They're even following our real estate downturn in the UK. The Financial Times reports, "The slick real estate professionals who congregate each Friday night at the waterfront restaurants in Miami’s financial district seem unaware or unconcerned that they are relaxing near a crime scene."
"Three buildings in the Brickell area saw 166 units go into foreclosure last year with borrowers owing a total of $120m (£59m, €77m) on the properties."
"These unusually high default rates have attracted the attention of fraud investigators. 'There’s not just one or two cases [of mortgage fraud] in each building – there are 10 or 15,' said Lucas Lechuga, a Miami real estate broker. 'It’s a lot more widespread than people thought.'"
"One in every 29 homes in Miami-Dade County is now in foreclosure and the authorities estimate up to 30 per cent of all foreclosed properties in Miami-Dade county have been affected by fraud. A report yesterday by the Mortgage Asset Research Institute found that mortgage fraud rates in Florida outstripped every other state as a proportion of all loans taken out in 2007."
"Prices are falling faster in Miami than in any other city in the United States, with the latest Case-Shiller house price index showing the market dropped 17.5 per cent over the past year."
Friday, March 14, 2008
Million-Dollar Foreclosures
Forbes reports, "In Detroit and Southern California, foreclosure opportunists are going after cheap homes in downtrodden neighborhoods, which are selling in the five-figure range."
"But there are plenty of million dollar-plus homes out there, in good neighborhoods, which have fallen into foreclosure as the result of shoddy lending practices, speculative buyers and homeowners walking away from a negative equity situation."
"Foreclosures have always been present in the top end of the market, but what best accounts for the increase are negative equity situations. For homes around the million-dollar mark, especially those derided as McMansions, it's a case of the home no longer matching the value of the loan. Many of the million dollar-plus homes listed as foreclosures and REOs were built in the last five years and are now worth significantly less than the inflated prices the owners originally paid. But it's not necessarily that buyers didn't put down enough money or had a piggyback loan; the owners may have owed more on the house than it was worth, sinking them into a negative equity situation."
"But foreclosures are not all bad news for the high-end real estate market. Nelson Gonzalez, a broker with Esslinger-Wooten-Maxwell, specializing in Miami Beach, says that the rash of foreclosures in Florida, which has the second-highest foreclosure rate in the country, has driven interest from out-of-town and foreign buyers looking to snag a deal. 'They think that every house in Florida is in foreclosure,' he says. 'The offers we're getting are fairly decent, but the sellers are not coming down yet.'"
As you can see, the Realtors® are still claiming that waves of rich, foreign investors are coming in droves to South Florida with suitcases full of cash to snatch up local bargains. If these rich foreigners really existed, why would we still be seeing record low sales?
"But there are plenty of million dollar-plus homes out there, in good neighborhoods, which have fallen into foreclosure as the result of shoddy lending practices, speculative buyers and homeowners walking away from a negative equity situation."
"Foreclosures have always been present in the top end of the market, but what best accounts for the increase are negative equity situations. For homes around the million-dollar mark, especially those derided as McMansions, it's a case of the home no longer matching the value of the loan. Many of the million dollar-plus homes listed as foreclosures and REOs were built in the last five years and are now worth significantly less than the inflated prices the owners originally paid. But it's not necessarily that buyers didn't put down enough money or had a piggyback loan; the owners may have owed more on the house than it was worth, sinking them into a negative equity situation."
"But foreclosures are not all bad news for the high-end real estate market. Nelson Gonzalez, a broker with Esslinger-Wooten-Maxwell, specializing in Miami Beach, says that the rash of foreclosures in Florida, which has the second-highest foreclosure rate in the country, has driven interest from out-of-town and foreign buyers looking to snag a deal. 'They think that every house in Florida is in foreclosure,' he says. 'The offers we're getting are fairly decent, but the sellers are not coming down yet.'"
As you can see, the Realtors® are still claiming that waves of rich, foreign investors are coming in droves to South Florida with suitcases full of cash to snatch up local bargains. If these rich foreigners really existed, why would we still be seeing record low sales?
Florida is tops in mortgage fraud
This report from the Miami Herald is hardly surprising to anyone who has been following South Florida real estate: "For the second consecutive year, Florida ranked No. 1 in the country for mortgage fraud, as the stalled housing market quickly pushed both prevaricating borrowers and seasoned criminals into foreclosure."
"Lenders reported more than twice the number of suspected fraud cases in Florida than would otherwise be considered average, based on the number of loans originated here in 2007, according to a report Thursday by the Mortgage Asset Research Institute and an industry group of the nation's biggest lenders."
"The fallout is showing up in state's historic foreclosure rates. The report notes that fraud and delinquency rates are closely linked, as borrowers who may have lied to qualify for a home loan find themselves unable to make their monthly payments and criminals abandon properties after they have skimmed the proceeds of illegal mortgage transactions."
Florida also ranked second in the number of new foreclosures filed in the last three months of last year, and third in the total number of loans in foreclosure at the end of 2007, the Mortgage Bankers Association reported.
"Lenders reported more than twice the number of suspected fraud cases in Florida than would otherwise be considered average, based on the number of loans originated here in 2007, according to a report Thursday by the Mortgage Asset Research Institute and an industry group of the nation's biggest lenders."
"The fallout is showing up in state's historic foreclosure rates. The report notes that fraud and delinquency rates are closely linked, as borrowers who may have lied to qualify for a home loan find themselves unable to make their monthly payments and criminals abandon properties after they have skimmed the proceeds of illegal mortgage transactions."
Florida also ranked second in the number of new foreclosures filed in the last three months of last year, and third in the total number of loans in foreclosure at the end of 2007, the Mortgage Bankers Association reported.
Developers continue to build
Despite record vacancy and inventory levels, the developers continue to add to insanity.
The Sun-Sentinel reports, "Housing slump. Burst bubble. Real estate decline. Really?"
"Developers in Fort Lauderdale sought and obtained approvals Tuesday for 629 residential condos or apartments that had been approved several years ago in slightly different form but never built. The projects will move forward, the developers say, even in a real estate market that has frightened off some investors."
"Despite a lot of bad rap about the real estate market, developers continue to submit building plans in Fort Lauderdale City Hall for new multi-family residences, while construction continues on hundreds of condo units approved in recent years."
"For example, construction workers this week hammered away on twin condos at the beach, completing the top floor of the 172-unit Sapphire condo and hoisting the ceremonial tree to the rooftop. Across from Holiday Park on Sunrise Boulevard, the same developer, Joel Altman, has a rental complex called Satori under construction."
"Developer and lawyer Ron Mastriana knows about slump-time building. Mastriana just finished Coconut Grove Residences on Holiday Drive, with 57 condos on the beach sand in Fort Lauderdale. And his 63-unit Bamboo Flats downtown, on Third Avenue, just opened as well."
The Sun-Sentinel reports, "Housing slump. Burst bubble. Real estate decline. Really?"
"Developers in Fort Lauderdale sought and obtained approvals Tuesday for 629 residential condos or apartments that had been approved several years ago in slightly different form but never built. The projects will move forward, the developers say, even in a real estate market that has frightened off some investors."
"Despite a lot of bad rap about the real estate market, developers continue to submit building plans in Fort Lauderdale City Hall for new multi-family residences, while construction continues on hundreds of condo units approved in recent years."
"For example, construction workers this week hammered away on twin condos at the beach, completing the top floor of the 172-unit Sapphire condo and hoisting the ceremonial tree to the rooftop. Across from Holiday Park on Sunrise Boulevard, the same developer, Joel Altman, has a rental complex called Satori under construction."
"Developer and lawyer Ron Mastriana knows about slump-time building. Mastriana just finished Coconut Grove Residences on Holiday Drive, with 57 condos on the beach sand in Fort Lauderdale. And his 63-unit Bamboo Flats downtown, on Third Avenue, just opened as well."
Wednesday, March 12, 2008
Near-riot over Boca Raton housing vouchers sends 9 to hospital
The housing bubble affect all social classes. The ultra-high-end home being sold at auction. Meanwhile, at the other end of spectrum, desperate citizens are near rioting as they search for the affordable housing.
The Sun-Sentinel reports, "In a sign of the desperation facing Palm Beach County's poor, hundreds, maybe thousands, descended on the city Wednesday for a chance to get on a subsidized-housing waiting list.The wait nearly turned ugly when housing officials told hundreds still on line Wednesday morning that they only had enough applications left for those with disabilities. The crowd surged forward, almost crushing mothers with children and people in wheel chairs, said Judith Aigen, Boca Raton Housing Authority executive director. 'I think a riot was about to happen,' she said."
"It was then that police in riot gear stepped in, dispersing the angry crowd. Boca Raton Fire Rescue took nine people to area hospitals for medical conditions such as seizures, fainting or diabetic shock, said fire Chief Tom Wood. Police arrested two people and charged them with resisting arrest without violence, said police Chief Dan Alexander. No one foresaw the response to an announcement by the housing agency that it planned to give out 600 applications for its Housing Choice Voucher program. Only 200 of them will be accepted."
Click here to watch the Palm Beach Post's video of the incident.
The Sun-Sentinel reports, "In a sign of the desperation facing Palm Beach County's poor, hundreds, maybe thousands, descended on the city Wednesday for a chance to get on a subsidized-housing waiting list.The wait nearly turned ugly when housing officials told hundreds still on line Wednesday morning that they only had enough applications left for those with disabilities. The crowd surged forward, almost crushing mothers with children and people in wheel chairs, said Judith Aigen, Boca Raton Housing Authority executive director. 'I think a riot was about to happen,' she said."
"It was then that police in riot gear stepped in, dispersing the angry crowd. Boca Raton Fire Rescue took nine people to area hospitals for medical conditions such as seizures, fainting or diabetic shock, said fire Chief Tom Wood. Police arrested two people and charged them with resisting arrest without violence, said police Chief Dan Alexander. No one foresaw the response to an announcement by the housing agency that it planned to give out 600 applications for its Housing Choice Voucher program. Only 200 of them will be accepted."
Click here to watch the Palm Beach Post's video of the incident.
CBS 4 runs a piece on YouWalkAway.com
CBS 4 ran the video in the link below on a recent newscast. You'll find the video on the right-hand side of the video:
Video on YouWalkAway.com
Video on YouWalkAway.com
Luxury homes in auction around South Florida
Even the high-end properties are falling victim to the housing downturn.
The Sun-Sentinel reports, "Even sellers of high-end properties are struggling to find buyers during South Florida's housing downturn.Nestler Poletto Sotheby's International Realty of Boca Raton and Miami-based Sol Sotheby's International Realty said Monday they will hold a luxury home auction for Palm Beach, Broward and Miami-Dade counties on March 28.More than $200 million in properties will be for sale, and some of them will go to the highest bidder, regardless of price. Frustrated by the glut of homes for sale, more sellers are choosing auctions as a way to unload their homes. The March 28 event will be at the Bahia Mar Beach Resort, 801 Seabreeze Blvd. in Fort Lauderdale. It will feature large-screen videos and gourmet beverages and hors d'oeuvres."
The Sun-Sentinel reports, "Even sellers of high-end properties are struggling to find buyers during South Florida's housing downturn.Nestler Poletto Sotheby's International Realty of Boca Raton and Miami-based Sol Sotheby's International Realty said Monday they will hold a luxury home auction for Palm Beach, Broward and Miami-Dade counties on March 28.More than $200 million in properties will be for sale, and some of them will go to the highest bidder, regardless of price. Frustrated by the glut of homes for sale, more sellers are choosing auctions as a way to unload their homes. The March 28 event will be at the Bahia Mar Beach Resort, 801 Seabreeze Blvd. in Fort Lauderdale. It will feature large-screen videos and gourmet beverages and hors d'oeuvres."
Losses Stall Affordable-Housing Projects in Miami
The Wall Street Journal reports, "Affordable housing is the latest victim of the credit crunch that is reverberating through financial markets."
"Projects are being canceled because some of the nation's largest financial companies, including Fannie Mae, Freddie Mac and Bank of America, have scaled back their participation in the federal government's largest and most prolific affordable housing tax-credit program, designed to boost construction of below-market-rent apartments."
"Carlisle Development Group, a developer that manages 6,000 government-subsidized units in Florida, recently shelved the first phase of a $100 million project it was planning in Miami with the local YMCA. It would have provided 355 affordable housing units. The housing authority in Pueblo, Colo., delayed a 25-unit project for senior citizens this week. Developers report similar tales around the country."
"'I've got a lot of screwed up tax-credit deals,' says Matthew Greer, chief executive of Carlisle. On the YMCA project, he qualified for $74 million in tax credits but the investor who had committed to taking the credits walked away. 'There's lack of liquidity,' says Mr. Greer. "
"Projects are being canceled because some of the nation's largest financial companies, including Fannie Mae, Freddie Mac and Bank of America, have scaled back their participation in the federal government's largest and most prolific affordable housing tax-credit program, designed to boost construction of below-market-rent apartments."
"Carlisle Development Group, a developer that manages 6,000 government-subsidized units in Florida, recently shelved the first phase of a $100 million project it was planning in Miami with the local YMCA. It would have provided 355 affordable housing units. The housing authority in Pueblo, Colo., delayed a 25-unit project for senior citizens this week. Developers report similar tales around the country."
"'I've got a lot of screwed up tax-credit deals,' says Matthew Greer, chief executive of Carlisle. On the YMCA project, he qualified for $74 million in tax credits but the investor who had committed to taking the credits walked away. 'There's lack of liquidity,' says Mr. Greer. "
Tousa wins bankruptcy court OK to sell interest in Florida property
The Sun-Sentinel reports, "Florida homebuilder Tousa Inc. won bankruptcy court approval to sell a note it holds on a piece of property in one of Orlando's most popular tourist areas for $13.5 million.Bankruptcy Court in Fort Lauderdale on Thursday said Tousa can sell the note to PRN Real Estate & Investments Ltd, a Florida company."
"Tousa sought to sell the note after the note's issuer, which pledged the debt as part of the purchase of the Orlando property, defaulted on the note."
"In court papers filed last month, Tousa said that, by selling the note, it would avoid having to initiate a lengthy foreclosure action against the note's issuer. The company said PRN's $13.5 million bid was its best option in spite of a $2.8 million shortfall between the offer and the note's face value of $16.3 million."
"Tousa sought to sell the note after the note's issuer, which pledged the debt as part of the purchase of the Orlando property, defaulted on the note."
"In court papers filed last month, Tousa said that, by selling the note, it would avoid having to initiate a lengthy foreclosure action against the note's issuer. The company said PRN's $13.5 million bid was its best option in spite of a $2.8 million shortfall between the offer and the note's face value of $16.3 million."
Tuesday, March 11, 2008
Today's Real Estate News
Remember when Realtors® used to tell us to "Buy Now" because South Florida was running out of land?
The Daily Business Review now reports:
"Now that residential development has hit the wall, builders and lenders are partners in misery. Developers in the field — from small-scale operators to national home-builders — who aggressively acquired land during the go-go years of the early and mid-2000s, are now stuck with hundreds of acres of land they have no use for and cannot afford to hold."
"Lenders have already taken title to numerous parcels and with a wave of land loans coming due, the worst is yet to come."
"Local experts point out that most overpriced land deals transpired at the peak of the residential market in late 2005 and early 2006, just before home-builders began to realize the sector was about to crater."
"Hundreds of residential parcels in South Florida are for sale. Some have been on the market for more than a year, a few for as long as two years. Most major publicly traded companies like Lennar, Centex Homes and Pacific Standard have dumped tracts for much less than what they paid during the housing boom, and have written off millions of dollars in deposits on land deals they abandoned."
The Daily Business Review now reports:
"Now that residential development has hit the wall, builders and lenders are partners in misery. Developers in the field — from small-scale operators to national home-builders — who aggressively acquired land during the go-go years of the early and mid-2000s, are now stuck with hundreds of acres of land they have no use for and cannot afford to hold."
"Lenders have already taken title to numerous parcels and with a wave of land loans coming due, the worst is yet to come."
"Local experts point out that most overpriced land deals transpired at the peak of the residential market in late 2005 and early 2006, just before home-builders began to realize the sector was about to crater."
"Hundreds of residential parcels in South Florida are for sale. Some have been on the market for more than a year, a few for as long as two years. Most major publicly traded companies like Lennar, Centex Homes and Pacific Standard have dumped tracts for much less than what they paid during the housing boom, and have written off millions of dollars in deposits on land deals they abandoned."
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