First time in 2 years: Tampa home prices don't fall

A surprise in Tuesday's release of the S&P/Case Shiller home price index: Tampa home prices remained flat from June to July, the first time the region hasn't experienced a month-by-month decline since August 2006.

Just a one month reprieve to be followed by further price plunges? Perhaps. The glut of homes on the market suggests prices will keep falling, though no one knows by how much.

And Tampa area home prices didn't look so good when measured year over year. From July 2007 to July 2008, prices plopped 19.4 percent. Cities that performed worse than us: Miami, Los Angeles, Las Vegas, Phoenix, San Francisco and San Diego.

Case Shiller publishes a 20-city index of which Tampa is a part. In July, 14 of the 20 cities showed monthly price declines. So we were in pretty select company for a change.

Here's a link to the index for July

Trump dumps Tampa tower

New York tycoon Donald Trump formally cut his ties to Trump Tower Tampa by agreeing to a mediation deal Monday with former Tampa business partner SimDag-Robel LLC.

Neither side got everything it wanted. Trump sued in May 2007 to recover more than $2-million in licensing fees SimDag was supposed to pay for the right to use Trump's name on the 52-story condo project.

SimDag launched a counter suit accusing Trump of breaching a long-standing confidentiality agreement by going public with his complaints against SimDag.

The tower was planned in 2005 as the biggest skyscraper in west-central Florida, but couldn't get a $200-million loan in the Florida condo glut. SimDag filed for Chapter 11 bankruptcy in June.

“It’s really off the drawing boards right now. That’s the economic reality of what’s happened,’’ SimDag's bankruptcy lawyer Jeffery Warren said of the tower.

“If SimDag wants to use the Trump brand again they'll need a new agreement,’’ Warren added.

Though the Tower deal is dead, SimDag is resisting an immediate sale of its 1.5-acre Tampa riverfront lot at 111 S. Ashley Drive. It prefers waiting until the real estate market improves to get a better price.

The mediation settlement, hammered out Monday by Trump's New York attorney Bernard Diamond, still needs ratification by SimDag's bankruptcy judge.

Good advice for tough times

One person's depression is another person's buying opportunity: Download cycle_of_market_emotions.pdf.

Why do we follow the pack and buy houses and stocks when they're fetching top prices? Aren't we the same people who buy two jars of mayo for the price of one and strip the clearance rack when $50 shirts get marked down to $5.99?

Forgive the amateur psychology, but as social animals I assume we crave the security of numbers, even if it means making wretched overpriced investments.

Big banks in deep foreclosure doo doo in Tampa area

Considering the national banking nightmare brought on by homeowners skipping their mortgage payments, I was curious how many problem real estate loans three of the biggest troubled lenders had in the Tampa Bay area.

Here's the guidelines I used. I decided to count "Lis Pendens" cases, typically how a bank initiates a lawsuit against a late-paying property owner. Not all such cases end in the confiscation of a house, but filing a Lis Pendens is a sign a loan hasn't been paid, sometimes for many months running. I started my Lis Pendens count on January 1, 2006, a rough marker for when the housing slump began.

So here's the extent of Washington Mutual, Countrywide and Wachovia's involvement in lis pendens cases in Pinellas, Pasco and Hillsborough counties the past 2 1/2 years:

• Washington Mutual: 2,077
• Countrywide: 3,200*
• Wachovia: 1,540

That's nearly 7,000 shaky home loans from just 3 lenders. Washington Mutual was bought last week by JP Morgan Chase, the former Chase Manhattan Bank. Countrywide was absorbed earlier this year by Bank of America. Wachovia is the latest buy-out victim, acquired today by Citigroup.

*Countrywide's number is approximate, and probably an undercount, since court records in Pasco wouldn't tabulate higher than 500. 

WaMu joins bankers butchers bill

You probably all know that Washington Mutual - a bank that gave mortgages away like penny candy the past few years - has expired and gone to meet its maker.

WaMu's many Tampa Bay area branches were humming along normally on Friday. To salvage the bank's operations, the government has arranged a shotgun wedding with J.P Morgan Chase & Co. Unfortunately we're fast running out of grooms willing to go to the altar with these bankrupt brides.

Take a look at this chart of bank failures over the past 8 years assembled by the Federal Deposit Insurance Corp. Note that Florida's only recent contribution to death row is First Priority Bank in Bradenton, which went kaput August 1.

But the list underestimates the troubles. Coast Bank, for example, was absorbed late last year for pennies on the dollar by First Banks of St. Louis. Based in Bradenton, Coast had a bunch of branches in our area.

It got into trouble financing no-money-down new home investment schemes near Port Charlotte. The housing market collapsed. The builders and investors bailed from their deals. Coast went broke.

Tampa Bay area home sales stop sliding in August

Tampa Bay area's median home price is back to what it was in December 2004, but those discounts helped keep home sales from falling in August.

Home sales in Pinellas, Pasco, Hillsborough and Hernando totaled 2,154 in August, no change from sales in August 2007, according to the Florida Association of Realtors.

This marked the fourth straight month that local sales were flat, fell slightly or rose slightly, suggesting that the market has flattened.

Low prices have been dealmakers in many cases. Tampa's median home price stood at $171,200 in August, 20 percent below the $214,100 median price in August 2007. Realtors say discounted foreclosure sales have helped drive much of the traffic.

“Sales have picked up significantly in several Florida and California markets,” says National Association of Realtors chief economist Lawrence Yun.

In Florida as a whole, sales were down 4 percent in August versus a year earlier. Sales were way up year over year in Fort Myers, Fort Lauderdale and Fort Pierce. Among the sales losers were Panama City (down 29 percent), Pensacola (down 31 percent) and Tallahassee (down 42 percent).

Here's a full Florida chart: Download august08.pdf

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Latest from Census: Florida third least affordable home owning state

Plenty of confirmation in the latest U.S. Census estimates for those who think housing is overpriced here.

The Census Bureau's 2007 American Community Survey says Florida is the third least affordable state for home owners. Nearly half of all Floridians pay more than 30 percent of their income on mortgage costs. Nationally, 37.5 percent of mortgage holders spend more than 30 percent of their income.

Is rent any better? Not really. Our state actually ranks first in the nation in lack of affordability. Close to 53 percent pay more than 30 percent of their income on rent and utilities.

The Census also breaks things down for the Tampa Bay area, but I never found away to rank our metro area against hundreds of others. Here's the raw numbers:

• Our median home price is $203,300, above the national median of $194,300
• Our median monthly mortgage costs are $1,523
• The percentage of people who spent more than 30 percent of income on mortgages in 46.2 percent

If you want to click around the Census site, here's a link. Scroll down a hair and find the survey results.

Builder loses $89-million, and it's good news!

Big time home builder Lennar, a Tampa Bay area mainstay, lost $89-million in its third quarter that ended Aug. 31. Sales were off by about half.

But all failure is relative. Lennar lost $513.9-million in the third quarter of 2007. Last year's disastrous performance was partly tied to the company's selling off or breaking contracts on land it no longer needed.

Locally, Lennar purged itself of 8,300 lots less than a year ago. The fire sale buyer was Tampa's Metro Development Group.

Lennar president Stuart Miller reported that the company's East division, which Florida occupies along with Virginia, Maryland and New Jersey, outperformed the rest of its divisions last summer.

But Miller emphasized that "the housing market continues to search for a bottom" and bemoaned lack of government action to stabilize home prices.

(He must have missed the proposal for taxpayers to assume $1-trillion in bad mortgages based on the two recent housing rescue plans. So much for corporate gratitude. )

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Florida loses 76,400 construction jobs in one year

If you doubted the economic slump was other than real-estate-related, guess again.

Almost half the state's job losses the past year were in construction, most of that housing-related. Between August 2007 and August 2008, 76,400 construction jobs melted away.

"Professional and business services" shed 31,200 jobs the past year. That's a broad category that includes accounting, architecture, engineering, information technology, secretarial, etc.

And for the not-so-bad: "Real estate, rental and leasing" actually gained jobs the past year. Seems the purge that began in early 2006 has ebbed. And, of course, hospitals kept hiring in droves. What would we do without the health care industry?

Here's the state's employment report released Friday: Download augempl.pdf

Several explanations why we're feeling the higher unemployment now and not a year ago when the housing industry was already in full retreat:

• Many of the first to be let go were undocumented workers able to migrate with ease. Their positions weren't always reflected on the employment/unemployment rolls
• Though sales were suffering a year ago, many projects continued on autopilot in 2007, their developers hoping for a fast turnaround.
• The credit crunch that unofficially began in August 2007 with the subprime meltdown was the start of a period of deeper unemployment. No loan, no project, no workers needed.

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Market madness: Prominent 34-story Tampa condo tower to go rental?

Developers of Element, the still-incomplete 34-story downtown Tampa condominium tower, are considering converting much of the building into apartments until the housing market improves.

A shortage of qualified buyers forced the hand of Novare-Intown Tampa Development LLC, whose completion of the neighboring SkyPoint condo tower was among the few success stories in the imploding urban condo market.

Novare is considering renting out units that range from 691 to 3,445 square feet, using the rental income to help cover its debts until the sales climate improves in a couple of years.

Christine Burdick, head of the Tampa Downtown Partnership, said the move makes sense: Better a vibrant apartment building than a half-empty condo tower.

"There are a lot of people not eligible for mortgages and there's a lot more renters," Burdick said. I think having people living downtown and contributing to its vibrancy is one of the objectives.

Work on Element is so far advanced that Novare plans to remove its tower crane this month from the construction site on Franklin Street. Though the building is nearly topped out, the interior work will stretch well into 2009.

Sales prices range from about $220,000 to nearly $1-million.

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Is bankrupt Channelside condo project really a bargain?

Talked today to a wealthy real estate developer who considered buying in The Place at Channelside, the insolvent Tampa condo complex up for auction Oct. 5 for a starting bid of $17.25-million.

His opinion? He won't touch it. The main reason? Property taxes. And the location isn't so hot, either.

A bankruptcy judge ordered the auction to dispense of 171 condos ranging from 596-square-foot studios to a 3,665-square-foot penthouse. The whole portfolio will be sold as one unit, and the average starting price of $100,000 per unit seemed attractive.

No so fast. My source pointed out that each unit comes with an undesired albatross: Hillsborough County and Tampa want about $5,000 a pop in taxes. That's a nearly $900,000 in annual carrying costs one may or may not be able to pass to renters.

The property appraiser considers the auction an emergency fix, and the sale doesn't qualify as an "arms length transaction" valid for taxing purposes.

The same developer also hates the location in a semi-industrial zone near the Port of Tampa. Waterfront is great, just not waterfront with an obvious oil slick.

Some history: Developer Fida Sirdar of Key Developers Group signed up buyers for The Place's two 8-story condo towers in 2005. It was to be 245 units in all.

But by 2007, buyers were suing by the dozens to back out of deals based on prices the market no longer could support. Denied sales, Sirdar sought refuge in bankruptcy. The judge ordered the auction to pay off debts.

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Another holy high roller charged in mortgage scam

From the office of Florida chief financial officer Alex Sink:

A Florida mortgage broker and her husband, a pastor and popular radio show host, are facing numerous felony charges stemming from a state investigation that found the couple allegedly scammed consumers in a real estate investment scheme.  Investigators said the couple has been enjoying expensive leased vehicles while sticking their “clients” with more than $1 million in mortgage debt.

Shalonda McGill and her husband Rodney McGill were arrested today on charges of Racketeering, first degree; Conspiracy to Commit Racketeering, first degree; Grand Theft, first degree; Grand Theft, third degree; and Obtaining a Mortgage by False Representation, third degree.  The Department of Financial Services’ (DFS) Division of Insurance Fraud and the Office of Financial Regulation (OFR) conducted the investigation.

“It appears that these individuals used their positions in the community to take advantage of people who trusted them,” said Florida Chief Financial Officer Alex Sink, who oversees DFS.  “The evidence our investigation uncovered indicates these two improved their own bottom line while financially devastating the Floridians they promised to help.”

The McGills are being held in the Martin County Jail, with bond set for each at $1.4 million.  Deputies with the Martin County Sheriff’s Department made the arrests during a traffic stop.

The McGills garnered clients through various programs including the Young Millionaire’s Group, Inc. (YMG); RSM Investment and Mortgage (RSM); and New Hope Outreach Center, Inc. (New Hope), all of which operated out of a facility in Jensen Beach.  Florida corporation documents identify Rodney McGill as president and Shalonda McGill as vice president of New Hope, which is incorporated as a non-profit church with the McGills listed as pastors. 

The investigation found that Rodney McGill, as president of YMG, solicited listeners through a daily local radio program on WJFP Radio.  He stated his purpose was to teach and mentor individuals on how to buy and sell real estate without any out-of-pocket expense, with the goal of earning $50,000 in 90 days.

In July 2006, investigators said, Rodney McGill solicited listeners of the radio show to call in and qualify, based on their credit, to become one of his “Fab 5.”  Callers allegedly were assured that they would learn McGill’s real estate investing “cash-out technique.” 

The McGills purchased real estate in Martin and St. Lucie counties, allegedly by preparing and submitting fraudulent loan applications, and then “flipped” the properties to the “Fab 5” for huge profits.  Based on the fraudulent loan applications, four mortgages were obtained in excess of the property’s actual worth, and the McGills allegedly skimmed off the profits leaving three members of the “Fab 5” with more than $1.115 million in mortgage payments they were unable to make.

Investigators said all of the properties are either in or are facing foreclosure. The buyers all believed they were part of the “Fab 5” and were learning the McGill’s real estate investing techniques. 


 

Hello Tampa: Developer's got about a billion to spend

Here's another 750 million reasons why Florida's not a has-been of the real estate world.

Palm Beach developer Kitson & Partners, backed by $750-million in pension fund money from a Chicago private equity firm, is going on a shopping spree in the Tampa Bay area.

Chief executive Syd Kitson's preference is to buy developed and undeveloped land large enough for 500 to 1,000 homes and medium-sized shopping centers anchored by supermarkets. He's looking at several Tampa deals worth tens of millions of dollars.

"We're looking for great locations that would be a good long-term investment," Kitson told the Times Tuesday. "We're patient. We're not out bargain hunting."

Kitson's name might sound familiar. The 6 foot-4-inch Wake Forest University graduate played offensive guard for the National Football League's Green Bay Packers and Dallas Cowboys from 1980-85.

In the business world, Kitson's best known for the massive Babcock Ranch project, approved for 19,000 homes and $6-million-square-feet of commercial development on 17,000 acres in Charlotte and Lee counties. He paid $700-million for the property 3 years ago and set aside most of the land for preservation.

"We're real bullish on Florida," Kitson said. "We're making a billion dollar investment in Florida in addition to the billion dollars we already have here."

Kitson said his company's latest injection of $750-million, courtesy of Chicago's Evergreen Real Estate Partners, allows him to pay cash and bypass the shaky credit market.

Unlike investors who will duck into and dive out of a market in a matter of a couple years, Kitson's views himself as a keeper. When it comes to residential lots, he wants to buy now and develop the land in time for an expected real estate turnaround in 2011.

"We're hoping to become the developer of choice for the builders when they'll need those lots again," he said.

 

Fed won't cut rates, home loans still cheap

The Federal Reserve on Tuesday declined to lower federal funds rate below 2 percent. That's what the government charges banks to borrow money.

The pressure was building on Bernanke & Co. to inject the economy with cheaper money to sooth Wall Street turmoil. But they held tight, realizing that the economy, thanks to volatile oil prices, has yet to slay the inflationary beast.

What's this mean for home loans? People with good credit can get a mortgage today for less than 6 percent. That's plenty good and historically extraordinary. We don't need an open monetary spigot at this point. You know where that got us in 2004-2005.

The Fed has been eager to buck up the dollar after its recent free fall, a plunge that's encouraged speculation in oil and gold. For all the talk of the dollar's demise as the world's currency, it's still needed as a stabilizing force.

Good for Bernanke.

Q&A: When Wall Street fails, we all suffer

The Times ran a Q&A addressing the Wall Street meltdown yesterday. The real estate market is far from immune. In fact, bad mortgages are directly responsible for the bankruptcies and mergers breaking out all over. A sample:

Didn't Lehman Brothers and Merrill Lynch get into trouble by investing in bad mortgages? Does their failure hurt my ability to buy and refinance a home?

It should be business as usual for people making their house payments on time. But home loans could get scarcer and refinancing options narrower. That's because banks, despite relatively low interest rates, are rationing credit. "As bad as the credit crunch was, it's going to get worse because any time banks see financial disarray, they're going to back off," said banking expert Ken Thomas in Miami. That could prolong the housing slump, and some economists like Thomas don't see a turnaround in Florida home prices until 2010.

Two Florida experts predict 2010-11 housing recovery

Florida housing was supposed to recover in 2007. Then everyone talked about 2008. Now 2009's looking a lot less bright and sunny if you believe a couple of economists I talked to yesterday.

Mark Vitner is an economist with Wachovia and an expert on the Florida market. He predicts Florida home sales will show improvement next year but that prices will likely not appreciate until 2010.

"We're at least half way or 2/3 through the correction,’’ Vitner told the Times. "We’re probably 2 years away from a solid recovery."

Vitner predicted a further tightening of housing credit with banks placing greater emphasis on a borrower's character. What's character? Well, remember when a guy put on his best suit to plead his case to the bank's loan officer? Expect more of that. If money is harder to come by, you have to compete for it. Leave the flip flops at home.

"We're moving into an era where relationships between a bank and its customers matter," Vitner said.

The other expert with a lot to say about housing was Ken Thomas, a banking wizard based in Miami who successfully called many of the state's bank failures like Coast Bank in Bradenton.

"I don’t see us hitting bottom till 2010,’’ Thomas opined this week. "And I don't see price appreciation until 2011. But Florida's still the fourth biggest state. We’ll be back.’’

Thomas compared the housing slump to a person who got a little cut on his leg, never got it treated, and watched it get infected.

He blames former Federal Reserve chairman Alan Greenspan for keeping interest rates too low for too long. Some of the pressure for keeping money cheap came from a White House hoping to pump up the economy post 9-11, Thomas said.

"When money is cheap strange things happen,’’ he said.

Local foreclosures high but down since last year

I'd call the news mixed from the foreclosure front: They were high in August -- 5,298 cases in the Tampa Bay area alone -- but that was down from 5,904 in August 2007 and 5,918 in July of this year.

The biggest improvement came in Pasco County, which had 37 percent fewer foreclosure cases this August than last. I live in Pasco and suspect the reason for the rosier scenario there is the huge price concessions you see. Banks are dumping lots of houses via short sale.

The Tampa Bay area ranked 34th in the nation in foreclosures, with such mortgage default affecting one in 244 households. We're pikers compared to Cape Coral-Fort Myers, which ranked sixth.

All these stats come from RealtyTrac. Most local foreclosure cases (3,676) were "lis pendens," which is when the bank first files suit against a homeowner after what is usually several months of missed payments.

Another 1,027 cases were sale notices, when banks announce they'll auction the property. Another 588 cases were homes confiscated by the bank. Not too pretty, but take heart that RealtyTrac counts each foreclosure filing on single properties as if they are different properties. So the numbers are exaggerated. I'd suggest the lis pendens are most telling, though a majority of these homes will not go full foreclosure.

Here's a spreadsheet with more details if your computer can read Microsoft Excel: Download realtytracaug.xls

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Swedish box: IKEA enters home building market

From Friday's St. Petersburg Times:

You've got to love Ikea's chutzpah, or whatever word they use to suggest presumptuousness on the 55th parallel.

After seducing millions of 20-somethings with its assemble-it-yourself white wood, stainless steel and plastic furnishings, the Swedish furniture giant is offering itself as a north-woods elixir for a real estate market gone mad.

Ikea's "BoKlok" subsidiary, a joint venture with Swedish construction giant Skanska, is ratcheting up sales of prefabricated, timber-frame homes starting at 500 square feet. In my book, that's barely large enough to set up Snoopy and Lassie in domestic doggy bliss. But thousands of Europeans swear by their chic, bleak boxes.

Ikea's selling point is affordability, but let's be clear that we're talking about a land-squeezed European's sense of affordability.

Realty company Coldwell Banker reminded us this week how much a typical-sized American suburban home costs Irishmen, Spaniards or Dutchmen. A 2,200-square-foot house costs well north of a million dollars in many major European cities. One of the most expensive markets was Bucharest, Romania. So when you hear a Swedish BoKlok home costs close to $200,000 for a one-bedroom or $325,000 for a three-bedroom, the reaction might just be "I'll take two, please."

We won't have to worry about Vikings dominating our housing market — yet. Ikea opens its Tampa superstore next year, but BoKlok is not yet part of the company's U.S. expansion plans.

I say let Ikea try its hand at the hammer. Sears used to sell "kit homes" from catalogs for a few hundred bucks a pop 100 years ago. Many of those homes still stand. Lowe's entered the same do-it-yourself market as part of the post-Hurricane Katrina reconstruction. The chain's "Katrina Cottages" are supposed to withstand 140 mph gusts.

Lowe's will sell you most of the materials to build a house for as little as $30,000. (But you'll have to supply labor, land, the slab, and heating and air conditioning. Try living without the blessings of Freon in the Louisiana bayous.)

Maybe in 10 years we'll stroll down Ligonberry Lane or Eric Bloodaxe Boulevard. You can only stomach so many Alhambra Terraces and Windemere Circles.

As a 40-something, I find IKEA overrated, its stuff fit mostly for kids furnishing their first apartments. But that pine end table I bought in 1991 is still standing, albeit covered with seed and guano from my daughter's bird cage.

Tampa home sales give a little back in August

After three straight months of year-over-year sales gains, the Tampa area housing market took a little dip in August.

The Greater Tampa Association of Realtors reported home sales of 1,327 in August, 4 percent below the 1,384 sales in August 2007.

Average sales prices continued to slide both month over month and year over year. The typical home price stood at $213,002 in August. A year earlier homes sold for an average of $262,629. That's a drop of 19 percent.

The last time homes sold for so little was February 2005.

August seemed to snip off a budding recovery. Sales were up year to year in May, June and July. But I wouldn't draw too many conclusions from 57 fewer sales. Hey, it was an awfully rainy August ...

An informative chart here: Download gtaraug.pdf

Centex, Pulte, Weekley dubbed top builders in Tampa

The top builders for customer satisfaction in the Tampa Bay area are Centex Homes, Pulte Homes and David Weekley Homes.

So say the hundreds of people who filled out J.D. Power and Associates 2008 builder customer satisfaction survey.

Here's the list

A few thoughts. Just because your builder targets the budget market doesn't mean it's hopeless with a hammer. Centex is hardly an upscale builder, but collected the highest score of "5" in eight of 10 categories having to do with workmanship, customer service, price and amenities.

The lowest ranked builders in the Tampa market were Beazer, KB, Mercedes, Ryland, D.R. Horton and Maronda. All scored 2 out of 5 in overall customer satisfaction, which J.D. Power considers below average.

Strangely enough, KB was one of the top ranked builders in the Jacksonville survey, which just goes to show that brand is no guaranteed badge of quality or ineptitude.

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Tampa homes seem cheap compared to County Cork

I get a kick out of this yearly Coldwell Banker home price survey that takes in hundreds of national and international markets. I'm always amazed how places like Dublin, Ireland, which I anachronistically associate with jangly horse carts and thatched roofs, are unaffordable to all but Bill Gates' richer brother.

In each market, Coldwell seeks out 2,200-square-foot houses with four bedrooms and 2.5 bathrooms fit for a midlevel executive. In the United States, La Jolla, Calif., tops the least affordable category with an average price of $1.8-million. Sioux City, Iowa, is most affordable at $133,000.

As always seems to be the case, Tampa is lost in the middle of the pack. With an average price of $285,000, we're ranked 146 out of 315. Last year our average price of $350,000 placed us 177th.

Let's concede you can find a four-bedroom house for much less than $285,000. But if we're talking junior executive homes in a nice Tampa neighborhood, that's about right.

If you want real shockers look to Europe. More than $1.6-million for a four-bedroom in Dublin? Nearly $2-million for a post-Communist spread in Bucharest, Romania? Maybe it's not too surprising when you realize most people in Eastern Europe live in apartments to shame Snoopy and bang their shins on the kitchen table as they crawl out of bed.

Coldwell makes no claims that this is some sort of super scientific survey. The company samples about 10 to 15 sales from each market. It's meant as a tool to compare what you'll pay if you're facing a job transfer at home or abroad.

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Government takeover of trouble lenders necessary evil

Is the federal government's bailout of Fannie Mae and Freddie Mac a necessary adjustment to stabilize the shaking credit and housing market?

Or does it herald inefficient and costly meddling of government in private enterprise?

It's probably both. But we didn't have much of a choice. These two companies have become so important to priming the housing market in Florida and elsewhere, we couldn't afford to let them fail, even if it costs the taxpayers tens of billions of dollars. Sounds a lot like the Savings & Loan crisis of 20 years ago.

Congress created the two companies to help more Americans buy homes. They now provide money for about 3/4 of all new home loans. They do so by buying loans from the private market. That's what got them into trouble. Countrywide Financial Corp., recently bought by Bank of America, supplied the most loans to Fannie Mae, about 29% of its business last year. Freddie Mac also relied on Countrywide, but to a lesser extent. As you know, Countrywide made tons of the risky loans that helped sink the housing market.

Though we dwell on the housing market here, the real estate and credit markets are obviously attached at the hip. I've got dozens of stories of house hunters who've found an inexpensive house but can't get a loan. Though exaggerated by builders and Realtors, the subprime meltdown last summer really did seem blot out the first rays of a tentative recovery.

Of course, it's one big chicken-and-egg quagmire: People bought overpriced homes with stupid, short-sighted loans. Prices necessarily fell. Unable to make their payments or refinance, people let homes drift into foreclosure. Banks lose their shirts and tighten credit. Home sales get worse.

Here's a pretty interesting take from the Wall Street Journal.

Tampa mortgage fraudster heads to the big house

"Attorney General Bill McCollum today announced that a
former vice president of a subsidiary of one of the nation’s largest
subprime lenders has been sentenced to 18 years in prison for his
involvement in a mortgage fraud scheme that spanned more than two years
and involved loans in Hillsborough, Lee, Pinellas and Polk counties.

Orson Benn, former vice president of Argent Mortgage Company, was part of an
elaborate mortgage fraud scheme that involved co-defendant Scott Almeida
and multiple co-defendants. The three-year investigation began when victims filed complaints about
incomplete or substandard construction work being performed by
construction companies affiliated with Almeida. Almeida and his associates
secured mortgages for homeowners to finance the home repair projects by
submitting fraudulent documents to Argent Mortgage Company.

Benn, as vice president of Argent, approved or oversaw the approval of the fraudulent
loan applications. Investigators followed the trail of fraudulent
applications back to the organized criminal operation which submitted
nearly 130 loans to Argent that were funded for approximately $13 million.

After the initial investigation of Benn’s activities, the investigation
was expanded to include additional targets that were actively engaged in
fraud with Benn. Benn was ultimately charged with racketeering, conspiracy
to commit racketeering, and grand theft and must serve 12 years of
probation after his prison sentence has been completed. Co-defendants
Frank Giffone and Adrienne White have pleaded guilty to similar charges
and will be sentenced later.  Co-defendant Bradford Peck pleaded
guilty and has already been sentenced to eight years in prison. Samuel
Green, a fourth co-defendant, was convicted by a jury in August and will
be sentenced in October. Almeida pleaded guilty in October 2007 and will
serve 10 years in prison."

National foreclosure rate highest in 3 decades

Driven by homeowners in Florida and California, the national home delinquency rate set a new record in the second quarter of this year by coming in at 6.41 percent of all mortgage loans.

Foreclosures have tripled since the housing boom ended in 2005 and now represent 2.75 percent of home mortgages.

The Mortgage Bankers Association, which collects the stats, defines delinquencies as loans on which payments are at least one month overdue. (But which haven't entered the foreclosure process yet). So it's sort of a preview of upcoming foreclosures, though many people will straighten out their troubles before their cases goes to court.

More details from a Bloomberg story here. For a more technical read, here's a direct link to the mortgage bankers.

Maybe Barbie and Ken can be the listing agents

It's desperation time for some sellers. Check out this couple that made a doll house replica of their house as a marketing tool. If you buy the doll house for more than $150,000, you get the real house for "free."

Home price indexes concur: Tampa prices down 23- to 27 percent

When it comes to tracking the housing market, every company hypes its unique way of counting home prices changes in the Tampa-St. Petersburg-Clearwater market. But what's remarkable is how closely the various counting methods shadow each other. Observe:

• The Florida Association of Realtors says Tampa prices have declined 25.4 percent from a peak in June 2006.
• The S&P Case Shiller home price index says local prices have dropped 26.5 percent from a peak in July 2006.
• Radar Logic Inc., a New York firm that provides housing data to traders, said prices here are off 23 percent from a peak in June 2008.

Some challenge the Realtors' price reports, arguing they omit For Sale By Owner deals and others not handled by their membership.

Many trumpet Case Shiller as a more accurate alternative since that index keeps track of repeat sales of individual properties.

Radar Logic's approach is to highlight changes in average price per square foot, which it says has dropped from $146.48 to $112.89 in the Tampa area.

But for Average Joe Home Buyer (as opposed to traders and investors making money on tiny percentage shifts) notice the relatively scant difference between the home indexes.

Recent trends on all these indexes suggest overall prices are still declining in our market. When will we hit bottom? Hard to say. But expect sales of financially distressed homes - including foreclosure cases - to weigh prices down for the near term. 

In its index of 25 metro areas, which includes Tampa, Rader Logic predicts home price weakness extending into 2009, stability in 2010 and renewed price growth in 2011.

Federal Reserve: Florida no longer South's worst home construction market

The worst of the housing crisis may have passed for Florida.

So suggests the Federal Reserve in its most recent "beige book," its summary of national economic activity that came out Wednesday.

The Fed divides the country into 12 districts. We're part of the sixth district centered in Atlanta and comprising all of Florida, Alabama and Georgia and parts of Tennessee, Mississippi and Louisiana. Here's the mixed news dealing with the housing industry in Florida:

"Reports from homebuilders and Realtors indicated that new and existing home sales remained below year-earlier levels for July and August. Contacts reported that sales activity was mixed; some District contacts noted further weakening while others reported modest strengthening. Weakness was most pronounced among Georgia builders. Modest improvements in new and existing home sales activity were noted by some Florida contacts. The majority of builders reported that construction was significantly lower than a year earlier. Overall, new home inventories continued to fall while existing home inventories rose slightly. Home prices continued to decline across much of the District. The outlook for residential sales and construction over the next several months remained subdued; however, most contacts did not anticipate further significant weakening."

Home builder stocks could be bargain. Come again?

Is it time to buy home builder stocks again? This from Kiplinger.com:

"The argument for buying building stocks now isn't that home prices are about to stabilize. The case for the stocks is that they have fallen so much -- more than 70% -- since peaking in 2005, additional home-price declines are already reflected in the share prices. If the patterns of previous investing bubbles hold this time, the potential is huge."

Realtors report 28 percent surge in Tampa online home searches

Maybe this is another sign of the housing market starting to turn. Maybe it's just another semi-relevant factoid with little bearing on the real economy.

Anyway, Realtor.com, the official home search site of the National Association of Realtors, said Tampa's search traffic was up 28 percent from July 2007 to July 2008. Nationally, searches were up 9.5 percent year over year, so we've had triple the average traffic.

The makes us the 34th most improved market in terms of online searches. Naples and Cape Coral-Ft. Myers both made the top ten. Here's the list showing where Realtor.com searches are up by the highest percentages.

Stockton-Lodi, CA 140.9%
Las Vegas, NV 93.9%
Riverside-San Bernardino, CA 86.3%
Oakland, CA 73.6%
San Jose, CA 71.4%
Fort Myers-Cape Coral, FL 69.5%
Naples, FL 66.2%
Sacramento, CA 65.0%
Orange County, CA 62.8%
Miami, FL 56.7%

Neighborhood Watch shows a decent July

From Times news technologist Matt Waite:

Pinellas home sellers had a better July than June and prices in Pasco hung tough after after steep declines in previous months, according to updated data on Tampabay.com's Neighborhood Watch. The midpoint price of a single family house in Pinellas ticked up 1.6 percent from June to July, while the same point in Pasco slid a mere $200.

New sales, trends and maps for more than 200 neighborhoods in Pinellas and Pasco are updated weekly.

Census: We'll need tens of millions more houses

Want proof that the housing crisis is really only a short-term phenomenon? By 2050 the U.S. will have added more than 100-million new residents, the result mostly of immigration. Those are the Census projections highlighted in a Washington Post story.

"An increase of 135 million people by 2050 is equivalent to the entire populations of Mexico and Canada moving here. Assuming the same ratio of population to infrastructure that exists today, the United States would need to build and pay for 36,000 schools. We would need to develop enough land to accommodate 52 million new housing units, along with places for the people who lived in them to shop and work. We would also have to construct enough roads to handle 106 million more vehicles."

We can debate the desirability of importing tens of millions of new people from mostly poor countries. But what isn't up for debate is that they'll need to live somewhere. As a gateway to Latin America, Florida will likely inherit a disproportionate share of new immigrants.

Expect the typical immigrant pattern: Newcomers fill the inner-city neighborhoods vacated by the last immigration wave that's intent moving on up to the suburbs.