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.

National homes sales weakest in year, but still only half as bad as Tampa's

Two weeks ago we reported about September's poor home sales in the Tampa Bay area. Sales were off 39 percent year to year. Today we get a glimpse at the national and Florida numbers.

Here's an early glimpse at existing home sales across the nation. As you'll see, things are pretty bad everywhere as banks tighten up credit. Though national sales are down 19 percent year to year, it's only half as bad as our 39 percent decline.

Check in later for the Florida numbers.

Tampa Bay area builder freezing construction

Levitt & Sons, a home builder with a strong presence in Hernando County, among other places, is shutting down construction on its Florida subdivisions. Levitt's best know for its Levittown subdivisions outside of New York City.

It's one of a number of builders that seem to be hurting worse than the industry as a whole. Another is Beazer Homes, which has sold hundreds of houses and town homes in Hillsborough, Pasco and Pinellas counties. Atlanta-based Beazer is heavily indebted and trying to restructure repayments to hold off bankruptcy.

Here's a story with more details  about Levitt. 

Turnaround several price cuts away, Wachovia says

Wachovia is offering some tough words for tough times: The first step to healing the Florida housing market is for owners to drop home prices. In its October 2007 "Housing Chartbook," Wachovia's economic forecasting team blamed speculators for blowing prices out of the water from 2004-06. "What needs to happen now is for prices of new and existing homes to adjust back to levels where families earning the median household income can once again afford to buy a wide assortment of homes, particularly in Florida, Nevada and California," the forecast said.

The average annual wage in the Tampa Bay area is about $41,000. For a home to be affordable, its price shouldn’t exceed about three times a buyer’s income. But many sellers have stubbornly clung to what in many cases are intolerably high asking prices.

That's one reason why 41,000 homes clutter the listings. Some people are eager for gains, but many simply can't afford to lower prices further. Maybe they took out 100-percent financing or borrowed against the value of their houses.

Is office real estate getting a case of the housing willies?

Just what we needed. Housing's in the tank and now office real estate isn't looking so peachy either. Here's the take from a local expert I've spoken to several times:

If every Tampa Bay area office project currently under development gets built, the regional economy will be buffeted –– though not too severely –– by a surplus otherwise known as “overbuild,” says one commercial property expert.   

Stevens E. Tombrink, CCIM, regional vice president for real estate services at Equity in the Tampa region, said he isn’t too worried Tampa’s office market will reach the “overbuild” stage.

 

“We pay very close attention to every project, so we have a clear picture of both the macro and the micro in office development,” Tombrink said.  “The truth is that only a percentage of projects under development now will ever open.  Office development is a rigorous, time-consuming enterprise, and typically more projects start the development process than end it,” he said.

 

Tombrink said office development in the region is more severely affected by high-flying insurance costs and property taxes, which have substantially reduced Florida’s competitive edge in attracting new business and industry to the state.

 

“The true effects on these price hikes are just now being felt and they will only get worse as time goes on,” said Tombrink.  “With all our efforts to create new employment here, the cost spikes are particularly disheartening,” he added.

 

Florida’s flagging housing industry is adding new woes to the region’s economy, Tombrink explained.  With fewer new homes under construction, demand for retail space is also slowing at a time when rents are approaching a ceiling.
 

Does Trump Tower Tampa have financing this time?

Is Trump Tower Tampa finally getting a real financing deal after two years of would-haves, should-haves, could-haves?

Developers of the long-delayed 52-story downtown luxury condo high-rise on the Hillsborough River say they have a "commitment agreement" for a $200-million loan to start construction.

Such a letter outlines the terms of a loan while listing conditions borrowers must meet before funds are disbursed

Developer SimDag LLC has been negotiating financing with an undisclosed New York hedge fund after traditional bank loans proved elusive in the housing downturn.

Announced with fanfare in February 2005, Trump Tower Tampa has been plagued with problems, including soil instability on the 1.5-acre site. Construction is expected to take more than two years.

New York tycoon Donald Trump is licensing his name to the deal in return for 50 percent of the profits on each condo unit.

The Related Group, a Miami developer with ties to other Trump projects, has expressed interest in nudging aside SimDag to build the project. SimDag has been reluctant to relinquish control.

No good news from pending home sales report

The National Association of Realtors said pending homes sales are lower than expected. Why does it matter? Pending sales are a way to predict home closings one to two months in the future. According to this story, mortgage unavailability is a big factor in the lackluster sales.

Judge orders Trump Tower to return deposit

Further tribulations for the Trump Tower Tampa project.  If this becomes a trend, the project could lose potential buyers tired of waiting two years for construction to start. Read here.

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.

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.

Think Tampa Bay market has it bad? Think again

We in the press get whacked for playing up the negatives, particularly from the housing market. I wanted to change that perception with a glowing tribute to our local real estate market.
Unfortunately, the news around the Tampa Bay area is pretty grim, unless you’re a bargain hunter who enjoys low-balling some of the tens of thousands of people trying to sell homes.
Not to be deterred, I’ve sought out regions whose real estate reeks worse than ours, operating on the theory that things may be bad here, but they’re worse elsewhere. Consider it similar to Dustin Hoffman cracking jokes about Danny DeVito’s height:
Miami: For all of our overconsumption of stucco and shingle, our neighbor to the south went on a binge. With about 78,000 houses and condos for sale on the market, Miami’s been ranked “most vulnerable’’ and “most overpriced” by Forbes.com. Thanks partly to high housing prices, it’s the only major Florida metro area that’s lost population since 2000. Don Johnson’s probably renting a place in Boca these days.
San Francisco: You think adjustable rate mortgages were bad here? About three quarters of Golden Gate City home buyers used them, partly to take the edge off of a median home price that’s scraping $850,000. And when it comes to insurance risk, our hurricanes have nothing on the San Andreas fault.
Las Vegas: Dancing lights, show girls and Elvis impersonators? Yes. But this landlocked city of casino workers isn’t everyone’s Shangri-la. Home prices in this Sodom of the Sands average about $75,000 to $100,000 more than ours. And the Wall Street Journal says real estate speculation was even more rampant in Vegas than here. What do you expect from the city of slots?
Elmira, N.Y.: I decided to take one on the chin personally. Of all markets in the United States, my hometown puttered into last place with a median price of $71,700 after falling 18 percent in a year. That’s dead last out of 150 U.S. metro areas. Lest you think cheap homes deserve applause, the closest competition is Youngstown, Ohio, and Decatur, Ill.
Are you feeling better about the housing market yet? After that Elmira bit, I think I need a wild weekend in Vegas.

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

Group forms against mortgage bailouts

A group calling itself Tax Payers Against a Wall Street and Mortgage Bailout is urging the Democratic-controlled Congress to avoid bailouts for bad home loans. The thrust of the argument seems to be that many of these borrowers were gamblers buying above their means. Read the on-line petition yourself.

The Mouse isn't roaring for Orlando condos

Tampa Bay area real estate getting you down?  We're not alone. Here's a story about the condo slump in Orlando.

Even Mouseville isn't immune.  Walt Disney is probably spinning in his cryogenic freezer.