Today's Local Real Estate News

The Miami Herald reports on that the mortgage crisis is still in its early stages (see my previous post on this issue):

“Millions of other borrowers are wrestling with another type of adjustable rate mortgage, or ARM, called ‘interest-only.’ These loans allowed borrowers to pay just enough each month to cover the interest owed on the loan, leaving the balance of the outstanding debt unchanged.”

“While most of the mortgage market worries so far have focused on the huge losses flowing from the subprime home loans made to people with bad credit, the option and interest-only ARMs held by more creditworthy borrowers loom as another calamity in the making.”

“If the worst fears about these loans materialize, the economic damage would likely extend well beyond the United States because much of the debt has been packaged into securities sold to pension funds, banks and other investors around the world who were hungry for high yields. The fallout could also further depress housing prices, leaving U.S. consumers feeling poorer and less likely to buy the merchandise imported from overseas.”

“So far, less than 4 percent of the option and interest-only ARMs are delinquent, well below the 14 percent rate for the subprime market, where about $1.5 trillion in home loans are still outstanding, according to the most recent data from the research firm First American LoanPerformance.”

“But there is still reason to be alarmed because the trouble with option and interest-only ARMs still appears to be in its early stages. Many industry observers suspect the biggest problems will emerge during the next 16 months as shoddily underwritten ARMs made near the real estate market's peak in 2005 and 2006 climb to higher interest rates.”


The Sun-Sentinel reports on the credit crunch, an issue that I feel will ultimately impact prices in the market more than any other issue:

“If you're hunting for a home loan and have lousy credit, plan to keep looking. Even if your credit is stellar, prepare to pony up a sizable down payment and prove every penny of income to the lender.”

“‘Banks, especially those in South Florida, are becoming increasingly tight-fisted,’ said Ken Thomas, a Miami-based industry analyst and consumer advocate.”

“Growing delinquencies and defaults on subprime mortgages, loans given to customers with poor credit histories, have increased rapidly in recent months. As a result, investors are hesitant to buy the loans in the secondary markets.”

“Without that, lenders often have no other funding sources and shut down because they have no cash liquidity.”

“The widening credit crunch has claimed more than 100 lenders nationwide in recent months, many of them with ties to Palm Beach and Broward counties.”

Local developers are not doing much better. The Sun-Sentinel reports:

“Stung by the downturn in the U.S. housing market, Fort Lauderdale-based builder Levitt Corp. on Friday announced a $58.1 million loss for the quarter ended June 30, compared with a $737,000 loss for the same period a year earlier.”

“The hefty loss included a pretax charge of about $63 million to revalue its home-building inventory, compared with a impairment charge of $4.7 million during the same period last year.”

“The company said the ‘large’ impairment charge reflects the ‘continued deterioration’ of its home-building markets, especially Florida, the need for ‘aggressive pricing and discounting strategies’ to increase sales, and ‘the prolonged duration of the weakness in the market.’”

When all else fails, sellers can always pray for Saint Joseph to intervene. The Sun-Sentinel reports on this growing practice:

“Some folks say it's silly superstition. Others even call it sacrilegious. But those who've had success with the help of St. Joseph say despite the dismal housing market you can count on him as your heavenly real estate agent.”

“True believers insist that when they plant a small statute of this patron saint of carpenters upside down in the yard and pray for his help, their house sells.”

“‘I plant them all the time, and I say a little prayer,’ says Christine Beck, a real estate agent with Coldwell Banker on Las Olas Boulevard in Fort Lauderdale. ‘You have got to do something in this market.’”

“St. Therese of Lisieux Catholic Church in Wellington carries the St. Joseph home sale kits in the gift shop. Father Brian Lehnert says they come with prayer cards and he doesn't disapprove.”

“‘Whatever you do, ask St. Joseph to help guide you in selling the house,’” he says. ‘If it's done in faith, I don't have a problem with it.’”

I have a better idea, why not simply lower the price -- I have little doubt that will be far more effective than burying a statue in the yard.