Today's Local Real Estate News: "They're on strike, waiting until after prices have fallen."

Local10.com reports that South Florida leads the nation in mortgage fraud:

“A mortgage fraud initiative that includes local, state and federal agencies will crack down on violators in light of the rising number of mortgage fraud cases in South Florida, said the United States attorney for the southern district of Florida Thursday.”
“‘The American dream of home ownership is under attack by mortgage fraudsters. Mortgage fraud puts lenders at risk and confronts homeowners with the possibility of foreclosures and the loss of their homes,’ said Alex Acosta, the U.S. attorney for the southern district of Florida.”

“As reported by Fannie Mae in June 2007 and by the Mortgage Asset Research Institute in May 2007, Florida led the nation in mortgage fraud rates this past year. Within Florida, South Florida has the highest rate of mortgage fraud in the state.”

“Officials involved in the initiative said more arrests are to come.”

“‘The mortgage lending and housing market have a considerable overall effect on the nation's economy and combating mortgage fraud will remain a top priority for the FBI,’ said Jonathan I. Solomon, special agent in charge of the FBI's Miami office.”

The Miami Herald reports on the national new home sales data released yesterday:

“New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump.”

“Sales of new homes dropped 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000. That was the lowest level since June 2000.”

“‘This is just hideous,’ said Ian Shepherdson, chief economist at High Frequency Economics.”

“Home prices tanked. The median sales price in August fell by 7.5 percent from a year earlier to $225,700. That was the biggest drop in percentage terms in nearly 37 years. The median price is the middle point at which half sell for more and half for less. The average sales price dropped by 8 percent in August from a year earlier to $292,000. That was the biggest decline in 17 years.”

The Chicago Tribune quoted University of Florida professor, Jay Ritter, on the slow sales:

“‘Mismatched expectations,’ explains Jay Ritter, a professor of finance at the University of Florida who says that consumer behavior is the wild card in the marketplace impasse.”

“Many home sellers, he says, are in love with the old days, when home prices seemingly rose by the hour.”

“And sellers, he said, are stuck in neutral, waiting for a better deal.”

“‘When prices are going down and there are articles in the news about prices dropping, it leads more people to wait and see, and it becomes a self-fulfilling prophecy,’ Ritter said. ‘Rather than closing the deal now, they're on strike, waiting until after prices have fallen.’”

CNNMoney.com reports on vulture investors in South Florida

“Real estate investor Matthew Martinez is the point man for a private equity group that plans to invest $200 million in Florida condo developments.”

“But recent forecasts show many housing markets in the Sunshine State are looking at double-digit drops in home prices. What is he thinking?”

“‘We believe in the long-term viability of the Florida real estate market, but we're buying on rental economics,’ Martinez says. ‘People had been purchasing on condo economics and those numbers no longer apply.’”

“He's looking for 15 percent or higher discounts off previous condo prices to make his purchases viable. He then plans to convert the apartments back into rental units.”

The Palm Beach Post reports that falling property values does not necessarily mean falling property taxes:

“For the first time in more than a decade, Palm Beach County's taxable value is expected to drop next year by 5.4 percent, according to preliminary estimates released this week by the property appraiser's office.”

“The dip comes after years of double-digit property value increases that poured millions of dollars of tax revenue into local government coffers.”

“But even though values are declining, many property owners may not see their tax bills drop. In fact, many could be paying more in 2008, Property Appraiser Gary Nikolits said Thursday.”

“Local governments could be forced to raise their tax rates to make up the property tax revenue they will lose because of dropping values, Nikolits said.”

“Residential property values are expected to drop by about 15 percent next year, according to preliminary estimates. But officials in the property appraiser's office warn that number could be higher by the end of the year because values have been slipping at a much faster rate in recent months.”

“‘Toward the beginning of the year, especially in the first three or four months, prices were flat,’ said John Thomas, assistant director of residential appraisal services for the property appraiser's office. ‘In the last few months, we are starting to see the values slip, and it appears to me that the rate of decrease is accelerating.’”

Target Corp. blamed some of its poor earnings projections on the Florida housing slump:

“Target Corp.'s (NYSE: TGT) is now warning the market of a slower September sales month after coming off several months of better-than-expected same-store sales. The nation's second-largest discount retailer seemed to set a scary precedent for other retailers as well, with the market thinking that a slow holiday season could set in as October approaches and the holiday shopping season begins in November.”

“This week, Target, cut its forecast for September same-store sales (sales from stores open at least a year) to 1.5% to 2.5% -- quite a drop from the previous 4% to 6%. In a sign that maybe the housing market was playing a factor, the retailer stated that sales in Florida was particularly sluggish. The state is sharing the top spot with California in terms of housing foreclosures and mortgage flops.”