marshall and Tyler, Gaines said homes are still appreciating at about 4 percent to 5 percent a year. The average price of home sold in the Longivew area in 2007 was about $124,000 — more than double the $60,000 average price of 1990, he said.”

“‘Rural land prices in East Texas went up 20 percent last year and I don’t know when that’s going to stop,’ he said. ‘This area is a tremendous area in attracting retirees and for population growth in general you’re poised for a boom.’”

“Due to problems on the national level, mortgage lending requirements have tightened up, while in Texas housing continues to increase about 4 percent a year. While that means home ownership can be a good investment in Texas, it also means fewer people may qualify for loans.”

“‘In Texas, 54 percent of all households can’t afford a $125,000 home — if they could find one at that price,’ Gaines said.”

The Dallas Morning News. “There are plenty of houses for sale in North Texas – more than 45,000. And prices in many neighborhoods have dropped from recent peaks.”

“But what’s missing in this year’s spring housing market is the usual rush of buyers. Through the first four months of 2008, home sales are off 15 percent in the area, according to statistics released Wednesday from Texas A&M University’s Real Estate Center and the North Texas Real Estate Information Systems.”

“Agent Barry Hoffer says buyers are stuck on slow. ‘Even with interest rates in the 5 percent range, buyers are taking their time in making a decision,’ Mr. Hoffer said. ‘They want to make sure that they can make the best deal that they can and are not chasing properties as they did a year or two ago.’”

“April was the ninth straight month of double-digit sales declines in the area. The recent decline in affluent home sales continued in April. So far this year, there has been as much as a 29 percent drop in purchases of homes priced above $600,000.”

“Since the last housing recession here in the early 1990s, the tax values of homes in the Dallas area have jumped about 70 percent.”

“While the rest of the country has suffered double-digit home price declines, in North Texas the drop so far has been small – only about 4 percent in the most recent survey.”

“Dallas is no stranger to home price drops. In the last big housing downturn – brought on 20 years ago by a regional recession and years of overbuilding – home prices fell at an even greater rate than we are now seeing in some California and Florida markets.”

“Between 1987 and 1990, the value of a then-average-priced $100,000 home in the Dallas-Fort Worth area fell by about 30 percent, according to surveys done in that period.”

“And it was seven years from the peak of 1980s home prices to the turnaround in the market in the early 1990s. Even the most pessimistic home market forecasts for North Texas don’t talk about that kind of debacle.”

“‘All bets are off, however, if we lose 50-70,000 jobs around here like we did in the late ’80s,’ said Dallas appraiser Chuck Dannis.”

“‘Some neighborhoods are holding up well in values, while others are suffering,’ said appraiser Jack Towers. ‘Overall, volume of sales is down significantly; I can attest to that.’”

“‘Just about every report I have done in the past year or so, the sales volume has dropped to about half what it was the previous year,’ he said. ‘This has to eventually work its way into an oversupply of listings creating more price competition.’”

“The high volume of home foreclosures here – almost 20,000 in 2007 – is also adding to the number of for-sale signs popping up across towns.”

“The developer of Dallas’ big Victory complex is shifting gears for the next phase of construction. Ross Perot Jr. said Friday that his firm Hillwood will delay work on more high-rise condominiums and hotel rooms to focus on additional office space.”

“Hillwood has postponed construction of Victory’s next big hotel and condo project. The 43-story skyscraper was to include a Mandarin Oriental Hotel, luxury condominiums, office space and retail. It was scheduled to open next year.”

“But Mr. Perot said, ‘Our hotel and condos are on the slow track at the moment. You don’t want to introduce that until people feel better than they do,’ he said.”

“Lenders are also reluctant to finance additional luxury hotel and condominium development, Mr. Perot said, speaking to the National Association of Real Estate Editors.”

Please post off-topic ideas, links and Craigslist finds here.

It’s Friday desk clearing time for this blogger, “The most severe real estate recession in decades appears far from over, with the pace of foreclosures rising, the fall in home prices accelerating and the pain spreading to nearly every major U.S. city, according to two reports. Gary Sweredoski, a Realtor in Myrtle Beach, S.C., is behind on his own mortgage and facing possible foreclosure. He’s also sought bankruptcy protection.”

“‘I’m a real estate broker, and my business just died,’ says Sweredoski.”

“I decided to take a look at Greenwich, CT, one of my favorite enclaves of multi, multi-million-dollar homes. Existing home sales in Greenwich are down 37.5 percent in March from a year ago and prices are down 13.7 percent. What’s even more disturbing, given the median income of the typical Greenwich homeowner, the number of Greenwich foreclosures in March was twice what it was a year ago.”

“If Greenwich is falling, perhaps the super-rich are not so immune to this housing crash as we’ve been saying all along.”

“Moving to a 55-and-older condominium community was supposed to make life easier, Richard Greig said. ‘This was supposed to be our retirement dream. We were going to come here and we wouldn’t have to mow the lawn or shovel snow,’ Greig said.”

“Instead, Greig and other residents of two incomplete developments in Litchfield, have been left to scramble through the financial and legal wreckage of a housing market gone sour and an allegedly bankrupt developer with a history of legal entanglements.”

“‘There’s nobody that lives here that’s happy that they purchased here at this point,’ Greig said. ‘But we’re stuck here now.’”

“‘I’m not the only developer out there having a tough time right now, it’s a tough market,’ said Richard C. Berube of Londonderry. ‘The bank is part of the problem. The real estate market is part of the problem. I’m probably part of the problem.’”

“The nationwide housing slump isn’t keeping adventurous single women like Roxanne Williams from buying homes in the Victor Valley. ‘There’s no point in me paying rent and I want security for myself and my children,’ said Williams.”

“‘I have probably 10 single moms at my office out of 60 Realtors and they’re all buying homes,’ said Caroll Yule, a broker and president of the Victor Valley Association of Realtors.”

“After years that saw developments sprout up faster than rooms could be sold, Center City’s high-rise boom seems to be slowing. Projects have been quietly canceled or delayed, and with a glut of units on the market, more and more realtors see at least a temporary slowdown in the works.”

“Alan Domb, whose real estate company owns high-rise condo buildings including the Parc Rittenhouse, said it could take as long as two years for the market to regain its footing. ‘If you haven’t started a project, and you’re thinking of starting in this environment, you have a better chance of seeing God,’ Mr. Domb said.”

“Prices in the Bay Area and Los Angeles are about where they were in August 2004. Hard-hit Detroit has retreated to its August 1999 level. Seattle, on the other hand, is back where it was July 2006. The 20-city Case-Shiller home price index is now roughly where it was in January 2005, about 3 1/3 years ago.”

“Let’s not forget that in the second half of 2004, prices in Las Vegas were soaring 50 percent on a year-over-year basis. Anyone who thought that would go on forever spent too much time in the desert sun.”

“Billionaires Warren Buffett and Charlie Munger say the pain many financial institutions are feeling because of the credit crunch is well deserved. (They) said that the financial companies that engineered subprime mortgages and the investment funds backed by those mortgages don’t deserve much sympathy as they record losses now.”

“Munger said lots of financial institutions acted with stupidity and overreached to improve earnings in recent years. ‘I think you have to start with the idea that a lot of the current troubles are richly deserved,’ Munger said.”

“Steve O’Conner, chief lobbyist of the Mortgage Bankers Association, said, like many before him have said, ‘We are clearly in extraordinary times. This is the greatest housing crisis in the country since the Great Depression.’”

“O’Connor answered a question about relief for lenders by saying: ‘Nobody’s going to bail out lenders. There is zero sympathy for lenders. I know because I go up there (to Capitol Hill) every day.’”

“American International Group Inc. shares were under pressure Friday morning, retreating after the blue-chip insurer reported a quarterly loss of nearly $8 billion triggered by huge write-downs on credit investments gone sour. The results were driven by a $9.11 billion write-down on a credit derivatives portfolio and $6.09 billion of net realized losses from AIG’s investment portfolio.”

“‘Although we expected that AIG would have some losses in the first quarter, the level of the additional losses exceeds these expectations,’ S&P credit analyst Rodney Clark said. Fitch Ratings downgraded the firm too.”

“Fremont General Corp, which is selling assets after regulators ordered it last year to stop subprime mortgage lending, on Friday said it may file for bankruptcy protection.”

“Economist Mark Zandi says the nearly nine million homeowners with negative equity are particularly vulnerable in this weak economy.”

“‘These folks are in big negative equity positions. If there is any disruption to their income at all, they have a major problem. And disruption to income doesn’t mean what it used to. Disruption to income ten years ago meant death, divorce or major disability. Disruption of income now means, well, I have to replace two tires (on my car), or my water heater broke,’ he said.”

“What was once a red hot market has softened and the number of homes on the market has jumped. ‘Sales are much lower than in the past three years,’ said Donnie Brainard of Alameda Property Group. ‘Las Cruces hit a high and now we’re hovering at the bottom edge of a cycle.’”

“There are more than three times as many homes on the market this year than four years ago. The first quarter of 2004 saw 474 listings while this year there were 1,593. ‘We’re still seeing tons of interest from California and places like Wisconsin,’ said Rick Stoes, managing director of the Grubb & Ellis office in Las Cruces. ‘I think we’re still ahead of the nation.’”

“Oklahoma City’s market conditions are not as bad as they are in many areas of the country, Oklahoma City Realtor Faith Thomason said. Thomason said, ‘It is a buyer’s market, even in Oklahoma City, because we have so much inventory.’ For example, she said that in just the southwest area of Edmond, there are more than 200 new homes on the market.”

“‘Don’t get anchored to a price,’ she said. If a neighbor’s house sold for $180,000 last year, that doesn’t mean that you can reasonably expect your home to fetch the same price.”

“According to Southern Oregon MLS figures, 288 existing homes sold in the rolling quarter that ended April 30, a decline of 33 percent compared to the corresponding three months in 2007. Broker Vic Nicolescu says one in four sales during the rapid-fire sellers’ heyday earlier this decade were to people who have since flooded the market with inventory.”

“‘A quarter of the sales in 2004 and 2005 were to speculators and investors with no intention of occupying the property they bought,’ Nicolescu says. ‘It should be obvious to everyone that we’re in for at least another year of a buyer’s market. Buyers can be very picky and sellers are going to get their brains beat in.’”

“‘These are tough economic times,’ said Mayor Antonio Villaraigosa. ‘The fact is a lot of economists, a lot smarter than I am, didn’t see this coming. A year ago, no one expected us to have the problems we are to the extent we are.’”

“‘The No.1 issue on the minds of voters is the economy,’ said David Fleming, president of the Economic Alliance. ‘We have an economist at the L.A. chamber who four years ago predicted the housing bubble would burst. We have seen prices decline by 20 percent, … and they could go down another 20 percent.’”

“I’ll admit it: When home prices were soaring in my neighborhood, it made me feel really smart. As the years went by, and all of us on the block could count our home appreciation month by month, all this paper equity made us feel financially secure as in, ‘Now we know how we’re going to pay our college tuition bills down the road.’”

“But as they say, easy come, easy go. Home prices in our neck of the woods have been falling just as they’ve been falling around the country.”

“The huge drop in home equity has spooked home sellers. Foreclosure rates have skyrocketed, hitting new records. Banks are still taking weeks and weeks and weeks to parse offers from prospective buyers. Buyers are getting fed up and are moving on to make other low-ball offers.”

“Fighting through all this to get a deal done is like wading through Jell-O. Just ask any real estate agent who hasn’t torn his or her hair out yet.”

“If the news isn’t bad enough, I’ve been hearing from readers around the country who are in shock that their home equity lines of credit have been shut off. This is what a stuck housing market looks like. Nobody feels that smart anymore.”

The St Petersburg Times reports from Florida. “Hold on to that house. Lawrence Yun, chief economist with the National Association of Realtors, says it will be worth at least 20 percent more. But you’ll have to wait until 2013. In a presentation Wednesday to the Greater Tampa Association of Realtors, Yun predicted the Tampa Bay area housing market will revive by next year and resume appreciating at a modest pace.”

“‘By five years from now, comfortably, things will be much better,’ Yun reassured more than 100 association members in the crowd.”

“Homes could eventually attract premium prices obtained in places like San Francisco, Yun said. ‘There will be a tipping point where Tampa becomes a superstar city,’ he said.”

“Appointed the association’s chief economist a year ago, Yun has faced skepticism in the past about his guesswork. During a visit to Tampa last June, he foresaw a ’sonic boom’ in home sales if the Legislature lowered property insurance rates. Rates went down a bit, but the region is still waiting for the boom.”

“Yun said his role at the national association is to promote positive trends as long as the information is factual.”

“With local home sales off by more than half since the 2005 peak, Realtors were grateful for the bit of good news. They thanked Yun with a warm ovation. ‘We’ve been doing it for 100 years. We’re going to be doing it another 100 years,’ said Deborah Farmer, president of the Tampa association. ‘Because Realtors rock!’”

“These days, a tension hangs over the quiet streets of Andalucia. Rival groups of property owners avoid each other except at board meetings, where they clash. The Andalucia Master Association’s board has been trying to force owners of vacant lots to build houses since 2003.”

“‘It really has turned personal,’ said Leon Arndt, one of a group of dissenting lot owners. ‘People cross the street to avoid meeting each other. It’s tearing the community apart.’”

“Late last year, the association replaced that demand with orders to install landscaping, sidewalks and other amenities on empty lots. Lot owners objected, saying the improvements would cost them $20,000 to $30,000 each.”

“Among the residents who support letting lawyers sort it out is Sandy Hopper, who lives next door to Arndt’s vacant lot on Rubia Circle. ‘I don’t know too many people who can pay $850,000 for a lot and then cry poor because they don’t want to pay $30,000 to fix it,’ said Hopper.”

“That 2005 purchase price is accurate, Arndt said, adding, ‘I’d be surprised if I could get $600,000 for it now.’”

“One of the reasons behind the housing boom through 2005 was heavy migration into the Tampa Bay area from places like the New York City suburbs, Chicago and Miami. And one of the reasons homes aren’t selling as they should this year is that the pipeline of transplants from these feeder markets is drying up.”

“The drop in home sales the past year in Queens, Suffolk and Nassau counties in New York, the Chicago region and Miami are worse than the sales drop in the Tampa Bay area.”

“‘Going back to 2001 through 2005 we had a huge (number) of homeowners cashing out and moving not just to Florida but to the Carolinas. In the last 24 months, we’ve seen very few,’ said L.P. Finn III, whose family owns one of Long Island’s largest realty companies. ‘Our referrals to fellow brokers in Florida are way off, about 50 percent off.’”

“Chicagoan Lynn Tempera bought a house in Pasco County’s Oakstead neighborhood as the housing fever tightened its grip in 2005. But when she returns on visits to her suburban Chicago haunts, she gets a glaring lesson on why fewer Midwesterners are duplicating her Florida migration.”

“‘My daughter lives in Huntley, Ill. The same houses are still for sale every time I go up there. It’s been that way for over a year,’ Tempera said.”

“Homebuyers still see better values in Florida than in New York, Finn said. ‘But they’ve said, ‘Let’s put that move off a couple of years.’”

The Herald Tribune in Florida. “Sarasota attorney John Yanchek admitted that he helped a client prepare two sets of mortgage documents with two different sales prices and that he lied about money that was supposedly held in trust. When asked why at a Florida Bar hearing Thursday in Sarasota that could be a prelude to the stripping of his law license, Yanchek said it was because his clients asked him to.”

“‘I was instructed by my client to sign it, and I signed it,’ said Yanchek, referring to a mortgage document that bore an incorrect sales price. ‘It was not the smartest thing in the world to do.’”

The News Press from Florida. “Building industry representatives want Lee County to make massive cuts in its budget for permits and inspections before a $430,000-a-month deficit drains the coffers dry.”

“The industry has been hit hard by the collapse of housing prices in the county: Median price for an existing home was $212,500 in March, down 34 percent from $322,300 in December 2005, at the height of the boom.”

“As a result, new houses can’t be built for what existing ones cost, and construction has plunged. A similar situation exists in Cape Coral, where a similar fund is running a deficit.”

“‘We’re having to do some difficult things and having to let some very good people go’ as construction jobs become scarce, said Dennis Cantwell, a director of the Lee Building Industry Association. ‘It’s not easy for us and it’s not easy for the county, but it’s the sort of choices they have to make.’”

The Daily Business Review from Florida. “As more South Florida homeowners fall behind on their mortgage payments, many lenders are slow to embrace a less costly alternative to foreclosure: short sales.”

“Lenders have been deterred by several factors, including the significant amount of documentation required and the related processing costs. They are also holding out for more lucrative — yet elusive — deals.”

“‘Banks are frozen like a deer in the headlights,’ said Richard Green, a real estate lawyer and broker in Fort Lauderdale. ‘They are inundated with cases and take weeks and months to make a decision. Often, buyers get disgusted and withdraw their offers.’”

“Michal Pospieszalski unsuccessfully tried to use a short sale to avoid foreclosure of a Coral Gables house he owned as an investment. He bought the property in October 2006 for $1.1 million with mortgages for $880,000 and $220,000 — 100 percent financing, according to Miami-Dade County court records.”

“By February 2007, he had stopped making payments to GMAC Mortgage for the $880,000 loan. The lender began foreclosing in May but agreed to a short sale for $875,000 in November, according to public records.”

“But the deal collapsed when the bank objected to Pospieszalski’s proposed $20,000 seller’s contribution, said Seve Fernandez, a principal with foreclosureassistanceofamerica. He found the potential buyer for Pospieszalski’s home.”

“Pospieszalski had planned to come up with $150,000 to cover the second mortgage if the short sale was approved. But the sale did not happen, and he could not pay the second mortgage either, Fernandez said.”

“Two subsequent offers for $750,000 last year and $650,000 four months ago were rejected because the lender wanted close to $700,000 for the property, Fernandez said. GMAC took the property back in March with Pospieszalski owing $989,608 in principal, interest and other fees.”

“Today, GMAC is marketing the three-bedroom home on Cellini Street for $609,900 — more than $250,000 less than the original short sale offer.”

“Some real estate agents are staying away from short sales. They still don’t think the financial return outweighs the uncertainty and hassle of dealing with banks, Miami Condo Investments real estate agent Lucas Lechuga said.”

“‘I know a few buyers who tried to buy condos through the short-sale process but failed,’ he said. ‘It was frustrating for me and equally frustrating for them. It made me quickly realize that short sales aren’t that great. If a buyer wants a great deal and wants to close fast, then foreclosures are where it’s at.’”

From CBS 46 in Georgia. “The housing crisis is hitting home in Georgia. Foreclosures hit record highs this month, and real estate prices across Metro Atlanta are plummeting.”

“‘I couldn’t tell you what will happen to me,’ Ruby White said. Her house was scheduled to be sold to the highest bidder at this month’s foreclosure auction on the Fulton County courthouse steps. ‘I can’t sleep at night,’ White said.”

“White’s mortgage payments jumped from $780 a month to more than $1,200. That’s more than she takes in on her monthly fixed income. ‘I’ve been living here for 38 years,’ White continued.”

“‘Prices are still going down,’ Steve Palm said. His company tracks trends in home values across the Metro Atlanta using actual home-buying and selling prices. According to Palm, White lives in one of the hardest-hit areas for foreclosures and price reductions in the metro area.”

“‘In these areas, we saw the price go down by 8 percent or more,’ Palm said, pointing to a map that showed areas in Clayton, South Fulton, and DeKalb County. According to Palm, more than half of Clayton County is in what he considers a ‘crisis zone,’ where home prices have dropped 8 percent or more in a 12-month period.”

“‘Pretty much the south side or below Interstate 20 has seen the greatest reduction in price,’ Palm continued. ‘Clayton County, South Fulton, South Atlanta, we have some areas in DeKalb.’”

The Atlanta Journal Constitution from Georgia. “To those optimists who argue the housing market is about to turn around, one of Atlanta’s top developers begs to differ. ‘We believe it will be some time — at least the second quarter next year — before we see any substantial recovery in the residential markets,’ Tom Bell, CEO of Cousins Properties, told shareholders.”

“‘We’ve stopped producing lots in almost all of our projects and are now watching the market closely for the opportunities that inevitably show themselves during tough times,’ he said. ‘We’re seeing office users that are slower to commit or expand, retailers that have significantly pulled back on new locations and residential buyers that are still waiting to see if we’ve hit bottom.’”

“A Cousins condominium building in Buckhead is scheduled to open in three months. Only 25 percent of the 137 units have sold thus far, Bell said. Two other condo projects — CityPlace at Buckhead and the Premiere at Fox Plaza — were put off because of the soft market. CityPlace was a joint venture with The Related Cos.”

The News & Observer from North Carolina. “Progress Energy’s utility meters are spinning noticeably slower in Florida, a reflection of the national real estate bust that has stalled the Sunshine State’s economy.”

“The Raleigh electric utility reported Thursday that earnings dipped 3.5 percent in the first quarter of this year as the once-booming growth in Florida’s population has slowed to a trickle. Tens of thousands of unoccupied homes in Florida have swelled a backlog of unsold or foreclosed properties in that state’s housing market.”

“‘This is permanent for the next year or so until we see the housing inventory reduced,’ said Peter Scott, Progress Energy’s chief financial officer. ‘This is just a temporary slowdown.’”

“Rising demand in recent years emboldened Triangle apartment landlords — many jacked up rents and fees while offering fewer giveaways. But the tables could be turning as a crush of new apartments hits the market and job growth slows.”

“‘We’re starting to see adjustments that could put money into the pocket of the renter,’ said Brian Reece, a partner at Karnes Research, which collects data for the Triangle Apartment Association.”

“The Triangle labor force is growing at its slowest pace since 2003, state labor data show. During that period, 3,647 new units became available — the most in any year since 2002, apartment association data show.”

“Another bit of foreshadowing: The region’s apartment vacancy rate is climbing for the first time in six years. At least 9.2 percent of the region’s 91,800 apartments were empty at the end of March, up from an eight-year-low of 7.8 percent a year earlier.”

“Meanwhile, 3,687 units are being built, in addition to a growing number of unsold homes that are moving to the rental market. There were 7,123 units on the drawing board at the end of March, according to the apartment association.”

“‘A few years ago, money was very easy to come by,’ said David Ravin, president of a Charlotte company that is building at least 612 apartments in communities in Cary, Chapel Hill and Raleigh. ‘But the money has been cut off. And while we might have a bubble here to get over, there’s going to be a slowdown in supply.’”

The Charlotte Observer from North Carolina. “Charlotte-area home sales and construction plunged during the first quarter, outpacing national declines. The eight-county region has now seen four straight quarters of worsening declines, and the current period may be even more painful.”

“‘It was bad, and I believe second quarter will be worse,’ said Chuck Graham, a longtime expert on the area real estate market. ‘We’re getting into the worst time for us.’”

“A national index also shows the Charlotte market as the only one of 20 urban areas where home prices are still appreciating. But those measures are scant comfort to anyone struggling to sell.”

“Scott and Angela Gibson have dropped the asking price on their Charlotte home nearly 9 percent, to less than $175,000. They moved back to Tennessee in November after he was laid off. They’re straining to pay rent and the $1,400 mortgage payment. One month, they sold their lawn mower to raise mortgage money.”

“‘We are an average middle-class family, and this has left us financially spent and worn out,’ she said.”

“Charlotte logged a record year for sales and construction in 2006, even as housing markets elsewhere slowed. The region’s sales rose further during the first three months last year. Since then, they’ve tumbled hard. ‘We’re late to the party, but we have arrived,’ said Matt Martin, an economist with the Federal Reserve branch in Charlotte.”

“Newcomers, like the Gibson family, have propelled the Charlotte region’s growth and kept houses selling. The Gibsons studied several cities as they contemplated a move in 2006. They bought in the Davis Lake community.”

“But they found costs higher than they expected, from taxes to child care and food. Last October, he was laid off from his job in marketing for a lawn and power equipment company. It was time to leave.”

“They first asked $191,900 for their house on Windchase Lane. They’re at $174,900 and willing to negotiate.”

“‘When we bought … there was such a high competition for good homes, and when you saw something good, you had to make a bid quickly,’ Angela Gibson said.”

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