Today's Local Real Estate News: "In the coming weeks and months, buyers should expect sellers to keep dropping home prices."

Housing data came out yesterday and the three major South Florida new papers reported on the situation. The Miami Herald explained:

“Prices of homes and condos in Broward County dropped in September compared with a year ago, a sign that stubborn sellers may finally be accepting the reality that they are no longer able to get the sky-high prices of the boom years.”

“Broward's single-family home sales were off last year's number by 46 percent; condo sales declined 39 percent. But prices also fell -- the median home price down 7 percent year-over-year to $345,200 while condo prices slipped 15 percent to $174,600.”

“In Miami-Dade, single-family home sales were more than cut in half for the month, dropping 53 percent from September 2006. Condo sales were similarly off 47 percent. Home prices were mostly flat at $372,300, and median condo prices rose 2 percent to $275,000.”

“Gabriella Berenyi, a seller in Oakland Park, said she will not budge further on her price.”

“Nearly a year ago she put her three-bedroom lakefront condo up for sale, asking $289,000. She found few interested buyers, and the ones she found couldn't qualify for a mortgage. So she dropped her price to $279,000.”

“‘This has been the worst experience,’ she said.”

“‘But I don't believe in going down too low [on the price] because I invested so much remodeling it. If I go down too low, I can't get any money out of it. So I am trying to rent it out now; people say prices will go up in six months or a year.’”

The Palm Beach Post reported the following:

“The housing decline has been under way for more than a year, and analysts say it could be at least another year before the market plateaus, based on September existing-home sales reports.”

“The median price for an existing single-family home in Palm Beach County dipped to $355,300 in September, down 3 percent from $365,500 in September 2006, as sellers continued to hold out for their asking prices despite heavy market pressures. The number of homes sold in the county fell 17 percent, to 471 from the 566 homes sold in the same month one year ago.”

“In Martin and St. Lucie counties, the news was even worse. The Treasure Coast posted the second-steepest home-price decline in the state. The median price plunged to $202,000, off 17 percent from a year earlier, when the median was $244,300, the Florida Association of Realtors said Wednesday.”

“‘Mortgage money is very tight now,’ said housing analyst Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach. ‘Prices are going to continue to drop. From 2007 to the end of 2009, you're going to see a 35 to 40 percent drop off the market peak.’”

The Miami Herald reports that the housing downturn is not just a local phenomena; it’s a national problem:

“Sales of existing homes had a record decline in September while median home prices fell by the largest amount in nearly a year, reflecting deepening problems in the troubled housing market.”

“Analysts said the current downturn is already more severe than the housing slump of the 1990s. They predicted that before it is resolved, it will rival the 1980-82 housing slump. Back then, the industry was battered by double-digit mortgage rates and the economy was in a steep recession.”

“The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September. It was the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was the slowest pace on record.”

The Sun-Sentinel reports similarly and even used the “C” word (capitulation):

“September's home sales plunged in Broward County, and real estate experts say fewer sales and declining housing prices reflect the continuing trend in South Florida, the state and the nation.”

“Buyers are deterred by the state's property tax and insurance crisis, stiffer mortgage financing requirements owing to credit turmoil, and home prices that many still can't afford. September marks month No. 21 of the region's housing slump.”

“‘The investors are gone. You have the average person trying to put a roof over his head, and prices are still unaffordable,’ said Mike Larson, an analyst with Weiss Research in Jupiter.”

“In the coming weeks and months, buyers should expect sellers to keep dropping home prices, experts said.”

“‘In last 60 days, anecdotally we're hearing about a lot more capitulations on the part of sellers,’ said Brad Hunter, a housing analyst with Metrostudy in West Palm Beach.”

“In September, sales of existing homes in Broward County declined 46 percent to 401 from 741 a year ago, the Florida Association of Realtors said Wednesday. Statewide, home sales fell even further in other cities: in Miami, 53 percent; in Orlando, 48 percent, and Fort Myers, 53 percent.”
“‘Sellers need to get a grip,’ said David Dweck, head of the Boca Real Estate Investment Club. Homeowners are not likely to sell their homes if they're not ‘priced slightly below the market and your property is not beautiful,’ he said. ‘Buyers have their pick of the litter.’”

In an amusing article, The Sun-Sentinel reported on bitter flippers who making legal moves to try and recover their pre-construction deposits now that the housing market has tumbled:

“When Jennifer Wigand put down a deposit in 2005 for a condominium in a multi-use development called Veranda at Plantation, she hoped to quickly sell it and use the profits to help pay her law school loans.”

“Then the housing market plunged. Wigand said she wasn't worried because the developer had promised she could back out any time and her money would be returned. But in July, when she asked to take part in that program, Wigand said she was told it had been canceled.”

“Like an increasing number of buyers in South Florida, Wigand last month filed a lawsuit to get out of the deal. Last week, 20 other buyers in Veranda joined her suit.”

“‘I was disappointed that the developers and their agents went back on their word,’ said the 24-year-old Fort Lauderdale resident. ‘I just want my [$39,200] deposit back.’”

“Wigand's two-bedroom, $392,000 condo is scheduled to close on Oct. 30. She said she will forfeit her deposit if the court does not grant her relief.”

“Ori Onn, a real estate agent, signed a contract in 2005 to buy a one-bedroom Phase One condo for $295,000. He put down $59,000 and like Wigand, he planned to flip it.”

“‘They told me they would put it on a resale program if I didn't go through with the deal,’ Onn said, adding he tried but was unable to reach Veranda representatives four times in the last few months to take them up on the offer.”

In an effort to avert foreclosures, Countrywide is starting to deal with some troubled borrowers:

“Countrywide Financial, the nation's largest mortgage lender, said Tuesday it will begin calling borrowers to offer refinancing or modifications on $16 billion in loans with interest rates set to adjust by the end of 2008.”

“But as defaults and foreclosures snowball, the mortgage industry is under increasing pressure to do even more to help financially strapped borrowers hang on to their homes.”

“‘People are talking about it, saying it might be necessary, but there's not a lot of it going on,’ said Guy Cecala, publisher of Inside Mortgage Finance, an independent trade publication.”

“So far this year, Calabasas, Calif.-based Countrywide said it has completed about 20,000 loan modifications -- a figure that represents less than 5 percent of the more than 500,000 loans the lender reports were behind in payments as of last month.”

“The figure amounts to about 24 percent of the roughly 82,000 loans the company said were in foreclosure.”

Now that homeowners no longer own homes that they can use as ATMs, the automobile and boating industries are suffering. Yesterday, local auto dealer giant, AutoNation, reported:

“The slumping housing market continues to leave vehicle sales in the slow lane at Fort Lauderdale's AutoNation.”

“AutoNation sold 9,632 fewer new vehicles in the quarter ended Sept. 30 compared to a year ago, a decline of almost 10 percent.”

“That drop was driven by softness in Florida and California, which account for half of AutoNation's new-vehicle business and where the housing slump has been most severe. Sales were down 11 percent in those two states.”

“Falling home values mean consumers can't as easily tap the equity to buy vehicles. And the construction slowdown has spilled over to light-truck sales.”

“‘Things will be difficult for at least [another] year,’ said Mike Jackson, AutoNation's chairman and chief executive. ‘There is no shortcut to better days, but the stabilization process has begun,’ because of last month's interest rate cut by the Federal Reserve. Still, he said further cuts are needed.”

Sales in the boating industry show which financial classes are being affected by the housing downturn. The Miami Herald reports:

“As the housing slump and the sputtering U.S. economy spur consumers to cut back, much of the boating industry is in the doldrums. The number of powerboats sold is expected to plunge about 10 percent this year, and many exhibitors at the show, which opens Thursday, are cautious about prospects.”

“Yet builders of superyachts -- boats 80 feet or longer -- have full order books with delivery dates well into the next decade.”

“‘The megayacht market is very resilient,’ says Frank Herhold, executive director of the Marine Industries Association of South Florida, which owns the Fort Lauderdale show, the world's largest in terms of exhibition space. ‘It looks like full speed ahead.’”