The Palm Beach Post provided one of the more realistic views of the local real estate market:
“The housing market in Palm Beach County and the Treasure Coast has turned "brutal" and is getting worse, a veteran mortgage broker said Tuesday.”
“The stark outlook came from William Davis, president of Private Funding Specialists Inc. in Palm Beach Gardens and past president of the Palm Beach County chapter of the Florida Association of Mortgage Brokers.”
“‘I've seen some tough times, but I've never seen anything like this,’ Davis told members of the Economic Forum of Palm Beach County.”
“There were 33,708 houses and condos listed for sale in Palm Beach County in August, according to Illustrated Properties Real Estate's analysis of Multiple Listing Service data. Illustrated Properties President Chappy Adams didn't attend Davis' speech but agreed with his conclusions.”
“‘It's pretty bad,’ Adams said. ‘We've got a 40-month supply of homes, which has got to be an all-time high. For the foreseeable future, prices are going to keep coming down a bit.’”
A Palm Beach Post real estate blog added some other quotes made by William Davis at the same meeting:
“On the foreclosures that follow negative amortization loans: ‘We called them neutron bombs, because the people would go away, and the buildings would stay.’”
“On the housing hangover: ‘We had a three-year fraternity party, and it’s going to take more than a month of Sundays to clean up the mess.’”
“On the glut of homes on the market: ‘It’ll make you sicker than West Palm water if I tell you how many houses are for sale.’”
A Miami Herald poll tells a similar story:
“Last week, we asked readers what impact the stagnant real estate market is having on them. Those with homes on the market made a strong turnout: 48 percent of respondents said they're trying to sell but buyers aren't biting. On the other end of the spectrum, 29 percent said they aren't feeling any impact, as they have no plans to move; 14 percent said they'd like to buy, but taxes and insurance are still too high; 5 percent said they'd like to sell but will wait until the market picks up, and another 5 percent are ready and willing to buy now.”
The New York Times reports on the troubles faced a bank that financed condominium developments:
“Javier Miglin may walk away from an $80,000 down payment on a condominium with water views in Miami. Randal Mills may give up a $130,000 deposit on a 15th floor condo on the Strip in Las Vegas. And in San Diego, Jeanette Graham would just like to meet the neighbors.”
“The three seemingly unrelated predicaments have a common thread that leads to Chicago, and Corus Bankshares, which financed the construction of each condominium development involved.”
“Whether buyers like Mr. Miglin and Mr. Mills close on their condos will be a crucial indicator for Corus. Many condo projects that started during the real estate boom are just being completed, and developers must begin repaying construction loans taken out before the market turned sour. If buyers do not close, and developers struggle, lenders like Corus may be left holding the bag.”
“Still, the Corus Bank president, Robert J. Glickman, remained optimistic. So far, he said in an e-mail message, developers have used many successful strategies ‘to ensure that buyers come to the closing table.’”
“‘Good developers — those that are diligent, successful — need to keep up the buyers’ interest and desire to close,’ he said.”
“That optimism raises warning signs with analysts like Jack McCabe, a real estate consultant in Deerfield Beach, Fla. He has been hired by hedge funds and other investors to study 8 of 12 projects in Miami that Corus has financed and advise them on their progress.”
“‘In this market downturn, even the most successful developers with the best projects and the best geographic locations are going to take hits,’ Mr. McCabe said. ‘Mr. Glickman’s comments are eagerly overoptimistic and do not match the severity of this downturn.””
As the prices of condos tumble, expect more builders to walk away from unfinished projects.
The Sun-Sentinel reports on one troubled condominium project in Boca Raton:
“The developer of the troubled Eden condo project missed two deadlines Tuesday that were part of its agreement with the city to extend its building permits.”
“Three weeks after the City Council scolded Ceebraid-Signal Corp. before agreeing to permit extensions, the city put the company on notice they would expire if it didn't submit a $500,000 letter of credit or a written plan on securing the four-building site in the next 15 days.”
“After years of financial trouble and construction delays, three Eden buildings remain unfinished.”
“Expiration of the building permits could lead to the demolition of the unfinished buildings.”
USA Today reports on how the housing slump is affecting homebuilders:
“Even as home buyers were being offered a free washer, dryer, refrigerator and window blinds, plus 5% off the price or in cash to pay closing costs, business was dragging at Reeves Williams' communities.”
“So at the end of July, Reeves Williams, a home builder in the South, began offering $20,000 in incentives or cash assistance. In the first week, 22 buyers had signed contracts for new homes. Then the mortgage market fell into a tailspin.”
“‘We lost 17 of them. It was a huge hit,’ says Martha Fondren, vice president of sales. ‘It was a credit issue. They did not have horrible credit. But they didn't have the credit scores to get (a loan), and six months ago they would have.’”
“Since early August, the real estate market has sunk deeper into recession. Forecasts of a recovery have been pushed back to the middle of 2008 — at the earliest. For home builders, market conditions are already worse than in the last housing recession, in 1991-92.”
“Stuart Miller, CEO of Miami-based Lennar, says he thinks some builders' price cuts have been ‘unrealistic, maybe even ridiculous.’ Lennar reported the worst quarterly financial results in the company's history and a surge in cancellation rates.”
“Miller says he walked away from 15,000 home sites the company had planned to develop and has laid off 35% of his staff. ‘August seemed to be a melting pot of all things negative,’ Miller says.”
“Some laid-off employees have managed to find jobs in commercial real estate, which so far hasn't been affected as much by the turmoil in the credit markets. But the magnitude of the downsizing among builders is exerting a drag on the economy that could, in turn, further dampen demand for new homes.”
“‘We have hundreds of thousands of jobs to lose over the next six to 18 months,’ says Mark Zandi, chief economist for Moody's Economy.com. ‘Housing employment accounts for 10% of all jobs nationwide and 15% of the economy.’”
CBS 4 reports on the mortgage woes facing South Floridians:
“Since 2005, home buyers in Miami-Dade and Broward counties have signed so-called ‘exotic’ mortgages at twice the rate of borrowers in the rest of the country, according to a report done by CBS4 news partner The Miami Herald.”
“These mortgages included loans with low so-called ''teaser'' rates which can skyrocket within three years to as high as 16 percent.”
“Roughly one in five mortgages written in Miami-Dade and Broward counties between 2005 and July 2007 fell into one of those categories, according to data from McDash Analytics, a private firm that gathers information from nine of the 10 largest loan servicers in the United States and provided to The Herald.”
“The potential financial peril could go beyond the more than 100,000 South Floridians who signed such loans since they became popular in 2005. If banks foreclose, or owners are forced to sell at a bargain price, experts say it could extend, and deepen, the pain from the already troubled housing market.”
The Palm Beach Post explains how the dissolution of many subprime lenders is affecting homeowners:
“The worst housing slump in 16 years has produced a subprime mortgage meltdown, widespread layoffs and record foreclosures.”
“It also has produced Larry Leggett, a Vero Beach homeowner who wants to make his monthly payment — he just doesn't know where to send it.”
“That's because HomeBanc, his mortgage company, filed for Chapter 11 bankruptcy protection in August. As of Thursday, the only thing he had received was a form letter — addressed to ‘Dear Valued HomeBanc Customer’ — telling him he would get a statement at the end of the year.”
“And this: ‘As a reminder, effective Oct. 1, 2007, all checks will be made payable to the new mortgage company that will service your loan. If you have any questions about this transfer, please contact your new lender on all matters concerning your loan.’”
“Unfortunately, HomeBanc didn't tell him who his new lender is. Or how to contact it. Or where to send his mortgage payment.”
“‘We were making it through this horrible, tough time,’ he said, ‘and then this happens. I am just trying to make my payment.’”
The Sun-Sentinel reports that Governor Crist continues to push for property tax reform:
“Gov. Charlie Crist on Tuesday released a retooled $6.3 billion package of property-tax cuts he said he may ask Florida legislators to vote on next week.”
“‘I don't know if we'll be able to do it for sure,’ Crist said. ‘But if you get the good framework ... my view is, ‘Why not do that? Why not get the job done?’”
“The plan would scale back the $8 billion in tax savings promised by an earlier proposal that was thrown off the Jan. 29 ballot by a Leon County judge. It would save the owner of a $275,000 home just $214 a year in property taxes, though it would deliver substantially bigger breaks to first-time home buyers or people who sell one home and buy another.”
“Fort Lauderdale Vice Mayor Carlton Moore called Crist's proposal ‘a political stunt.’ Genuine tax reform, he said, would end the possibility of two next-door neighbors getting drastically different tax bills.”
“‘You have not done anything until you're addressed the inequity of our tax process,’ Moore said.”
The Miami Herald reports on a troubled real estate firm:
“The housing-market decline has taken its toll on another giant Florida real estate company. St. Joe, Florida's largest private landowner, plans to eliminate more than 75 percent of its workforce and sell about 100,000 acres of land.”
“St. Joe, whose 800,000 acres in Northwest Florida include some of the last pristine beachfront land, had ambitious plans to remake the region. It owns 10 master-planned communities, seven commerce parks, six golf courses and three marinas and had donated land for a new airport in the Florida Panhandle.”
“Now the company that referred to itself as a ‘place maker’ is handing off the management of its planned communities to what it calls strategic partners. CEO Peter Rummell said the move makes good business sense regardless of market conditions.”
“‘This is not a fire sale,’ Rummell told analysts Monday on a conference call. ‘We are not going to make stupid decisions, but there are things that we believe have reached their height in pricing. I firmly believe that we would be doing this whether the market was good or bad.’”
But, the housing slump also continue to affect non-real-estate industries.
Ryder is the latest to report lowered earning as a result:
“Trucking company Ryder System Inc. lowered its third-quarter and full-year earnings forecast Monday because of softness in the housing and construction industries and beyond.”
“Miami-based Ryder also said it's cutting 300 jobs among its more than 28,000 employees worldwide. The cuts are part of a restructuring plan that will result in charges of about $12 million in the third quarter. The charges will offset a third-quarter gain of about $10 million from the sale of a property, Ryder said.”
“The economic factors have hurt Ryder's higher-margin commercial rental segment, where revenue has declined for six straight quarters, said analyst Todd Fowler of KeyBanc Capital Markets.”
“‘It is our opinion the concentration of Ryder's weakness is housing related, although we sense the company is seeing some spillover to broader industries, resulting in a more cautious outlook,’ Fowler said.”
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