Mercedes Homes files for Chapter 11 bankruptcy

Mercedes Homes, the Melbourne-based private builder that thrived in the Tampa suburbs during the housing boom, filed this week for Chapter 11 bankruptcy protection in South Florida.

The builder numbered its creditors at between 1,000 and 5,000. Fifth Third Bank is owed $7.1-million. 84 Lumber, due $615,000 from Mercedes, is among the contractors owed the biggest bucks.

Unlike Windjammer Homes, which filed to dissolve itself this week, Mercedes clearly intends to stay in business. The bankruptcy filing notes that it's hiring financial advisers to restructure it debts on the assumption every creditor will be made whole.

After covering the housing industry for many years, I admit I liked the Spanish-style homes Mercedes built up in Pasco County. A couple friends of mine live in them.

Mercedes is at least fifth private local builder either filing for bankruptcy of going out of business. The big national publically-traded builders like Pulte, Lennar and KB Homes, though financially strained, seem to have the money to outlast most private builders.

Click here to read Mercedes' main bankruptcy filing: Download mercedes.pdf  

Windjammer Home Builders going out of business

Another private luxury home builder has gone out of business, the victim of the industry-wide sclerosis that's robbed builders of their lifeblood.

Windjammer Home Builders built in such pricey enclaves as Lake Jovita and Grey Hawk at Lake Polo in Pasco County. Far from being an upstart in the business. President Robert Vause founded the company, based in New Port Richey, in the 1980s.

Sales had been dwindling since peaking in 2006 at $31-million. In 2007, income had dropped to $19-million. Last year sales barely surpassed $7-million.

Windjammer was swamped with a couple dozen lawsuits from contractors, banks and taxing authorities seeking payment. According to his Chapter 7 bankruptcy filing on Thursday, Vause owed $7.5-million, including about $2-million each to lenders BB&T, SunTrust Bank and Whitney National Bank.

Pasco and Hernando counties have been dunning Windjammer for $91,000 in delinquent property taxes.

The list of defunct Tampa area builders is growing longer. Casualties in the past year include Nohl Crest Homes, Tripp Trademark Homes and Smith Family Homes.

WCI Communities and Engle Homes have filed for Chapter 11 bankruptcy and intend to stay in business. Other builders, including McCar Homes, have pretty much ceased new construction.

National relocation survey: Tampa still top choice

According to this USA Today story, a Pew survey found most Americans would like to live somewhere else. And guess what? Tampa was ranked as the fifth most popular place people would like to move to, favored by 34 percent of those surveyed. Orlando was fourth.

That's good news for Florida for whenever the housing market recuperates. Here's one key section:

In addition to Denver, favorite cities among Republicans are Phoenix, Orlando and San Antonio. Half of all liberals would like to live in San Francisco, more than double the share of conservatives. San Diego, once a bastion of conservatism, appeals to Democrats, liberals and moderates. "Good weather and the beach triumphs over ideology," Morin says.

I also found this bit interesting considering all the calls from "smart growth" proponents to abandon the suburbs in favor of city centers:

"City residents disproportionately are more likely than people living in other types of communities to say they would prefer to live in a place other than a city," Morin says. "Fewer than half of all city residents say there is no better place to live than in a city."

A smaller proportion of women express the desire to live in the nation's largest cities. "Women are less drawn to big cities," says Robert Lang, co-director of the Metropolitan Institute at Virginia Tech. "It could be safety."

I'm not surprised by the anti-city findings. When I was single in my 20s, I preferred city life. That's where the bars, restaurants, movie theaters and unattached women were.

But when you become a Married with Children candidate, thoughts veer towards good suburbs with safe schools. You're no longer charmed by pools of vomit on the pavement, free-spending big city mayors and sirens 24-7.

Of course, most of the commentators who set the nation's cultural tempo live in big cities and tilt their coverage accordingly. Inner cities are not dens of depravity. But neither are the suburbs, all the Hollywood, American Beauty propaganda to the contrary.

Tampa woman uses essay contest to sell home

Oh no. A Tampa homeowner has rigged up an essay contest with a $40 entry fee as a clever way to sell her home. As the press release suggests below, if she can get 9,000 entries, for a total of $360,000, she could make more than she would have on the open market:

A woman in South Tampa is getting creative to sell her home in this tough housing market.

Karen Henderson who owns the home located at 4206 West Angeles Court, in the Palma Ceia West area of South Tampa, has come up with an essay contest called "Why I Would Love to Own My Own Home in Tampa, Florida.”

Along with the $40.00 entry fee, entrants get a chance to win the renovated three bedroom two bath home within the Plant H.S. district, which is valued at approximately $300,000.

The goal is 9,000 entries and one dollar from each entry will be donated to the Make-a-Wish Foundation.

“People still want to own their own home, but it’s a tough time for both buyer and seller.  This is a great opportunity for someone to have their own home for $40.00. It just doesn’t get any more affordable than that,” said Henderson. “The home is free and clear, all they have to do is pay their annual taxes and insurance.”

According to the assistant state attorney with Hillsborough County, the essay contest is legal in Florida, as it requires skill and not luck, such as a raffle.

For more information on the contest and how to enter, visit www.ComeHometoTampa.com

6 errors that created economic turmoil (most housing related)

The New York Times published a short piece highlighting "6 errors" that led to our current financial mess. While I don't agree that every one of the errors cited had the same sorry impact, it's a pretty good list.

Here's one of the "errors" I think the author exaggerates about:

The government’s continuing failure to do anything large and serious to limit foreclosures is tragic. The broad contours of the foreclosure tsunami were clear more than a year ago — and people like Representative Barney Frank, Democrat of Massachusetts, and Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, were sounding alarms.

Yet the Treasury and Congress fiddled while homes burned. Why? Free-market ideology, denial and an unwillingness to commit taxpayer funds all played roles. Sadly, the problem should now be much smaller than it is.

Ohhhh-kayyyyyy. Frank was one of the clowns who pushed home loans for the financially illiterate, loans that in most cases represented 100 percent of a home's value. You can't keep covering for people's mistakes. Was the government supposed to send $50,000 checks to the Lexus owning guy who took 100 percent financing?   

Housing naysayer predicting end to home price slide in late '09

Economist Mark Zandi of Moody' Economy.com is predicting a stabilization of home prices by the end of this year. I wouldn't make much of such guesswork usually, but Zandi has been a housing doom and gloomer:

Join Chief Economist Mark Zandi and Director of Housing Economics Celia Chen for an introduction to Housing in Crisis: When Will Metro Markets Recover?, a new study that offers a comprehensive look at the near-term prospects for a recovery in housing markets in a recessionary environment.

The current state of price and inventory imbalances in the housing market will be evaluated, as well as conditions in the mortgage market. The outlook for foreclosures, a key force in the housing downturn, will be discussed. The most recent Moody's Economy.com metro area price forecasts will also be presented.

Key findings:

· House prices will stabilize by the end of this year.
· The national Case-Shiller house price index will decline by another 12% from the third quarter of last year for a total peak-to-trough decline of 30%.
· By the end of this unprecedented downturn, house prices will have declined by double digits peak to trough in nearly 62% of the nation’s 381 metro areas. In about 10% of metro areas, price declines will exceed 30%.

Case-Shiller: Tampa home prices down about a third since 2006

Tampa area home prices are down 20.9 percent for the year and 32.4 percent since the July 2006 peak, according to the latest calculations from the S&P/Case-Shiller home price index.

Why are Case-Shiller's price plunges so different from those published by Florida Realtors yesterday? Simple. Case-Shiller tracks repeat sales of individual homes, so you always get apples-to-apples comparisons.

Realtors showed a 27 percent annual price decline and a 39 percent decline from the June 2006 peak. But since people are buying smaller homes - leading to many apples-to-oranges comparisons - Realtor statistics tend to exaggerate the dip in home values.

One stipulation: Case-Shiller lags a month behind the Realtor index. It's publishing November numbers while Realtors have already closed out 2008.

Tampa was the 7th most impacted by annual price declines in Case-Shiller's 20-city index:

Phoenix: -32.9 percent

Las Vegas: -31.6 percent

San Francisco: -30.8 percent

Miami: -28.7 percent

Los Angeles: -26.9 percent

San Diego: -25.8 percent

Tampa: -20.9 percent

Quite a massacre in the Sun Belt, eh? Note that Dallas and Atlanta are doing much better, Dallas because of oil and Atlanta because prices never shot up as high during the housing boom.

How bottomless is the foreclosure pit?

A bit of unhappy news (has there been any other type lately?) about the Tampa area foreclosure situation. As I reported the home sales story yesterday, a prominent Carrollwood Realtor told me that distressed properties will dominate the market this year:

Tampa real estate broker Jim Knetsch of RE/MAX ACR Elite Group said foreclosures make up close to half of sales in some areas. Most of the purchasers are bargain-hunting investors with ready cash.

He expects a further wave of foreclosures to hit the market as banks find agents to list homes they've already repossessed. Until more homesteaders appear to suck up the surplus, Knetsch expects home prices to remain strained.

"It's just a race to the bottom right now," Knetsch said. "Where the bottom is, I don't know."

Of course, a large barrier to home ownership has been the tight credit market. So what if rates are 5 percent if you need to raise a 20 percent downpayment in a bum economy?

The housing market basically needs a restoration of the Three "C"s: Confidence, Credit and Cash.

Stimulating home sales one foreclosure at a time

December was the fourth month in a row that homes sales rose in the Tampa Bay area. You don't have to look hard for reasons why. Foreclosure homes are depressing prices while stimulating sales.

From December 2007 to December 2008, sales here rose 16 percent from 1,597 to 1,857. Median sales prices went in the opposite direction. Year over year they plunged 27 percent from $199,800 to $145,700.

The December sales picture across Florida was similar: Sales up 27 percent, prices down 27 percent. Sales rose in 16 of 20 Florida housing markets. Gainesville, Tallahassee, Pensacola and Punta Gorda were the down markets.

“Sales are rising in areas with large numbers of distressed properties as bargain hunters take advantage of discounted home prices,” said Lawrence Yun, chief economist with the National Association of Realtors.

The Florida Association of Realtors also wrapped up its yearly sales reports. In the Tampa Bay area, sales were down 3 percent overall in 2008. Prices were down 19 percent from 2007 to 2008.

The December to December price plunge in Tampa is pretty shocking at 27 percent. But you should temper the pessimism. Aside from the foreclosure sales, which are necessarily discounted, people are buying smaller homes. Measured in price per square foot, the decline is not that steep.

Charts broken down by Florida metro areas are here: Download fardec08.pdf and Download faryearend08.pdf 

We could be among worst apartment rental market in '09

The Marcus & Millichap real estate firm published a pretty downbeat apartment rental forecast for our region. Apartment vacancy here is supposed to climb 1.3 percentage points to reached 9.7 percent in 2009.

Doesn't sound that high?  Our projected vacancy makes us 10th worst in the nation. Jacksonville sits atop the dishonor roll, and Sun Belt markets dominate the top 10.

Marcus & Millichap also compiled a National Apartment Index that rates where it makes sense for its real estate clients to invest in apartment buildings. Tampa ranked a dismal 41 out of 43. We fell 14 places from our 27th ranking last year.

The full report is here: Download marcusmilli09.pdf  Tampa's mentioned near the beginning and again on page 51.

The report predicted that Tampa would lose 28,000 jobs this year, making us the 7th worst market for employment. I'm actually somewhat encouraged by that number considering the firm Global Insight forecast 42,900 job losses in our region this year.