Today's Local Real Estate News

The Daily Business Review reports on a F-cked Buyer using the legal system to get out of flip properties:

“Virginia investor who bet on South Florida’s condo market in headier days is trying everything he can to get out of contracts on four Singer Island units and recover about $1.6 million in deposits.”

“John Cherin has filed three federal lawsuits against Bonita Springs-based WCI Communities, which developed the Resort at Singer Island and One Singer Island.”

“‘During the happy times of the condo boom, if a purchaser wanted to get out of a contract a developer said, ‘Fine, I’ll sell it again,’ said Robert Chasnow, a Washington, D.C-based partner at Holland & Knight who is not involved in the litigation. ‘You didn’t find them squaring off on these issues. But now the market has turned; developers are reluctant to cancel and give back the money.’”

“Cherin claims WCI made misleading and confusing contract promises, according to complaints before federal judges in West Palm Beach.”

Yahoo Finance explains the recent surge in Jumbo mortgages:

“Buyers of pricey houses are finding that money has suddenly become more expensive to borrow. Ditto for loan applicants who don't want to prove that they told the truth about their incomes.”

“Rates on jumbo and Alt-A mortgages have zoomed upward since the last week of July, even as rates on conforming, fixed-rate mortgages slipped downward.”

“The development is bad news for people who want to borrow more than $417,000 to buy a house or refinance a loan, or who can't or don't want to document their income. Rising jumbo rates make it more difficult to sell a house costing half a million dollars or more.”

“‘I've never seen anything like this in my life,’ says Bob Moulton, president of Americana Mortgage Group of Manhasset, N.Y. ‘The last couple of days last week, it was difficult to place loans.’”

“Moulton quoted one client a 7 percent rate on a stated-income, jumbo mortgage. That was on a Monday. By Thursday, the rate had jumped to 13 percent and the client was considering an option ARM, which would allow him to pay interest only or even less than the interest accumulated over the month. It's either that or lose a $120,000 deposit.”

But Jumbo mortgage are not he only mortgages affected. Rates on conventional mortgages keep going up as reported by the Miami Herald:

“Rates on 30-year mortgages edged up slightly this week after falling for three straight weeks.”

“Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.62 percent. That was up from 6.59 percent last week, which had been the lowest level since early June.”

“This week's rate is the highest since 30-year mortgages averaged 6.73 percent four weeks ago, a level that was near the high for the year of 6.74 percent set in mid-June.”

The Miami Herald writes that legislators in Tallahassee have little interest in Save Our Homes portability, long touted as a savior of the real estate market:

“A proposal to let homeowners take at least part of their existing tax breaks with them when they move received a frosty reception Thursday from part of a commission studying Florida's tax structure.”

“Several members of the Taxation and Budget Reform Commission's property tax work group said the ‘portability’ proposal would exacerbate inequities caused by the Florida Constitution's Save Our Homes Amendment, which voters adopted in 1992.”

“‘As I look 20 years out into the future and I see this portability that you're talking about, I see a disaster that's going to make Save Our Homes seem like a walk in the park,’ said Commissioner Nancy Riley, also president of the Florida Association of Realtors.”

“The amendment caps assessment increases on primary homes, known as homesteads, at 3 percent annually, but that has shifted tax burden to other taxpayers including new home buyers and owners of commercial and rental properties and second homes.”

The Sun-Sentinel reports on slowing housing starts:

“Construction of new homes fell to the lowest level in more than a decade in July as builders continued to struggle with the steepest housing slump since 1991.”

“The Commerce Department reported Thursday that construction of new homes and apartments dropped 6.1 percent last month to a seasonally adjusted annual rate of 1.38 million units. That was down 20.9 percent from the pace of activity a year ago and represented the slowest pace since January 1997.”

“Home builders in South Florida have been hit particularly hard. Lennar Corp. of Miami and Fort Lauderdale-based Levitt Corp. have seen rising contract cancellations as demand for new homes wanes.”

“Last week, Levitt announced a $58.1 million loss for the quarter ended June 30, compared with a $737,000 loss for the same period a year ago. In the past year, the builder has laid off at least 70 employees, about 10 percent of its work force.”

Still, construction does continue in South Florida. One developer plans to build 14,000 homes in Okeechobee. The Sun-Sentinel reports:

“The Grove, a proposed development in the county's extreme northeast corner, could encompass the city of Okeechobee.”

“Barron Collier plans to raze the grove and replace it with nearly 14,000 homes and roughly 2 million square feet of commercial space. The master-planned community would have a turnpike exit -- built by the developer -- and its own water and sewer system.”

“Age-restricted communities would encompass about half The Grove's homes.”

“‘It's going to be a lot of people from up North, getting on the computer and finding this community, and it's going to be a much cheaper place for them to live,’ Noah said. ‘Coastal living is just getting out of hand.’”

Efinancedirectory.com reports on local housing affordability:

“During the boom, Florida home prices increased 84 percent. Wages, on the other hand, did not. The result is that workers in Florida's key occupations, such as nurses, receptionists, firefighters, and law enforcement professionals, have been priced out of the housing market. Here is an interesting collection of charts detailing how many hours people in these key occupations need to work to afford fair market rent, and how much they would need to make annually to afford the median priced home in some of Florida's largest metropolitan areas.”

“In Fort Lauderdale, it is just as difficult for individuals making the average wage [as a firefighter, nurse, police officer, receptionist, or wait staff] to afford a median priced home as it is in Miami. Fort Lauderdale police officers, who earn the highest average wage of the five occupations, need to work at least 90 hours per week to reasonably afford a median priced home. Renting, in comparison, is cheaper but still incredibly difficult for receptionists and wait staff, who need to work 60 hours and 80 hours per week respectively to rent a two bedroom apartment.”