Entries from April 2008 ↓

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The head of Fannie Mae is predicting a slow real estate market spanning through 2009 as indicators such as the Case Shiller report as showing even greater weakness in the market. Daniel Mudd predicts the slowdown lasting longer than many other prognosticators, but interesting enough recognizes that he is guessing as forecasting housing is not an easy job.

This is a great point. We all would love to know the date of the turnaround. But the complex formula of consumer sentiment, finances, macro economics, local economics, and government fiscal policies will make it very hard to determine when and where the bottom will be. Add to that different local and socioeconomic groups may react differently to market conditions you have to remember the classic adage.

All real estate is local.

So before you get all bothered by this report, watch the indicators. The  best example of this are  the charts that are on Doug Quance’s site  for the different towns in Atlanta. Some are showing increases over the past couple of months of 10 percent while others right next door are showing declines. If you did not know any better you never would know all these communities were in one metro region! 

“We think at Fannie Mae that ‘08 is going to be a tough year, kind of a continuation of the end of 2007; ‘09 will be similar,” said Daniel Mudd, the company’s president and chief executive, who spoke at a business journalism conference in Baltimore.

Fannie Mae, which buys and repackages loans to sell to investors, claims about half the market for newly issued securities backed by single-family homes.

Forecasting the bottom of the housing slump is a tricky business, with the many conflicting predictions by economists as proof, he added. He said he has seen recent improvement in the capital markets, which play an important role in the mortgage products and rates that borrowers can get, but a housing-price index released yesterday showed accelerating declines across the largest metro areas. via the baltimoresun.com

A Connecticut Housing Official and her husband is now charged with stealing Section 8 housing money from the East Haven housing authority. The amount of 173 thousand dollars was taken through a debit card that Cassandra Ashe illegally obtained.

I do hope she gets what she and her husband deserve stealing our tax money that was designated for low income housing families.

The executive director of East Haven’s housing authority was arrested with her husband Tuesday and charged with stealing $173,000 of federal housing money that was supposed to help low-income town residents pay their rent.

Cassandra Ashe, 36, and her husband, Jonathan, 43, are accused of conspiracy and theft from a program receiving federal money. Cassandra Ashe earns $57,000 a year as executive director of the authority. Her husband, who works in the New London Housing Authority’s maintenance department, earns $12.20 an hour. They live in North Haven.

According to the arrest warrant affidavit, Cassandra Ashe, without approval from the East Haven Housing Authority, obtained a debit card in May 2007 that gave her access to the authority’s bank account containing low-income rental subsidies.  via the Courant.com.

Local government officials must be getting nervous if they are reading this story. New York City is one of the few hot warm spots in the real estate market and is showing a significant weakness in tax revenue collection. What are the mayors of Stockton and San Diego thinking as they try to keep all the bloated city services going?

So many local governments allocated their real estate tax surpluses to special vote buying constituent services that made the voters feel good without fulfilling their basic needs.  Now they will fight to keep these services going even after the real estate tax well has run dry.

The true catch 22 of the matter is when the homeowners realize they are being assessed for much more than their properties are worth and start mass appealing their assessments. That will be fun to watch as the politicians start scurrying.

Both of New York City’s underpeforming real estate tax revenues are based on sales of offices, warehouses, apartments and single-family homes. The number of deals has slowed, though with some properties, such as Manhattan apartments, prices still rose substantially in the last quarter.
Real property transfer taxes fell 12.7 percent, or nearly $162 million, from the same period a year ago, according to Democratic Comptroller William Thompson. At the same time, mortgage recording tax collections were down 20.1 percent, or $234 million. The Guardian

If the conditions shown in this video were to happen in any rental property in the country the landlord would be facing a condemnation notice. Instead our soldiers coming back from a 15 month deployment are facing these living conditions.

This has got to stop. No matter your feeling on the war, and I do not want to bring politics to the site, soldiers deserve to live better than this.

If you feel motivated please contact your elected officials.

House of Representatives
The Senate
The President

Into the gloom and doom of the housing market comes this tidbit of knowledge from one of the founders of K&B Homes. Eli Broad is thinking that home prices could drop another 20 percent over the next couple of years.

I bet the folks in the corporate offices of K&B are grumbling a bit over that quote as they try to sell their inventory right now.

“I don’t think we’re anywhere near a bottom in housing,” Broad told Bloomberg TV at the Milken Institute Conference in Beverly Hills, California. “We’re going to have a big inventory of unsold, unoccupied homes that’s going to take three or four years to clear out.”

Homebuilders, hurt by banks’ stricter requirements for granting home loans and concern over the rising number of homeowners failing to pay their mortgages, have begun work on the fewest number of houses since 1991, according to the U.S. Department of Commerce.

“People were using their home equity as really an ATM machine,” Broad said, referring to an automated teller machine. “They were spending more money than they were earning by taking equity out of their home. That couldn’t go on indefinitely. We’re now paying a price for that.”  via Bloomberg.com

The United States real estate market has an inventory problem. When there are over 18 million empty homes across the country we have no reason to continue to build new homes. If this were a logical marketplace we would tell builders to take a 2 year moratorium until absorption met demand.

Instead we have builders building 2.1 million homes last year. Yikes! And of those homes almost half of them are now sitting empty. The speculative years between 2000 and 2005 drove construction of homes not based upon need in the marketplace but demand created by speculators. When that demand dried up many of these homes are sitting empty and forlorn.

Now we see in the first quarter of 2008 construction is down significantly which is a great thing. The key thing is to get rid of this overhang in inventory and fill up some of the homes. Once that occurs the market can regain it’s equilibrium and prices will stabilize.

The homeowner-vacancy rate rose to a record 2.9% in the first quarter from 2.8% in the fourth quarter, about 1 percentage point higher than normal. The vacancy rate has jumped in all four regions of the country, as well as in cities, suburbs and rural areas since the housing bubble exploded.

The total U.S. housing stock increased by 2.1 million to 129.4 million in the past year, with about half of that gain accounted for by the increase in vacancies. Much of the newer stock of housing is vacant, the data show.

Of all housing units built for owner-occupancy since April 2000, 10.2% were vacant, up from 8.8% in the fourth quarter and 4.7% two years ago.

While the vacancy rate for single-family homes has risen to 2.5%, the most dramatic increase in vacancies has been in smaller condominium projects. via Marketwatch

The top 10 metro areas in the United States for foreclosures include the usual suspects led by 6 California markets, Las Vegas, Detroit, Phoenix, and Fort Lauderdale. There were 2 real surprises for me in the RealtyTrac report, first that Detroit has dropped down to number 6 after being the leader in foreclosures for so long. And the other one was San Diego moving up to the 9^th position. San Diego has gone through a boom and a bust, there is no doubt of that, but overall with it’s amazing climate and location I thought it would be a bit more resistant to the travails of the marketplace.

Top 10 Metro Areas For Foreclosures - 1st Quarter, 2008

1. Stockton, California
2. Riverside, San Bernardino, California
3. Las Vegas, Paradise, Nevada
4. Bakersfield, California
5. Sacramento, California
6. Detroit, Livonia, Dearborn, Michigan
7. Phoenix, Mesa, Arizona
8. Fort Lauderdale, Florida
9. San Diego, California
10. Oakland, California

My apologies to UB40 for the title, but this is not something you would want to see when you are hearing noises downstairs in the middle of the night.

An 8 foot alligator sitting in your kitchen who chased your cat into the house after pushing in the screen porch door. Florida living can be a wonderful experience but alligators in the kitchen is a bit much.

Sandra Frosti went into her kitchen to see what was causing the noises and found an 2.4-metre alligator thrashing around on the floor.
The 69-year-old had returned from an evening out to hear scratching sounds in her home, near Tampa.
When she discovered what was causing them, she ran to her bedroom to call emergency services, who had to be convinced that the creature had got in to her house. The operator taking her call asked whether what she had seen was actually an iguana.
Police and a specialist wildlife trapper eventually arrived to catch the alligator. Gouges from the creature’s claws were left in Frosti’s floor.
It is thought the reptile may have been chasing her cat when it came into the house.  via  guardian.co.uk.

Video from MSNBC

In the past if you developed websites you aimed not to alienate the dial up user and those with smaller monitors. Well with the new information out that websites have tripled in size since 2003 and the number of objects on a page doubling, don’t get hung up on those metrics anymore.

The size of the average web page has more than tripled since 2003. From 2003 to 2008 the average web page grew from 93.7K to over 312K (see Figure 1), some 233% (Domenech et al. 2007, Flinn & Betcher 2008). During the same five-year period, the number of objects in the average web page nearly doubled from 25.7 to 49.9 objects per page. Longer term statistics show that since 1995 the size of the average web page has increased by 22 times, and the number of objects per page has grown by 21.7 times. via WebSiteOptimization

If you are still worried about creating your website for those with a dial up connection or a smaller screen you are going to be left far behind with those very same users. Broadband is where we are now and not utilizing the features that broadband offers is going to hurt you, especially if you are a real estate agent. Design for a 1024×768 screen size and use that bandwidth to tell your story as best you can.

Nancy Pelosi, Speaker of the House, must be the Queen of the FUD (fear, uncertainty, and doubt). Instead of talking about the positive things that have gone on in the country over the past 2 years of her speakership, she instead decides to be a fear monger to those in the fear mongering business.

Addressing a mixture of housing volunteers and families facing foreclosure at San Francisco City College, Madame Speaker decided to scare the bejesus out of them by stating that 5 percent of all California homes will enter foreclosure in the coming 2 years.

This is especially galling as the election is coming up in November. What makes me think that if the Democrats, Pelosi’s party, win both the Congress and the Presidency she will be speaking to these same people that the economy has turned around and all will be well now.

The problem is affecting not only individual families, but the country’s economy as well, she said, adding that in California, one in 20 homeowners are projected to be in foreclosure in the next two years.via SF Gate.