Second Tampa Channelside condo developer declares bankruptcy

Last summer, dozens of people sued The Place at Channelside to get their money back on condos they felt they overpaid for in 2005.

On Wednesday the developer had had enough. Key Developers Group and its owner Fida Sirdar asked for Chapter 11 protection.

His is the second bankruptcy filing this year among Channelside condo developers. Towers at Channelside LLC declared insolvency in January.

Sirdar completed two eight-story towers last year but many investors who paid top dollar during the housing boom wanted out of the 245-unit complex at Channelside Drive and Washington St.

You've got to sympathize with both parties: The developer who built with confidence knowing he had bona fide buyers and the buyers who realized too late that imploding home values would skin them alive.

The four stages of Home Seller Sickness

The customer is always right, but this is getting ridiculous. I’m talking about Tampa Bay area home sellers who refuse to drop prices on their homes. An exasperated Ann Guiberson, head of the Pinellas Realtor Organization, says asking prices are up over last year by a few thousand dollars.

How can that be? We’re stuck in a Florida-wide housing retraction with talk of 25 percent price declines in the air. Call it Home Seller Sickness. I had the affliction earlier this year when I sold my house after wrestling with the dead-weight market for more than half a year. The disease has four stages, ranging from prickly denial to glum acceptance:

Stage 1/My House Is Better Than Your House: You list your house for $300,000. Your neighbor lists the same model for $275,000. Of course, you can justify the premium you’re charging. Your kitchen has new floor tile, handmade by Venetian artisans. Your neighbor has brown linoleum, circa 1979. You start pricing the Toyota Highlander you’ll buy with the profits. House hunters respond by treating your home as if it’s the Bates Motel.

Stage 2/Maybe I Was a Little Rash: You’re forced to drop the asking price to $275,000. Sure, you’re still not undercutting your neighbor, but that guy’s a slob. Did you see the orange paint in his living room? Hasn’t redecorated since Fonzi was on TV. Plus, you’ve installed the best aromatherapy system on the block. One whiff of “ocean breeze” and “fresh laundry” and buyers will be racing for the contracts.

Stage 3/You’re Going to Make Me Work for This, Aren’t You?: Six months pass. Neither you nor your neighbor has sold. You drop the price to $249,999. Your realtor insists on the $999 trick: Make the house look desirable. Cancel the Toyota SUV purchase. Settle for an electric scooter.

Stage 4/Will Somebody Please Kill Me Now?: You drop your home price to $234,900. It’s the cheapest house on the block. The buyers finally make an appearance but demand you knock off another $15,000. You accept an offer just to be done with it. They nitpick you to death, insist you fix every jiggly doorknob or else void the contract. The buyer’s smile at closing contrasts with your frown. You blame your realtor. It’s all her fault. But the scooter ride home is invigorating.

--James Thorner

In real estate, unwholesome recipes for holidays

With the holiday season’s arrival this Thursday, let’s welcome a festive break from the housing doldrums. But before we do, let’s assemble a list of the rogues and dupes who have made the real estate market such an unwholesome place for the holidays.

You’re behind on your house payment. A postcard arrives in the mail. A company promises to fix your foreclosure for $1,200. One condition: Don’t call your lender. The foreclosure fixers will handle everything. Who could refuse such an offer? The company must have spent at least a quarter on postage. Many people forked over $1,200. How did it work out? Let’s say quite a few homeowners are now not-so-happy renters. The TV show Inside Edition savaged one of those self-proclaimed rescuers, Clearwater’s Foreclosure Assistance Solutions. Nothing says subtlety like the juxtaposition of homeless customers with the owner’s $2-million waterfront mansion.

A special niche in the rogue’s gallery goes to the people who manipulated the market at The Club at Brickell, a 43-story condo tower in Miami. They committed deception on such a scale that bankers are calling it a national epicenter of mortgage fraud. Phony appraisals and lax underwriting let crooks arrange sales of $400,000 condos for $800,000. The cheaters paid the sellers $400,000 per condo, cashed out the remaining $400,000 and let the empty condo fall in foreclosure. Investigators said about 200 of the deals were shady.

Wonder why Florida leads the nation in mortgage fraud? Stick the next case in the dumb-as-a-sheet-rock file. Transeastern Homes, operating in Tampa as Engle Homes, is one of the builders lanced by bankruptcy rumors this month. Here’s one reason: Transeastern was notorious for its high-pressure, cattle-call sales events. At one event at Saddlebrook Resort in Wesley Chapel, if you didn’t sign up for a home quickly, you’d be exiled to the rear of the line. The ploy came back to bite the company. So eager was Transeastern for fast sales, it lost money on many transactions. Construction costs rose and the company couldn’t renegotiate home sale prices they locked in.

We could fill the list with more examples, but that’s plenty for now. Must leave room for pie.

Call it the Great Home Heist of 2007

The proposal to double the homestead exemption from $25,000 to $50,000 on Florida homes is a joke. There, I said it.

But it’s hard to laugh at this particular joke. In all the debates about property taxes, no one seems to mention that the $25,000 homestead exemption, effective since 1982, has been The Incredible Shrinking Tax Break for 25 years. When the exemption was increased from $10,000 to $25,000 between 1979 and 1982, the median home price in the Tampa Bay area was about $50,000. In other words, the exemption cut the taxable value of your house in half. March forward 13 years.

In January 1995, when the complementary Save Our Home tax cap took effect, Tampa Bay area homes sold for a median price of $71,000. The homestead exemption exempted about 35 percent of a home’s value. Observe our plight today: Based on September’s local home sales price of $200,700, the value of the exemption is only 12 percent of a typical home’s value. What seemed like a governmental gift in 1980 is the Great Home Heist in 2007. Home values have risen through the roof, but the state hasn’t indexed the exemption for inflation.

Instead, the Legislature passed Save Our Homes, approved by voters in 1992. SOH caps the increase in taxable value of a primary residence at 3 percent a year. When you move, you lose the accrued savings and are taxed at your new home’s real value. Florida Tax Watch flagged the unfairness of SOH back 1992. People mistakenly think SOH is a tax cut. It’s not. It’s a tax shift, a shift to first-time home buyers, businesses, vacation homes and anyone who wants to change his or her address. To its credit, the Legislature tried to rig a fairer tax structure this year. The homestead exemption would have expanded to 75 percent of a home’s value up to $200,000. The state would have taxed a $200,000 house as if it had been worth $50,000. Voters feared the change. A judge objected. And the Legislature hatched this turkey of a compromise to double homestead to $50,000.

On my house, it’s going to cut $200 off a tax bill of $6,200. The sound you hear is laughing. And it’s not the joyous variety.

Are jobs cuts in real estate finally slowing?

Here's a good-news-bad-news report about jobs in industries like mortgage lending, real estate, and construction.

About 6,500 people across the nation lost jobs with mortgage lenders in October. That's bad enough, but not when you compare it to the more than 50,000 mortgage workers who lost jobs in August and September.

It was a similar story in housing, which includes real estate agents and construction workers. About 12,000 people lost jobs in October, far below the nearly 57,000 who dropped from those industries the two months before that.

The figures come from the Chicago outplacement consulting firm Challenger, Gray & Christmas Inc.

"It may be too soon to declare an end to the crisis in housing and the credit markets, but this is definitely a very positive report," said John A. Challenger, chief executive of the company.

Many of those jobs cuts are happening in Florida, which shares top honors with housing-stressed states like California and Nevada.

Florida housing numbers mirror Tampa-St. Pete's

It looks like we're about average in Florida when it comes to single family home sales the past year, according to the Florida Association of Realtors.

Florida's average home sales decline was 38 percent in September 2007 compared with the same month of 2006. Median home prices fell 9 percent over the same period. The Tampa Bay area's numbers were 40 percent down in sales and 10 percent down in price.

The Realtor association numbers were a hair different than Tampa area numbers reported two weeks ago. That's because the state association adds Hernando County to the mix of Pinellas, Pasco and Hillsborough counties.

If you're after more details, take a look at two charts, one showing single-family homes Download September_2007_home_chart.pdf and the other condos Download September_2007_condo_chart.pdf .

Note that Fort Lauderdale, Miami and Ocala turned in extra lousy numbers. Even Orlando was hit harder than Tampa.

Tampa Bay area home builder loses half a billion

Bad news from Lennar, the huge Miami-based builder that has suburban projects all over the Tampa Bay area. Here's the latest on a whopping $514-million quarterly loss.

In a morning conference call, Lennar's executives singled out August as a horrible month, describing it as a "melting pot of all things negative.'' In the face of sales off more than 40 percent, the company has ditched 138,000 home sites it had once planned to build on.

The Miami-based company said it's boosted incentives per house by $10,000 the past year but vowed to avoid "fire sales." Some housing analysts took the builder to task for not cutting prices enough relative to competitors like Hovnanian/Windward and Standard Pacific.

Let's not paint all housing with negative news

The broad brushes have been slathering black paint all over the national housing scene the past week.
In case you missed the dark headlines: Foreclosures at record highs, builders in the dumps, home prices riding a greased pole to the ground floor.

The problem with broad brushes is they’re sloppy and stray beyond the lines of what’s reasonable. Let’s take each dollop of bad news one by one:

The foreclosure crisis: Yes, Floridians are defaulting on their mortgages at unprecedented rates. The firm RealtyTrac flagged 5,904 “foreclosures” in the Tampa Bay area in August. Read the fine print: 770 of those homes were repossessed by lenders. The rest represented people behind on their mortgages, most of whom will likely either keep or sell their homes. And huge numbers of foreclosure properties are owned by speculators casting off what for them are bad deals. It’s a mountain of a problem, but more Matterhorn than Everest.

Builders got the blues: We heard last week that home construction is plunging to depths not reached since 1995. Is anyone perplexed why slower residential construction, in a Tampa Bay market with 41,000 homes listed for sale, is bad news? Sounds like a market purging itself of excess supply. And when did 1995, amid a tech boom, become a benchmark for sluggish economies?

Home price slide: I sold my house during the slump this year. I got $205,000. My neighbor a year earlier got $245,000 for a smaller house. I felt cheated. I was wrong. In eight years I made $113,000 profit. That brings us to Moody’s Economy.com. It published a list that breaks down how far prices should fall in markets across the country. Here in the Tampa Bay area, Moody’s foresees home prices bottoming out in the summer of 2008, when we should have lost 12 percent from the peak in late 2006. Let’s return to my example. My home sold for 16 percent below my neighbor’s. That’s worse than Moody’s forecast, and we haven’t even reached 2008.

Here’s the point: Real estate is intensely local. A bird flu of a market in Sarasota — Moody’s projects a 25 percent home price decline — may be a head cold of a market here in Tampa Bay. Not every neighborhood will suffer the same from the slump.

Easy answers are scarce. But it helps to use a finer tip on your brush.

Florida stung by latest foreclosure figures

This new foreclosure report may exaggerate things a bit by including homeowners a couple months behind on their mortgage payments. Still, it's not too flattering for Florida.

Clearwater's Cay Clubs lays off dozens, blames housing downturn

You may not have heard of Cay Clubs Resorts & Marinas. It's a developer based in Clearwater that feverishly expanded in places like the Florida Keys and Las Vegas since its founding in 2004.

Cay sold investors units in condo-hotels, agreed to act as landlord in renting those units to tourists and promised stellar returns to investors.

A sign that it hasn't worked as advertised: Last week Cay laid off many of its employees at its Clearwater headquarters at 18167 U.S. 19. Several of its restaurants in the Florida Keys have been shuttered. Angry investors are filing the first lawsuits.

Cay made $46-million last year but got roughed up in the housing slump. The real estate speculators that fueled the company's growth have mostly gone away.

Incidentally, the St. Petersburg Times wrote about Cay Clubs last year when chief executive Dave Clark announced he was buying Walker's Cay, an island in the Bahamas.

Adding to its string of bad luck, Cay Clubs cancelled the deal when the Bahamian government demanded the prospective owners clean up years of buried waste.

 

Putting your mortgage payment on plastic

Why does this seem like a far-from-ideal solution to the foreclosure crunch?

A new company, CardIt LLC is making a splash by setting up an online system to make mortgage payments with credit cards.

"Until now, consumers have had no easy way to directly pay mortgages using credit cards," CEO Philip Mikal said.

Let's get this straight: You're behind on your 7 percent mortgage, the bank's clamoring for payment, so you lard up your 20 percent credit card with thousands of dollars in house payments.

CardIt LLC is based in California, one of the nation's foreclosure leaders and the birthing ground of many a funky innovation. It accepts Visa, MasterCard and Discover. Why, of course!

August numbers out for Tampa Bay area home sales

Ahead of the release dates of the national and state real estate groups, house and condo sales for Pinellas, Hillsborough and Pasco counties for the month that just ended are now public, courtesy of the Pinellas Realtors Organization.

The news is mixed, though it's more glum than giddy.

The good news is that Tampa Bay area inventory - the number of homes for sale on the market - is the lowest it's been this year.

The bad news is that sales in August were off big time over sales in August 2006. Only Pasco County showed a sales increase (and that's just month to month) from July to August of this year.

Total sales for August in Pinellas, Pasco and Hillsborough counties were 2,374. Listings totalled 40,896.

For a more detailed breakdown county by county, click on these links: Download pasco.pdf; Download pinellas.pdf; and Download hills.pdf

Lenders vs. flippers: Who preys on whom?

Ever on the lookout for a heart rending housing slump story, we journalists naturally gravitate to the hard up families being put out of houses they can’t afford.

But a Wall Street Journal story that ran last week suggested a good percentage of Floridians defaulting on their mortgages don’t deserve the tear-soaked hanky treatment.

In 2005, the boom year in which houses appreciated about 30 percent in the Tampa Bay area, almost a third of home purchase loans in Florida were for "non-owner-occupied" properties.

Translation: Most of these homes were bought by investors, speculators and flippers eager for quick profits.

How are some of those investors doing two years later? Well, the Journal pulled those statistics, too. In Florida, a quarter of prime home loan defaults this year are on those very investment properties. Such busted loans are even more common in Nevada and Arizona.

I’m not trying to be heartless: I have friends, neighbors and acquaintances who collectively own more than 15 investment properties. But it’s hard to avoid the fact that they willingly ponied up to the gaming tables with a stake they couldn’t afford to lose.

Investors’ share of mortgage defaults might be even greater than the Journal let on. That’s because investors often hid their intentions when lining up to buy new homes and condos.

As a house hunter in 2005, I lined up at a home sales center behind two men who swore they were buying four-bedroom houses for their widowed grandmothers. They later confided to me that they planned to flip each house at a $50,000 profit in less than six months. Nudge, nudge, wink, wink, say no more.

My family and I eventually bought a house in a new subdivision. The builder assured us investors were barred. I wonder how they’ll explain the quarter of the houses on my street that have become rentals?

Keep these facts in mind next time you have the urge to savage banking predators who ripped off little ol’ home buyers. Sometimes you’ve got to wonder who preyed on whom.

-- James Thorner

Bush mortgage plan a modest bailout

President Bush extended a helping hand Friday to thousands of homeowners caught in the financial bind of escalating mortgage rates. It’s a limited offer to people with good credit and steady jobs, but it’s a sign that the federal government can no longer the ignore the growing tide of foreclosures -- nationwide but especially in Florida -- that has thrown the financial markets into turmoil and depressed real-estate sales. "What the president did today is provide the opening shot in what will be an extended debate that ultimately will result in some real money being put to work," said stock analyst Dick Bove of Lutz in Hillsborough County, who follows financial companies for the brokerage Punk Ziegel.

About 240,000 families would qualify for the program, according to the administration’s analysis, though some groups estimate as many as 2-million households face potential foreclosure.Those most vulnerable may benefit little from the administration’s offer.

"You’re talking about helping people who have relatively good credit and that’s not the problem," said Scott Brown, senior economist at Raymond James & Associates in St. Petersburg. The highest foreclosure rates have been among borrowers with "subprime" credit and investors who bought houses and condos expecting to resell them quickly at a profit. Investors are a huge part of the problem in Florida, where about a fourth of the investors with good credit are in default. They wouldn’t get a bailout from Bush.

Here are the key points of the president’s proposal:

•Launch "FHA-Secure" program to refinance loans for people who have good credit but fall behind on payments when their mortgage rates adjust.

•Allow FHA to reduce down payment requirements and insure larger loans.

•Change tax code so cancellation of mortgage debt on primary residence would no longer be considered taxable income.

•Work with lenders and nonprofit groups to provide mortgage education and expand refinancing options.

•Support efforts to improve mortgage lending standards and disclosure requirements.

-- Helen Huntley

Facts to consider about property tax reform

We're supposed to vote Jan. 29 to decide whether to create the option of a super homestead exemption that would cut Florida property taxes by billions of dollars.

If you've been listening to some local governments, the cuts will place them on a starvation diet when it comes to popular services like police, fire fighting and libraries.

So it's worth looking at the actual tax money local government took in during the housing boom that ran roughly from 2000 to 2006.

Decide for yourself whether public coffers are svelte or portly. Here's a selection of taxing bodies with their cumulative increase in tax income during those 6 years:

LARGO: 152 PERCENT

CLEARWATER: 93 PERCENT

ST. PETERSBURG: 78 PERCENT

PINELLAS COUNTY: 77 PERCENT

PINELLAS COUNTY SCHOOLS: 89 PERCENT