Friday, October 26, 2007

Condo "Scrapheap" Grows

From the Sacramento Bee:

Billboards featuring the bemused face of star architect Daniel Libeskind have disappeared from downtown street corners, and so have plans by Denver developer Craig Nassi to build two Libeskind buildings here. First, Nassi's Aura condominium project on the Capitol Mall ran into trouble. Now the head of BCN Development says he can't find financing for the 50-story Epic condo and hotel tower he planned for 12th and I streets, either.

Last week, a lawyer representing Libeskind and the local office of architecture firm Stantec Inc. sent a letter to Nassi terminating their relationship for nonpayment. "Design professionals do not have the ability to continue working for free," said the letter from lawyer John Condrey, a copy of which was provided to the city. In an e-mail Thursday, Nassi characterized the letter as a "routine" part of shutting down the city approval process for Epic for lack of funding.
"Sacramento's economy is so depressed at the moment, we can't get lenders to consider any projects at this time," he said.
The scrapheap of high-rises planned for Sacramento before the real estate market collapsed is starting to pile up. Libeskind's creations join the twin 53-story hotel and condominium towers formerly planned for the Capitol Mall by local developer John Saca.
Lenders started formal foreclosure proceedings on a record number of California homeowners last quarter, the result of declining home prices, sluggish sales and subprime mortgage distress, a real estate information service reported. A total of 72,571 Notices of Default (NoDs) were filed during the July-to-September period, up 34.5 percent from 53,943 during the previous quarter, and up 166.6 percent from 27,218 in third-quarter 2006, according to DataQuick Information Systems of La Jolla. Last quarter's default level passed the previous peak of 61,541 reached in first-quarter 1996. A low of 12,417 was reached in third-quarter 2004. An average of 34,781 NoDs have been filed quarterly since 1992, when DataQuick's NoD statistics begin.
Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 24,209 during the third quarter. That is the highest number in DataQuick's statistics, which go back to 1988. Last quarter was up 38.7 percent from 17,458 for the previous quarter, and up 604.8 percent from 3,435 for last year's third quarter. The peak of the prior foreclosure cycle was 15,418 in third-quarter 1996....
Half the state's default activity is concentrated in 293 zip codes, almost all of which are in the Inland Empire and Central Valley...While numbers at the zip code level can fluctuate severely, among the zips with the biggest foreclosure problem are 95330 Lathrop in San Joaquin County, 92571 Perris in Riverside County and 95832 Sacramento.
From the Sacramento Bee:
At least 6,638 homeowners in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba received formal notices of default -- the first step in the foreclosure process -- from their lenders during the three-month period....That's up 27.6 percent from April, May and June defaults in the six counties...Sacramento County's defaults were up 180 percent from July, August and September 2006.
In the six-county region, 2,731 home owners lost their houses to banks during July, August and September. That's up from 2,203 foreclosures in those counties in April, May and June.
DataQuick says about 46 percent of homeowners who go into default are able to work out financial arrangements to either keep their houses or sell them and pay off their debts.
From the Sacramento Bee:
We know. We know. The real estate news these days is always about home sales hitting a new low and values falling. As 2007 nears an end, everyone who owns a house is longing for something better – a recovery or at least some stability for the Sacramento region. Most local experts counsel it's still a little early to be talking about either.

But for the sake of all anxious homeowners standing around the wishing well, let's look at local history. If it has anything to tell us, it's that real estate recoveries – and that dependable upward trajectory for California home values over the long run – usually come pretty fast once they start.

Consider 1997 across much of the Sacramento region. After several lean years of recession, job losses and military base closings, homeowners in El Dorado, Placer, Sacramento and Yolo counties saw their values start to climb again. Here's a look at [DataQuick] September median sales prices for new and existing homes combined in the region after recovery began and until the next boom took off.
Sacramento County: September 1997 delivered a $119,000 median price – still below the $138,000 median from September 1991. But the median climbed to $140,000 in 1999 and $154,000 in 2000. In September 2001 it hit $180,000 and then soared away. The September 2007 median: $307,000.
From the Sacramento Business Journal:
Bank of America Corp. will exit its consumer wholesale-mortgage business, a move that will eliminate 700 jobs, including "less than 100" in Rancho Cordova...The Rancho Cordova operation has a centralized processing operation for wholesale mortgages, and that will be ended.
From the Modesto Bee:
Condo conversions were all the rage a couple of years ago, as seven Modesto apartment complexes decided to sell about 500 rentals as owner-occupied units. The first couple of projects sold like hotcakes, filling a niche for lower- priced housing. Then the real estate market cooled, and sales slowed dramatically. Now after two years of trying, one of those multifamily projects is giving up on traditional sales methods. Instead, the Villas at Creekside is going to auction off its final 29 units Nov. 18, with bids starting at $100,000 to $130,000. That's less than half what those town houses sold for in 2005.
At first, only those who planned to live there were allowed to buy. Now investors are being invited to bid, and the auction is being promoted in the Bay Area....


Patient Renter said...

So we've already broken the record for defaults and we've not even hit the peak for resets yet! Being that it usually takes several months to go from a mortgage reset, to missed payments, to a notice of default, and the reset peak is still a little ways out, we can expect that the default peak is certainly a ways out.

bubblemachine said...

Just look at the BILLIONS in loans that will be resetting during the next 15 months. Yikes!

Oct 07 - $20B
Nov 07 - $23B
Dec 07 - $22.5B
Jan 08 - $25B
Feb 08 - $25B
Mar 08 - $23B
Apr 08 - $22.5B
May 08 - $24B
Jun 08 - $18B
Jul 08 - $20B
Aug 08 - $25B
Sep 08 - $23B
Oct 08 - $23B
Nov 08 - $23B
Dec 08 - $20B

Source: JP Morgan

anon1137 said...

Is it my imagination, or has this been a busy couple of weeks for housing news?

I've got a file with about a dozen stories or links I haven't had time to read - foreclosures, bankruptcies, poor earnings, writedowns, new legislation, recession talk, rate cuts, rate resets, auctions, "liquidity ehancement conduit" - it's too much!

commercialag said...

Here's a funny one that I just heard yesterday:

Called a realtor to check on the status of a home in Lincoln that had just been dumped from $273,000 to $250,000 - and only after a month on the market (I have a subscription to MLS, and what can I say, it is a hobby of mine to look wonder what the status is on the properties with the green downawards arrows next to them!!)

Anyway, so the house is located on Zoe Ann Drive, in case you all were wondering. I get ahold of the realtor, and ask her what the status of the home is (short sale approved price it said in the listing), and if she had had any nibbles at that price range. Now maybe she was blowing smoke up my butt, but . . . here is her reply, and it really felt sincere.

Well, that is a funny thing, we dropped the price last week, I already have two offers for the home at the new price, and then I took them to the bank (it was already a pre-approved short sale price by the bank), and the bank's response is: "Sorry, we don't want the offers now, we have decided to go the Auction route - thanks anyway." Goodbye, Soyonara! Relationship with this realtor will be terminated once it goes to the Auction.

I started to think about how stupid the bank is to do this right now. But then I thought about the marketing team for the "Home Auctioneers Group" errrr
(realtors standing in front of a bunch of people in folding chairs with numbered cards), and how they might have convinced the lender that they could really get $260,000 for the house, and how they would accept a lower commision in the process. Wow. And what if it doesn't sell at auction, and goes back on the market three months from now at $240,000. WHat is the lender's loss incurred from holding costs, remarketing the property, etc.

Now I am really not surprised that these are the same banking industry professionals who have managed to lose billions of dollars over this fiasco. I would not even pretend to understand their unquestionable logic and reasoning on such matters. Guess that is why these guys get paid the big bucks.

Oh, and the other little lovely thing going on in Lincoln is this, ol' John Laing and Company at Lincoln Crossings have dropped the prices on those 2,200 SF boxes they were selling back in 05' for $400,000. Well now the same models are going for $295,000. Now that homeowner's due and mello roos feels just a wee bit heftier since it makes up a larger proportion of your home payment, hmmm???

Resale is definitely the way to go for me. I can not justify losing $40,000 of buying power at the $280-320,000 level for a community pool and to have my 5x5 front lawn mowed once a week. Sorry. Hey, with the extra money I save and interest compounded, I can send my kids to Loretto and Jesuit.

SheWrestles said...

I'm out in Lincoln, too. 2259 Century Oaks just closed, but I'm not sure what the final sale price was. When the asking price dropped to $429,000 last month, I offered $410,000 and then the bank countered at $436,000.

Yes, you read me correctly - they countered at a number higher than the list price and then raised the asking price to $439,000 the following day.

Good on them that they found a buyer, but I was not willing to be their sucker.

Cmyst said...

If AgentBubble is out there, two long-time listed properties went off MLS last week:

4325 Jan Dr 95608
8716 Superb Cir 95624

Plus, 3333 McCowan Way 95608 went off several weeks ago at the same price asking as it had been for months over a couple re-listings. I kind of expected it to pop back up on MLS like it had in the past, but so far it hasn't.
Jan Dr and Superb Cir have both made two trips onto MLS, too.

Cmyst said...

oops, forgot to add, if AB is out there could you look up what the status is on these please?

alba said...

According to RealtyTrac, there are 2 REOs on Century Oaks, but the home addresses for the entire street are all in the 2500-2608 range.

alba said...

looks like the house at 610 zoe ann drive went back to the bank at $240K. Zillow has an estimate of $319K and RealtyTrac estimates $321K. If is still worth that much at a privately run auction (marketing gimmick), it will likely sell. It didn't sell for $228K at the public courthouse auction on 5/10/07. Previous owner also had a $57K 2nd. At some point, Countrywide picked up the loan (new owners).

AgentBubble said...

Cmyst said...
If AgentBubble is out there, two long-time listed properties went off MLS last week:

Hey fellow bloggers...I'm in Hawaii on vacation this week, so I don't have MLS access...If you have any MLS search requests, please e-mail me at agentbubble at gmail dot com and I'll get to them when I return on the 5th...Thanks!

SheWrestles said...

According to RealtyTrac, there are 2 REOs on Century Oaks, but the home addresses for the entire street are all in the 2500-2608 range.

Oops, my bad - it was 2569 Century Oaks.

The other REO is right across the street and I *believe* that one was to have been auctioned off on 10 OCT, but not sure how that went.

alba said...

I can't really tell, but that one looks like it had already been foreclosed on 9/05; one bank sold it to another for $360K; and now the Bank of NY is trying to recoup the initial loss of 2 loans at $522K. It didn't sell at the 10/10 auction, so it belongs to the Bank of NY for now. Has it been vacant for 2 years?

SheWrestles said...

I can't really tell, but that one looks like it had already been foreclosed on 9/05; one bank sold it to another for $360K; and now the Bank of NY is trying to recoup the initial loss of 2 loans at $522K. It didn't sell at the 10/10 auction, so it belongs to the Bank of NY for now. Has it been vacant for 2 years?

According to the next-door neighbors, 2569 Century Oaks was occupied up until about 6 months ago. The initial owners had left some time ago, but since 2005, there had been about 2-3 really good renters in there.

I'm not sure how long the one across the street has been vacant, but got the impression that no one has lived there for quite a while.