Another 2.78 million square feet of vacant industrial space in Tampa Bay

Industrial property in the Tampa Bay area has lost that loving feeling, according to a new report by the Colliers Arnold real estate firm:

The downturn in the economy and the housing market continued to cause companies to vacate or downsize. Net absorption during the quarter was a negative (1,625,637) square feet bringing the year-to-date net absorption to a negative (2,775,806) square feet. Vacancy has doubled from a low of 4.7 percent in the fourth quarter of 2006 to the current average of 9.3 percent.

To keep things in perspective that 2.78 million square feet of new vacancy makes up 1.3 percent of the total inventory of 206 million square feet. But the trend isn't encouraging.

Congressman: Fight bad mortgages with more bad mortgages

Got to hand it to Democratic Rep. Barney Frank of Massachusetts. He's spending part of this week haranguing banks to modify mortgages threatened by foreclosures.

Frank is famous for his refusal to strengthen mortgage rules for government-backed lenders Fannie Mae and Freddie Mac, despite lobbying by the previous administration. Then he blamed the housing meltdown on everyone but himself.

In one sense I understand Frank's frustration. Banks have been slow to refinance and modify home loans in, or headed, for default. When the Hope for Homeowners plan was approved in early spring, the administration predicted 3 million to 4 million homeowners would avail themselves of mortgage relief subsidized by the federal government. But four months later the plan has helped fewer than 200,000 homeowners.

The problem with Frank is that he's the wrong messenger to be issuing decrees to a banking industry he helped despoil. You get the sense he's just advocating another give-away we'll regretfully pay for down the road.

Metrostudy: Tampa new home sales rise to level of mediocrity

I pretty much reported most of these details 2 weeks ago, but Metrostudy formally published its 2nd quarter 2009 new home report for the Tampa Bay area. Here's a copy: Download Metrostudy2q2009

When housing rescue becomes highway robbery

Why does it sometimes feel as if Florida is the flim-flam capital of the United States?

The state is investigating 81 "foreclosure rescue" companies it suspects might be duping the public. Some of these firms are legitimate and helpful, but I've gotten calls about convicted felons who've posed as guardian angels to defraud homeowners.

Another 86 such companies have also attracted the state's attention, though it hasn't yet opened full investigations. As attorney general Bill McCollum said last month: "The time is ripe for disreputable companies and individuals to capitalize on consumers' financial concerns .And foreclosure rescue fraud is one of the worst manifestations of the current economic situation."

Here's more.

Tampa Bay commercial real estate: The coming storm?

A commercial real estate report put out by First American CoreLogic flags two areas of concern for the Tampa Bay area.

We're among the national leaders in commercial mortgages that came due in June. That means property owners will have to refinance, sell or pay off their loans, no easy matter in this lousy real estate market.

Tampa Bay had $132 million worth of office building mortgages that matured in June. The maturing debt on local industrial property was even higher, $204 million. (Please note page 2 of the report I link above.).

Why does this matter? If commercial property goes the way of residential property, expect greater strain on the already hobbled banking system. Where office buildings were overbuilt - south Pasco County comes to mind - expect to see a glut of empty cubicles.

Fortunately, with the glaring exception of condo construction, commercial development didn't have a sub-prime segment comparable to that which ails the residential market. Large down payments are routine. That acts as a buffer against depreciation.

More proof of Tampa Bay home price stabilization

Tampa Bay area home prices were flat from April to May, the first time in nearly three years that housing values didn’t fall month to month, according to the S&P Case Shiller home price index.

While the region’s home prices declined 20.8 percent from May 2008 to May 2009, Case Shiller identified a change in the behavior of the market since prices peaked in July 2006.

“The pace of descent in home price values appears to be slowing” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.

Tampa Bay wasn’t alone. On the 20-city index, only 4 cities showed price declines from April to May: Las Vegas, Phoenix, Miami and Seattle.

On the year-to-year measurement, all 20 cities showed home price drops, Phoenix leading the list with a plunge of 34.2 percent. Las Vegas was second worst for price declines.
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For the past 5 months, Realtors have also noted a price stabilization trend in the Tampa Bay area. Several Florida economists predict home prices will stay relatively flat for at least a year and won't appreciate with any strength or regularity until 2011.

Tampa Bay home sales keep rising, but foreclosures remain a drag

Tampa Bay area home sales rose 21 percent in June compared with a year earlier, but at least one Tampa Bay area housing analyst complained that banks are harming the housing market by unfairly dumping foreclosure homes.

The Florida Association of Realtors said sales improved to 2,848 in June from 2,346 in June 2008. That continues a happy trend of rising sales that started last September. The peak for June home sales was 5,230 in 2005.

Local home prices have been holding more or less steady since they bottomed at $121,000 in January, but still are down 22 percent from a year earlier. June’s median sales price was $139,400.

Prices would be higher were it not for banks pouring cheap foreclosure homes onto the market at about half price, said Peter Murphy, president of Tampa’s Home Encounter.

Home Encounter said distressed sales - both foreclosures and pre-foreclosures - constituted 37 percent of sales in June.

Murphy accused banks of prolonging the housing slump. He said the federal bank bailout perversely encouraged banks to sell homes at any price since the government was covering their losses.

“Lenders – not homeowners – have become the most powerful force in the US housing market,” Murphy said. “Yet rather than learning a lesson from the housing boom and acting in a responsible fashion, lenders are now selling homes at prices so low that they’re single-handedly leading the decline in home values in Tampa Bay.”

Nevertheless, the sheer volume of cut-rate distressed properties is driving the sales turnaround. Realtors also cited the $8,000 first-time home buyer federal tax credit that expires at the end of the year.

Tampa-St. Petersburg-Clearwater isn’t alone. Home sales gained in all of Florida’s 19 major markets except Gainesville, Sarasota-Bradenton and Tallahassee. Improvements were concentrated in hard-hit housing markets like Cape Coral-Fort Myers, where the average home changes hands for less than $88,000.

The cheapness of many homes is causing problems in some quarters. Lawrence Yun, chief economist for the National Association of Realtors, said poor appraisals tied to distressed property sales are killing deals.

“Poor appraisals are stalling transactions,” Yun said. “The big question is how much the appraisal issue will impact the ability of contracts to go to closing.”

Fed chairman: Foreclosures yet to reach peak

Foreclosures will rise through the rest of the year, according to Federal Reserve Chairman Ben Bernanke:

"The combination of unemployment and falling house prices -- the double trigger -- does create a very high rate of foreclosures," he said. "Our assessment of the foreclosures is that it's likely to peak in the second half of 2009, corresponding with the peak in the unemployment rate and, perhaps, be somewhat less in 2010."

Bernanke is speaking for the entire country, of course. In June, foreclosures in the Tampa Bay area were lower than I'd expected, though still high. Could have been a temporary blip. Could have foreshadowed an improvement.

Analyst: Housing still has room to sink

We're fooling ourselves if we think housing has bottomed. So says this Californian who assumes foreclosures are about to hang a lead-plated albatross around the housing market's skinny neck. A snippet:

There are four items in place that are tricking people into calling a bottom, when in fact three of these items are temporary. The result is an artificial restriction of supply and artificial pumping of demand.

1) It’s the seasonally strongest buying season

2) There’s a foreclosure moratorium about to end

3) Federal tax credits offered for 1st time home buyers

4) Historically low mortgage rates (this may or may not change soon)

Housing sharks in Sarasota/Bradenton bit banks for nearly $500 million

Sweet writeup in the Sarasota Herald-Tribune about the catastrophic cost of home flipping during the housing boom. Here's a telling section that indicts some bad eggs in the real estate industry:

At least 37 groups of property flippers operated in Sarasota and Manatee counties. The groups bought hundreds of properties worth more than $350 million and sold them to associates for inflated prices.

The flippers identified by the Herald-Tribune -- and the people who ultimately bought their properties -- have so far defaulted on more than $450 million in mortgage loans. Their defaults account for $1 in every $13 lost to foreclosure in Sarasota and Manatee counties from 2005 through 2008.

Nearly 40 percent of the people involved in questionable flips in Sarasota and Manatee counties were industry insiders -- real estate agents, developers, lawyers and mortgage brokers.

Here's a story I did last year about one conspicuous real estate flipper in our area.