Foreclosure picture bleak, unemployment wreaking havok

Jan 19, 2010 | No Comments | Sean Mills

Does this surprise anyone?  Do you need to be a rocket scientist to figure this out?  I guess you do with all the buy antibiotics without prescription mis-information floating around. -Sean
A record 3 million U.S. homes will be repossessed by lenders this year as high unemployment and depressed home values leave borrowers unable to [...]

Does this surprise anyone?  Do you need to be a rocket scientist to figure this out?  I guess you do with all the buy antibiotics without prescription mis-information floating around. -Sean

A record 3 million U.S. homes will be repossessed by lenders this year as high unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast.

Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005. More than 4.5 million filings are expected this year, including default or auction notices and bank seizures, said Rick Sharga, senior vice president for the seller of default data and forecasts based in Irvine, Calif. There were 3.96 million filings in 2009.

“This will be the peak year, and the main reasons are unemployment and house prices that have stabilized way below mortgage amounts,” Kenneth Rosen, chairman of the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley, said in an interview.

Government and lender efforts to keep people in their homes are failing to relieve the worst foreclosure crisis since the Great Depression. Unemployment was 10 percent in December, unchanged from the previous month, while the so-called underemployment rate that includes part-time workers and discouraged workers rose to 17.3 percent from 17.2 percent, the Labor Department said Jan. 8.

U.S. lenders permanently modified 31,382 mortgages, or 1 percent, of the 4 million loans targeted under the Obama administration’s foreclosure prevention plan through November, the U.S. Treasury Department said last month. Fewer than half of the 3.2 million homeowners estimated as eligible for mortgage relief by the Treasury actually qualify, according to Herb Allison, assistant secretary for financial stability.

“The government doesn’t have their act together on housing,” Rosen said. “They seem to be pussy-footing around. We need a much more robust effort.”

Obama’s loan-modification program is “destined to fail” because it doesn’t confront the problem of negative equity that is driving foreclosures, Laurie Goodman, senior managing director at Amherst Securities Group LP, told Congress Dec. 8. Homeowners with negative equity, where a property is worth less than the loan, have little incentive to keep paying the mortgage and will “strategically default,” Rosen said.

More than 728,000 borrowers have already received an average $550 reduction in monthly payments, giving them “a second chance to stay in their homes,” she said.

An $8,000 first-time homebuyer tax credit and a $200 billion lifeline to keep mortgage buyers Fannie Mae and Freddie Mac solvent are among the administration’s efforts to date that have supported the housing market, she said.

“Modifications will not be the solution for all homeowners and will not solve the housing crisis alone,” Reilly said.

The number of homeowners with negative equity totaled 10.7 million, or 23 percent, at the end of the third quarter, according to a Nov. 24 report by First American CoreLogic, a Santa Ana, Calif.-based real estate research firm.

Home prices probably fell 13 percent in 2009 to a median of $172,700, following a drop of 9.5 percent the previous year, Walt Molony, a spokesman for the National Association of Realtors, said in an interview. Prices are down 26 percent from the July 2006 peak.

Defaults among prime borrowers are likely to accelerate, adding to a “huge” inventory of properties that banks possess and haven’t yet put on the market, according to Robert Shiller and Karl Case, who created the S&P/Case-Shiller Home Price Index. In September, Goodman estimated that 7 million homes were already in foreclosure or likely to be seized.

The housing market is weighed down by a “a massive supply of delinquent loans” that will end up in foreclosure this year, James Saccacio, RealtyTrac’s chief executive officer, said in a statement Friday.

The end of the government’s tax credit for first-time buyers, scheduled to expire in the spring, and the end of the Federal Reserve’s $1.25 trillion purchase of mortgage bonds, may add to housing woes, Rosen said.

A total of 2,824,674 U.S. properties got at least one foreclosure filing in 2009, a 21 percent jump from the prior year and more than double the number in 2007, RealtyTrac said.

About 2.2 percent of households received a filing last year, according to the company, which sells default data collected from more than 2,200 counties representing 90 percent of the U.S. population.

December filings increased 15 percent from a year earlier to 349,519, the 10th straight month the tally surpassed 300,000. Foreclosures in the fourth quarter jumped 18 percent from the same period in 2008 and fell 7 percent from the third quarter.

Nevada had the highest foreclosure rate for the third straight year in 2009, with more than 10 percent of households receiving at least one filing. December filings fell 22 percent from a year earlier and rose 27 percent from November.

Arizona had the second-highest rate for the year as more than 6 percent of households got a filing. Florida was third at 5.93 percent, followed by California at 4.75 percent and Utah at 2.93 percent, RealtyTrac said.

The other states among the 10 highest rates were Idaho at 2.72 percent, Georgia at 2.68 percent, Michigan at 2.61 percent, Illinois at 2.5 percent and Colorado at 2.37 percent.

source article

Bank of America to release homes

Jan 19, 2010 | No Comments | Sean Mills

Bank of America expects to release about 6,000 foreclosed properties into the Nevada housing market in 2010, or about 500 a month, an executive with the bank said Wednesday.
It’s part of the so-called “phantom inventory” of foreclosed homes being held by banks as they work out loan modifications and negotiate short sales, two of the [...]

Bad bets: The condo meltdown in Las Vegas mirrors Miami’s

Dec 29, 2009 | No Comments | Sean Mills

Though Las Vegas’ problems are on a much smaller scale, the boom and bust is fairly similar. Some blame South Florida developers, in part, for whipping up the frenzy.

Photos

BY MONICA HATCHER

mhatcher@MiamiHerald.com

LAS VEGAS — With foreclosures soaring and home prices in the tank, Miami and Las Vegas often compete for the dubious distinction of being [...]

Though Las Vegas’ problems are on a much smaller scale, the boom and bust is fairly similar. Some blame South Florida developers, in part, for whipping up the frenzy.

Photos

BY MONICA HATCHER

mhatcher@MiamiHerald.com

LAS VEGAS — With foreclosures soaring and home prices in the tank, Miami and Las Vegas often compete for the dubious distinction of being the nation’s hardest hit condo market.

Just a few years ago the two cities shared a reputation as invincible boom towns. Now both real estate markets are climbing out of an abyss of stalled condo developments, spiraling foreclosures and stymied sales.

Trying to figure out which is the biggest real estate loser isn’t so easy. But comparing the two markets puts into perspective just how unprecedented Miami’s condo explosion was.

“They built less in Las Vegas than in Miami,” but there are fewer potential buyers, said Marty Burger, president and chief executive of Artisan Real Estate Ventures in Las Vegas.

Vegas condo owners like Kathy Riggle, a retiree from Tucson, who bought a condo conversion sight unseen for $180,000 during the boom, have watched in disbelief as values have dropped by more than half.

“Will Rogers once said, `Buy land because they ain’t making any more of it.’ We got caught up in it like a lot of people,” Riggle said.

Her unit, now valued at $49,000, is in foreclosure because she can no longer rent it for enough to cover the mortgage.

Las Vegas analysts and builders blame South Florida developers, as well as other out-of-market players, for helping whip up the condo mania in the nation’s gambling mecca.

During the the boom, Miami development companies launched full-scale assaults on the Vegas market — complete with cocktail parties (hosted by gorgeous models) and million-dollar sales centers.

The developers dreamed of expanding their empires on the new Vegas condo frontier.

They figured frequent visitors to Las Vegas from Canada and the mega-population hubs of Southern California would buy second homes rather than continue paying for high-priced hotel rooms.

Faulty assumption, said Richard Lee, a Las Vegas analyst and vice president with First American Title Company.

And here’s another false perception the Vegas condo boom was built on: Locals, tired of traffic and long commutes, would seek a more urban lifestyle closer to the action on the Vegas Strip.

“There was no real demand that you could point to,” said Jack Winston, a consultant with Goodkin Consulting who cautioned several South Florida developers about their ambitious Las Vegas plans. “The people in Las Vegas, if they want to gamble, they have their own casinos in the suburbs. Permanent residents rarely go down to the strip.”

Just as in South Florida — hemmed in by the Everglades and the ocean — the vertical push out West was propelled by the belief that developable land was running out. Although Las Vegas is surrounded by empty desert, much of it is federally owned and off limits to development.

“Outside developers came here and really misjudged this market,” said Irwin Molasky, a veteran Las Vegas real estate developer, who also built the 84-unit Park Place condominium that sold out in 2001. “It is not a Miami market. We don’t have the South American trade, the New York trade, and they just thought, if you build it, it will come.

“And, unfortunately, they turned out to be wrong.” he said.

Aventura-based Turnberry Associates was one of the first to go vertical buying antibiotics online in Las Vegas with the four-tower Turnberry Place project. It rapidly closed out 770 units and made tremendous profits.

Others tried to mimic them.

“It was like the gold rush after that,” said Bruce Weiner, president of Turnberry Ltd., the residential division of Turnberry Associates.

But condos weren’t the only buildings sprouting on the Vegas skyline. There was also a casino building spree that pushed construction and labor prices through the roof, forcing dozens of developers to shelve plans. In the end, a fraction of what had been proposed actually made it out of the ground.

PROJECTS STALLEDIn Las Vegas, only 8,300 condominiums of 29,000 residential condo units planned since 1999 were built, most of them around the Strip. Only 13 high-rise projects, comprising 21 towers, went up. Six were Turnberry’s.

 

Another 4,800 units are stalled in their tracks or otherwise yet to be completed, including almost 900 residential units in the vaunted CityCenter development, a $9 billion mixed-use project of shimmering hotels, condominiums and retail space that sits on 68 acres adjacent to the strip. The units are scheduled to begin closings in the first quarter of the new year.

As in South Florida, several developers were caught mid-construction when the market froze. Others, like Turnberry, which finished the two-tower Turnberry Towers in 2007, were stuck with unsold units.

“We were about 50 percent sold out in the second tower when Armageddon set in,” Weiner said. Turnberry’s partner in the venture, Prudential Real Estate Investors, ended up paying off the banks and taking ownership of the project, which still has about 250 of 636 units unsold, he said.

Another Turnberry project, the $3 billion Fountainebleau Las Vegas, with its 1,000 condo/hotel units, filed for bankruptcy in June.

PERFECT TIMINGJorge Perez of Miami’s Related Group, sensing an impending market implosion, pulled out at the last minute. He said his decision to cancel plans for a $3 billion mixed-use project called Las Ramblas was one of the smartest he ever made.

 

“The market was clearly showing signs of decline and the demand for construction services was so great that construction prices had been inflated to the point of making our project unfeasible,” Perez said in an e-mail. “Instead of taking the immense risk, I decided to sell the land at a huge profit.”

Perez also nixed ICON Las Vegas, a separate two-tower project in which three-quarters of the 502 units were pre-sold.

His timing was not as good with ICON Brickell, his $1 billion mega-condo in the 400 block of Miami’s Brickell Avenue. Although the project was completed in 2009, only about 100 sales in the 1,800-unit towers have closed. Perez has recently suggested that he may soon turn the project over to lenders in a “friendly foreclosure.”

Unlike the bulk of Miami’s new condominiums, which are clustered around the downtown area in stunning high-rise towers, most of the new Las Vegas projects are mid-rise buildings and condo/hotels perched on top of casino hotels.

In that sense, the problems plaguing the Las Vegas market have been less visible than the darkened condo towers of Miami and are obscured by massive LCD screens and the glitz of surrounding buildings.

Several real estate watchers estimated at least 1,000 Las Vegas units remain unsold, excluding apartments in CityCenter and other condo hotels. About 4,800 additional existing townhomes and condos also were for sale in November, according to the Greater Las Vegas Association of Realtors.

Since the condo model was relatively untested in Las Vegas, the volume of building was huge. But Miami’s building boom was far, far more expansive.

During the boom, developers had filed plans to build 85,000 new units throughout Miami-Dade County. The final count, according to Bal Harbor-based research firm Condo Vultures, has been about 23,000 units since 2003, more than double the amount built in the previous 40 years.

In the greater downtown area, where most new construction is located, developers still had almost 8,500 units to sell at the end of September. There are an additional 16,700 existing condo and town homes listed around Miami-Dade County as well.

Miami is burning off its excess supply of condos nearly twice as quickly as Las Vegas. The median price for an existing condo in Las Vegas stood at $72,500 in November and $149,000 in Miami-Dade.

Thousands of foreign investors, many from Latin America and with long-held ties to South Florida, have helped jump-start new condo sales. Although its just as hard to get a condo loan here as in Las Vegas, Las Vegas does not have hordes of foreign buyers willing to pay cash.

Also, lenders have begun allowing South Florida developers to sell units for less than the amount needed to repay their loans. That lowers prices for buyers.

Bulk buys, or the purchase of large blocks of condos for deep discounts by investors, have also taken off in Miami but not in Las Vegas.

“They haven’t gotten to the point of capitulation yet in Las Vegas,” said Peter Zalewski, a consultant with Condo Vultures. Burger, of Nevada-based Artisan Real Estate Ventures and also the leader of Related’s ICON Las Vegas project, said prices are all over the lot in Las Vegas — from more than $1,000 a square foot at CityCenter to $80 a square foot. Not even Miami, where new construction maxes out at about $500 per square foot, matches the lofty prices of CityCenter.

“There is a lot of cash out there ready to buy bulk, but they are ready to buy bulk at much cheaper price than developers and banks are willing to sell for right now,” Lee said.

Burger and partner John Tippins, a broker with NorthCap Commercial property, are among them. Caught in the stare-down, they decided to use their expertise in managing, selling and leasing Las Vegas condos still held by developers.

“We said, since we can’t buy the units at the moment, let’s keep our foot in the door,” Tippins said. “We think we can do a better job operating these buildings than some outside company.”

As for which market will mend more quickly, most analysts said it’s hard to tell.

For Weiner, so many unsold condos in South Florida will be tough to sell off.

But “as bad as it is,” he said, “I think South Florida will absorb its condos probably as fast, if not faster, than Las Vegas.”

Source Article

Las Vegs – More foreclosures on horizon, say analysts

Dec 17, 2009 | No Comments | Sean Mills

A cloud of foreclosures will hang over Las Vegas for at least a couple of more years and median prices will continue to fall in 2010, most likely by double digits, executives from two California-based real estate tracking firms said Tuesday.
About $2.5 trillion in adjustable-rate mortgages are due to reset from July through August 2011, [...]

A cloud of foreclosures will hang over Las Vegas for at least a couple of more years and median prices will continue to fall in 2010, most likely by double digits, executives from two California-based real estate tracking firms said Tuesday.

About $2.5 trillion in adjustable-rate mortgages are due to reset from July through August 2011, a substantial amount of it in places already reeling from the foreclosure crisis, said Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac.

Read More » »

House Flipping Makes a Comeback

Dec 9, 2009 | No Comments | Sean Mills

SCOTTSDALE, Ariz. — Four years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.
Jon Mirmelli, a Phoenix real-estate investor, learned late in the morning of Sept. 28 that a never-occupied custom house on the northern fringes of this Phoenix suburb was going up for auction around noon the same day. [...]

SCOTTSDALE, Ariz. — Four years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.

Jon Mirmelli, a Phoenix real-estate investor, learned late in the morning of Sept. 28 that a never-occupied custom house on the northern fringes of this Phoenix suburb was going up for auction around noon the same day. The six-bedroom home, built on a three-acre desert plot, has a kitchen with two dishwashers, four ovens, “antibacterial” copper sinks, and a master “spa” bathroom with space for a flat-screen TV visible from the tub.

The minimum bid, as set by a unit of Citigroup Inc., which had a $1.3 million mortgage on the home, was $379,900. After several minutes of bidding among investors and their representatives, some wearing shorts and flip-flops, Mr. Mirmelli won the home for $486,300. A week later, he agreed to sell it for $690,000 to a woman who moved in this month.

During the housing boom, millions of Americans tried to make money by buying and then quickly reselling new houses and condominiums. That kind of flipping stopped several years ago as home sales stalled amid a surge in foreclosures and curtailed lending.

Now, a different breed of flipper is proliferating: one who seeks bargains at foreclosure auctions. Unlike the boom-time flippers, the latest generation needs cold cash, lots of local-market knowledge and strong nerves.

Investors compete mostly with other full-time professionals who monitor foreclosure auctions at county courthouses across the country. The bidders often haven’t had a chance to inspect the property or determine whether it’s occupied by tenants, who may be hard to evict.

Sometimes “you have half an hour to make a half-million-dollar decision,” says Damon Lines, an executive at PostedProperties.com, a Phoenix firm that provides information to foreclosure investors and bids on their behalf. “That’s something most people can’t or aren’t willing to do.”

In the states where home prices have fallen the most, many local online medicine without prescription real-estate markets are dominated by foreclosed property, dragging down the value of neighboring homes. Barclays Capital estimates that banks and mortgage investors have 639,000 foreclosed homes for sale across the U.S., largely concentrated in Florida, California, Arizona and Nevada. That’s equivalent to more than 10% of expected U.S. home sales this year.

Flippers swoop in at public auctions of foreclosed homes, known as trustee or sheriff sales. In many states, the lender sets the minimum bid, and takes possession of the property only if no one bids more. In the past, the minimum generally was about equal to the mortgage balance due. But in today’s market, in which many home values have dropped far below the loan balance, lenders wouldn’t attract investors if they set the minimum at that level.

So lenders, or the loan-servicing firms that represent banks and investors, are increasingly likely to set the minimum much lower. Their goal is to tempt others to buy the house and spare banks the headaches and costs that come with taking possession.

Sean O’Toole, chief executive officer of ForeclosureRadar.com, a research firm, estimates that in November about 21% of homes sold in trustee sales in California went to investors rather than to a foreclosing lender, up from 6% a year earlier. The trend is similar in some other areas with high foreclosure rates, including Phoenix and Miami.

The advantage of such an outcome for the bank is that it gets money for the property right away, even if it isn’t enough to cover the loan balance due. The bank doesn’t need to make repairs to the home, cover the taxes and insurance, or pay real-estate-agent commissions.

The risk for banks is that if they set the minimum bid too low, the home might end up selling for much less than they could reap if they took ownership of it and sold it themselves. But with some 7.5 million U.S. households behind on their mortgage payments or in foreclosure, many lenders are overwhelmed. They’re negotiating with distressed borrowers and figuring out how to sell the growing supply of foreclosed homes.

“The banks are so screwed up,” says Mr. Mirmelli, the Phoenix investor, that they don’t always have a clear idea of the value of the property they are foreclosing on.

To help them set the minimum bid, banks often consult with local real-estate agents and use software that estimates housing values. American Home Mortgage Servicing Inc., which collects payments and handles foreclosures on behalf of banks and loan investors, uses a formula designed to “achieve a fair value for the property and induce third-party bidders,” says Christine Sullivan, a spokeswoman for the Coppell, Texas-based firm.

American Home starts with a broker’s estimate and subtracts the expected costs of taking ownership of the house and selling it. The minimum bid is above the net proceeds American Homes believes it could get by acquiring and selling the property itself, she says.

Outside the Maricopa County court building in downtown Phoenix, trustees, companies that are hired to handle foreclosure auctions, offer as many as 600 or 700 houses every weekday. A typical auction lasts only a few minutes. On a recent afternoon, a few dozen bidders and onlookers were clustered around a trustee employee seated on a lawn chair conducting auctions. He kept track of the bids on a laptop computer perched on one knee.

Many of the bidders are regulars at the sale, bidding for themselves or on behalf of investor clients. “We’re all kind of like a little dysfunctional family,” says Steve Mutsaers, a representative of PostedProperties, who was wearing black sunglasses, a white polo shirt and gray plaid shorts. During the summer, Mr. Mutsaers says, he wears a sombrero to cope with temperatures well above 100 degrees.

People who attend trustee sales here and in other foreclosure hot spots around the nation say the auctions have recently been attracting more bidders. “Properties are getting bid up,” says Hal Feinberg, a Phoenix property investor. “You can still get good deals, but you’ve got to be more patient than you were a year ago.” He and other investors in the Phoenix area say they have been flipping a lot of the homes they buy to Canadians taking advantage of a weak U.S. dollar.

Buying at these auctions is perilous. There are no public viewings, so bidders often can’t know how much damage may have been done inside a house by occupants facing foreclosure. “We’ve seen everything,” says Doug Hopkins, chief executive of PostedProperties. “We’ve seen people pour concrete down the toilets.” Unless they’ve done their homework, bidders also don’t always know whether they’re buying a home subject to a lien from another lender, which can happen in cases where the borrower took out more than one home loan.

View Full Image

Joshua Lott for The Wall Street JournalInvestors in Phoenix gather at one of the 700 auctions that take place here each weekday.

Because of such complexities, many of the bidders are people with experience in the property business. Jon Goodman, a real-estate lawyer in Boulder, Colo., for example, has bought 19 properties so far this year with other investors and sold 11 of them.

In February, the group won an auction for a home in Commerce City, Colo., near Denver, by bidding $142,000. Only afterwards did they discover that the previous owners had stripped the house of a toilet, much of the carpeting and a kitchen range. They replaced the missing items and made other minor improvements, eventually selling the house in May for $209,000. (The loan balance on the house had been $265,663.)

Mr. Goodman says their expenses came to about $24,000, including about $8,000 for real-estate commissions. That left a pretax profit of about $43,000.

The foreclosure auction was handled by American Home Mortgage Servicing. Ms. Sullivan, the spokeswoman for American Home, says the firm believes it didn’t underprice the home and it received “a fair, market-value price for the property.”

In Miami, a group of investors led by Oded M. Kaiser recently bought a condo at auction for $170,000. Two weeks later, they flipped it for $330,000. The loan balance was about $466,000. A spokeswoman for Litton Loan Servicing, which handled the sale on behalf of mortgage investors, declined to comment.

Not all flippers come out on top. Mr. Goodman says one of his legal clients, bidding on his own, unwittingly bought a house that was still subject to a first-lien mortgage. To gain control of the property, the client had to pay off the first mortgage. As a result, says Mr. Goodman, the client, who declined to be named, is likely to have at least a small loss on the deal.

Last summer, Phoenix investor Greg Thielen bought a home at an auction and later found that the former owner had stripped out air-conditioning units, granite countertops and kitchen cabinets, and uprooted palm trees from the lawn. Repair costs came to about $30,000, leaving Mr. Thielen with a small loss on the purchase. “It’s not as easy as people think,” says Mr. Thielen.

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James R. Hagerty/The Wall Street JournalInvestor Jon Mirmelli in the kitchen of the Scottsdale home he flipped.

The Scottsdale property bought by Mr. Mirmelli was supposed to be the dream home for Brad and Michelle McCaughey and their three children. Mr. McCaughey, who grew up in Ann Arbor, Mich., was a minor-league hockey player and coach after graduating from the University of Michigan. About nine years ago, having moved to Phoenix, he says he discovered “a passion for real estate.” He became a real-estate agent and began investing with his father and brothers-in-law in rental properties. Soon they had a dozen homes.

In 2005, Mr. McCaughey and his wife paid about $500,000 for three acres of desert land and began building a home. By the time the house was nearing completion in 2008, the family rental-property business was in trouble because financing and other costs were exceeding their income.

The McCaugheys started selling their rental properties and put their own house on the market. They hoped to avert a foreclosure by getting Citigroup to accept a short sale, in which a home is sold for less than the loan balance due. Before they could find a buyer, though, Citigroup foreclosed on the home, and it went up for auction at the Maricopa County Courthouse this past September.

Citigroup initially set the minimum bid at auction at $1.3 million, far more than the market value, given comparable sales in the neighborhood. Then, on the morning of the sale, Citigroup lowered that minimum to $379,900. PostedProperties, which monitors Web sites for such price changes, sent out an email on the opportunity to Mr. Mirmelli.

Developments Blog

• A Reluctant House Flipper Yearns to Buy and Hold

Mr. Mirmelli has his iPhone set up so he can call up the address of a home due to be auctioned, see a map of the neighborhood with a tap of his finger and then see panoramic photos of the street with another tap. While he researched the home, one of his partners drove out to see the exterior and make sure there were no occupants. A PostedProperties employee bid on their behalf and won the house for $486,300, a sum that then went through the trustee to Citigroup.

After expenses of about $54,000, including real-estate commissions and minor repairs, Mr. Mirmelli and his partners expect a profit of about $150,000 on the flip. “It turned out to be a very good return,” he says.

A spokesman for Citigroup declined to comment on the transaction.

The McCaugheys, who formerly owned the house, are now renting a smaller home. Mr. McCaughey now works for a telecommunications service and is thinking about going back into hockey-related work.

Over a bowl of soup at a Paradise Bakery & Café in Glendale, a suburb of Phoenix, Mr. McCaughey says he sees a lot of real-estate bargains now and may jump back into the market at some point. As for the losses he’s taken on his former holdings, he says: “It is what it is. You deal with it.”

Source article www.wsjonline.com

Las Vegas Home Prices Fall 34% on Foreclosure Sales (Update1)

Dec 2, 2009 | No Comments | Sean Mills

The droves of investors and speculators have descended on Las Vegas because, according to the National Association of Realtors, now is the perfect time to buy.  You first…-Sean
Source Article Bloomberg.
Dec. 1 (Bloomberg) — Las Vegas home prices fell 34 percent in October from a year-earlier as foreclosed properties accounted for two-thirds of sales, reducing the [...]

The droves of investors and speculators have descended on Las Vegas because, according to the National Association of Realtors, now is the perfect time to buy.  You first…-Sean

Source Article Bloomberg.

Dec. 1 (Bloomberg) — Las Vegas home prices fell 34 percent in October from a year-earlier as foreclosed properties accounted for two-thirds of sales, reducing the value of single- family houses and condominiums, MDA DataQuick said today.

The median price paid for all new and re-sold houses and condos in the Las Vegas metropolitan area fell to $130,000 in October from $196,000 a year earlier, the San Diego-based real estate research company said today in a statement. The price has been at or close to $130,000 since July and hasn’t fallen below that level since April 1999, when it was $129,000.

Homes that had been foreclosed on in the previous 12 months rose to 67 percent of resales in October, from 65 percent a year earlier, MDA DataQuick said. It was the highest foreclosure rate that month among metropolitan areas with populations of 200,000 or more, according to RealtyTrac Inc.

A total of 5,068 new and resale houses and condominiums were sold in the Las Vegas-Paradise metropolitan, an increase of 1.1 percent from September and 22 percent from a year earlier, MDA DataQuick said. Of those, 485 were newly built, down 34 percent from a year earlier.

“Builders can’t compete with discounted foreclosure resales,” MDA DataQuick said.

The research company is a unit of Richmond, British Columbia-based MacDonald, offshore pharmacies Dettwiler & Associates Ltd. It compiles surveys using county records and supplies real estate information to customers including public agencies, lenders and title companies.

The new faces of day labor

Nov 10, 2009 | No Comments | Sean Mills

The new faces of day labor
U.S. citizens are joining immigrants in store parking lots

It sounds like a George Lopez joke.
“Times are so bad that I saw an Anglo day laborer standing outside Home Depot the other day.”
Except it’s true.
In the latest sign of the Las Vegas Valley’s economic free fall, U.S. citizens are starting to show up [...]

The new faces of day labor

U.S. citizens are joining immigrants in store parking lots

It sounds like a George Lopez joke.

“Times are so bad that I saw an Anglo day laborer standing outside Home Depot the other day.”

Except it’s true.

In the latest sign of the Las Vegas Valley’s economic free fall, U.S. citizens are starting to show up in the early mornings outside home improvement stores and plant nurseries across the Las Vegas Valley, jostling with illegal immigrants for a shot at a few hours of work.

Experts say the slow-starting but seemingly inexorable trend is occurring nationwide.

“It’s the equivalent of selling apples in the Great Depression,” said Harley Shaiken, chairman of the Center for Latin American studies at the University of California, Berkeley.

But it is not only a sign of the times, they add. If the numbers of citizens among the day laborers in cities across the country continue to grow, it’s likely to increase the ire of followers of TV host Lou Dobbs and others who will see illegal immigrants as stealing food off the tables of the nation’s native-born or naturalized poor.

Or, it may flip certain canards upside down in the immigration debate, easing tensions in some communities.

In the Las Vegas Valley, where the most recent unemployment rate was 13.9 percent, one face of this phenomenon is Ken Buchanan. The 50-year-old describes himself as a “food and beverage” guy, most recently working for four years at Renata’s Sunset Lanes casino and, before that, 30 years in a string of restaurants, hotels and casinos here and in his birthplace, Chicago.

But in 2006 Renata’s closed for remodeling. When the casino reopened as Wildfire, the management did not rehire Buchanan, he said.

In the months that followed, Buchanan discovered the difficulty of seeking work in his fifth decade, eventually winding up at Green Valley Car Wash, where he stayed for about two years, he said.

The banks foreclosed on the house he was renting. In the attempt to grab his things two steps ahead of the constable, he wound up missing work. He lost his job. He became homeless.

A Hispanic man Buchanan met in Renata’s sports book told him he had picked up work standing outside the Home Depot on Pecos Road at Patrick Lane. One July day, Buchanan gave it a try. At first, he got nothing but sunburn. But then he started to get work. Now he’s at the Home Depot six days most weeks.

Pablo Alvarado, executive director of the Los Angeles-based National Day Laborer Organizing Network, said he has been seeing the same thing elsewhere. “It’s happening, though still not in massive numbers,” Alvarado said. In the past six months or so, he has heard of “americanos” on the street corners and parking lots of Silver Spring, Md., Long Island, N.Y., and Southern California locations.

“It’s just beginning,” he said. “But I think it’s only going to increase.”

A recent morning’s swing through the valley produced reports of the same phenomenon. At Star Nursery on Cheyenne Road west of Tenaya Way, Nicolas stood shivering under a hooded sweatshirt, hoping a car or pickup would stop. The Mexican immigrant said he had seen a couple of “white guys” showing up recently, though not on the blustery cold days last week.

At Home Depot on Decatur Boulevard north of Tropicana Avenue, Jose said the same thing, adding that “it’s never more than three or four, but they’re coming out.”

Farther south, in front of Moon Valley Nursery on Eastern Avenue, Israel said a couple of “americanos” — white and black, he added — have come out for work in recent months. “But they tend to stay only a few days.”

As a salesman at Moon Valley, Mike Fugitt’s job includes making sure the laborers don’t come into the nursery’s parking lot, because their presence draws complaints from some customers. In the past three months or so, he said, more of those laborers have been telling him, “But I’m an American.” That includes some Hispanics, he added. “But I treat them all the same; they can’t be trespassing,” he said.

Workers at all the sites said the presence of the americanos hasn’t made work scarcer or produced any conflict. Some suggested that people hiring day laborers prefer Hispanics anyway, because of their reputation as hard workers.

Shaiken said shaking up the mix at day labor sites may eventually produce conflict in the greater society. “It essentially shreds the argument that Americans don’t want certain jobs,” he said.

In the current economy, he added, “we’re almost sure to see die-hard opponents of illegal immigrants seize on the fact that we have legal workers in day labor markets,” heating an already-inflamed debate.

In the longer term, it may also lead to a more rigorous analysis of future labor markets, including revised estimates of how many immigrants would be needed under a guest worker program, as proposed in recent congressional bills.

At the same time, Shaiken said, the issue won’t become central to the debate before Congress over what is known as comprehensive reform, including a pathway for legalizing millions of workers. “The point is, do we really want a labor market with day labor work as a career path? It’s more a commentary on the economy right now,” he said.

Although Alvarado allowed that the change in day labor sites was an undeniable sign of the withering economy, he also sees a “beautiful irony” in U.S. citizens seeking work as day laborers.

That’s because his organization has defended the free-speech rights of day laborers in at least 10 court cases over more than a decade. Up to now, courts have ruled in favor of the laborers.

“We always knew (these cases) would be useful not only for immigrants, but also for U.S. citizens,” Alvarado said. “We knew there would be a time when the economy would reach this point, and they also would be looking for work this way.”

Buchanan likes to wear a Cubs or White Sox cap as a sign of his Chicago heritage when he stands with one or two Hispanic laborers about 20 yards south of a larger crowd. He said he has gone through an education of sorts in the past four months. He has always worked around Hispanics in restaurants, hotels and casinos, but now he understands the issue of immigration from up close.

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Homes: About to get much cheaper

Oct 21, 2009 | No Comments | Sean Mills

(Yahoo) 
If you thought home prices were bottoming out, you may be wrong. They’re expected to head a lot lower.
Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.
Overall, the national median home price is predicted to drop 11.3% by June [...]

(Yahoo) 

If you thought home prices were bottoming out, you may be wrong. They’re expected to head a lot lower.

Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.

Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.

In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years — though it underestimated the scope.

Mark Zandi, chief economist with Moody’s Economy.com, agreed with Fiserv’s current assessments. “I think more price declines are coming because the foreclosure crisis is not over,” he said.

In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June — after having already fallen a whopping 48% during the past three years.

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Lunacy in Las Vegas Housing

Oct 14, 2009 | No Comments | Sean Mills

Just when you think you’ve heard it all in today’s housing market, along comes a story that takes all those statistics and all those monthly foreclosure reports and all that testimony to Congress and just drop kicks them all out the window.
I’m going to tell you about a nice young woman named Katie. Last week [...]

Just when you think you’ve heard it all in today’s housing market, along comes a story that takes all those statistics and all those monthly foreclosure reports and all that testimony to Congress and just drop kicks them all out the window.

I’m going to tell you about a nice young woman named Katie. Last week Katie tried to buy a house in Las Vegas, and got a lesson in real estate reality that she will never forget.

Let’s back up a bit for some background. Katie and her husband live in Maryland and are about to have their first child. Both work, but Katie’s husband, who has a very solid government job, is being transferred to Vegas. And please note, the government is paying all his moving expenses, Buy Xenical Online including Realtor and closing costs. Both he and Katie have credit scores right around 800.

So off the two went to Vegas, thinking they were in the right place at the right time.

The foreclosure capital of America, Vegas home prices are down more than 50 percent from their peak in 2006. The median price of a home there is $138,000, but, interestingly, the inventory is down to a less than 3-month supply. Compare that to the national inventory, now at an 8.5 month supply. Despite the low supply, prices are not recovering quickly because the sales are all by banks, looking to unload properties quickly.

But back to Katie. Her Realtor, who is also an old friend, emailed Katie the following warnings before her arrival on the Vegas strip:

- This market is crazy and many things are just not going to make any sense.

- I can guarantee you 99.99% of the listings emailed to you will no longer be available by the time you get here.

- Properties are selling in the blink of an eye.

- Properties are getting multiple offers within a few days of being on the market, the most offers I’ve heard a house had recently was 44 offers (I know, crazy).

- This market is crazy and many things are just not going to make any sense.

- 40% of all transactions are cash purchases, which makes it harder for the buyers who are financing to get their offers accepted.

- We have 1/2 the inventory we had a year ago and 4 times as many buyers as we did a year ago.

- Chances are we will have to submit several offers to have the chance of getting 1 accepted.

- This market is crazy and many things are just not going to make any sense.

- You will probably leave not knowing if you have a house or not because banks take 2 to 3 weeks to respond, because this market is crazy… you know the rest.

I’m guessing you noted the crazy part. Katie is looking in the $150-200,000 price range. Despite the warnings, Katie was completely unprepared for what she found. In seven days, she saw 50 homes. All but one were foreclosures.

On the first day, Katie and her husband saw 13 homes.

Only three were anywhere close to move-in condition, despite the fact that all of the homes were built in 2005 or later. All were foreclosed properties. “People find out a year before they’re ever kicked out, so what do they do for that year?” says Katie. “Completely destroy their homes.”

I know we’ve already heard about this, as had Katie, but the destruction was even beyond her expectations. “There’s no cleaning that would help.” There was dirt rubbed on the walls, graffiti, holes in the walls and garbage deposited inside the holes. The smell? “I couldn’t get past it.” Obviously there was no hardware on the doors and no appliances, kitchen cabinets, stovetops…whatever could go went. 75 percent of the homes she went into were an instant no.

But here’s the crazy part:

“We went to a home that had been on the market for one day, and the key was stolen out of the lock box. Our Realtor said immediately, ‘You want this home.’ She told us another Realtor had stolen the key because they wanted their client to get it. So what did my Realtor do? She broke in. And sure enough this was the home we fell in love with. It was on for $132,000 so we decided to be really aggressive and offered $160,000, plus we had government backing on our loan. Well our Realtor called that night and said, ‘You’re not going to get the home. They got 30 offers and half are cash offers, so the bank is not even going to look at you.’ The banks just want the cash to unload these places.”

Finally, on day 7 of looking, and after having 7 offers ignored by the banks (who owned all the homes), the Realtor called Katie with “a gold mine.” Yes, an owner-occupied, regular home. A rare non-foreclosure. They went immediately and put in an offer. The owner claims to like them, but she ended up with 10 offers and is still mulling.

Ironically, in a market still flooding with new foreclosed properties every day, at the end of their week Katie and her husband met with a local builder. “We know our money will not get us as much, but they’re giving away the granite and hardwoods for free.” It’s not in their ideal location, and they wouldn’t be able to move in until March, the month their first baby is due. But at least they don’t have to deal with the banks, the filth and the competition.

• Slideshow: 10 Most Affordable Metro Areas

Oh, and by the way, a fun factoid on Katie’s Realtor: She bought her brand new home in 2005 for $240,000. According to the comps she runs daily, she says it’s now worth between $90-110,000. So in January she decided to stop paying her mortgage. No financial hardship, she just figured she was throwing money away. The bank hasn’t gotten to her yet, so she’s just been living there for free. At some point, she knows, her bank will foreclose, but she’s fine with that. She says she’ll do far better financially renting for a while.

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REAL ESTATE: Apartment prices decline in Las Vegas, amenities don’t

Oct 6, 2009 | No Comments | Sean Mills

No secret on this one if you have been to Las Vegas in the past year. -Sean
Budget-minded apartment tenants may be willing to sacrifice features such as walk-in closets and hardwood floors for cheaper rent, but they still want swimming pools, fitness centers and barbecue pits that make staying home more enjoyable.
Paid utilities and washers [...]